By Rumplestatskin, a professional economist with a background in property development, environmental economics research and economic regulation. Follow him on Twitter @rumplestatskin. Cross posted from MacroBusiness
The ignorance of many highly experienced economists to the moral foundations of their work is quite alarming. As a group, economists typically internalise the utilitarian morality embedded in their methodology to such a degree that they are happy to promote economic theory and practice as an objective scientific approach.
To set a more honest course for the discipline I pushed hard during the development of Australian Learning Standards in Economics to include criteria for the teaching of moral foundations, in addition to professional ethics. Indeed, I have argued previously for adopting standards of professional ethics in economics. You know, to cover the usual expected standards of professionalism such as not making comments in public forums without disclosing financial interests.
I couldn’t get the actual words morals and ethics into the new learning standard. But the result was very good I think, with the fifth learning standard being called Reflection, and containing the following.
Bachelor graduates will be able to reflect on the:
- nature and implications of assumptions and value judgments in economic analysis and policy
- interactions between economic thinking and economic events, both historical and contemporary
- responsibilities of economists and their role in society.
You wouldn’t believe it, but one concern was that there may be insufficient expertise within the cohort of university professors to achieve this standard. So in the interests of raising awareness, I want to provide a very brief comment on the moral foundations of economics.
Utilitarianism is the moral foundation of economics. The idea of the greatest good for the greatest number is intuitively appealing. But applying a utilitarian framework relies on value judgments about the desires, and a comparable measure of their intensity, of every individual. Some of the defining debates in economics over the past century have centred around the measurement and comparability of utility between individuals.
Thus any application of economics requiring estimation of costs or benefits is applying a judgment about the worthiness of competing desires of the population at large. That judgment is necessarily a moral one.
Further, most economic analysis applies utilitarianism in an ad hoc manner, by considering only the population within national borders. Unless you are a ‘national utilitarian’ (a distinct moral position), it can never be appropriate to consider domestic policy in terms of the utility of local residents while ignoring effects on the utility of those abroad.
A truly utilitarian analysis must always and everywhere adopt a global perspective, which would make it exceeding difficult to justify any domestic policy in the developed world that didn’t entail a massive redistribution from that country’s wealthiest to the world’s poorest.
Then there’s the moral position that only the utility of humans counts.
Other times economic analysis is more clearly a case of applied morality. In analysis of public health economists usually appeal explicitly to the idea of utils, or some metric of quality-adjusted life years. The adoption of this metric relies on a moral judgement, for it implies that the elderly are less deserving of health resources than the young. But an equally valid moral position is that the elderly are more deserving as a repayment for their lifetime of work contributed to the community. Another moral position is that the young are easily and cheaply replaced, while the wisdom held in those elderly bodies has a high value and is costly to replace.
In more general terms we face the morality problem when measuring progress. Economists prefer GDP because their utilitarian framework implies that more consumption leads to greater utility. Apart from the obvious problem that GDP only includes goods traded in markets, ignores household production and externalities, it also contains a compositional problem.
What I mean is that many of the ‘goods’ that people trade are actually what we would call precautionary spending and increase utility only because they compensate for a loss of utility arising from outside of the market. Home security is one example.
Isn’t it better, morally, to not need to have home security, than for people to feel the need to spend 5% of their income on security, including locks, alarms, surveillance, insurance and so forth?
Other measures of progress have been proposed to overcome these issues. Each of these simply reflects and alternative moral judgment.
Lastly, there are the moral positions surrounding the degree of wealth distribution, the degree of community support to offer the unemployed, the elderly, and so forth that are perennially topical. These are all moral judgements, which are easy enough to see when we get down to the nitty-gritty debate and words such as worthy come out.
There is of course much more to the story of morality in economics than can be covered in this short post. One important thing to remember is that in practice utilitarianism can be, and has been, applied to justify almost every policy position.
What we need to remember is that you can’t escape morality in economics. But understanding the moral foundations of economics is the best way to properly grasp the limits of economic reasoning. It is my hope that the next generation of economists will learn to discuss and criticise the moral foundations of economics, and by doing so see policy debates as far more complex than is typically realised when alternative moral perspectives are ignored.
