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Economics is not a stand-alone science, as disciples of the Enlightenment claim, but a branch of philosophy. In short, economics is one of the liberal arts…

economics joseph pearce

My recent essay seeking an adequate definition of capitalism prompted an intriguing comment from a usually eloquent interlocutor, who wondered how those who “have no economic training… think that their opinions on something as highly complex as economics amounts to anything worthwhile.” My suspicion that this was an ad hominem suggestion that my views on the topic of capitalism were worthless were confirmed by my interlocutor’s next sentence. “It amazes me,” he wrote, “how liberal arts scholars think they understand economics.” In other words, my views on economics in general and capitalism in particular are not worthy of any serious consideration because I do not have a Ph.D. in economics.

I couldn’t help feeling a sense of wry amusement at this approach to something that affects all of us. Do we all shut up and leave it to the “experts” in some sort of quasi-mystical trust in the gnostic nature of something that is too complex for us to understand? Such a suggestion is curious considering that these “experts” invariably fail to see any of the seismic shifts in the economy and are as shocked as the rest of us, and more shocked than some of us, when their “expert” predictions prove to be fallacious. Do we need reminding that the “experts” predicted disaster were the United Kingdom to fail to ditch the pound in favour of the euro? Have we forgotten that the “experts” predicted an economic apocalypse in the wake of Brexit? Quite frankly, if meteorologists had the same success rate in predicting the weather as economists have in predicting future shifts in the economy they would all be fired!

Another source of wry amusement was the fact that Adam Smith, whom I imagine my interlocutor reveres, was not an economist but “a liberal arts scholar.” Like me, the venerable Mr. Smith does not have a Ph.D. in economics. His training was in moral philosophy.

I have no idea whether my interlocutor has a Ph.D. in economics. Perhaps he doesn’t and is happy to leave it to the “experts.” Perhaps he is a disciple of the aforementioned Mr. Smith, in which case he is presumably happy to concede that at least some “liberal arts scholars” can pontificate on “something as highly complex as economics.” For my part, I am not a disciple of Adam Smith but of E.F. Schumacher, who, unlike Smith, does actually have a formal academic training in economics, at Boon in Germany, at New College, Oxford, and at Columbia University in New York City. He later held a position as an economist at Oxford University before becoming Chief Economic Adviser to the U.K.’s National Coal Board and an economic consultant to Third World governments. My book Small is Still Beautiful was merely an updated reiteration of Schumacher’s international bestseller, Small is Beautiful. I make no claim to originality. On the contrary, as a disciple of E.F. Schumacher, I am merely standing on his venerable shoulders, seeing things from the heights of perception that he has attained. They are not my ideas but his.

I am not claiming that my ideas about economics are better than those of disciples of Adam Smith because my mentor is an “expert” who is a real economist, whereas their mentor is only “a liberal arts scholar.” Such an argument would be silly because, as Schumacher insisted, all economics is a derivative of the philosophy which informs it. In his essay “Buddhist economics,” published in 1966 and later incorporated as a chapter in Small is Beautiful, Schumacher showed how economic thought is predicated by the anthropology that informs it. It is the underlying philosophy that shapes the economics. This means, in effect, that economics is not a stand-alone science, as disciples of the Enlightenment claim, but a branch of philosophy. In short, economics is one of the liberal arts.

Schumacher was so impressed by Catholic social teaching, as elucidated in the papal encyclicals of Leo XIII, Pius XI and Paul VI, that he proclaimed that the popes in their proverbial “ivory tower” understood more about economics than any of the so-called economic “experts” who were Schumacher’s peers. Surprised by the wisdom of Catholic social teaching, which is rooted in an insistence that the problems associated with modern economics are a consequence of the false anthropology arising from the so-called Enlightenment, Schumacher was received into the Catholic Church.

Returning to our original question, I would say that we can understand economics and capitalism best by standing on the shoulders of giants and seeing from the heights that they’ve attained. I am sitting on the shoulders of E.F. Schumacher, who is sitting on the shoulders of the popes, who are standing on the rock that Christ established. Who am I and what right do I have to pontificate on capitalism and economics? I am merely a pygmy standing on a mountain top. It’s a great place to be and I invite my interlocutor to join me. The view is simply splendid!

