You ask whether Nash and Von Neumann contributed political biases to game theory. I don’t think their biases were political. Indeed, I criticize the superficiality of the liberal-conservative continuum (see links below).
No, Von Neumann’s “biases” were just that he was a great mathematician who was interested in abstractions rather than messy reality, and he worked for the US military. Game theory was developed as part of that military’s wargaming projects.
As for Nash, he was a paranoid schizophrenic. As Mirowski explains in Machine Dreams: Economics becomes a Cyborg Science, “Nash appropriated the notion of a strategy as an algorithmic program and pushed it to the nth degree. In the grips of paranoia, the only way to elude the control of others is unwavering eternal vigilance and hyperactive simulation of the thought processes of the Other.”
More broadly, “This mortal fear of abject capitulation to others is the moral center of gravity of the Nash equilibrium, and its implacable commitment to the solitary self-sufficiency of the ego is the marginal supplement that renders the otherwise quite confused and contradictory textbook justifications of the Nash equilibria comprehensible. It is also the key to linking the Nash equilibrium to the Cold War. The Nash equilibrium stands as the mathematical expression par excellence of the very essence of the closed-world mentality of impervious rationality.”
More from Mirowski: “the computer tends to foster the existence of what Paul Edwards has called ‘the closed world’: as an artifact of the algorithmic imperative, the computer game comes to swallow up the players, incorporating them as cyborgs, just another part of the software…but it was at RAND for the first time in history that the players of formal games on computers were themselves rendered as formal automata, not just out of convenience, but as an integral part of building the theory of social processes that became embodied in the game.”
This came to a head with Kenneth Binmore, “who first managed to crack the consciousness of the orthodox economics profession about the dire consequences of identifying Homo economicus with a full-fledged computer in the context of game theory. Nash’s precept that a rational player should be able to reconstruct totally the thought processes of an opponent finds its ‘natural’ expression in the formalism of a universal Turing machine accessing the Godel number of its opponent and then simulating its entire process of strategic reasoning.”
But that proved a dead end because of the halting problem, so Binmore turned to evolution and to the idea of memes, offloading to natural selection the complexities of rationality. “Binmore proposed that the inaccessible master program would arise out of the meme soup as a process of self-organization.”
So game theory isn’t scientistic as much as it’s robophilic. For the math to work, the models have to reduce the game-players to machines. That makes for flexible and rigorous applications, but it also makes the models oversimplified and vulnerable to the main economic bias, which is to protect capitalism. The presumption that people are hyperrational agents sits nicely with the free-market ideology, since there would be no need for a central planner if everyone were hyperrational or if our minds consisted of meme swarms making use of the power of natural selection to arrive spontaneously at Nash equilibria. In that case, the invisible hand would suffice.
By contrast, if you assume most people are irrational most of the time, as cognitive science shows is actually the case and as is assumed in the conservative versions of the original sin doctrine, for example, you start to think more along Hobbesian lines, that we need a central authority to whip us into shape when we get out of line. (Of course, the conservative’s solution is grossly suboptimal, especially from the narrower view of rationality.) That was the point of the Federal Reserve System, to preempt socialist responses to the boom-and-bust cycle of free-market capitalism.
I asked if you could use game theory to support socialism against capitalism, and you gave a strange answer. You said, ‘all societies are “socialist” in that the use of private property occurs entirely at the sufferance of the electorate.’ And you added that, “Game theory is fine with all of that.”
So game theory is fine with the fantasy in which democracy works perfectly to empower the electorate to deal, for example, with powerful private interests. Perhaps there was some miscommunication. I was asking if game theory naturally favours socialism over capitalism in the real world, not in a fantasy such as the one about how democracy empowers the electorate even in a capitalist economy that enriches and empowers a minority at everyone else’s expense. Can we apply the tools of game theory to justify a socialist revolution against dysfunctional capitalism, given that democracy is likely to be tainted by the derangements of capitalism? That was the thrust of my question.
Then you said—revealingly I think—that if the government kowtows to the one-percenters instead of serving the general populace, “the government is not a democratic exercise in self-government. A rational populace with access to good information would throw the bastards out. If you want to say that our government doesn’t work as a government, that’s a wholly different conversation than one about whether a well-constituted government is an economic actor in a free market.”
Are you saying game theory assumes governments work perfectly? Evidently capitalism doesn’t work perfectly either, given the theory of self-regulation by the invisible hand, so does that mean game theory is inapplicable to real-world economies, just as it would be inapplicable to real-world, typically-dysfunctional governments? Do you mean to concede that game-theoretic models apply only to abstract fantasies, due to the oversimplifications necessitated by the mathematical tools, so that we have to read the tea leaves to make predictions about how the models would apply to real-world systems?
Assuming you’re not conceding that, I’d still like to know how game theory would advise a dysfunctional government in which the incentives are as I specified (the politicians depend on the one-percenters to get elected and can easily mislead the voters to distract from the political system’s dysfunctions), to reform capitalism in a socialist direction? Of course, if there’s no such revolutionary potential in game theory, this would support my claim that those tools favour the capitalist status quo.
Coming close to addressing this, you say, “Game theory favors whatever the universe is serving up as a plus-sum opportunity based on whatever the political system determines to be the pay-offs. If you don’t like the determinations, work to change the pay-offs. Game theory is inherently dynamic because pay-offs change with technology.”
Right, so for what I regard as straightforward evolutionary reasons, the universe tends to serve up dominance hierarchies in which a powerful minority rules over a less aggressive majority. Democracy is supposed to challenge that natural default, but is evidently based on some secular humanistic myths, so democracies end up degenerating into more natural systems, as the ancient Greeks suspected. Capitalism defers to natural power dynamics, and orthodox economics defers to capitalism while the relevant part of game theory is part of mathematical economics.
In short, I don’t see game theory as having any revolutionary potential. It’s as I said: game theory assumes only instrumental, amoral rationality, which means game theory can take no stand on what counts as a healthy political or economic system. Game theory only works with the systems as they are, even if their faults are obvious to nonrobotic (or non-centrist) thinkers. Sure, in a utopia in which sustainable socialism is realized, game theory could be used to show how to reason strategically in such a system. But game theory may say nothing about how to get from the real world to such an unnatural result. In practice, then, game theory is beholden to capitalism and to dominance hierarchies, because nature’s beholden to them.
So we may agree on the dysfunctions of these systems, but you seem to think game theory can work with a non-cultish version of economics, one that doesn’t cheerlead for a deranged version of capitalism that may presently be leading us all to ruin (via the infantilization of the masses and the destruction of the biosphere). I suspect any such mathematical tools would have to be supplemented with evaluative assumptions that wouldn’t pass for objective and thus that would conflict with neoclassical economics (given the latter’s scientific pretensions).
For example, you’d have to presuppose some idea of what counts as a healthy democracy. A conservative can say democracy works best when it’s only a cover for a moneyed aristocracy, like in Russia. That’s evidently the Republican view, so what would game theory have to be to come between Democratic and Republican ideals for democracy and capitalism? Best to stay neutral, to assume only instrumental rationality and to provide mathematical tools for “scientific” economics. That reminds me of how by going professional and by being outmaneuvered by the likes of the pseudoscientific happiness industry, professional philosophy, too, has abdicated its original responsibility of showing folks how to live well.