This: “The adoption of this metric relies on a moral judgement, for it implies that the elderly are less deserving of health resources than the young,” makes me think of the “impeccable logic” used by/attributed to Larry Summers in his infamous memo. I didn’t follow the controversy when it happened, but I’m under the impression that Summers tried to argue that the “logic” was not meant to be serious. Summers wrote, “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”
I suppose when someone says “economic logic” they are making some kind of claim that the “logic” is free from moral judgment.
I thought this comment by Summers, I think in reference to Africa, was shocking. I’ve never heard him make any mention of our obligation to repair environmental destruction. He doesn’t look at things from the ground up; he looks at things from the tip-top down. Summers first assumption is that there must be a good profit for private investors and the poison that ensues from their lucky gain is almost irrelevant. I do not think many other people are as blatantly blind as he is, thank god.
Summers didn’t actually write that paper, but rather a subordinate. Summers just past it along. However, we already are dumping our toxic wastes, in the form of discarded electronics, by exporting them to Africa and Asia. This is actually illegal under international trade law, but that is skirted simply by re-labeling the junk “used goods”. So the “Summers” paper was actually prescient!
The logic for Summers is that of the corporate ghoul – business is responsible to shareholders, not society.
U London professor emeritus John Weeks said it very clearly when discussing his new book on TRRN the other day, “The Economics of the 1%: Deficit Disorders and Debt Delirium,” and the “triumph of nonsense over good sense.”
“The basic [neo-liberal economic] ideology [is] that everybody is a consumer, and that you derive your pleasure in life from consuming, which if you reflect on it, is a pretty sick idea. People who actually behave that way are rather unhappy people.”
Thanks for the links and especially the “triumph of nonsense over good sense” phrase. I continually fault economists for externalizing so much from their models that most are of the nonsense type.
Strangely, I encounter people who don’t want to live that way and feel guilty for not being more shallow. The problem is that to live a meaningful life you have to, largely, swim against the current of contemporary values. The dominant ideology in our society, at least in the U.S., is that we live to fulfill our fantasies and desires (or at least those approved of by the oligarchs) if we do then we are “winners” if we don’t then we are “losers.” Mind you, it is not that most people live that way since the notion is highly toxic to the human soul but that most Americans at least tend to feel that they ought to live that way even those who claim to have religion and spirituality at the center of their concerns.
I remember many years back reading Vaclav Havel’s letters to his wife from prison. One of the things he emphasized time and again was that politics had to be an exercise in moral behavior. He saw his society as being dominated by, if I can get this right, a cybernetics of control, and thought this mechanistic and inhuman, as the word cybernetic implies.
Consciously or unconsciously (although in practice it makes no difference) economics has become just such a cybernetics of control, a system not to support other human activities like raising a family, being a friend, acting out your citizenship, or contributing to your community, but to administer carrots and sticks. I have no idea if this simple truth can be conveyed to the Ph.D. brigade. We’ll learn a great deal by their reaction as it is pointed out to them.
Mind you, it is not that most people live that way since the notion is highly toxic to the human soul but that most Americans at least tend to feel that they ought to live that way even those who claim to have religion and spirituality at the center of their concerns.
To the extent that American Christianity has retained its vitality it is largely due to adapting itself to the consumerist ideology that permeats American society. On Sundays megachurches throughout exurban America ring with pastors telling their firmly middle class flock that Jesus wants them to rich and successful and that it is a sign of divine providence to want the good things in life. That mushy social gospel stuff about helping the poor and the meek – well, that’s just not what fills the pews anymore.
I think the mega-church Christianity you speak of is not so much about materialism but about providing some kind of order and community in chaotic lives. I have attended the local mega-church here and have found their work and insights to be very helpful–sort of like something you’d get on Oprah. As long as you believe in Jesus and the Word of God (the Bible) as being inerrant or literally true (the world was created 6k years ago etc.). Broken people have a place to focus and connect with others–that’s the value of the local church. Plus, the music is very professional and dress is casual.
I do not mean to deny that Christianity (and other religions) can be a positive and constructive force in peoples’ lives – quite the opposite.