Books by Joseph Pearce may be found in The Imaginative Conservative Bookstore.

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8 replies to this post
  1. Ha! That was me that made those comments on your previous article. Peace Mr. Pearce, I have the utmost respect for you, and I did not think that was an ad hominen attack. It was a statement of fact. That criticism about liberal arts scholars thinking they understand economics was more directed at Chesterton, who by the way I also revere but also again not for his economic knowledge. And up front I do not have any degree in economics but I have taken about four (I can’t remember exactly how many) college classes, enough to realize that economics is not intuitive but a complex interaction of many factors. It is closer to applied physics than philosophy, and here I’ll tell you that my occupation and degree is in mechanical engineering, and I’ve been a mechanical engineer for over 31 years. I have an English literature degree as well, so I oddly span both applied science and Liberal Arts.

    Economics requires the attempt to empirically model all the factors that go into the economy. There are equations of concerning economic processes (production, consumption, investments, capital in its many forms, etc.), equations concerning efficiencies, expenditures, revenue, competition, and whatever else is not coming to mind at the moment. For a layman to understand what happens to all the factors within the economy when one pontificates that we should do this or that is not exactly all worthwhile. It’s certainly not intuitive that a layman can just philosophize upon it. It’s like this in engineering. A person can “philosophize” that one needs a cooling system for an engine. OK, so? Could that person figure out the amount of coolant and the flow capacity required and the pump design given how much heat is dissipated from air cooling and the temperature field of the parts and the heat absorption rates and heat capacities, all given limitations of power, size, and space available? Let’s leave that as a rhetorical question.

    I know they call economics “the dismal science,” and I do agree it’s not quite a science, but it’s definitely not a liberal arts either. It’s not a science because human beings are somewhat unpredictable, and that creates unknowns. In applied physics we also have lots of unknowns that have to be managed, mostly due to unknown unknowns or inability to measure inputs to the level one needs. So both applied physics and economics both use empirical equations based on observation over time to approximate outcomes, and it’s quite remarkable how predictable people are statistically when one looks at them in mass. Now unknown unknowns pop in every so often, and that makes economists rather humble. If economists get humbled, why would I not be humbled looking in from the outside?

    Do I revere Adam Smith? Yes, I do. Adam Smith came to his The Wealth of Nations inquiry through observation and a sort of proto-modeling of those observations. He was a philosopher but he didn’t just pontificate from reading liberal arts works. He made the first attempts to capture phenomena in a sort of mathematical-esk way. That is a significant distinction between him and Karl Marx. And don’t forget Smith’s inquiry was published in 1776, way before the full understanding of economics developed. That became the initial step toward a fuller understanding. Could Adam Smith if he were alive today predict the efficiency to the economy of raising import taxes at the border? I’m sure if he had enough economics training and experience he could do no worse than those practicing today. But it’s like Newton coming up with F=ma, and thinking that if he were alive today Isaac Newton could design that engine. He could with training and experience, and probably learn faster than most, but it still takes more than what he knew in 1687.

    No I don’t care if you express an opinion on what appears to be “gnostic.” It’s not gnostic, it’s complex. It requires a lot more than a Liberal Arts degree. The thing is that economics is thrown into the political dialogue, and everyone has a political opinion. Economics becomes another issue to express an opinion on, and they express it without knowing the ramifications and unintended consequences. Politicians feed into this, of course. And you can see that once they get into office they rarely implement whole scale economic changes that they campaigned on. What they implement, and this goes for those on the right and the left, is just enough to satisfy whatever promise they made but short of radical change. Ronald Reagan did make that huge tax cut at the beginning of his presidency but what people don’t realize is that there were tax increases after that, even under his own presidency, and then afterwards as well from subsequent presidents, and we’ve been suffering with a deficit ever since. I think it was your old country, Britain, which made a radical shift to a socialist economy in 1950’s or was it 60’s? But that radical shift was a disaster, of which they regretted. Philosophic shifts in economics should be looked on with caution.

    Now that doesn’t mean I desire higher taxes. I too have philosophic leanings. And here’s where I’ll concede to you a little. If one is unconcerned with economic efficiency, then go ahead with philosophic speculations. Just be aware it’s highly unlikely that a layman speculating can find the most economically prosperous course of action. When I hear such speculations I always think of Karl Marx, and what a disaster he brought to western civilization with his musings. What the general public wants from politicians is just a prospering economy, not applied philosophy.

