Why Was Keynes Different?

John Maynard Keynes

This is a post for all and none. Initiates to economics will see the fast one I'm trying to pull a mile a way, novices will have no idea what I'm blathering about. It's my attempt at writing a Nick Rowe post. I want to apologize in advance if I get the numbers wrong. The medium I'm using to write this is not conducive to editing and I am a poor enough craftsman to blame my tools. What I want to do is to make Keynes and monetarism strange to you again. Strange in the way it felt to Lionel Robbins and Jacob Viner in the 40's, when they were new. It won't be easy, since their language has pervaded thought so perfectly that it is hard to even talk without it...

Jacob Viner

A warning: Keynes was not different because he advocated spending out of depressions and saving out of inflations. Every sober person recommended this. Jacob Viner & Keynes on policy were indistinguishable - but there is no Vinerian economics. It is not because Keynes invented some black magic called "aggregation" - Giffen (yes, that Giffen) and his student Flux (who was the first to recognize Euler as the author of his famous theorem on homogeneous functions) had a spat on measuring national income a decade before the General Theory. Keynes was not different because he was a "statist" or because he was secretly had a labor theory of value or etc, etc, etc. The world was full of those types, but they didn't become Keynes. So what was it? Where to start...

Adam Smith

Adam Smith was a wise man as well as a great economist, a man who knew where to start things. Smith gave us the following "State Of Nature" argument, or just-so story:

"If among a nation of hunters, for example, it usually costs twice the labour to kill an eager which it does to kill a deer, one beaver should naturally exchange for or be worth two deer."

Isn't that lovely?

David Hume

The state of nature argument was well established in 18th century thought, not least by Smith's mentor Hume. The point of a state of nature argument is not historical account (it his said that in the throes of the unguarded ecstasy of madness Rousseau actually believed in the historicity of such thoughts - I doubt this is so), but rather to show, in Voltaire's famous phrase, if something did not exist it would be necessary to invent it. Hume's famous rowers showed that social equilibrium would be invented even without language, demonstrating that conventions come first (logically speaking) and linguistic agreement after. Smith's hunters show that a market and a (relative) price system "come first" and formal markets after. It also demonstrates why ratios of prices are fundamental, rather than differences (try the argument with differences and see what happens). When labor is the only input the hunter can use (which is, for the economist, "production"), one has an easy and agreeable labour theory of value - though, of course, once there are multiple inputs this story loses its agreeability. But this is unnecessary, Keynes is a marginalist like any other. Subjective value is part of his analysis, just like it was your high school Econ teacher.

Keynes - who was also a great and wise man whatever anyone tells you - did not start with a just-so story about the existence of trade and the balance of demands, though he probably should have. Unlike the other world changing theses of its era (such as Frank Knight's Risk, Uncertainty And Profit), his General Theory assumes that you walk in capable of doing marginal economics on the level of a Pigou off the bat rather than spending a chapter on his personal conception of the supply and demand lines. As a matter of historical fact, Keynes never wrote a introductory book on basic conceptions (he and Pigou would just say "It's all in Marshall."!). Most of his serious writing is on money on the international stage, but the General Theory is about an "Isolated State", as it were. This might explain why students and the unserious had such difficulty but it wasn't just them...

Irving Fisher 

We have to keep going past Adam Smith now. Here comes Irving Fisher, perhaps the greatest economist of all time ... though not gifted with deep personal wisdom. His American accent will be more familiar than Smith's 18th century Scottish brogue. He asks us to consider not hunting today, but hunting tomorrow as well. Let's say that a deer in the hand is worth two in the bush. How many deer today is a beaver tomorrow worth? The answer must be four - a beaver is worth two deer and a tomorrow is worth half a today.

But what if the difficulty of hunting changes with the seasons? Let's say that hunting is easier next season, so that the same amount of labor that gets one beaver today will also get two deer tomorow, three beaver tomorrow or four deer tomorrow. Then a promise of a deer tomorrow is worth half a deer today, the promise of a beaver tomorrow is worth a third of a deer today and the promise of a beaver tomorrow is worth 3/2 of a deer today. In terms of marginal analysis, this is the product rule for derivatives applied to a simple spot & future market. If the market left this so-called "intertemporal equilibrium", then anyone could gain just by cyclically trading beaver & deer.  This arbitrage argument is in Keynes's General Theory (Chapter 17, part II).

Frederich Hayek

So far, so good. Right now we're telling the story that Brad DeLong calls The Story Of The 20th Century - that of production increases & galloping scientific innovation. Economics is a serious subject about the things of our lives - the clean water, the iPhones and the clothes all together. Knight, Hayek and Schumpeter see that the entrepreneur is the central actor, able to take on uninsurable risks because they have local knowledge that others can't get - and the romantic temperament that drives the will to power. And this is - as far as it goes - undeniably true.

But it doesn't go all the way. The ancients called wise he who can control his enemies - and Keynes was a wise guy as well as a great man. The name The General Theory Of Employment, Interest And Money was a trick but not an underhanded one. It is that, but this isn't mainly that. The book is really an exposition of a Money Theory Of Production. Keynes announced such a book before writing it and admits it in the aforementioned Chapter 17.

Knight and Viner - the Old Men of Chicago - obsessed over the poorly named concept of the "long run". What this really means is that the path of production is picked out more or less like the beavers and the deer above, except lucky years are replaced by lucky (or, rarely, talented) entrepreneurs. In modern terms, this is called "golden path growth" and the obsession is justified by "turnpike theorems".  But Keynes, the greatest of the international monetary theorists and practitioners, saw that in many countries unbalanced flow & pricing of gold destroyed industries even though they were stocked to the gills with gutsy entrepreneurs and genius scientists.

Why, back with our hunters, do you think that just because they can get the deer and beaver at the rates quoted they necessarily will? Must every hunter go out for the hunt? This is a very crude way of thinking about "output in general". Surely a hunter could become irrationally exuberant (filled with romance, let's say) about his ability to kill beaver and hunt it in defiance of logic - and surely this would alter the price ratio whether he gets lucky or not. Surely each level of output, in terms of labor spent, is associated with a particular price system - in economic terms, each quantity of labour to spend gives a different production possibility frontier which, as it's dragged out doesn't necessarily touch the indifference curve at a locus of points drawing a straight line.

That's 2deep4me. Let's hear one last folk tale instead. Next year doesn't make it easier to hunt in general. Instead, next year the amount of labor to catch a beaver will be four times what it takes to hunt a deer tomorrow - and that amount will stay static. Now nobody would buy a promise for a deer tomorrow at a market clearing price. The asset whose rate of production has climbed most rapidly with output in general has knocked out the other assets - exactly as Keynes taught in Chapter 17!