But the Christianity preached in the churches favored by a large segment of the American middle class often has only a very tenuous relationship to the teachings of Christ in the gospels and is far more reflective of the values and preoccupations of the congregants.
“As long as you believe in Jesus and the Word of God (the Bible) as being inerrant or literally true (the world was created 6k years ago etc.”
However, actually doing so, actually taking the entire Bible as authoritative testimony that should inform and shape policy lies right at the heart of the US/West’s psychosis so deadly for so many for so long.
Then how do you explain the popularity of the new Pope (with both catholics and non-catholics)? It’s his economic/social justice message that is appealing to people. But then perhaps catholicism is not at heart “American Christianity” and more importantly when he talks about economic issues he is not really speaking from one specific religion’s doctrinal views.
Easily: most Christians are not firmly middle class Americans attending exurban megachurches.
Wow, Banger, that strikes me as really despondent. Take a break and go for a hike in the woods or read a book to a kid :)
Our country is not plagued by a populace that agrees with the kleptocrats; that would be a much more difficult proposition to change. The median wage in the US is $28K. Only 20% of workers make more than $60K.
We’re really talking about a small minority of people chasing materialism or consumerism or whatever we want to call it. Most people just want their work to be valued, to mean something, and to be able to support their family and take vacations and do a hobby and so forth.
Alas, too many of the 80% who earn less than $60K identify w. the plutocrats so much that they vote against their own economic interests. They don’t want taxes raised on the rich because they dream that they’ll be rich one day.
Who was it that said that most americans view themselves as “temporarily embarassed millionaires’?
Oh I found it. Its a john steinbeck quote: “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
IMO, it would be more accurate to say ‘the middle class’ rather than poor.
The ACTUAL poor realize theyre never going to have wealth, but theyre too busy begging for food and looking for a place to sleep to organize politically, and who can blame them?
“The dominant ideology in our society, at least in the U.S., is that we live to fulfill our fantasies and desires (or at least those approved of by the oligarchs) if we do then we are “winners?”
Banger, you have to spend less time In Washington!
I got out of Washington in 2011 but it has infected me I now live in North Carolina and only know relatively few people with graduate degrees or even college degrees and am happier for it. Still, on the whole, the culture as expressed by the media and most movies tends to encourage selfish behavior though in many ways I think people are moving away from that–but our cultural institutions do everything they can to encourage that ideology. People who lack a moral center do automatically adopt selfish and materialistic goals despite protests to the contrary. Social science has shown us that people unconsciously defer to authority.
l left NY 22 years ago because living there made no sense. I tried the City (25 yrs) and the suburbs (3 yrs) and don’t know which was actually worse, although of course the City was more ‘interesting’ because the people were more diverse. Eventually, I too settled in North Carolina, which I live because the population is spread out and people are civil to one another. Nobody cares how much money anyone else has. Most value their physical independence. Among my closest friends is a lady of sixty who is land poor in the ultimate sense. She barely earns enough pulling rich people’s weeds to pay the taxes on her house, which has no indoor plumbing. She has no education, but I give her difficult books which my educated friends refuse to read and she reads them and makes intelligent comments. I think the biggest problem with places like NY and Washington is the concentration of population, which makes everyone feel to some extent under assault. Even NY’s ultra rich, moving from luxury coop to luxury limousine, are conscious mostly of the dog shit under the soles of their $2,000 shoes.
“which I live” should read “which I like”. Sorry.
I don’t agree with the concentration of population thing. I’ve lived in big cities in other parts of the world and found them more convivial than cities in the USA. I think the problem with American urban areas is the striving, the phoniness, the ambition, the bitterness and the stress. I live in a small city and I like it even though it’s got a big area of strip malls that I avoid.
People who lack a moral center do automatically adopt selfish and materialistic goals despite protests to the contrary.
It’s been my experience that people who lack a moral center **thrive** on neoliberal economic ideology because it gives them the rationale they need to behave as they do.
A ‘normal’ person has pangs of conscience and refrains from doing things that damage the larger community upon which their own well-being depends. But not everyone has a conscience.