  2. To my mind economics does not require an attempt to empirically model all factors that go into the economy. Most economists are trained to do so, but nothing in the field requires it. The only sub-branch of economics which actually requires it is econometrics. Economics can be purely deductive. Its proofs, like elementary mathematical proofs in Euclidian geometry, can all rely on axioms amd deductions from those axioms without any empirical data whatsoever (in this sense economics and math have more in common as deductive sciences while econometrics and statistics are the inductive sciences that people often confuse with the former). Naturaly I am referring to conomics as principaly understood by Mises. Mises is in one sense a minority or even marginal view in the field. On the other hand Hayek was his student and won a Nobel prize. My point however is that one need not have amy training in empirical modeling of economic data in order to understand the basic principles of economics. I am not trying to downplay the importance of empirical modeling which firms rely upon daily, I am simply trying to distinguish between a mathematician and an accountant (speaking symbolically).

    As an aside, I happen to now be reading Freud on economics and report that he too, as a well rounded man, had interesting things to say on the subject. Interdisciplinary studies are a fine thing and of course those of us with a particular specialization ought to be careful when going outside of our field – but we should go and explore.

    Asimov is a great example too: He was a biochemist by education and then taught himself physics. Our formal education is always only the beginning which gives us the tools to explore other realms.

  3. Dear Manny,

    Having read this article and your comment I feel the need to interject in order to dispute a few things, I hope you shall allow me this boldness.

    It seems to me that you are making four major points, firstly that economics can be equated to applied physics, secondly that good economics can be equated to correct empirical modelling, thirdly that it is a field requiring more vigour than the liberal arts, and finally that those within liberal arts are wrong to discus or critique economics in any detail as it is outside their field and is perhaps in some way above them.

    Now as to your first point I do not disagree so much as I believe it is rather minimal definition and perhaps even the wrong factor to emphasis. Whilst economics as a ‘Science’ is a matter of understanding economic process, working with empirical evidence and theorising as to how the economy is working and what effects might follow certain decisions this does not account for Science as a field of the Humanities. What I mean by this is science works within certain perimeters to theorise upon empirical evidence so as to get a better understanding of how things work but it does not tell us how things should work. It can say that x should have a certain effect on the economy or even theorise as to the results of structuring the economy in a certain way but we cannot through this method devise how the economy should be best structured. For example should the economy be structured around large corporations in order to increase productivity and wealth, or should it be structured to ensure, as best as possible, the growth of local communities and small businesses. Additionally, much work has been done which demonstrates that many supposed principles of neo-liberal economics are far from empirical or sound, for example the complete misunderstanding of pricing in the market which it equates almost exclusivity to supply and demand whilst ignoring real world empirical evidence as to how businesses price goods.

    Economics needs both firm rational and empirical foundations yet most modern schools of economics ignore much real world empirical data being unable to account for it in their modelling, instead relying on economic laws and theories to understand microeconomic factors. Yet they propose to give sound economic advise by virtue of their knowledge of microeconomics. You state, “There are equations of concerning economic processes (production, consumption, investments, capital in its many forms, etc.), equations concerning efficiencies, expenditures, revenue, competition, and whatever else is not coming to mind at the moment”. You are correct on this but the truth is that many of this factors are not (indeed cannot be) accurately modelled especially when subject to the supposed laws of neo-liberal economics which when observed in the market are more often the exception than the rule. I do not wish for this to turn into a debate primary on economic theory so shall stop here. What I have written is in order that I might point out both the weakness of economic modelling and the fallacy of claiming that those whose principle field is within the liberal arts should refrain from commenting on economics when the majority of economists are themselves limited in their knowledge of the economy; often working from taught economic theory rather than on what they can observe and reason.