You might be thinking "Where's the unemployment, the interest rates & the money?". They're all there.  The fast one I pulled is to talk about the path of production instead of the "interest rate". Interest rates are an abstraction, what exists are things and prices. Only after acclimatization in the polite fiction of interest rates does the intertemporal & Keynesian world make obvious sense. If I had said "The money-rate of interest rules the roost." one would be off talking about unrelated things. But when I say the identical, but differently worded "The production path of money knocks out less profitable production paths." it suddenly feels alien, requiring proof and argument. Which is what Keynes did.

Joseph Schumpeter 

Keynes ruined economists lives in order to save civilians. Before Keynes, all economists agreed that just because the story of the 20th century was about innovation and not money it should be the story that economists tell. Schumpeter the romantic was so furious that he said that if Keynes would not tell this story he wasn't an economist at all! It seemed so obvious that economists must focus on The Story, right? Keynes made economists not the epic poets of innovation but mere dentists checking Ulysses teeth before he goes to war.

What Do Their Deaths Mean?

Thomas Schelling

The late Thomas Schelling is often described as a "game theorist", but what that means is rarely clearly discussed. Game Theory is usually conceived as a branch of mathematics, an abstruse brand of pseudo-psychology inspired contests between hyper-rational contestants. And it is true, game theory is an abstruse brand of mathematics. It can and has been used by philosophers such as Jaako Hinitikka to ground our idea of quantifiers. It can and has been used by mathematicians such as Abraham Wald to ground our idea of statistics.

I don't think Thomas Schelling ever used mathematics beyond a high school level. In that sense, he was not a game theorist in the sense of Von Neumann and Bob Aumann. Schelling's contributions were not mathematical, they were philosophical. Thomas Schelling is one of the most consequential social philosophers of the 20th century. What was important to Schelling was not Game Theory's difficult technical content, but rather the important constraint that everyone's decision depends on everyone else - at least on that. This concept of equilibrium - the balance of the personal actions of each actor - lead Schelling to the concept of commitment. Equilibria allowed Schelling to escape escalation.

"As little as possible..."
- Chinatown

War, and especially nuclear war, was Schelling's great fear. Why did the great powers go to war in World War 1? There are many, many historical roots, but certainly the basic answer is for various reasons the high command of each European country badly missestimated the willingness of every other European country to go to war. Norman Angell was wrong - France & Germany would go to war over Alasce-Lorraine even if it meant breaking linkages and reducing output. Why couldn't the Great Powers after a year of war (which certainly revealed the true willingness to fight) get together to multi-laterally deescalate? The War cut off their ability to communicate, there was no focal point at which they could come together. Even though everyone knew that their opponent was more ferocious than they had allowed, they couldn't act on it.

Or take the famous Camp David Accords. Israel and Egypt both wanted to avoid further war. But Egypt didn't know for sure that Israel wouldn't become belligerent. And so Israel couldn't know if Egypt knew that Israel didn't want further war. And so on and so on. If you're Jimmy Carter, how do you make the true intentions of Egypt & Israel "common knowledge" (an expression coined by Schelling - who also coined "focal point", "collateral damage", ...).

The concept of international politics that is developed by Schelling in his book Arms And Influence is that of a broken, abusive family. Schelling's goal was to stop them from murdering each other, despite the gaslighting, the stealing and the drunken brawls. Who can forget his infamous analysis of rational irrationality? If you can convince them you're crazy enough to burn the whole thing down, they have to give into your demands. So when North Korea acts up again, the last thing you want to do is over commit and escalate...

Thomas Schelling's work went beyond war, of course. There are two pieces I'd like to pick out as particularly interesting.

The first is the famous Schelling Discrimination model. This model is exposited in his book Micromotives And Macrobehavior. One sunny day, Schelling was listening to an interview of Fidel Castro. Castro called America a "racist nation". Schelling, of course, didn't think the descriptor fair but then how can you explain all the obvious discrimination? Schelling decided to define down discrimination and examine the consequences when everyone had weak preferences but they all had to be satisfied together. Using pennies & nickels on a chessboard, he found that he could construct scenarios where initially mixed neighborhoods spontaneously segregated even though nobody particularly wanted to be in the majority (as long as they had a couple friends).

Now, as a model of racial discrimination in neighborhoods this model is a nullity. Racial discrimination in neighborhoods was not spontaneous. As to spatial economics it isn't up to snuff, since there aren't any prices. One can't do comparative statics of an anti-discrimination law with a Schelling model. As a mathematical model it already existed under the name "Ising model" and had been solved in the 40's. The contribution of the model was philosophical. The contribution of the model was to introduce complex system behavior. These complex systems can't necessarily be captured by aggregate models. In the Schelling model there lurks a representative agent. The agent isn't "racist" - he doesn't necessarily dislike being in the minority. But he lives in a segregated society and does nothing about it.

The second contribution of Schelling's I want to pick out is his discussion of addiction. His thoughts on addiction are developed in his book Choice And Consequence. The first economist to seriously discuss addiction was Gary Becker, who posited that addiction was a "rational" behavior - that is, increases in the price of cigarettes (and reduction of prices of cigarette substitutes, etc. etc.) will tend to reduce the use of cigarette demand. Schelling offered a much more radical interpretation that addiction is the result of internal bargaining. In order to become an ex-addict, the addict must engage in the kind of commitment strategies analyzed by Schelling in the field of international relations. Anyone who has known addicts has even seen them act out Schelling's famous rational irrationality in order to convince themselves and others that they will remain addicts.

This is also a philosophical contribution. Students will recall from their micro classes that a group may be licitly aggregated in a supply & demand model if the aggregate obeys "WARP", otherwise they must be distinguished. Schelling recognized that there was no secret sauce on a man's skin that made this axiom true within him.

One could go on and describe Schelling's influence - such as inspiring the David Lewis/Brian Skyrms approach to reviving the Humean project of reducing meaning to preference theory or inspiring a million internet types to call every possible behavior as "signaling". But that would be an injustice to his own creativity. Instead, the best thing to do is to remind ourselves of the moral weight. In Schelling's analysis, when other channels breakdown governments murder in order to communicate. Even if we are saddened, we must go on. What does all that death mean?

All My Possessions For A Moment Of Time

Another commentary on a Twitter spat, you say? Well, my throat glands are returning to normal, so I can go back to normal soon. Until then...

Clio, Muse Of History

The brilliant blogger & economist Brad DeLong opens his economics class by giving a defense of economics as history, perhaps the unique history of the 20th century. The history of the 20th century in this viewing is a Whig's history, perhaps an authentic one.

DeLong's world is one of amazing, galloping productivity increase - a world were man's ability to create and control comes to dominate all things, where even the will of heaven is a plaything of this global engine. A world of "growth", economically defined.

The great economist of inequality Branko Milanović politely fired back with a defense of Eric Hobshawm's "short twentieth century". Neville Morely, another economic historian, also came to Hobshawm's aid.

