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Your donation supports “Seeing Through Other Eyes” by:
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A Short History of “Seeing Through Other Eyes”
When Leo was in Switzerland in 1940 and hoping to emigrate to the United States, the U.S. Consulate in Zurich required a “certificate of good conduct” from each of the countries he had been in during the previous five years. One of those countries was England, which did not issue such certificates. It seemed like an insoluble problem. Meanwhile, Switzerland had refused to extend Leo’s permis de séjour (residence permit), meaning he was officially required to leave the country – something that could easily prove deadly, given the Nazi terror raging in neighboring countries like Germany, Austria, Italy and France. Knowing that Switzerland was eager to rid itself of its surpopulation étrangère (excess foreign population), Leo went to police headquarters in Geneva, explained his dilemma and suggested that the chief of police write to to Scotland Yard asking if they had anything to his detriment. Scotland Yard replied that they did not, and the U.S. Consulate accepted that in lieu of a certificate of good conduct.
Leo purchased a ticket on an Italian boat sailing from Lisbon to the United States. However, by the time he got to Lisbon, Italy was about to enter the war and all Italian ships had been ordered back to their home ports. His ticket was useless, and the Italian shipping company office in Lisbon refused to refund his money – or more precisely said they would do so when the war was over. He didn’t have money for another ticket. Again, it seemed he was stuck. And again, he used a similar strategy. He went to the harbor police – who were not overly fond of having refugees stranded on their docks – and pointed out that if he couldn’t get his money back he would be there for the duration of the war. He suggested they go to the Italian shipping company and threaten to shut them down if they didn’t refund his money. Portugal was a dictatorship at the time, and the government could do anything it wanted, so the shipping company knew it was a credible threat. They refunded the money, and Leo bought a ticket on a Greek boat. (Greece was neutral at this point, and when they did enter the war it was on the side of the Allies.)
As Leo explained years later, “I somehow found if you sort of think through logically from the point of view of the other person . . . And everybody wanted to get rid of the refugees.”
He could easily have pleaded his pitiful case, but instead he looked at things through someone else’s eyes and proposed something that would give them what they wanted – while also, not coincidentally, giving him what he wanted. This became a hallmark of Leo’s success in life: seeing through other eyes.
The field of economics that Leo founded, mechanism design, incorporates this same principle.
It all started in the 1920’s and 30’s with the “socialist calculation debate,” an academic argument among economists about how (or even whether) a socialist economy could determine the value of goods and services (i.e. perform economic “calculation”). In January 1920, Austrian economist Ludwig von Mises published a famous article, “Economic Calculation in the Socialist Commonwealth,” arguing that state ownership of all the means of production — the basic definition of socialism — made rational decision-making about productive resources impossible. With only one owner, Mises reasoned, there can be no meaningful buying or selling. And because such economic exchange is the means by which value is calculated and resources allocated in complex economic systems, socialism eliminates the only practical means of making rational, economically-based decisions about how to allocate, deploy, decommission, upgrade, or expand the various means of production in a large-scale modern economy.
Others suggested that the state could set up market-like mechanisms for determining value. Polish economist Oskar Lange, most notably, proposed in 1936 what became known as the “Lange Model.”
Friedrich Hayek, at the London School of Economics, countered that gathering all the knowledge dispersed among buyers and sellers and then making the necessary computations to determine value was a practical impossibility. This was Hayek’s “knowledge problem.”
Leo followed this debate with interest. He knew, however, that Mises and Hayek were dedicated proponents of free markets, Lange a committed socialist. And a discussion in which both sides already knew the “right” answer and were just looking for arguments to support it did not strike him as a scientific form of investigation. It was also clear to everyone that markets in the real world were seldom either perfectly free or perfectly socialistic. Market “imperfections” were more the rule than the exception, and many economists were working to find ways to take that into account rather than just sniping at one another from their ivory towers.
Leo accepted the Mises/Hayek idea that knowledge was dispersed and would remain private unless economic agents were willing and able to share it. He accepted Lange’s idea that it might be possible to design systems that motivated such sharing. He took on the challenge of working with systems that might be “imperfect” in any number of ways. Ultimately, he developed an approach – mechanism design – that did not assume any “right” answer, instead elaborating a general mathematical framework for defining desired outcomes and deducing/constructing economic systems that could produce those outcomes.
In other words, he designed a system that encouraged setting aside the familiar “right” answer in favor of producing blueprints for all possible answers that produced the desired results, a system for considering the widest possible range of solutions – for seeing through other eyes.
I recall once, in the late 60s – I was around nineteen or twenty – I got in a discussion with my father. I don’t remember that exact topic. (As you may have heard, if you can clearly recall the 60s, you probably weren’t there.) I suppose I may have been propounding ideas and ideals that would trigger vast, groovy and beautiful social and psychological changes and usher in a world of peace, love and understanding.
My father was somewhat skeptical. After a certain time, probably to extricate himself from a discussion that held little hope of resolution, he said, “Well, perhaps a few years from now, we’ll be on opposite sides of this argument.”
What he was suggesting was that, even though he didn’t actually agree with me, he could imagine himself doing so. Even though he didn’t agree with my point of view, he could see my point of view – see through my eyes. And he was inviting me to imagine seeing through his eyes, even if only in some distant and speculative future.
I believe that this tendency of my father’s, which might be termed “radical open-mindedness,” has something to do with the creativity that led to his Nobel Prize. And I wonder, if each of us brought a little more of this “seeing through other eyes” into our own daily lives, our relationships, our careers, what beautiful and useful (perhaps even groovy) economic, social and psychological changes we might bring about – maybe even a world of a little more peace, love and understanding …