    Concerning the field of economics as requiring “a lot more than a Liberal Arts degree” indeed it does because a liberal arts degree does not provide the specialisation that is required to understand economics. However, this is not to say that economics is some how a more complex field which requires greater vigour. The scientific method is taught and used to far more effect by historians than by economists, the skills taught and the reasoning imbibed by taking a Classics degree far outweigh those of the best economics degree both in academic vigour and because of the very specialisation of an economics degree limits the overall understanding of a student. To put it another way an economic student encountering the Classics for the first time has little clue as to how to proceed whereas a Classics student has both already encountered economics and has transferable skills which can serve as a basis whilst learning economic theory. This does not mean that someone with a liberal arts degree should think to discus the science of economics without first acquainting himself thoroughly with the subject, but should he first do so then what is found lacking in terms of specialisation may-well be more than off-set by a more rounded, less biased, and wider reaching analysis supplied by his own formative education.

    In continuing my answer to your final point I should like to bring this back to a point I made at the beginning which is that economics is properly understood both a science and a field of humanities. Whilst economists are best qualified to understand the science of economics (or at least should be) they are not best qualified to understand economics as a field of the humanities. It it is within this area of economics that those within the liberal arts are better placed to discus economics and to formulate economic theory. To use an analogy those within the liberal arts are like an architectural designer who in designing a house both understands the practical needs of a family and the desired aesthetics, and has knowledge of the context of the site and appropriate building materials. On the other hand those within economics are like an architectural engineer who understands the mathematics and structural factors, such the load baring capacity of the materials, of building. Now in fact we need both of these specialisations when building a house which is why it is far more common to hire an architect as one trained in both. This is , I think, one of Mr. Pearces’s primary points namely that in the modern world economics has been so split that we know longer have the economical equivalent of architects or even the means to provide them.

    P.S. There is also much I agree with in your post in especially in terms of economics being ‘thrown into the political dialogue, and everyone has a political opinion’ but I have sought only to highlight points of disagreement here for the sake of an (failed) attempt at brevity.

    Daniel,

    • Daniel

      Thanks for the reply. I’m probably going to respond in a couple of posts. So this is the first. Let me quote your summary of my points and I’ll respond to those points immediately so as to be clear on my positions:
      “It seems to me that you are making four major points, firstly that economics can be equated to applied physics, secondly that good economics can be equated to correct empirical modelling, thirdly that it is a field requiring more vigour than the liberal arts, and finally that those within liberal arts are wrong to discus or critique economics in any detail as it is outside their field and is perhaps in some way above them.”

      First Point: Yes.

      Second Point: Yes.

      Third Point: No, I am not against free speech. Of course anyone can comment on economics. I think I phrased it as such: why would anyone with “no economic training… think that their opinions on something as highly complex as economics amounts to anything worthwhile.” Perhaps a better phrasing would be: “Why would a reader value the opinions of a Liberal Arts scholar on something outside their field of expertise, such as economics which is extremely complex and specialized?” As you can see, I’ve offered my own opinions on economics too. The reader is perfectly free to think they are worthless.

      Fourth Point: No, I don’t think I said it was wrong. Because Chesterton may be a genius in his field, I see no reason to value his economic acumen. There are books and books on economics, there are magazines and journals, peer approved, all written by economists. Would Chesterton’s ideas on economics be peer approved? If not, then why are his economic ideas any more valuable than my neighbor’s next door? Because Chesterton writes well?

      I don’t have time at the moment to address points inside the body of your comment. I’ll get back to it shortly.

    • Daniel, let me return. I’ll quote you and reply.
      “It can say that x should have a certain effect on the economy or even theorise as to the results of structuring the economy in a certain way but we cannot through this method devise how the economy should be best structured.”

      I guess it depends what one means by structured. I look across the first world nations and they seem to me to be roughly structured the same. They all have a level of government managed sectors with a mostly free market. Some a little more of one then the other, some a little less, depending on the local values. They all have a combination of large and small businesses, some a little more of one, some a little less. Why do they all have a similar structure? It’s either a lack of imagination or more likely that over time economic policy drives a nation toward what is optimum. That’s my opinion, and maybe that’s the distinction between those that disagree with me.

      “Economics needs both firm rational and empirical foundations yet most modern schools of economics ignore much real world empirical data being unable to account for it in their modelling, instead relying on economic laws and theories to understand microeconomic factors. Yet they propose to give sound economic advise by virtue of their knowledge of microeconomics.”

      Is that true? To my perception most data in the news deals with macroeconomics. When I hear economics being interviewed they give projections of the economy’s growth and inflation. That’s macro.

