Coming soon, a blog by Gary Becker and Richard Posner. Should be fun.

Coming soon, a blog by Gary Becker and Richard Posner. Should be fun.

Lynne Kiesling

In catching up on the mail and newspaper yesterday after returning home, I was excited to read Virginia Postrel’s Wall Street Journal Weekend section column on shopping and fashion magazines (subscription required). Virginia sees an independence and creativity in the emergence and popularity of shopping magazines relative to old fashion stalwarts like Vogue and Harper’s Bazaar:

Shopping magazines don’t dilute their celebration of shoes, gadgets, sweaters, handbags and makeup with articles on politics, celebrities or art. That makes it easy to sneer at them. Critics call these publications “magalogs,” charging that they’re little more than catalogs. Lucky doesn’t even have real articles, grouse prestige journalists, just glorified captions. Even Kim France, Lucky’s editor in chief, acknowledges that the magazine’s photography is “very literal,” with none of the artistic ambition of Fashion photography with a capital F.

For all their blatant materialism, however, Lucky and its kin actually represent cultural progress. Their unabashed presentation of goods as material pleasures keeps materialism in its place. They don’t encourage readers to equate fashion with virtue or style with superiority. They’re sharing fun, not rationing status.

That last point is the most important of all: the realization of the idea that shopping as a process is itself fun, and that the process of creating your own look instead of aspiring to what the magazines tell you that you should want to buy is fun and empowering. And these shopping magazines are much less elitist and less hierarchical than the old guard fashion magazines.

The shopping magazines reverse the relationship between reader and editor. In traditional publications, the reader’s goal is to emulate the editor’s style, to admire the people she admires, to read the books she reads, to wear the things she wears. Thus every issue of Vogue has a section called “People Are Talking About,” to let you know what books, movies, art exhibits, restaurants and so forth the in-crowd deems essential. Traditional fashion magazines tell readers not just what to buy but what to value. [emphasis added -- LK]

But in the shopping magazines, the editor represents the reader, serving not as arbiter but as agent. Lucky effectively uses photos of its various editors, and their first-person voices, to emphasize personal style and individual passions. Instead of dos and don’ts, ins and outs, it offers “What I want NOW” and “Our Obsessions.” Editors come across as fellow enthusiasts. They know more than their readers not because they’re superior creatures but because they get paid to look for really great stuff.

This is great because it makes finding a great piece, a great bargain, a great pair of shoes that are also affordable and comfortable, a collaborative and congenial activity. There’s a sense of empathy, of “we’re in this together” between reader and editor because each one knows how wonderful it feels to find that perfect pair of pants that makes you feel like you’re queen of the universe. The old guard fashion magazine continues to be about aspiration, about status difference between the subjects of the features (and, by extension, the editors) and the readers themselves. There’s no empathy, no sense of conspiratorial glee in finding that you can put together your expensive Marc Jacobs jeans with a very cool $12 Old Navy top and create a really cool look, for example. And that these looks are individual.

It turns the aspiration from one of status by emulating the rich and famous to one of aspiring to apply your own creativity and enjoy the process of putting it all together, and feeling great about how you look and how you achieved it when all is said and done.

[Side note: this is also a big reason why I knit. Original pieces, personally tailored]

In fact, I subscribed to Vogue for years, but I cancelled it when I realized that I didn’t give a hoot about what “People Are Talking About” and the only features I was reading were Jeffrey Steingarten’s food and cooking articles (which are fabulous). I find that when I buy a fashion magazine these days it’s likely to be In Style, Lucky, or Allure. Virginia’s column on Friday articulated to me why my behavior has shifted.

UPDATE: Virginia’s posted the Opinionjournal.com link, so even non-subscribers can read it, yay.

Lynne Kiesling

Thanks to the invaluable Will Wilkinson for his link to this U. of C. Chronicle article profiling Ronald Coase:

Coase said that “it’s very difficult to imagine a system that would work better than one with private property rights and a market: mechanisms that have proved themselves repeatedly against regimes where central authority is the dominant economic force. A private enterprise system with vigorous, competitive markets seems to function best because central authority cannot have all the diffused knowledge that is captured effectively by the workings of the market,” he said.