Uh, great photo of Hobshawm, Wikipedia

I'm not much of a Hobshawm scholar, in the sense that I've never read his books. In the same way, I'm the third best French speaker among my siblings. But it seems a reasonable gloss that in essence, Hobshawm saw the 19th century as the rise of Capitalism (as Marx saw it) and the 20th century as the rise of Communism (as actually existed in Russia and elsewhere). When you write this story, the 19th century is very long. Surely it was already starting in 1776, as Adam Smith's analysis of Capitalism needed a Capitalism to analyze. Also, there was some kind of political revolution in that year of slight importance. Surely this phase of history was still present in the actual Leopoldville of the 1950's. Not only was the 19th century very long - it was unevenly distributed.

The distribution of actually existing Communism in that "short 20th century" was also mercifully uneven.

General Mobutu

The facts are not open to doubt. The 20th century opened with a demon haunted world embroiled in imperial depredations and closed with ... if not "freedom" per se, at least significant bourgeois freedom ("Freedom's just another word for 'Nothin' Left To Lose' ... and nothin' ain't worth nothin', but it's free..."). When a Belgian hit squad (with US money) killed Lumbumba and burned away his bones with acid, they still could not install a Belgian government. Instead, the Congo got the fearsome General Mobutu. Mobutu was many things: a violent hypocrite who took Western money and condemned foreigners with equal ease, an embezzler and inflationist - but one thing he was not was Belgian. No amount of cruelty would return the old empires. There was no want of trying. De Gaulle can cry out for "Algerian France" all he wants, it made no difference. Times were somehow ... somehow different. This is a story worth telling, an understanding worth coming to.

Engles, Marx and three of the Jenny Marxes

A specter floats behind this debate. The specter of Karl Marx. Not communism, Communism, Actually Existing Communism, c0mnU1sm or anything like that. But Karl Marx, the German born philosopher, socialist, economist, journalist, etc. with his carbuncles and his Party and his beloved wife and daughters. How does Hobshawm's view fit with Marx's exactly? It seems that there is an underlying idea in Hobshawm that Stalin or Mao or ... was the realization (or a direct precursor to the realization) of Marx's epic tale of historical progress from primitive communism to ... well, Communism. But Russia, China, the Congo, Vietnam, North Korea, etc. etc. etc. were not late capitalist societies that underwent a fall in the rate of profit making collapse of the Capitalist systems and the rise of Communist ones inevitable. They were agrarian empires. Frankly, they were all sorely lacking in capital. The organic composition of capital in those countries was ... to be honest, still pretty damn organic. The outlines of Hobshawm's story as I understand them are not compatible with the outlines of the Marxist story as I understand them.

The Marxist story as I understand it is a (precursor to? perhaps a bitter uncle ...) DeLong's story! DeLong's is a story of changes in the organic composition of capital - no, we can be more clear. In the language of this post, DeLong's is a story of the distribution matrix changing through time in ways that cause \( \lambda \) to fall to near 0, which is just a way of saying that the maximum rate of profit is rising by leaps and bounds.

John Maynard Keynes

It's interesting, since I feel that if DeLong were to nominate a man for economist of the 20th Century, he would nominate John Maynard Keynes, the great slayer of Say's Law. The 20th Century is surely the century of the Great Depression and WWII. Were these times of galloping productivity? Everyone believes in Say's Law when the discussion is not about Say's Law - even you and me (and, yes, even Keynes made mistakes like this). DeLong implies but does not state that the long run history is a full employment history. He implicitly assumes that a balanced growth path is an acceptable behind the scenes driver of history.

I'm not so sure the 20th century will be remembered in this way.

E P Thompson

But let's go back to Hobshawm. I can't make sense of what I've read of him in terms of what I've read of Marx. What I've read of Hobshawm reminds me much, much more of E.P. Thompson. Thompson wrote of artisans and William Blake resisting capital deepening through moral action. Thompson had a beautiful, Blakean vision of a socialist state: "I am going to create a world of beauty. My eyes will see as through a new mind."*

Okay, Thompson's vision was incredibly vague and its relationship with Marx more elective affinity than anything comprehensible. Leszek Kołakowski rightly ridiculed Thompson on these grounds. It's difficult for me to understand these Thompson and Hobshawm characters, being a vastly different age and temperament. But I think that I can.

Let me tell you a story. It's a story about a pencil. I am holding it in my hand right now. To make this pencil, trees had to be cut down, pulped and reglued to be soft enough to easily sharpen. Somebody when cutting down these trees cut themselves and bled on the wood. Their blood is in my hands. Aluminum ore had to be dug out of the ground, processed at great difficulty, pressed and painted. These miners are worked to the bone in non-union mines. Their sweat is in my hands. Paint had to be synthesized. Precursors to the chemicals making this unnaturally red paint had to be synthesized. Everything that happens in every one of those chemical factories is part of this pencil. Open pit graphite mines are giving miners lung cancer. Those deaths are on my hands, are they not? Forget the labor theory of value, it's a will-o'-the-wisp. Isn't the fact that those deaths and all that pain happened because I wanted a damn pencil just the plain meaning of imputation?

Economists have a word for the fact that everything in this world is connected - well, actually they have dozens of words for hundreds of the closely related concepts that capture this idea with precision. Their special word is "equilibrium". Equilibrium means me, you, Sumatran loggers and Chinese graphite miners are all trapped in a single point in price space (which may be infinitely dimensional, or even have continuously many dimensions!) trapped unable to move. The tar that sticks us to this point has many names, the names of the great theorists: Nash, Pareto, Walras, Bayes ...

I don't fault Hobshawm or Thompson for cowering before this beautiful and horrifying vision.. It is a terrifying vision - whether set out by Marx or Walras. It is the real world in which we live, with all that implies. It is important to understand that. But I can and will fault them for not seeing that other visions can be equally or more terrifying. That they could let themselves only see the good of Stalin, Mao and Ho Chi Minh while fearing and hating bank managers and their ilk is something I can and will fault them for.

Hobshawm had to admit that Stalin did not create a world of beauty. Communist Poland was not a world of beauty. The idea of a short 20th century is a tacit, backhanded way of making this admission.

I prefer to be more direct.

The Long 20th Century?

So, the question becomes: Is the 20th Century the century of Marx's ideas (as DeLong thinks - after a fashion) or of Marxist parties (as Hobshawm seems to think)? Or perhaps it was the story of John Maynard Keynes and Milton Friedman, a story of uneven progress with the promise of balance. Perhaps it is the story of Lumumba & Mobutu, or the Park family versus the Korean people or Nixon or... Maybe it is billions of stories babbling from their intertemporal equilibrium trap.

In the end, I am on the side of Hume, such metaphysical talk should be burned for warmth...

*I cheated here. This is actually a quote from the 2002 cartoon Ghost In The Shell: Stand Alone Complex. It just captures beautifully what they wanted to say.

Economy And History Livin' In Perfect Harmony

"The paths up and down are the same."
- Heraclitus

I actually have quite a few blog posts percolating right now, but this is the one being written instead. It's about history, economics and accounting a little bit. You'll see where Heraclitus comes in later.