Economic principles need to consider that factor in a globalized, impersonal, era of mass communication where a lot of economic activity is transacted among strangers. Socially destructive people can now impact millions of lives in a very short period of time. Economics has failed to deal with this reality, and given the fact that externalities like climate change, ocean acidification, etc, are now looming in our future, we need economic models that enable even ’emotionally numb’ people to make more socially responsible economic decisions.
As the sociopaths are unlikely to go quietly, and as it would be unethical to build some sort of genetic or molecular ‘sniffer’ that would seek out and ‘liquidate’ the ‘paths, the only option is to abandon them. That said, decent people with ability exist in large enough numbers and work in enough vital areas throughout the economy that a new form of national strike could yield the sort of asymmetric outcome until now the preserve of the much smaller power elite – how does 25 million educated, skilled people calling in sick for a month sit with people who’ve never operated much more than their mouths?
The point is surely that many people, including most economists, don’t reflect on it. The fact that people largely derive their identity and sense of personal fulfilment from their patterns of consumption is uncritically accepted as “a given”. This indeed is the bedrock that underlies the values of most of the white collar professional middle class.
I’m sympathetic to the OP’s agenda but I think that under the prevailing circumstances it can only make limited headway. As an academic discipline the way economics is conventionally taught not only doesn’t appeal but is actively hostile to the kind of people who are likely to challenge received orthodoxies or seek to incorporate perspectives beyond the narrowly technical.
Small wonder that groupthink is such a dominant characteristic of the discipline’s mainstream.
“The point is surely that many people, including most economists, don’t reflect on it. ”
Indeed consumption is the bedrock that underlies the values of the middle class and it is also one of the circuses for the lower classes (cheap stuff at Walmart, gadgetry, etc) that serves- very effectively- to distract from the redistribution-upward policies of our corporate-controlled government.
Barbara Ehrenreich pointed out years ago in her book “Fear of Falling” that the defining trait of the traditional middle class was autonomy. The doctor, the lawyer, the professor, and the independent merchant all valued the lack of control and direction of their activities. Consumption patterns were a later add-on of 1950s cultural indoctrination. And a relative advantage in consuming quality goods became a sad compensation for collapsing autonomy as the world became corporatized and bureaucratized. This is why when push comes to shove much of the middle class is both nostalgic for autonomy which has morphed into a concern for individual rights and economically in thrall to the corporations and financial and real estate sectors where their bread is buttered. Thus in part the rise of the socially liberal, fiscally conservative “New Democrats” of the past 40 years.
What happened to those quality goods, by the way? I suppose if you don’t mind spending $80,000 on a car every four years…..
Why isn’t Herrnstein’s Matching Law used more? It is empirical, it operates across species, and it has log versions that account for bias and sensitivity. Different incentive structures have been tested and are well understood.
The simple version is R1/R2 = r1/r2, that the ratio of reinforcement translates to the rate of behavior. If lever_1 gives twice as many food pellets as lever_2, the critter will push lever_1 twice as often as lever_2. This is notably not an optimal strategy, but one selected for across multiple species.
It has been studied with different reinforcers for comparison. And rats with the lever hardwired to their pleasure centers have kept pressing the lever as they starved to death.
Seems applicable, that’s all I’m sayin’.
I think you misses the “moral” part of the argument. All you are saying is that we could be manipulated more efficiently than we are. Although perhaps true, I don’t think the author, or many of us reading him or her, believe that is the point of this exercise in reading and thinking.
Good points in this article. Of course morality is inherent in economics or anything else and morality has to be founded on some definition of the good which goes down to what we call metaphysics. We cannot just roll along ignoring on our assumptions, as we have for decades. For me economics is a kind of peripheral matter but for the oligarchs who determine public discourse “it’s the economy, stupid” sort of mentality that dominates everything.
Social science has shown us that, beyond a certain threshold, money incentives don’t work very well but, rather, after a person’s basic needs are met, meaning and the freedom to be creative becomes important. For some reason, this information is carefully kept under lock and key and by all spokesmen/women (who seem to be stunningly illiterate) in the bureaucracy of the propaganda organs or at least their bosses. The focus on “the economy” is a political tool and has absolutely no foundation in any philosophical tradition including utilitarianism.
