Tuesday, April 30, 2013

Of fact and fiction

Novelist Kerry Greenwood (the author of the Phryne Fisher books, now a successful TV series), has recently published a book on the Somerton Man mystery, Tamam Shud: the Somerton Man Mystery. The book interweaves Kerry's memories of her late father--a wharfie who loved telling stories--and her memories of Adelaide with the famous mystery of the unidentified man dead of unknown causes found on Somerton Beach in 1948. The tale being one of her father's stories--odd and memorable because it had no conclusion. The title of the book comes from the torn-out scrap of The Rubayiat of Omar Khayam that was found in a secret pocket in the dead man's suit. It is not really "true crime" because it is not clear there was a crime; it may have been murder, but it could also have been suicide, or natural causes. (Declaration of interest: I did some of the research for the book.)

A review of the book in the Sydney Review of Books notes with some emphasis Kerry's comfort with her working class origins and bemoans an allegedly missed opportunity to challenge the distinction between fact and fiction:
Someone in love with their form can see infinite potential within it, and Greenwood’s storytelling is impeccable, engaging, great fun. But someone in love with their form can also miss the potential that lies in breaking away from it, shifting familiar parameters to suit the demands of a different kind of story. Greenwood’s curiosity is so infectious, her stories so interesting, and the mystery of Somerton Man so fascinating, that this flaw can easily slip past us. And yet Tamam Shud strikes me as a missed opportunity to challenge the separation of fiction and non-fiction, and bring them together in some kind of whole. It’s almost as if the book is haunted by Adelaide’s psychic dualities.
Actually, the reviewer writes 'fiction and non-fiction', which lacks the blunt directness of 'fact and fiction'. The latter phrasing can be expected to resonate with someone who is legal aid solicitor operating in magistrate courts, where separating fact from fiction is rather the point of the exercise. Facts about the law, facts about the case.
In fact, an unsolved mystery such as that of Somerton Man rather starkly reveals the distinction. Fact turns on what is known, fiction has no such limitation. For it is a work of creation, constrained in what can be known about the characters and their motives only by the decisions of the writer.

Fiction has other limitations. To be successful, it has to generate what J. R. R. Tolkien called (in On Fairy Storiessecondary belief. We have to be transported into the imagined world and held there.

The various forms of fiction also impose particular limitations. As Kerry Greenwood points out, a crime novelist has expectations to fulfil:
No coincidences are allowed in fiction … It is because readers of crime fiction rightly demand three things – a crime, a detective and a solution. Crime fiction is a puzzle and the author must play fair.
But fiction does not have the limitation of lack of knowledge--at least not about the characters, their action and purposes--because fiction is an act of creation. Where knowledge cannot take us, imagination can still venture. But then it is not fact, but fiction or speculation.

It is not that there was no complete story about Somerton Man. As the fictional crime novelist Castle observes in the pilot episode of the TV series of the same name in an exchange with detective Kate Beckett:
Richard Castle: I'm here for the story.
Kate Beckett: The story?
Richard Castle: Why those people? Why those murders?
Kate Beckett: Sometimes, there is no story. Sometimes, the guy is just a psychopath.
Richard Castle: [scoffs] There's always a story, always a chain of events that makes everything make sense. Take you for example. Under normal circumstances, you should not be here. Most smart good looking women become lawyers, not cops. And yet here you are. Why?
Kate Beckett: I don't know, Rick. You're the novelist. You tell me.
Richard Castle: Well, you're not bridge-and-tunnel. No trace of the boroughs when you talk. So that means Manhattan. That means money. You went to college, probably a pretty good one. You had options. Yeah, you had a lot of options, more socailly acceptable options. But you still chose this. That tells me, something happened. Not to you. No, you're wounded, but you're not that wounded. No, it was someone you care about, it was someone you loved. And you probably could have lived with that but the person responsible was never caught.
Richard Castle: [silence]
Richard Castle: And that Detective Beckett, is why you are here.
Kate Beckett: Cute trick. But don't think you know me.
Richard Castle: The point is there's always a story. You just have to find it.
Kate Beckett: [opens up letter and eyes grow wide] I think I just did.
[shows Castle letter with a drawing of the crime scene]
There is (or rather was) a chain of events which makes what happened to Somerton Man make sense. The facts are that much of that chain of events is lost in the passage of time, likely never to be recovered. It is not that there is no story, it is just that not enough is known for us to have the story. The story is not accessible, it is lost to the realm of speculation.