Economic history blogger Pseudoerasmus recently wrote a brief tweetstorm about the excellent Eric Foner's boneheaded comment on methodology. Foner seems to have implied that counterfactuals have no place in history at all, which is shocking to the point of incomprehensibility. Even a simple statement of fact like "Cotton was core to the southern economy." can hide a counterfactual (perhaps "If cotton didn't exist, nothing would take it's place."?). An absolutely core question to the analysis of the Civil War is certainly whether southern cotton plantations were seeing output growth in the way that northern factories were. In order to talk about this, we simply must talk about the "growth" paths cut off by the Civil War.

David Hume

To see why, let's have a cartoon sketch of the use of  "causality" in historical argument. I, a Humean, think most causality talk is confused. Causality is only a way of talking about underlying functional relationships. If the path of history is A B C, we might not want to say C is just the damn stupid thing after B.

Alexander Hamilton

When Alexander Hamilton left the British West Indies for America, he was leaving a place where whites were not just relatively but absolutely rich to a place where they were poor - relative to whites in the British West Indies. But it is the USA that became rich and not the British West Indies. These are historical facts of no interest. What is of interest is why this outcome occurred and not vice versa. What might be interesting is the claim that the reason is that the British West Indies made slavery too central to their institutions, making them "extractive" (i.e. they want to get rich by chiseling) rather than "progressive" (i.e. they want to get rich by raising productivity). Someone, maybe John Stuart Mill, can draw some deep political conclusions from that.

Robert Fogel

We can talk about politics and metaphysics now because there's causality, slavery -> low productivity -> bad institutions (even long after slavery is abolished). A is slavery and C is poverty. But here comes our friend Robert Fogel. He tells us that slavery in the Old South didn't necessarily reduce productivity (recall that productivity is just a relationship between inputs and outputs), that large slave plantations might have had even higher productivity (more output per unit input) than free farms. The simple Millian story of progressive institutions is not simple.

But what does buddy Bobby's story have to do with the British West Indies? What we are really saying is that if British West Indies could adapt high productivity technologies of the Old South, then the slavery -> low productivity link would break down. Historians and economists evaluate counterfactuals by looking at close analogies. Now we can bring this up to date - if Baptist was right and productivity change was all about whipping machines, those technologies could have been (those magic words!) adapted by British West Indies slave drivers. Counterfactuals within counterfactuals!

(Aside: you know, some economic historians have taken Baptist to task for exaggerating the iniquities of slave masters by tending to take the darkest testimonials. But constructing a representative slave by taking the \( \min_i(U_i)\) over all slaves \( i\ ) is not an obviously methodologically unsound procedure. The representative firm, consumer, slave, etc. is not the average!)

Robinson Crusoe

Now that we know what we mean, I will play good cop to Pseudoerasmus's bad cop (this implies we are both after the same thing and I think we are). A warning: there's gonna be an equation coming up. It is necessary to use an equation as a metaphor for the difference between how economic historians and narrative historians. I won't be doing any real economics or history because that will just cloud up the methodological point.

I will start with the narrative history. Once upon a time, there was an island inhabited by people. Later settlers will call it "Crusonia", but the natives called it "Atlantis". By far the dominate food of the Atlantians was rose hips. Sometimes they'd catch a rabbit, sometimes they'd eat worms. But it was almost all rose hips. The Atlantians died 800 years before settlers came to Crusonia, after a blight killed off all Atlantian Roses.

How would an idealized economist approach this story? The big variable is the number of rose hips \( Y \). Obviously, the count of rose hips on the island at any particular time is exactly the number of rose hips per rose \( g \) times the number of roses \( K \). This is just counting ... but hey, there's another way of counting. We can count the rose hips not just by number born but by number used. Each rose hip is either eaten or used to grow another rose. Let \( r \) be the number of rose hips per rose that grow into new roses and \( C \) be the number of rose hips eaten.

The number of rose hips doesn't care about how we count them. By metaphysical necessity,  "The paths up and down are the same.". This gives us the governing equation

$$ K = \frac{C}{g-r} $$

I've written this to be as simple as possible, but I do have a point. The above equation is just accounting, it is automatically true. It's a thin description, even thinner than any real cliometric analysis. But now we can talk about causality (functional relationships). If \( g \) and \( r \) were constants, then increasing consumption should increase the number of roses. Well, why do you think roses grow rose hips in the first place? Or maybe the causal arrow moves in the opposite direction - it makes perfect sense to think higher consumption is associated with more roses. But why should \( g \) and \( r \) be constants? Doesn't it make sense that the number of rose hips per rose that grow into roses should vary inversely with the number eaten? Then you have \( r(C) \). Or perhaps if there are too many roses, then they start competing with each other for land - then you'd get \(g(K)\).

We can now approach the narrative above. During the end times of the rose blight, \( K \) tended towards 0. This will force C to be zero (which kills everyone), but its impact on \(g\) and \(r) is ambiguous. Did the Atlantians foolishly continue eating at the same rates? Did they desperately change their habits but were doomed by the rose blight? These questions are statements about functional relationships - a thick historical description will answer them (at least qualitatively).

If we want to go on to do real economics, we have to start worrying about equilbria - the points at which the annual stock of roses balances the flow of rose hips (into bellies and the ground). This is also useful, but takes us far afield.

Le Penseur

So this is my good cop routine in a nutshell: A thick historical narrative description is very, very important - it should give us good qualitative reasons to believe in casual relationships. A thin cliometric numerical description is equally important - not only can it clarify those descriptions but it can also serve as a sanity check on thicker descriptions.

Eat Yourself Fitter!: A Review of Production Of Commodities By Means Of Commodities

Niels Abel said about Carl Gauss "He is like a fox who effaces his tracks in the sand with his tail.". The same can be said of Italian economist Piero Sraffa, whose big book on the theory of production is 112 pages long. Though published in 1960, there is plenty of evidence that Sraffa had the basic ideas written out in 1928. This 32 year gestation period was mostly a time of intense "taking out", resulting in book that is like a glittering diamond with aperiodic facets.

Piero Sraffa, John Maynard Keynes and Dennis Robertson

The most important and most annoying thing about Production Of Commodities By Means Of Commodities: A Prelude To A Critique Of Economic Theory is that it is a ... well, prelude to a critique of economic theory. There are huge, yawning gaps that presumably would have been covered in the actual critique had Sraffa's perfectionism not prevented him from publishing it. This results in a book that often works by innuendo and carefully laid traps rather than by overt calculation.

Obviously, I can't approach Sraffa's level of brilliance in a blog post, but here we go critiquing anyway.

Philip Wicksteed

By "Economic Theory", Sraffa means the marginal method of Wicksteed, Irving Fisher and so forth. Unfortunately, it isn't easy to actually say exactly what this theory means, especially in equilibrium where all the forces balance. Perhaps the essential thing is captured in the famous quote from Richard Whately: "It is not that pearls fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.".