Modern economic theories are not bad in themselves it is just that they have no purpose other than political control. Consumerism is not bad in itself if and only if society is not dominated by oligarchs that care nothing for society itself and use that ideology to control the population. Consumerism has brought us “access to tools” as the Whole Earth Catalog has shown, i.e., that if you have a purpose to your life finding the right tool for the right job is a great benefit. But, instead, we have a system where there is virtually no purpose to life other than asserting status and fulfilling whims, fetishes, addictions, and desires–again nothing terribly wrong with any of that unless it becomes the only point of life. Once we discover that we are beings who thrive when we have meaning in our lives (as Victor Frankl showed) we will understand that life can be a much richer and more pleasurable endeavor than most of us can imagine.
“Consumerism is not bad in itself”
well, not necessarily true…consumerism has HUGE effects on the environment, for starters…
Agree. It’s what kind of consumerism. Like the question of growth and high employment and general prosperity – What kind of growth? Our capitalist economy has reached its rational quantitative limits but it has a long way to go qualitatively. And I think this is a big problem because when we start talking quality it dawns on us all that the whole reason for being of capitalism will have to have radical surgery. Profits and “free markets” will no longer run the show because we need science and dedication, cooperation, equity for all, etc. So just thinkin’ about an economy as applied morality v. an economy as applied politics – I think it begs the question because ideally morality and politics should not conflict. We just happen to have very corrupt and irrational politics right now.
I was about to say that its a perfectly rational politics for the elite.
But now that I think about it, its really only rational from a short term perspective… From a long term perspective its thoroughly irrational.
The Easter Islanders using their trees to set up enormous stone monuments may have made sense short term, but long term, the destruction of their trees destroyed their civilization.
But im curious… When has a large community ever used a ‘rational politics’ for any extended length of time? Im not sure its possible.
From their perspective, one possible solution to this is to run the consumer economy for as long as it is useful and advantageous to them, then revert back to something simpler and more easily guaranteed, like hereditary dynasties or divine right flowing from a monarch (see also Anacyclosis — where we are in the cycle is debatable, but IMO we seem to be closer to having a monarch/despot than not). If the economy just doesn’t boot up one fine morning, slavery or (if lucky) serfdom might look like a fine alternative to not eating.
Consumerism as a moral imperative is a bad thing–but as an economic dynamic when people uses the markets to further their larger goals it can be a good thing from my POV. When you define consumerism by consuming for the sake of consumption whether there is a true need there or not–that is toxic. I didn’t make that clear.
Everything old is new again.
THe fact that the current living generations cannot grasp the morality involved in economics,is because that is how they were taught and how how they have lived and that the reinforcement of these “ayn randian”,mindsetsis what the money powers wanted.
Whereas, to go back a hundred years and read Frederic Soddy, and what he was talking about;and see what we have today, is because we didn’t “go that way”.
Soddy wrote about the reality of basing economic decisions on a finite physical environment. How fossil fuels were finite, how the monetary system SHOULD be structured, to benefit the people and that the physical world was the real backdrop that an economic system must live within the confines of.
He may have been a nobel prize winner for his contributions to chemistry, but really his ideas about money, were really more prescient, in my opinion.
How economics has changed over the years, from a moral philosophy, to a discipline to assist the very richest in justifying their wealth
<The 1967 American Economics Association presidential address by Kenneth Boulding was entitled
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the link, to paper in full: http://bit.ly/1gEBUEW
You could take out Economics, and put in ‘Christianity’, and it would still be true. Or any other religion, really.
No matter how good an idea starts off as, its usually corrupted to someones best interests.
Thomas Jefferson couldn’t have known about DNA transcription when he suggested that a new Constitution be drafted by each generation, but he seemingly predicted the slavish adherence to tradition upon which many USians pride themselves, even (and sometimes especially) when they consistently produce harmful outcomes to themselves and others.
But he was right. It’s been said that the waterfall software development model represents a strong commitment to not act upon anything learned during implementation. A more agile, broadly sourced charter, like a more agile development model, helps avoid that potentially fatal mistake.
Very nice article!