A guide to the land of Faerie
A guide to the land of Faerie
Which makes it splendid fodder for fiction, since the writer can do what reality can likely no longer do--provide a coherent story. Somerton Man does not blur the difference between fact and fiction at all, but renders the constraints of fact particularly stark. We are pattern-seeking beings, and having merely bits of the pattern, so that the story is lost, is frustrating. Hence the urge to find the missing pieces, the enticement of an unsolved mystery. Unsolved because the key bits of the pattern we want to discern, the story, the chain of events which makes things make sense, are lost to us.

But the distinction between fact and fiction is not quite the same has that between fiction and non-fiction. For fact has no audience, it just is. It may or may not be discovered, but is not less real for not being known--otherwise the process of discovery is something else. Non-fiction and fiction both have an audience (or at least seek to do so). They are aimed at an audience, at garnering a readership or viewers. One is an audience for facts, presented coherently; the other for tales, which offer a more complete coherence.

Non-fiction accepts the constraints of fact; which are heavy constraints. But does so without the joy and burden of creation that fiction both instantiates and labours under. Indeed, the constraints of fact are so heavy, much non-fiction fails to abide by them, intentionally or unintentionally, to a greater or lesser extent.

The commonalities of seeking an audience, and providing pattern and structure, do not, however, relieve the writer of the constraints of the difference between fact and fiction. On the contrary, they make those constraints of distinction even more important. To blur the distinction so that the reader does not know whether they are dealing with fact or fiction is not to play fair with the reader, with the audience. It is a distinction with a difference and a conscientious writer is always acutely aware of it.

Hence novelists, particularly historical novelists, typically research the facts of a period so they can invoke it more effectively. Getting the period details right also plays fair with the reader, that the world they are being asked to believe in could have happened; the more we believe in the possibility of its reality, the more we are transported into it. The more it has secondary belief.

Fiction can, after all, not only provide us with a sense of the past (or the future) but also the present. Over the years, many an observation by a novelist (particularly female novelists) on abiding emotional truths about people, and the interactions they have, has provided me with enlightenment, or solace, or both. Nor am I the only one, as this classic blog post I am a Dark Elf expresses nicely; how a Muslim immigrant can find inspiration in the story of a drow from tales set in the Dungeons & Dragons universe. A story has that much more power the more it is embedded in the reality of people, in emotional truth.

Yet, they remain made-up stories, things of secondary belief, of sub-creation, however great the art and perception they may embody.  The story of Somerton Man is not made up; it is opaque to us precisely because it is not made up. As Tolkien says of Fantasy, but applies to fiction generally:
Fantasy is a natural human activity. It certainly does not destroy or even insult Reason; and it does not either blunt the appetite for, nor obscure the perception of, scientific verity. On the contrary. The keener and the clearer is the reason, the better fantasy will it make. If men were ever in a state in which they did not want to know or could not perceive truth (facts or evidence), then Fantasy would languish until they were cured. If they ever get into that state (it would not seem at all impossible), Fantasy will perish, and become Morbid Delusion.
For creative Fantasy is founded upon the hard recognition that things are so in the world as it appears under the sun; on a recognition of fact, but not a slavery to it. So upon logic was founded the nonsense that displays itself in the tales and rhymes of Lewis Carroll. If men really could not distinguish between frogs and men, fairy-stories about frog-kings would not have arisen.
How real are you? Real enough for emotional power?
How real are you? Real enough for emotional power?
The appeal of fiction is precisely that it invokes the reality we live in but is not entirely constrained by it. In particular, it does not have the epistemic constraints of reality. There is precisely the level of mystery about people, their action and motives that the author chooses, and no more. Reality is nowhere near as obliging. We can only work with what we have or can find, with no guarantees or promises that it will be enough.

As reading Kerry Greenwood's rather splendid rendition of the mystery of the unknown man, dead of unknown causes, found on Somerton beach in 1948, makes very clear; a rendition interwoven with her past and that of her father's. To seek to blur the distinction between fact and fiction is not to provide new understanding, it is to betray the understandings that both can give us.

[Cross-posted at Skepticlawyer.]