What could this possibly mean? The price of a commodity is just the balance of supply and demand for that commodity - whether it is a "final good" (like cake - a good whose demand is strictly for its own consumption) or mere "factor" (like flour - a good whose demand is strictly for making other goods, like cake, to consume) or something in between (like water - which is both consumed for its own sake and used to make cake). The vaunted and so-called "supply" is just the flour manufacturer's demand (for, say, money). "Equilibrium" is the balance of the demands of everyone's goods against everyone else's demand for everyone's goods.

Production theory, while not simple (due to involving demands across time), isn't special - just because the price of flour is determined by the demand for cake tomorrow doesn't mean it isn't set by the balance manufacturer's demand and consumer's demand.

Piero Sraffa

Sraffa's system is different. Sraffa is directly inspired by the system of David Ricardo, with the philosophy and economy of Marx floating ominous and powerful in the background. Instead of concentrating on the balance of subjective demands, he concentrates on a balance of objective supplies. Sraffa's system concentrates on the actual shifts of goods used in the creation of new goods. The actuality of this is both very important - especially if you want to be an historical materialist - and deeply problematic - especially if you want to do economics.

Take the simplest example - a single period of single product industries that produce with no surplus. The total amount of each good at the end of the period will be denoted \( G_j \). The amount of good \( j \) actually used in the production of good \( i \) is denoted \( G_{ji} \). Therefore, we define the distribution matrix  \( A \) by \(a_{ij} = \frac{G{ij}}{G_i} \). This matrix is the disaggregated distribution of goods - \(a_{ij}\) is how much of good i is used by industry j. Since there is no surplus, \( A \) is a stochastic matrix, therefore it is easy to see there exists a vector \( p \) such that \( A p = p \). This vector is the system of prices which would allow the system to hold together - at these prices there would be no social force away from the distribution of goods entailed by the distribution matrix.

It is here where Sraffa meets Scylla and Charybdis. What is so special about a self-reproducing economy? Yes, such a price vector can exist, but who cares? What if an industry becomes irrationally depressed and pointlessly produces less one year? Sraffa's system is not based on production functions in the traditional sense - \( A \) is the actual distribution of goods in the system, not the solution to some maximization problem. Sraffa is very proud of this because it lets him sidestep market structure. Sraffa cryptically boasts about this in the introduction of the book. He never explains that this is how he is able to handle increasing returns - because in his system he can't even write them down. Without market structure, Sraffa can't talk about stability or even why \( p \) will be chosen in actuality. His results are written subjunctively, "If the economy is self-reproducing, then...".

In the Wicksteed-Fisher system above, \(a_{ij}\) is the demand for good i by industry j and the price vector \( p \) zeros out excess demand. If one year an industry accidentally underproduces, then it's good's price next year will go up (there will be excess demand). This causes it to be overproduced next year - demand feeds back onto demand. If the system is stable (which may require some amount of intelligent management), eventually the original price vector will be retrieved. It makes sense to work it out temporally.

Now, you might object that Sraffa's system actually is stable, since for any all positive starting price vector \( p^s \), one clearly has \( \lim_{k \to \infty} \frac{A^k p^s}{\| A^k p^s \|} = p \). So if the distribution matrix holds still from time period to time period, the price level will adjust to it. But remember that Sraffa's system is based on the actual distribution of goods. There's no reason to associate \(A^2 p^s\) with two years of production - unless the distribution of goods is fixed by the Gods and the Kings. But why would that be? I'll come back to this point in a bit.

Joseph Schumpeter

This continues to be an issue when Sraffa makes his move at recovering classical political economy. Let's see why. Weaken the assumption that \( A \) is stochastic to merely being non-negative and irreducible. The Perron-Frobenius theorem now gives us the existence of an all positive price vector  \( p \) such that \( A p = \lambda p \). Again, this price vector is calculated solely from the actual distribution of goods \( A \). The eigenvalue \( \lambda = \frac{1}{1+R} \),  where \( R \) is the maximum level of profit (that is - one where the wage is zero). Another way to think of \( R \) is the amount of surplus in the system. This is an eigenvalue, so it's uniform across industries (not dependent on \( i \) ).

The wage of labor is then related to the actually realized profits \( r \) by the simple equation \(w = 1 - \frac{r}{R}\). In other words, \( \frac{r}{R} \) is the proportion of the surplus going to industry and \( w \) is the proportion going to labor (paid in that standardized unit that Sraffa laboriously constructs). If this is right, then Marx understood the political economic struggle basically correctly. Workers of the world unite - you have nothing to lose but your chains!

... because production doesn't depend on actually realized profits, so you can increase your wages until \( w = \frac{1}{R} \).

But wait - why must the level of profit be uniform? In Sraffa's system, there isn't any industry structure - \( R \) comes out of the matrix of actually distributed goods. But what if right after the distribution of goods \( A \) is measured (though, of course, Sraffa doesn't discuss measurement), an entrepreneur invents a better mousetrap factory. Let's say there are increasing returns and so all the market concentrates under her company. What economic force is equalizing her (long run) rate of profit with everyone else's? In other words, why can we rule out Knight-Schumpeter theories that actually realized profits and industry structure matter for production a priori?

 Richard Cantillon

Now, like I said before, Sraffa's book is a Prelude. Not answering these questions is a flaw, but it is a flaw that I think Sraffa would be happy to cop. Classical economics had an answer for these - one that Sraffa leaves carefully in the background. I'll briefly sketch Cantillon's answer as an example. You can read more here, but their notation is sometimes illegible. I'll just use words:

Cantillon was Irish, so let's draw an imaginary Ireland. There are two goods, potatoes and cake. There are two classes of people, royals and laborers. Laborers eat potatoes, royals eat cake. Assume that labor is homogeneous and land is uniform. Wages and rents are therefore uniform - otherwise, just switch to the more profitable sector (in other words: constant returns). Since there are only two goods, one can now solve for equilibrium based on the balance of income flows. The fund for labor for growing cake (that is, the uniform wage times the quantity so employed) must exactly be the total rent received for growing potatoes. Since rent is the same everywhere, this gives us the total rent  - which must also be the amount spent on cake. The number of laborers in the economy is a function of the amount of potatoes grown. Hopefully, there is some amount of potatoes that results in a stable population. That ratio decides the amount spent on potatoes the labor supply. Since we know the wages and the labour supply, we know the wages fund. We can then keep working through until we've solved for prices and quantities separately. With Cantillon's assumptions, everything is proportional to the quantity of land with proportionality constant coming from technology.

There are many differences between this argument and Sraffa's argument. In Cantillon's system, there is a clear - albeit slow - equilibrating social force. If "too much" land is given to growing potatoes, population will grow and wages will fall. As a result, landowners will be able to grow lots of cake cheaply until population falls again. If "too much" land is given to growing cake, then the population will be forced down and wages will rise until landowners are forced to change their pattern of land use. God chose the final distribution when he made man an animal.

