Yesterday I read”Why Chimpanzees Can’t Learn Language and Only Humans Can” by Herbert Terrace. His argument is that chimps (or any other animal) cannot learning language not because they cannot learn grammar (which was key to the Skinner-Chomsky debate about language) but because they cannot learn words. Terrace argues that animals cannot learn words because they lack two key features that humans gain as very small babies that are precursors to language: intersubjectivity and joint attention. He argues these arise mental features from the uniquely human feature of extended helpless of the infant and the resultant cradling of the key caregiver.
I often being teaching about economics and public policy by talking about baby ontology. Even toddlers have a pretty clear “two kind of thing” division of the world: agents and stuff. If I am trying to understand “why” something happened (in part to make it work for my purposes) I divide the world into agents who have purposes and stuff that has properties. Human beings can mostly be successful through their entire lives–even as top professionals like doctors or engineers–with this baby ontology. If I can successful understand agents and their purposes and stuff and its properties I can manage my world.
But baby ontology is not enough to do economics or public policy or social science. There are other ontological categories besides agents and stuff and they do matter for outcomes. But the tendency to rely on baby ontology, which after all, we have been perfecting since we were months old, is massive and we tend to “understand” complex systems by anthropomorphism. James Carville, a political adviser of Bill Clinton famously said ” I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody. ” This is insightful because governments really are powerfully constrained by the response to their actions mediated via bond markets, but it is funny because we all recognize the category mistake. The bond market is not an agent. We can imagine being reincarnated as a baseball player or a cat or a horse or a bat (with apologies to Nagel) as we regard those all as agents but not as “the bond market” as, ontologically, the bond market is neither agent nor stuff.
The key insight of Adam Smith, formally modeled in Arrow-Hahn-Debreu general equilibrium models and the two welfare theorems, is that an “economy” is an ontological something that has properties, really interesting properties, that are not the result of the purpose of any agent in the economy. Under very strict and very “unrealistic” formal conditions one can show the “economy” has an equilibrium (which itself is truly stunning and not “common sense”) and moreover this equilibrium has the property of being Pareto-optimal (no agent can be made better off without making another agent worse off). Even prior to the debate about how useful these theorems are for thinking about real policies in real economies, a conceptual contribution of these formal models is a “proof by construction” that complex systems have interesting properties (no one doubts that Pareto-optimal is an interesting property) and that these are emergent properties of the system–the way in which the agents’ interactions are structured–and not the result of the purpose of any given agent.
Of course it is a testament to the power of baby ontology that when economists, like Adam Smith, try and explain that baby ontology does not exhaust the modes of causal explanation he reverts to the metaphor of an “invisible hand” and explains that the agents “as if guided by an invisible hand” are led to produce good outcomes they did not intend. But this anthropormophizing metaphor leads to a false understanding. It leads people to say, “oh, I get it, there is an agent called a “market” and it has purposes and accomplishes its purposes by using its hand.” The main point about the invisible hand is not that it is invisible but that it is not a hand. The “market” is not an agent. The “market” is a complex system that patterns the possible interactions among agents and the market has properties but the market has no purposes or intentions.
Believe or not, all of this is to set up the question of what does it mean to explain “poverty” and in particular, what would an explanation of the causes of cross-national differences in the level of, and pace of reduction in, poverty look like? The official World Bank data on “dollar a day” (PPP $1.90 with inflation) poverty say that Zambia’s headcount poverty rate in 1981 was 47.3 percent and was 57.4 percent in 2015 and that Vietnam’s was 78.2 percent in 1981 and 2.2 percent in 2015.
Baby ontology explanations of the level and change in national poverty rates are just not even really plausible candidates. That is, explaining poverty as a function of the purposes of agents or their ability to adequately pursue those purposes or as the properties of the stuff in Vietnam and Zambia are going to have a very hard time explaining in any sensible way they Vietnam went from so much higher to so much lower. Did Vietnamese people suddenly change their purposes? Suddenly change their individual capabilities to pursue those purposes?
While one might, just might, explain why this person is poor and that person isn’t poor with baby ontology to understand why some countries (or regions) have high levels of poverty and why some countries have been successful in reducing poverty and other have not almost certainly going to have to rely on analysis of the emergent properties of systems, which can be better or worse at creating conditions that allow people to take actions that pursue their purposes.
More simply put, poverty is not the consequence of poor people, poor people are the consequence of poor places and poor places are the consequence of poor “systems” (like markets, capable organizations, political structures, norms) that allow people to interact and cooperate to pursue their purposes. The systems can change over time in ways that unleash human potential, create prosperity, and (essentially) eliminate poverty very rapidly.
However, in the hurly burly of public opinion (either mass or elite) system explanations are at an enormous disadvantage as nearly every person is a practiced expert in baby ontology and almost no one is expert in thinking about systems. When your child says “Daddy/Mommy tell me a story” they want a narrative about agents and their purposes and that is how any person with common sense understands and explains their world. People really want a clear narrative where the “solution” to poverty is that good person X does action Y for poor person Z. But those stories are wrong. At the large scale poverty for person Z is reduced when Z lives in a productive place, full stop, and productive places are nearly all about systems and emergent properties of ontological categories that are neither agent nor stuff.