As I recall, Aristotle argued that no one should seriously study (or comment on) political economy until they were in their middle age. Looking at the mess created by an academic economics discipline that indoctrinates its students (read disciples) in scientific and philosophical nonsense, Aristotle’s advice looks pretty good today. Only after having real jobs, a family, and perhaps a serious illness or death of someone close, can you really appreciate the very important economic and moral issues that economists so blithely ignore. Too bad we’ve thrown Aristotle away as just a metaphysician.
Um, the kids ain’t the problem in our world.
Well, apparently Ayn Rand has stated that Aristotle was her primary philosophical influence, so maybe you’ll see the resurgence you desire.
Considering that Aristotle made a moral defense of slavery, I dont find that AT ALL surprising.
He was also an advocate of the Golden Mean, i.e., the Middle Way. Something Ayn Rand (and pretty much everyone else lately has) ignored.
Yes. Economics decisions are inherently moral choices. The problem with utilitarianism, as I see it, is that “the greatest good for the greatest number” seems to allow the complete sacrifice of a minority, if overall “utils” are thereby increased. This is immoral; it is immoral because I believe — supposedly, WE believe — that all men are created equal, and have certain inalienable rights. But there can be no equality, no equality of opportunity, where there is gross economic inequality or injustice.
Economics has to cure itself of its physics envy and its obsession with quantifiable utils. It has deluded its into thinking that the answer to all moral questions is “more”. Only then can it see: more is NOT always better, it depends how it is made and distributed; that a living wage is a basic human right, along with life and liberty; and that the possession of great wealth is almost always immoral, because it almost always implies a great lack of compassion and rends the social fabric.
BTW, I agree that this change of thinking should apply on a global level, but practically, it’s probably much easier to start at home, with digging our own democracy out of its deep moral ditch.
Before you get to the economists’ “physics envy” a sensible person must surely be revolted by the moral rot at the core of their utilitarian thinking. Utility maximization through market mechanisms comes down to how much individuals “value” a particular good, service or outcome — and value is exclusively determined by how much they’re willing to pay. But an overfed billionaire’s willingness to pay $100 for a loaf of bread doesn’t mean that the billionaire “values” the bread more than a malnourished child — it just means he has the ability to pay that sum to obtain it.
For sure. Not all values, indeed, the most important values, cannot be quantified…
The thing that always gets me is the way they work around “the most people.” If they were really Utilitarians, they’d always stress what was best for the mass of people. But somehow it always translates as “the most good can only be enjoyed by the fewest people.” It’s as if one person in the group gets to have an orgasm and the rest get beaten about the head with ballpeen hammers, and therefore the one’s orgasm more than offsets the other’s agony.
How much are you willing to suffer to not have to suffer without this good? When every conceivable aggression or calculated inconvenience can be circumvented or made “whole” with money, that’s all money will buy. And it’s a seller’s market.
The more one understands Economics the less attention he gives to economists. All contemporary economic discussions assume the purpose of life is to have a job. As someone who never wanted a job and has not had one since 1976, I cannot tell you how ridiculous that seems. Of course, surviving without a job hasn’t always been easy. Indeed, it has often been rather frightening. But I hate to think how I would feel now at age 71 and find myself looking back on fifty years of having some kind of job.
Perhaps I should have said, a living-wage job *for everyone who wants one* is a basic human right. I have no problem with someone’s not wanting a conventional job — so long as that person is not exploiting the labor of others to live. I do think, however, that most people desire meaningful work. “Homo faber”, etc.
Veblen called it the “instinct for workmanship”, but that is an entirely different thing from having a job. A job demands that a free person sell his ‘labor power’ by the day, week or year. It makes labor just another commodity and putts the seller on a treadmill to oblivion. Imagine if land were justly held by those engaged in production. This was the original promise of America which has been expunged and replaced with the phony job promise. Of course, the plutocrats no longer need so many American workers, so instead we get Government make work and paper shuffling and snooping and propaganda and regulation of people’s private lives. Most of the work performed domestically on behalf of business involves salesmanship and marketing and transport and negotiation and deployment of legal mumbo jumbo, engineering of conspiracies, etc. Our society is dedicated to moving mountains of shit in order to provide an excuse for paying those wielding shovels. We would be better building pyramids.
