Cogs and Monsters, book review: Retooling the economy for a digital world

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Cogs and Monsters: What the Economy Is and Should Be • By Diane Coyle • Princeton University Press • 257 pages • ISBN: 978-0-691-21059-9 • $24.95/20 £

A few weeks ago, Jack Monroe caused a storm in the UK by detailing the triple-digit inflation that applies to the basic food ranges on which the poor depend. Within a fortnight the Office of National Statistics was rethinking the way it calculates inflation across the UK and Asda had its core range back on the shelves.

Monroe’s practical economics exercise is a good example of one of Cambridge economist Diane Coyle’s complaints in Cogs and Monsters: What the economy is and what it should be: the false belief that the profession is neutral and objective. As Coyle writes, the choice and design of the index that underpins how we calculate benefit payments ensures that there will be winners and losers. The choice cannot therefore be neutral in terms of values.

Cogs and monsters is a personal journey through the economy, based on a series of lectures interspersed with anecdotes. Coyle, who has worked as a journalist, regulator, consultant and academic, has watched the digital economy increase inequality since 1994, exacerbated by the financial crisis of 2008-2009. For this reason, his work is particularly interesting here.

Coyle has more critics: economics lacks diversity to an extraordinary degree, and its decades-long emphasis on “efficiency” is not suited to modern economics. It is particularly unsuited to the digital economy, full of externalities and network effects. What you don’t measure – quality of life, technical debt, the loss of social infrastructure as a result of austerity – remains invisible.

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Therefore, we always use labor statistics that do not reflect the transition to the labor economy, social change or innovation. Some policy options are completely lost, such as regulations to solve coordination problems where no actor dares to adopt change until everyone else does. This has particular value in the digital economy, where open standards have created huge new markets. And we remain unable to answer key questions, like how we can improve society as a whole and how we can tell if we’ve done it – questions that are gaining in urgency as AI begins to infest the socket. of decision.

Coyle concludes with a discussion of the challenges posed by the digital economy. These include the scale and leverage that today’s giant tech platforms derive from their huge collections of data, and how the infrastructure they have built can helping to gain control of entirely different market sectors in a way that requires a change in competition law. The popular method of assessing consumer well-being over the past few decades has been based on price, which means nothing in today’s world of data-based payment services, as the new president of the FTC, Lina Khan.

The crucial open question that Coyle is currently working on is how to value data. At the 2021 ODI Summit, she rejected the oil comparison and suggested using air as an alternative analogy to understand the value everyone derives from data when it is seen as a public good rather than a public good. merchandise. At an event in 2018, she posed this provocative question: “Does data age like fish or like wine?” The answer to that is still a work in progress.

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