Cormac McCarthy's Increasing Returns

January 4, 2017 1:49 AM

How To Write Better Harvard Business Review Articles: Have Cormac McCarthy Do Your Editing - "I really enjoyed this anecdote about the writing of W. Brian Arthur's classic article on increasing returns from 1996." (via)

As we are wrapping up the interview, [Arthur] tells me an anecdote about the creation of that Harvard Business Review article. “I don’t know if you know the writer Cormac McCarthy,” he begins, “but I was very good friends with him at the time. I mailed the draft down to Cormac, who was in El Paso or somewhere like that. When I didn’t hear from him, I called him up and said, ‘Did you like my increasing returns article? It’s for the Harvard Business Review.’ There was kind of a silence on the line. And then he said, ‘Would you be interested in some editing help on that?’ ”

Increasing Returns and the New World of Business - "Let's go back to beginnings—to the diminishing-returns view of Alfred Marshall and his contemporaries. Marshall's world of the 1880s and 1890s was one of bulk production: of metal ores, aniline dyes, pig iron, coal, lumber, heavy chemicals, soybeans, coffee—commodities heavy on resources, light on know-how. In that world it was reasonable to suppose, for example, that if a coffee plantation expanded production it would ultimately be driven to use land less suitable for coffee. In other words, it would run into diminishing returns..."

posted by kliuless (7 comments total)

What can I say, that's the propaganda you get when you have a conservative academic getting a conservative author to copy-edit economic "theory" for a conservative audience, one that tends to lack the intellectual toolkit needed to critique the rhetoric and/or evaluate the argument, a perfect system for large-scale groupthink. Cormac McCarthy is a great artist and all but from a research perspective I'd rather argue that he was responsible for making the article which would have been merely bad, a lot worse: a piece of sophistry that was easy for the masses to read and believe.
posted by polymodus at 3:51 AM on January 4, 2017

The article mentions a couple examples where Arthur's mechanism doesn't quite seem to work. Uber and AirBNB, because they involve the real world, may have natural limits to the benefits of network effect. And while Arthur himself points to airlines as a case where deregulation resulted in oligarchy because of increasing returns, oddly, ticket prices themselves remain much cheaper and airlines have struggled to turn a profit in the decades since deregulation. It's also not clear whether a service such as Uber can truly use increasing benefit to lock in a market --- Uber is losing money hand over fist, and is currently subsidising over 40% of passenger ride costs. If it jacks up prices and thereby becomes less attractive, local drivers and cab companies could easily switch to another app.

It seems to me that Arthur may have been on to something when it comes to software. Theory may need revising when it comes to the real world...
posted by Diablevert at 5:04 AM on January 4, 2017

New forms of scarcity appear: such as, people become unwilling to pay for software. You start with guys selling their cars so they can afford Visicalc, and you end up with people not wanting to pay $5 for sophisticated signal processing software that can transcribe Mozart's clarinet concerto.
posted by thelonius at 5:19 AM on January 4, 2017

Oh, Oh! I was there for this! I worked at the Santa Fe Institute in 1996, only a tiny bit with Brian Arthur but it was a small place and now I'm totally going to brag about my brief connection.

And I ran into Cormac McCarthy at SFI a couple of times. He wasn't a regular then, but he'd come for parties and lectures and the like. A friend pointed him out to me one time and in my ignorance I was like "who now? He's a novelist? Huh." I was young and dumb.

For that matter I was dumb about a lot of smart people I rubbed shoulders with. I used to play Go with a Nobel Laureate (and a 3-dan, which was awkward for me). I mocked another Nobel Laureate to my other young friends who worked there because he seemed so old and incomprehensible. I mean, I met Francis Crick, the eminence gris, and he was charming and interesting and had a lot of new ideas to offer.

The Santa Fe Institute in the 1990s was a pretty magical place. Deliberately designed to be, a place where scientists from all fields could come together and let their academic hair down, do some slightly kooky cross-disciplinary research and see what might come of it. It made perfect sense that a Western novelist might hang around punching up an Economics professor's journal article.
posted by Nelson at 7:49 AM on January 4, 2017 [2 favorites]

Cormac McCarthy is a conservative? It would be surprising to me.
posted by Bee'sWing at 9:24 AM on January 4, 2017 [2 favorites]

While "conservatives" might claim him, I can find no evidence of McCarthy ever having identified himself as such.
posted by Token Meme at 11:33 AM on January 4, 2017 [2 favorites]

It is hard to see any way to improve on the clarity of sentences like:

"Increasing returns are the tendency for that which is ahead to get further ahead, for that which loses advantage to lose further advantage."

Well, whatever happened to the "rich get richer and the poor get poorer?"
posted by pwnguin at 8:05 PM on January 8, 2017