Ceteris paribus? All things are not equal!

Cerebus paribus translates as "all things being equal." It is not the case however - our rational choices are often not really rational.

Gunnar K. A Njalsson, | updated: 17:59

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A certain Latin phrase brings back memories of macroeconomic and microeconomic studies at the University of Helsinki back in the 1990's. Those were good years and life seemed kinder and much more simple then- almost as simple as the world which the economic models I was then studying wanted to depict.

But the bubble of scientific wonderment began to burst early on as I started asking myself about the element of „tastes“ for certain commidities or services- the famous trade-offs between one good or service which favors the other good or service. With a given amount of money you can have either a certain amount of oranges or a couple of bottles of vodka. With a restricted amount of resources you can either gamble most of them away on the lottery in desparate hopes of bettering your precarious economic situation or buy supplies to repair your house this summer.

You can probably surmise what I was thinking at the time about „tastes“ and „tradeoffs“? Wouldn't the alcoholic much prefer the vodka and the compulsive gambler the hapless pile of lottery tickets? Doesn't this mean that we can make choices based upon addictions, religious conviction, psychological disorders, mass hysteria, false information fed by the right trusted source, etc.? I'm not telling you whether any of these valuation systems is good or bad. I'm just saying it stands to reason that our „rational choice“-choices are often not that rational. This applies to individuals as well as to societies and nations.

The models I am talking about needed a world of ceteris paribus to work their magic and convince the scientist of their utility (another famous concept of Economics where the comparative worth of goods and services is indeed in the eye of the beholder). But in the world we live in all things are not static or equal, i.e. ceteris paribus so that simple economic calculations can solve the problem of efficiency with limited resources- limited resources which in fact may not be as limited in our technologically advanced age as we tend to believe. In fact, the societies we live in have never been richer, nor have they ever been able to get more bang for the buck than they do today.

And yet our western societies are starting to polarize and crumble, much like the poverty-stricken socieities we read of where a string of dictators each in turn present a string of promises that „things will get better now“. But those promises never materialize and conflict continues.

Now, let's be brutally honest. We will be lucky if the next generation will be able to reach the standard of living that their parents enjoy today. In all likelihood at least in Europe the next generation may for the most part have things as „good“ as their grandparents or great gransparents did economically. It is not far-fetched to propose that a significant portion of the coming generations will finally, after much delay and protest, leave the great cities and return to a rural existence where subsistance and limited bartering are the norm- not in Guatemala, not in Mali or East Timor; but in Finland, Sweden, Canada, the US, France, Estonia, Italy or Spain.

So who ordered all the automation and all the anti-protectionism which will ultimately help this dystopian development along? Was it people who read those same economic textbooks too literally- without considering the alchoholic, the gambler or the fact that our wold indeed is not ceteris paribus? To many, we've never had it better in terms of things. But how long can we and the ensuing generations afford all of the things being made increasingly by the machines? Have the most brilliant minds in the world thought what to do with all of the excess (multitalented and increasingly hostile) labor force? If they have a solution, they are certainly not talking about it.

Despite the vast wealth we are being told that we enjoy, our societies are suffering from a breakdown in human relations skills, perhaps as a result of the „online culture“ we have been exposed to since the 1990's. We no longer temper each other, compromise or watch our choice of words. We „flame“ our fellow humans with little or no provocation and have lost the ability to credibly and honestly explain our actions and intentions to our family, friends, colleagues or opponents in a debate. We've lost our eloquence and our manners, taking on the informal, terse and egotistical tone of the „internet forum“ in all our relations.

Since manners, politeness and compromise techniques were designed to regulate conflict between humans, this development may indeed be our undoing. The glue of society is loosening and the economic development is turning our fellow humans into potentially deadly competitors for scarce resources- resources which in fact really aren't scarce.

Do we wish to live in a society where everyone competes for resources as the middle class is decimated? Because we are all programmed with the innate, unconsolable and even dangerously evil voice which commands us to survive, each of us could end up doing unspeakable things to anyone just to continue our lives. Is that the world we wish to live in?

We need to decide. Whatever world we choose will have a cost. It may cost us some automation or free trade or it may cost us the „societal peace“ and lead to constant conflict or even civil war. Whatever world we do choose, none of them will be ceteris paribus.


Gunnar K. A. Njalsson is an Estonian administrative scientist and government policy consultant, specializing in comparative technology, science and innovation policy. He has authored articles, books and guides dealing with protection of data assets, counterespionage, public technology policy, innovation policy and outer space law. He teaches at the University of Lapland, Finland.