      “[T]he truth is that many of this factors are not (indeed cannot be) accurately modelled especially when subject to the supposed laws of neo-liberal economics which when observed … that I might point out both the weakness of economic modelling”

      I don’t know the specifics of how economists model. In engineering when we don’t know an input to a model, we do a number of things to approximate it. We can back out data from other known inputs, use analogies, play with formulas to corroborate data. There are methods, and of course such approximations lead to some error in predicting. From my engineering experience, if we can predict to ten percent of reality, I would consider that acceptable. (Of course it depends on what. You would turn pale if you knew how small a safety factor are in airplane structural strength. Their modeling has to be extremely precise.) I imagine economists do similar. Is it unusual for economic predictions to our nation’s growth to be 2.5% and the reality turns out to be 2.1%? That’s pretty typical. Or an inflation prediction of 1.5% but it comes in at 1.3%? Now economists may not broadcast their dismal prediction failures, but the ones I hear seem to be within a reasonably sound range.

      “[A]nd the fallacy of claiming that those whose principle field is within the liberal arts should refrain from commenting on economics when the majority of economists are themselves limited in their knowledge of the economy; often working from taught economic theory rather than on what they can observe and reason.”
      Feel free to comment. What’s your prediction for next year’s growth and inflation? 😀

      “To put it another way an economic student encountering the Classics for the first time has little clue as to how to proceed whereas a Classics student has both already encountered economics and has transferable skills which can serve as a basis whilst learning economic theory.”

      In no way did I ever say—and if I implied it, I apologize—that a Liberal Arts scholar is any less intelligent than an economist or even an engineer. As I said in my reply to Prof. Pearce, I have an English Lit degree as well as an engineering degree. When I talk to engineers about Liberal Arts subjects, they are amazingly inept, poor writers, and poor thinkers outside their expertise. It’s not that their dumb. It’s a matter of skills and aptitude. Indeed, it’s my Liberal Arts background that has made me stand out where I work. So I encourage Liberal Arts degrees.

      “This is, I think, one of Mr. Pearces’s primary points namely that in the modern world economics has been so split that we know longer have the economical equivalent of architects or even the means to provide them.”

      That goes back to whether a structural change (and by that I mean a radical change) in the economy is worthwhile. I think I know where Mr. Pearce is coming from. I’ve seen him write on distributism, Chesterton’s economic hobbyhorse. Now if you think that first world nation’s economies can be improved with such radical change, then by all means think it, but I don’t see any significant number of economists support it and when I open economic textbooks I find no mention of distributism whatsoever. Now perhaps the economists are benighted but I’m willing to bet there isn’t much there. To think an economy would be better off without corporations doesn’t meet the sanity test. Do you think the public would prefer either being owners of small businesses, where the working hours are longer and the risk of failure higher, or hired hands to a small business owner, where the pay is less and the work is more, to working for a corporation where the hours are less, the pay is higher, the benefits are better? Chesterton came up with distibutism the same way Karl Marx came up with communism. Like I said before, the public wants and votes for a prospering economy, not applied philosophy.

      • Dear Manny,
        Thank you for your replies, I have read them and God willing I shall get back to you as soon as possible.

        Daniel,

      • First allow me to thank you for calcifying your views in your first post I apologies if I misconstrued them in anyway. I’m rather bogged down at the moment so I have very little time to comment as such if you might allow I should like to respond to the issue of structuring the economy and reply to the issue of economic modelling next weekend.

        I don’t disagree with you for the need for a free market, I would certainly not advocate a form of socialism, though I would properly define freedom in a different manner to most in the modern world. I would disagree however that the current economic system is a result simply of being driven toward what is optimum, there have been many differing forms of economic systems throughout history each of which has had advantages and disadvantages. What they have all shared is being largely ‘organic’ and private rather than state run as in socialism, but they have differed from each other. The modern economic system like everything else in life is constructed based on an underline philosophy. My issues with modern economic structure is perhaps best summed up by Chesterton’s assertion that the trouble with Capitalism is that there are too few Capitalists. That being said I would not rely on Chesterton for economic analysis per se, he was not an economist nor that well versed in economics and I look more to the objections given by the ‘heterodox’ schools of the post-Keynesians, Austrians, Institutionalists ect…. than Chesterton in his regard. Likewise a whole sale move to three acres and a cow is as unrealistic as it might be appealing. Nevertheless, many of his objections to many aspects of modern capitalism are still, in my view, valid from a conservative prospective.