Sraffa was intensely concerned to not assume uniform land and constant returns - in his system, rent is not uniform across land. He didn't want to spurn his first paper. If land is uniform, all patterns of land use are equally valid. But if land is starkly non-uniform as Sraffa believes (or at least, believes it is important not to rule out a priori), then a pattern of land use consistent with population stability may not even exist (though I have no proof of this). Nowhere in Production Of Commodities By Means Of Commodities does Sraffa even mention determinants of population!

Henry George

Earlier I said that Sraffa's analysis is full of innuendo and carefully laid traps. His discussion of Land Value Tax (LVT) is an example. Because land cannot be produced and therefore isn't in that set of self-reproducing commodities called "basic" by Sraffa, a LVT cannot affect production and therefore is not economic. It falls entirely on the landlord. This result is identical to the usual, "supply and demand" result, though less general (since the supply and demand result holds even if land is mispriced). But it carefully hints at the basic definition of what is and is not an economic result. Sraffa implicitly argues that there is no economic argument against a Land Value Tax because it doesn't affect production - implicitly defining economics in a way that emphasizes production.

Vilfredo Pareto

From the perspective of Pareto, this definition is by its very nature political - it values some people (producers) over others (landowners). You might agree - as I do, on basically utilitarian grounds - with a stiff LVT, but to simply dismiss landowners outright and a priori is a little shocking!

I'm sure that Sraffa could entirely defeat me philosophically, that he had very good arguments that this and not, say, "the optimal use of scarce resources for given ends" is the best way to do political economy. I'm sure he could give a good reason why this and not, say, Rawlsian reasons are the best reasoning behind an LVT. I'm sure he could give a good reason that the resulting distribution would be "just" to any Nozickian objectors (such as James Mill). But he doesn't deploy these reasons openly in Production Of Commodities By Means Of Commodities.

Piero Sraffa

Considered as a foundation of economics, there are many other things lacking in Sraffa's slim book - money, uncertainty, technical progress, etc. - but I can forgive all of these in return for it's flash and fire. I find it very hard to forgive the lack of an equilibrating mechanism.

Get Some Sleep!: A Contextual Review Of Dont Look Back

Bob Dylan

Starting on Friday, April 30th 1965, Bob Dylan made a 11 day concert tour of England - the first organized "concert tour" he ever went on. D A Pennebaker convinced Dylan or someone to let him follow Dylan around with a camera the whole time. This ended up being a movie:

Specifically, This Movie

In May of 1965, Dylan was about to turn 24 years old and three years deep into a record contract. He had an intense cult following and critical acclaim to spare, but was having difficulties turning this into album sales. His latest single "Subterranean Homesick Blues" - a deeply weird folk-rap with a shambolic garage rock backing - had managed to scrape the bottom of the US charts (number 39!) even as it ripped his folk purist cult following to shreds. His albums weren't doing much better - his first album had bombed so hard that it nearly destroyed not only his own career, but that of the executive that hired him. Two of his next three albums managed to make it into the top 30, but it was clear to anyone who looked at a checkbook that the songs (which included "Blowin' In The Wind" and "Times They Are A-Changin'") were being quoted, covered and ripped off more than bought.

This was the first image that came up when I typed "UK 1965" into Google.

But Bob Dylan records were selling much better in England, where they had some distinct advantages. The Beatles seal of approval, for one. They practically worshiped Bob Dylan, and their word was worth a lot. Another was distance from Dylan's strident pro-Civil Rights activism. Dylan had refused to go on tastemaker Ed Sullivan's show when CBS asked Dylan to drop a satirical song (Sullivan defended Dylan, but it added up to nothing). Finally, England is itself a smaller audience where word of mouth can consume an entire country. Dylan's pitbull manager Al Grossman (who surreptitiously helped himself to 50% of Dylan's songwriter fees - just in case you thought the most acclaimed songwriter in America could get rich) made a deal for an English concert tour with English super-agent Tito Burns. The money was clear - Bob's second album was the "fastest selling folk album in the history of England" according to a reporter somewhere in the movie.

Seated: Grossman, Dylan and Baez

According to a newspaper article read aloud in the movie, Dylan arrived in England by plane mere hours before his first scheduled concert in Sheffield. With Dylan were his aforementioned manager Al Grossman; Bob's famous, successful and beautiful girlfriend Joan Baez; unpleasant hanger-on Bob Neuwirth and super-producer Tom Wilson (who, if you need bonafides, produced Sun Ra's first professional album). Each of these people is leeching out something different from him: Wilson and Dylan are still developing their folk-rock sound; Neuwirth is a hanger-on; Baez came thinking she'd get to perform a few nights with Dylan; and Grossman is Dylan and Baez's manager.

Tito Burns is to the right

There's a lot of mean spirit in this movie. At one point, Tito Burns and Al Grossman conspire to put the BBC and another promotion into a bidding war over a Dylan appearance. Burns is convinced they can get the fee raised to £1,500, but not if they demand it right off the bat. One gets the feeling that The Beatles didn't have to fight over £300 (which, admittedly, is $6,712 in 2016 money). I'm still not sure if Bob Neuwirth had any job at all beyond being mean to everyone except alpha dogs Dylan, Grossman and Wilson.

Bob Dylan and D A Pennebaker

But in terms of personal cruelty, the central figure is Ol' Robert Dylan himself. The only thing that stops Dylan from being completely unsympathetic is his tendency to retreat into himself when annoyed. There's a scene early in the movie when Dylan is signing autographs from some fangirls and one of them off handedly mentions she likes his acoustic stuff better than his electric stuff. She has no idea that she stepped right on an issue Dylan is extremely sensitive about, and one can see Dylan physically choke back venom even though he knows that there is no point and no victory in spitting it at this school girl. Dylan frequently rags on the perfectly nice Donovan, for no particular reason except that Donovan's name keeps randomly popping up during his tour. Dylan obsesses over chart performance and filling halls - as he has to at this point in his career. Indifference is a luxury. It seems to be obvious to everyone except Joan Baez that Dylan and Baez's relationship is over - he barely acknowledges her until she starts singing Hank Williams songs and he never gets around to putting her on stage (aka the entire fucking reason she flew to England). Once she gets the message, she disappears and Dylan's behavior no longer benefits from having her positivity as a chaser.

Tommy Wiseau imitating Dylan

Dylan is trying to make a contradiction real. In order to function he has to be a celebrity - he's a singer-songwriter, not a corner-store druggist after all. But Dylan is incapable of giving straight answers to anyone. Over the course of the movie, he gives increasingly petty attacks to the press. Recall the episode of the high school girls - they love and own every Bob Dylan record, but they don't like them his way (the little monsters). Like Tommy Wiseau, Dylan combines a lust for fame and a demand for anonymity.

If it seems like I keep returning to the fangirls, I suppose I should be honest about why. Because he can't just spew hatred at them, it's the only time in the whole movie Bob Dylan says anything interesting. One of the girls says Subterranean Homesick Blues "... doesn't sound like you", to which Dylan responds "But I made it with my friends. I got a right to make things with my friends, don't I?". If Dylan could have been that disarming and unusual with the reporters, they'd take their pound of copy and leave.

