Bengt Holmström on contemporary trends

MIT Professor and former Nobel Prize winning economist, Bengt Holmström, known mostly for his interesting work in contract theory, recently offered an intriguing analysis with respect to the reemergence of extreme and violent populisms in relation to the appeal for simplistic narratives and information streams. I found his comments especially striking, particularly in an epistemological context. I think he raises a number of socially pertinent questions, including about the role of information and perception in the sociology of extremes.

Holmström’s comments can be read in the frame of a theory of information society, wherein, it seems, he explicitly suggests a structural connection between citizens growing frustrated with representative and liberal democracy – an emerging frustration in terms of wanting to have more direct control – and finally the outcome of an increase in appeal toward dictatorships or elected leaders as bold, simple-minded character types. Admittedly, the psychology and sociology of such patterns with respect to ‘bigger picture’ social scientific study are fairly well established and nothing short of timely and fascinating. There is so much psychology and sociology on such patterns and trends, it is overwhelming. And while Holmström offers few comments, he seems to capture something quite profound about both the pervasiveness of bias and how that might shape wider developments in how human beings consume information as well as shape the use of media and information technology in the context of the sociology of extremes. The emergence of the “click bait” phenomenon and “misinformation news” are two examples.

But what does one mean by the notion ‘simplistic narratives’? Holmström offers a conceptualisation via contract theory (one of is specialisations): namely, how the reduction to snippets of information comes at the cost of substantive analysis, which, I think, we can extend further to discussions on “fact” and “truth” and their absence. What is intriguing about his analysis is how he links what he views, in my own words, as structurally emerging patterns of simplistic information streams with increasing calls in the contemporary social landscape for transparency. At first, one might ask, how could these seemingly opposites be linked, considering that demands for greater transparency would suggests demands for more information. For Holmström, as I read it, the link between increasing demands for transparency and the prevailing trend of simplistic and reductionist narratives energises almost facile and non-reflective concepts of transparency within the limits of biased and simplistic channels of information digestion. Or, at least, this is my interpretation of his argument.

Consider his assessment in light of recent political trends in which far-right populism has been gaining traction throughout the world. Brasil offers the latest example. But we can observe these trends also in North America, in parts of Europe, and elsewhere. In Brasil in particular, it is one more example in what some experts are describing as the objective trend that is the unravelling of liberal democracy. In that history also seems to be repeating itself in the form of extreme populisms, from what I’ve studied on these subjects it very much seems there’s a pattern of predictability in macro human behaviour that we ought to take seriously. We might describe it in the form of the deficit of reason or, perhaps, economically or from other vantages; but how I read Holmström is precisely to this point: there is a(re)emerging objective trend in the appeal of extreme political movements, and this trend conveys something important about the deficit of rationality and the biases of information digestion in these contexts.

It would be interesting to think about how we might more accurately quantify such trends, as another way to analyse macro human behaviour.

Putting that to one side, I also want point to another interesting article by Amanda Ripley that applies many of the same ideas as Holmström, but she does so more explicitly in the context of increasingly polarisation and the development of ‘alternative facts’. These are interesting topics to think about when trying to understand the human social world and some of the irrational patterns we observe.