        In regards to corporations, the major problem though that I have is the affect they have on the economy whether good or bad, should one corporation fail the intimidate effect on the economy can be catastrophic in the short term. Now I acknowledge that not everyone has the skill or time to work for a small business and I would not advocate an attempt to impose an economic structure which would prevent large businesses. However, small business such as micro start-ups tend to be far more innovative and are generally more conductive to economic growth than larger business. Likewise they are concerned with growth and normal competition rather than running all their competitors into the ground and avoiding taxation. I would not agree that the work is more or the pay necessary less in smaller business, at least not over here in the U.K., in terms of retail it is the larger business such as Tesco where staff are expected to work long hours often at undesirable times of the day and night. Indeed as a whole I would say employment with a small company or employment within a co-operative is generally preferable to working for a larger company. Overall, I would say that governments spend a lot of time focused on national growth and the international economy, but neglect the local economy, unless the later is healthy then the former shall never be. I have some other objections to modern capitalism but I think these should be saved for another debate.

        The point I was making in the analogy of the architect is not that those in the humanities such as Chesterton should decide economic policy, but that there is currently too much of a split between those who better understand humanity and its needs and those who understand economics. There needs to be , in my view, at least more of a dialogue between the two. An architectural engineer can design and build a house and unlike one constructed by an architectural designer without reference to an engineer it shall be constructed well, but it shall be neither truly functional nor in any way beautiful.

        • Daniel, I apologize for taking so long to respond. For some reason I no longer get emails to comments. Let me reply with a quote from your comment with a reply.

          “[T]here have been many differing forms of economic systems throughout history each of which has had advantages and disadvantages. What they have all shared is being largely ‘organic’ and private rather than state run as in socialism, but they have differed from each other. The modern economic system like everything else in life is constructed based on an underline philosophy.”

          I agree with most parts of that statement, but you don’t ultimately spell out what is the underlining philosophy of the modern economy. It’s neither Laissez-faire nor socialist; neither absolutist corporative or small business; a free market, yet regulated in significant ways. I would put to you that ultimately it’s pragmatic, seeking flexibility to strive for efficiency. I would put to you it is optimum because it seeks to balance many competing interests. I would argue also that the modern economy is organic (not constructed) as the other economies of previous eras. The difference now is that we have a better understanding of economic principles and nudge it toward that optimum with government and private policies.

          “In regards to corporations, the major problem though that I have is the affect they have on the economy whether good or bad, should one corporation fail the intimidate effect on the economy can be catastrophic in the short term. Now I acknowledge that not everyone has the skill or time to work for a small business and I would not advocate an attempt to impose an economic structure which would prevent large businesses. However, small business such as micro start-ups tend to be far more innovative and are generally more conductive to economic growth than larger business. Likewise they are concerned with growth and normal competition rather than running all their competitors into the ground and avoiding taxation.”

          I don’t disagree. I am not for an economy filled only with large corporations. In my comment to Alexander Salter’s article (Free Trade, Protectionism, & the Limits of Economic Analysis”) here on TIC, I argued for a balance between free trade and protectionism. The free trade zeitgeist has caused an imbalance in my opinion of white collar jobs over blue, which could lead to a crises if some unknown unknown undermines the stack of cards that is the economy. I see the same with small and large businesses. You need a balance. You want the innovation and growth that come from small businesses but you want the stability and production of large businesses. Ponder this: could a small business produce the number of cars of a General Motors? Yet General Motors started as a small business and absorbed many other small businesses, all with their individual stamps on innovation. Balance and flexibility is what I think makes a sound economy, which is almost a definition of optimum.

          “The point I was making in the analogy of the architect is not that those in the humanities such as Chesterton should decide economic policy, but that there is currently too much of a split between those who better understand humanity and its needs and those who understand economics. There needs to be , in my view, at least more of a dialogue between the two. An architectural engineer can design and build a house and unlike one constructed by an architectural designer without reference to an engineer it shall be constructed well, but it shall be neither truly functional nor in any way beautiful.”

          I don’t disagree, but I don’t know what they would dialogue about. I don’t know if the economy is ever beautiful. : -)

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