Monday, April 15, 2013

The real convenience of money

I recently read Adam Fergusson's history of the early 1920s hyperinflation in Weimar Germany--which also covers contemporary hyperinflations of Austria and Hungary. (Well-spotted if you noticed that they were the losing Powers of the Dynasts' War--aka WWI; this was not a coincidence.) One of the striking things about the period is how misguided conventional wisdom typically was in the afflicted countries about what was causing the problem and how to solve it. People blamed almost everything except the actual cause--the flooding of the economies by the central banks with ever higher levels of currency. The rising flood of said currency having the consequence of rendering nugatory the war-debt incurred by patriotic citizens by inflating it into insignificance. (The losing-the-War reparations well in excess of the willingness to tax citizens were not, however, similarly eliminated: the history of the war reparations imposed on France in 1871 makes for an instructive comparison--the French paid theirs in full in gold before the due date.)

when money dies
Getting money wrong
But getting money wrong is a recurring feature of commentary on matters economic. That the Great Depression was overwhelmingly a monetary phenomena was not a much accepted view at the time, and is still disputed. Worse, much conventional wisdom during the 1930s revolved around fears of imminent inflation which were profoundly misguided then and seem unbelievably obtuse in retrospect.

In our own time, that the stagnation of the Japanese economy, the problems of the eurozone, US and UK economies, and the Great Recession more broadly, all have monetary causes is very much a minority view, even among economists, while the fears of imminent inflation which so disfigured 1930s commentary is very much in evidence. Fears based, as were the same fears in the 1930s, on a profound misreading of monetary conditions and the significance of surges in the monetary base. (In particular, not apparently grasping that money not being used in transactions has no effect on the price level, nor any necessary effect on future price levels.)

The myth of the real economy
The fundamental error threading through much of the above--leaving aside the misguided inflation fears--is the notion that the "real" economy--the economy of goods and services--is much more causally important than mere money. Money is merely a means of transacting, it is the exchange of goods and services which really matter and have real causal power. (And even the overblown fears of inflation typically massively discount the significance of income expectations on economic activity.)

This discounting of money having any "real" effects whatsoever is an odd claim. (To put it in economic speak, that money is not merely superneutral--changes in the rate of growth of the money stock have no significant long-run effects--but entirely neutral--changes in the money stock have no short-run effects at all. Though I am generally much more concerned with expectations than monetary quantities on their own.)

If we take the analogy of an engine being like a car engine, then money becomes like the oil which allow the parts of the engine to interact smoothly. And engines do not work too well if the oil is lacking, or if it floods the engine. In a monetary-exchange economy, money is half of almost all transactions. Surely something that is one side of almost all transactions might matter for the level of transacting? Adam Fergusson's above-mentioned history When Money Dies is full of very real effects from hyperinflation.

The underlying mistake is to assume that money does not affect either the level or nature of transactions. That the "real economy" is basic and money is just a convenient epiphenomena. But not so convenient as to have serious effects on that "real" economy of goods and services. Convenient, but not "really" convenient.

This is profoundly wrong-headed. A monetary-exchange economy is dominated by transactions that would not take place if it were not for money. That being so, shifts in the willingness to transact because of shifts in the willingness to spend money can profoundly affect the level of transactions. This without entering into the bizarre world of hyperinflation.

Wrong origins
Getting the role of money wrong is connected to getting the nature and significance of barter wrong. If we look as the standard "just so" story as set out by economist Carl Menger about how money evolved out of barter, we can see there is an underlying assumption that the self-contained (often one-off) transactions between otherwise unconnected individuals which are so much the stuff of exchange in monetised economies is the "basic", the "original", form of economic transactions. So transactions are either monetised or barter.

This is flatly wrong. If we look at the origins of human society (and so economic activity) in foraging (that is hunter-gatherer) bands, they were not barter economies. Barter was something that one did on the rare occasions that one traded with people you did not have on-going connections with. The overwhelming majority of transactions were embedded transactions. That is, transactions embedded in a web of personal connections and which were typically ways of fulfilling explicit or implicit obligations that were so much the stuff of said connections.