Corey Feldman is an illustration of "not making it". Sorry, Mr Feldman.

Watching this movie again, the truly fascinating thing about this movie isn't necessarily what happens as what failed to happen. Legendary Nobel Prize Winner Bob Dylan is, in this movie and at this point in his life, nothing but a low-to-mid-level celebrity so wrapped up in himself that he can barely function. There have been plenty of musicians with more success than Dylan has had at the point of this movie that went on to be nothing. People go from six figure advances to their parent's basements easier than you might think. It wouldn't be hard to imagine a world in which grocery store owner & college drop-out Bobby Zimmerman is bemused to see his songs on bargain 60's CD collections. He shows up on Where Are They Now? shows to explain how the early recall of Freewheelin' and Grossman's management made it impossible for him to make money. Even more darkly, in that world, Subterranean Homesick Blues is remembered on awful What Were They Thinking? TV as an incomprehensible attempt to sell out to rising of electrified rock while still appealing to the oh-so-massive Beat poet audience.

Yes, I'm glad to say some good came out of all this. You see, Dylan was able to channel all the negativity and anger he exuded in this movie into a song - you might have heard of it. This song went to number 2 (kept off by The Beatles, of course) and retroactively made Dylan into an Always Is instead of the Has Been he might have been. Tom Wilson produced that song, which is remembered as the crowning achievement of his long and varied career. Joan Baez recovered from the break-up to make some of her most artistically interesting records, including perhaps the greatest Christmas Album ever. Al Grossman, Tito Burns and 8 concert hall owners made good money. Even Donovan embraced folk rock with "Sunshine Superman" and never looked back. That's a precedent that I'll now follow.

I made it through an entire review of a folk music movie without mentioning A Mighty Wind. This ending is just to fix that.

Isn't This Such A Utopia? Mother 3 Review

I recently finished playing the Japanese Role Playing Game (JRPG) Mother 3 in its fan translation. This was an excellent game which continues the series tradition of great writing, fun game play and wonderful music. Let's start with a bit of background.

The Mother series of JRPGs is the brain child of the famous author and copywriter Shigesato Itoi and many of his traditional themes are developed in the series. Mother began as something of a joke. It's conception commenced after one day (I think he was stuck sick, but I can't remember where I read this), Itoi decided to play DragonQuest III (a new hit game at the time). He became intrigued by its simplistic, shonen manga-like writing and found himself narrating along to the battles. Itoi, at the time a well known advertiser, decided to approach Shigeru Miyamoto - the creator of Mario and others - with a pitch for a video game set in modern day with preteen characters. They developed a friendship and professional relationship that would end up being very important - Itoi, for instance, was the one who convinced Miyamoto to drop Ultra from the name "Nintendo Ultra 64". This was one of the first "celebrity" video games, and recall that the last time a celebrity made a joke video game it didn't go so well. We're lucky we got what we did.

Mother (in English, EarthBound Beginnings) is a very important series for the history of JRPGs. It's design (in particular, the way it approached the world map) clearly influenced Pokemon and Itoi's gentle but epic tone helped pave the way for the approach later Nintendo games, such as some of the Legend Of Zelda games or Super Mario Galaxy, would aim for. That being said, it isn't hard to tell that its the work of someone who doesn't have much experience making games. It's unbalanced and obviously not very play-tested. And moving to the third hand, the soundtrack was a huge, unexpected success, to the point that it was decided to release the soundtrack in a traditional form. (Yes, that is the most 80's thing in history, but in a fun way)

The second game in the series, called Mother 2 in Japan and EarthBound in English, is the big epic of the series. I'm going to do a lot of comparison between Mother 2 and 3 later, but let's talk about the place of EarthBound in the biz first. First of all, its tagline was "Adults, children, and even older sisters.". Normally one wouldn't talk about a tagline as being important - but remember that Itoi is a copywriter/advertiser first and a video game designer 12th or 15th. From a business perspective Itoi, Miyamoto and Iwata (another very important Nintendo higher-up) had the goal of making a game that would reach beyond the so-called "otaku" young male nerd market and appeal to "older sisters". In order to do this, Itoi aimed to make a game with a plot, themes and style that would speak to ordinary people. Therefore, the general goal was to avoid, say, dragons salivating over nubile elf princesses. I think the right comparison would be to Steven Speilberg's film E.T. vs ... maybe, Frank Herbert's Dune. The mainstream audience isn't interested in the machinations of the mentat Thufir Hawat against the House Harkonnen (even though technically, they're all human). They find it much easier to see little Eliot find his place in the world through friendship and hardship. A sci-fi adventure in a world with chrysanthemums and Reese's Pieces is just plain more interesting to normal people (sorry fellow SF fans). The advantage of a long development time, much larger space and much more powerful machinery allowed Itoi to explore and decorate the world of Ness's adventure much more intricately. One of his goals, for example, was to fill the world with whimsical and useless things - much more like our own than the typical RPG where every little thing matters. And, like EarthBound Beginnings to some extent, this game used a deliberately cartoony, Peanuts-like art style to emphasize its difference with the shonen manga style prevalent among JRPGs then and now.

Claus, clay sculpture

Well, now that we know where Mother 3 came from, we can talk about what it is. I'm going to leave spoilers to a special spoiler section. Let's start with the characters, setting, plot and what have you.

 Lucas, clay sculpture

Like its predecessor EarthBound, Mother 3 has a rich cast of characters. There's main character Lucas (pictured above), ninja/bassist Duster, enslaved dancing monkey Salsa, punk rock girl Princess Kumatora, serious rancher & father Flint, mysterious giant Leder (an obvious Twin Peaks reference, which I am always on the look out for), cruel and banana loving merchant Fassad, the sexless Magypsies, the lovably egotistical Rope Snake (I was not expecting this to even be a character, much less the hilarious one he was) and many more besides. Itoi really went out of his way to try to make the characters encompass many personalities. For instance, the aforementioned Duster has partial paralysis in his left leg. In a "normal" game, he would have ended up without this quirk. But in Mother 3 it's just allowed to be part of who he is. It's not often in video games that a character is just allowed to be disabled like that. That being said, there sure aren't many black people....

Partially as a result of this diversity, there are a surprising number of gay jokes in Mother 3, which I really wasn't expecting. The sexless Magypsies, for instance, hew pretty closely to crossdressing okama stereotypes. I found them funny, you might not.