Channeling Hayek a little there … and offering a pretty fair representation of the results in my freshman seminar today when we created a pollution permit market and ran it under a bunch of different rules. One of the almost surprising insights to my students (mostly because they’ve never thought about it before) is that in the course of trading, they learn how high or low their abatement costs are relative to others operating in the market. And this happens even though cost information is private knowledge, and traders are placing bids and offers that do not precisely reveal their abatement costs. Yet they each figure out how relatively high or low their costs are, based on the willingness to pay and willingness to accept that they observe in the market, and the ensuing market prices.

While we’re on the subject of Coase, I recently ran across an intriguing paper entitled “Coase’s Penguin, or Linux and the Nature of the Firm”:

For decades our understanding of economic production has been that individuals order their productive activities in one of two ways: either as employees in firms, following the directions of managers, or as individuals in markets, following price signals. This dichotomy was first identified in the early work of Nobel laureate Ronald Coase, and was developed most explicitly in the work of neo-institutional economist Oliver Williamson. In the past three or four years, public attention has focused on a fifteen-year-old social-economic phenomenon in the software development world. This phenomenon, called free software or open source software, involves thousands or even tens of thousands of programmers contributing to large and small scale project, where the central organizing principle is that the software remains free of most constraints on copying and use common to proprietary materials. No one “owns” the software in the traditional sense of being able to command how it is used or developed, or to control its disposition. The result is the emergence of a vibrant, innovative and productive collaboration, whose participants are not organized in firms and do not choose their projects in response to price signals.

In this paper I explain that while free software is highly visible, it is in fact only one example of a much broader social-economic phenomenon. I suggest that we are seeing is the broad and deep emergence of a new, third mode of production in the digitally networked environment. I call this mode “commons-based peer-production,” to distinguish it from the property- and contract-based models of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands.

I’d modify it to say “rather than simply market prices or managerial commands.” Looks like an interesting read.

Pat Lynch

At a conference on economics and social processes that I attended this past weekend, Vernon Smith, raised an issue that has bugged me quite a bit since we began our invasion of Iraq. Why has this administration said so little publicly about the development of capitalism, not merely democracy, in Iraq? Vernon said that it’s probably because we don’t know how to “build” a market, and certainly Hayek and other Austrians would agree.

The U.S. government has given U.S. companies a chance to cash in on the invasion. USAid is coordinating a massive handout to U.S. companies that are trying to rebuild basic Iraqi infrastructure. The Commerce Department has a rather silly sight on how to do business in Iraq. From it’s FAQ section I quote the opening line to the question “What Business Opportunities are in Iraq?”

“There are many business opportunities in Iraq. The leading business opportunities are through (1) U.S. reconstruction contracts and subcontracts, (2) contracts with Iraqi Ministries, (3) private sector opportunities, and (4) contracts with the United Nations (“UN”) and international organizations.”

So basically there’s no interest, at least at Commerce, in doing private business. It looks like the model of capitalism we have in mind is that you can get hand outs from the U.S. government directly, indirectly, or through the UN and NGO’s. Sounds like a great way to maintain the enormous nanny state that Saddam had in place. I can’t wait until we stop sending the money just to see how the Iraqis deal with that.

I recommend this as a starting point – the report from the Copenhagen Consensus Group assembled by Bjorn Lomborg. They provide an interesting plan to handle the major economic, political, and social problems faced in the developing world. Among the economic recommendations are free trade, immigration openness, ending agricultural subsidies and political stability.

I’d say that indirectly the Iraqi regime has probably got one of those things right – free trade. The rest of it is problematic at best. It’s certainly tough to expect a newly formed government to follow a collection of progressive development policies, especially with the pressure from USAid to spend resources with U.S. firms on big projects. But I hope we start to hear a bit more about promoting markets, not merely aid, in Iraq. If we don’t then I’m not sure that establishing democracy is going to change anything in the region or get us out of there in my lifetime.