Barter is awkward for all the reasons Menger and others have identified. As Menger states, in foraging and simple farming societies barter has the difficulty:
each man is intent to get by way of exchange just such goods as he directly needs, and to reject those of which he has no need at all, or with which he is already sufficiently provided. It is clear then, that in those circumstances the number of bargains actually concluded must lie within very narrow limits. Consider how seldom it is the case, that a commodity owned by somebody is of less value in use than another commodity owned by somebody else! And for the latter just the opposite relation is the case. But how much more seldom does it happen that these two bodies meet! Think, indeed, of the peculiar difficulties obstructing the immediate barter of goods in those cases, where supply and demand do not quantitatively coincide; where, e.g., an indivisible commodity is to be exchanged for a variety of goods in the possession of different person, or indeed for such commodities as are only in demand at different times and can be supplied only by different persons! Even in the relatively simple and so often recurring case, where an economic unit, A, requires a commodity possessed by B, and B requires one possessed by C, while C wants one that is owned by A — even here, under a rule of mere barter, the exchange of the goods in question would as a rule be of necessity left undone.
Far too awkward to be the basis of any society, no matter how simple. Instead, people lived in a web of personal connections and obligations that dominated economic activity, since transacting outside said web of connections and obligations was so difficult and chancy.

The first step to expand transacting possibilities was to create units of account, as such formal precision greatly expanded the connection and transaction possibilities. Such units were generally based on weight (shekelsdebensdrachmas and pounds are all originally weights), but cattle and slave girls (in Irish law codes) have also been used. That transactions could be formal rather than personal meant that they could be incurred outside existing webs of personal connections. This also allowed credit exchanges--barter exchanges without the time constraint of immediate exchange. Hence the use of tally sticks--the discharge of the obligation ended the transaction with the rejoining of the  tally stick. (Not coincidentally, tally sticks were also used in tax collection--taxes being a compulsory obligation.)

Tally sticks
It was entirely possible to create highly sophisticated economies based on formal and otherwise embedded connections. That is the way manorial economics work, for example. Landlord and peasants are connected by a web of ongoing obligations, often involving a basic exchange of protection-for-labour. To call such transactions "barter" merely because they were largely non-monetary is to profoundly mistake their nature.

Add in credit, and the mixture of embedded transactions, credit transactions and barter (often implicitly using units of account) plus commodity media of exchange (e.g. silver) is how societies from Pharaonic Egypt to the Khmer Empire operated for millennia. Merely having units of account greatly expanded transaction possibilities (and likely reduced conflict even for many embedded transactions because they could be made more precise and so determinant.) What means of transacting are available profoundly affect the level and form of transactions which become practical.

The next step was to create media of account; things that were a medium of exchange that also instantiated the unit of account. That is money--originally in the form of coins. Suddenly, the transaction possibilities expanded greatly. One-off transactions discharged on the spot with people you had no connections with became much easier. Rulers were no longer stuck with "use or lose it" labour service as their dominant income source. They could gain revenue now and spend it later. Not to mention that collecting coins takes a lot less administrative effort than organising labour service. And can be levied on any agent or transaction.

Coins make the world transact a lot more
Coins make the world transact a lot more
Once one grasps that money actually greatly expands transaction possibilities, and so the level of transactions, then the notion that money is some transparent epiphenomenon that cannot have "real" effects makes much less sense. The convenience of money is a "real" convenience affecting profoundly the level and nature of transactions.

That one can gain revenue now but spend it later also means that Say's Law does not apply. That, in Say's words:
it is production which opens a demand for products. . . . Thus the mere circumstance of the creation of one product immediately opens a vent for other products
is not correct (at least not in the same time period). So monetary causes can have "real" effects. Indeed, are much the most plausible culprit for the business cycle, of what used to be called "general gluts" (an overall fall in demand for goods and services; that is, in willingness to spend money to buy goods and services).

Monetary austerity--driving down income expectations--can and does affect the level of economic activity, the willingness to exchange in transactions. Particularly given that debt obligations are the ultimate "sticky" price, so adverse income expectations can drive people to cut back spending to service (or reduce) their debt while other "sticky" prices (notably wages) lead to spending having effects on quantities demanded that are not immediately "cleared" by price changes.

If central banks drive down income expectations, or fail to counteract a fall in income expectations, then the level and form of transactions will be affected. As the convenience of money is a real convenience, expectations about money income affects the level and form of transactions in a monetised economy. So money matters and can profoundly affect the "real" economy.

[Cross-posted at Skepticlawyer.]