The Nowhere Islands provide our quirky setting and its hidden secrets. More than the islands themselves, the game centers on Tazmily Village, a utopian place where people do what they want for each other because they want to. If you bring nuts to one woman, she bakes them into bread. The local "store" has items sitting on the ground. The jail has never been used, because there isn't any crime. The plot of Mother 3 requires the various leads to continuously return to Tazmily Village and watch how it evolves. Money is invented, alienated labor is introduced and commodified entertainment is brought in as a pain killer. Dangerous politics are played with as the borderline-fascistic Pigmasks control access to good employment (and, by extension, the entertainment). Itoi does a good job of avoiding being preachy or boring with these ideas, which is pretty amazing. The Pigmasks are people who the characters develop relationships with, the foreman is even appreciative of all the work your doing. The aforementioned commodified entertainment is a band that really does love music and its audience. It would have been easy to go the lazy route and make the Pigmasks inhuman jerks and the band pro-slavery sloganeers, but it would also be cheap. And avoiding the cheap turned out to be pretty important a the secrets of the Nowhere Islands are slowly revealed...

Character design from an early, 3D version of Mother 3

Mother 3 has basically the same art style as EarthBound, which is great because - as you can see above - early 3D art looked terrible and is now extremely dated. The march of time allows Mother 3 to do a lot more with what it has than EarthBound. There's some funny animation in there, not just having the sprites move up and down. Needless to say, the music is uniformly excellent, which even plays a role in game play. If the player presses the attack button in sync with the music, they'll perform an extra attack (up to 16). However, these extra attacks do little extra damage and clash with the way the damage is tabulated. Like in EarthBound, when a player character is hit their health rolls downward over time. If one is quick, a character can be fatally injured several times over and still be in battle. Healing a sufficiently large amount instantly reverses the counter, saving the character from dropping out of the battle. These tactics, however, cannot be combined with the amount of time it takes to do 16 hits.

While I'm complaining, it really annoyed me that my PP wasn't refilled after boss battles. I don't know why, but sometimes it seemed not even my health was replenished. Unlike EarthBound, enemies don't run after you've beaten the local boss, so this made for some painful limps home (I never died because of this, but it was annoying). These are my only complaints about the game play, which otherwise is loads of fun.

Before we move on to spoilers, I want to do more comparison with EarthBound. In some ways, Mother 3 is a superior game. I mentioned already the animation and variety of characters. I'm also happy to add that the most annoying game play flaw of EarthBound - dealing with an inventory system full of useless quest items - has been completely addressed. Quest items are now helpfully tucked away in their own space. Though the plots are very different, both games are basically a Hero's Journey (some argue that all stories are a hero's journey and this may be so, but they aren't all helpfully described as one). But, in my opinion, Mother 3 simply feels less epic than EarthBound. It may be the case that on a technical level, the Nowhere Islands are larger than Eagleland. But Ness's quest feels like more of a quest. I think that a lot of it has to do with the fact that Lucas is constantly returning to Tazmily Village (until the very end), while Ness is going from city to city. The overall thrust is the same: Ness goes from the comfort (and free room & board) of his family through a succession of larger and more expensive cities - meanwhile, Lucas sees Tazmily village from the primitive, utopian togetherness of the beginning to seeing it become a post-industrial semi-ghost town as everyone moves to the big city. But with more literal distance, Ness's journey feels like ... more of a journey. Only in the last chapter is Lucas really all that far from home. By the time you control him, he's already over his fearfulness from the first two chapters. It would be nice to have been part of that experience. Ness's process of growing up was represented in game play in a very clever way - at lower levels he was prone to suddenly become homesick and would randomly fight sub-optimally. Since Ness is by far the most powerful character, this could be very dangerous! After you've leveled up enough this stops happening. Lucas's growth process doesn't directly affect game play. It may or may not help that a major reveal in Mother 3 is the way it is tied into EarthBound, which made me feel as though the game I was playing was sort of a side game and the "real EarthBound 2" was about Ness's reaction to Porky's message at the end of that game...

SPOILERS

There are two stages to the major reveals of Mother 3.

The first happens once you reach Chapter 7, the centerpiece of the game. It is revealed that the Nowhere Islands are on top of a sleeping, godlike power known as The Dragon. This is hinted at very early in the game. The ageless Magypsies are tied to magical objects known as The Needles, which keep The Dragon slumbering. Only a chosen hero can remove The Needles, and I don't think I'm breaking any hearts when I reveal that the lead character happens to be chosen. Whoever should draw The Needles will have control over the nature of The Dragon when it awakes. Oh, and by the way - your creepy fascist enemies have someone who can draw needles too...

The second round of reveals take place in New Pork City. The most obvious reveal is the true nature of your creepy fascist enemies. They are controlled by Porky Minch, who you might recall from EarthBound. As you recall, traveling through time and across universes left him insane, immortal and very powerful. Leder, the mysterious giant from the first few chapters, goes on to reveal more secrets around this time. The world that the Nowhere Islands exist in is on the border of being completely destroyed. The power of The Dragon keeps the Nowhere Islands from themselves collapsing into the chaos of the surrounding world. The original inhabitants of the Nowhere Islands (which they called the Kingdom Of Oshoe) are gone, only the Magypsies remain. The current inhabitants are refugees from the destroyed outside world who wiped out their memories to try to make their new civilization peaceful. Only Leder was left with the memories to reveal in case it was necessary, otherwise the magical Egg Of Light kept the memories suppressed.

Now comes the speculation. How does this world exist in reference to the original EarthBound? Where are the Nowhere Islands in comparison to Eagleland? It's usually assumed that the Nowhere Islands are just somewhere in Eagleland's future, only thousands or even millions of years later.  We know Porky can travel across worlds as well as time, so his presence proves nothing. However, there is another hint that this is the same world - Lucas's family has Ness's Franklin Badge (which plays an important role in the plot, so it's clear we were supposed to notice this connection). Again, to play the third blackbird in Wallace Stevens's tree, this is not quite conclusive evidence since the badge is obviously supposed to be connected to Benjamin Franklin, so it might not be necessarily Ness's Franklin Badge (I have a hard time swallowing this though).

Let's posit the Nowhere Islands exist parallel to Eagleland for a moment. What consequences could that possibly have? I think this theory's chief virtue is the sense it makes of Porky's loneliness. Porky can travel across infinite spaces and flit through time at random, but he can't do the one thing he wants - gain the love and respect of the people he cares about. He nearly completely destroyed the world in which the Nowhere Islands exist, because his only remaining goal in "life" (if you can call a being in his state "alive") is to destroy "everyone who doesn't like [him]". Even Porky can see the pointlessness of destroying the world - in many ways his plans in Mother 2 and 3 are brilliant. His plan in Mother 2 was the more sensible conquest after all. But if it is just one world among many, it becomes easier to see his behavior from his end as a game. The Dragon is just another omnipotent psychic monstrosity to unleash on another doomed little world, just as Giygas was in the original worldline. Because of this, I think that it is best to think of Mother 3's setting as being parallel to EarthBound's (or at least, so far in the future that they might as well be).

It has the side advantage of not canceling out Mother 2's ending as well.

NO SPOILERS

So, that's about all I have to say about this game for now. It's a great game that I recommend to anyone with the 20 or so hours to spare it take to play it. Have fun!