You made me think of Dorothy Day’s distributism and GK Chesterton’s “3 acres and a cow”. I think they were saying much the same thing.
You gotta start somewhere — a living wage is as good a place as I can think of in our ‘post-industrial’ economy, and maybe it’s even achievable.
The living wage will not work because prices of necessities will increase to leave the ‘working’ population in the same circumstance. Think about how much wages and salaries have mushroomed since 1946, or 1957, or 1970. Are people any better off? A private college education was free to GIs in 1946. A Harvard education cost $12,000 in 1967. How much is it today? The only people who are better off are speculators and usurers.
There’s an easy answer to your objection: COLA. It’s not perfect, but if you want perfection, don’t look for it on Earth.
MLK argued for a living wage in the 1960s, because it was morally right. It was, and it is. “3 acres and a cow” is sweet and romantic, but it’s not practical anymore, unless you’re Amish.
“The ignorance of many highly experienced economists to the moral foundations of their work is quite alarming.”
What evidence is there that those academics support concentration of wealth and power out of ignorance?
I’m inclined to think that everything that falls into the subject “economics” is bookkeeping. Profit is the bottom line regardless of how it is achieved. So think of the phrase “economics as applied bookkeeping” and suddenly it’s meaningless. I think economics is just that meaningless. We need to get real. Practical measures taken to change the things that are wrong would be wonderful. And it’s going to be like starting from scratch to define what we want the economy to actually achieve. “Utilitarianism” is as meaningless as “bookeeping” and both deal almost entirely in quantities, not qualities. How to achieve the most good for society? Change the bookeeping that rewards the enterprise based on crazy profits and mindless consumption. OK. But if we start calling it “applied morality” we’ve got a lot of work to do. I’m seeing the whole edifice of our previous morality come crashing down. It’s not easy to change your morality. Good subject to talk about. As David Siderus says in French: Speak me more, plus, plus!
Economics is applied immorality.
This article flies in the face of empirical evidence. While micro-economics focuses on utility, macro-economics focuses on markets and capital. And when serving capital, as macro-economists generally do, the humanity – and morality – is stripped from the discipline. That’s how we have come to the socio-economic conditions that exist today, where costs are pushed to the little guy, the super wealth pay a pittance in taxes, healthcare costs multiples of what it should, the environment and the well-being of future generations is raped, economists cheerlead (or look the other way) as massively destructive market bubbles form, etc.
Its nice to see efforts to bring morality into the realm of economics but the author is not nearly critical enough.
Agree 100%; Economics is Applied Fatuity.
“Utilitarianism is the moral foundation of economics.”
Calling an amoral belief system a “moral foundation” is impressive satire. And leaving the reader with the impression that political ideology (which itself represents a set of moral beliefs) has little if any influence on economic policy was brilliant. But what really put this over the top was the implication that economic policy (and its satirical “moral” core) directed political ideology. It seamlessly turned the co-dependent relationship between political ideology and economics into a one way causal relationship in which economics leads.
Economics is functional analysis of systems of production and exchange with respect to the generation and distribution of more-or-less material surpluses. It is not intrinsically “utilitarian”, and doesn’t require any commitment to that particular sort of ethical theory, (which is a different matter than economics). And “moralities” can differ and conflict, independently from narrowly economic issues. As a matter of fact, the utility preference functions at the basis of marginalist neoclassical economics specifically required a prohibition on “inter-personal comparisons of utility”, precisely in order to be at all “technically” feasible, which was precisely a break from classical utilitarianism, “the greatest good for the greatest number”, which was the blurriest of standards anyway.
That said, yes, one can not completely separate out “positive” analysis from normative judgments and economists are all-too-often not reflectively aware of the problems and entanglements involved. And the guise of sheer technocratic “neutrality”, let alone instrumentalist reductionism, is a delusion. Though the author of this post has himself only made small progress in that regard.
“Economics is functional analysis of systems of production and exchange with respect to the generation and distribution of more-or-less material surpluses, made without regard to the social value of what is produced or who gets it.”
There, fixed it for you.
What part of “distribution” do you not understand?
I don’t understand any of it.
“Standards of professional responsibility” in the legal profession do not teach professionals to think and act ethically; rather, they provide an external set of technical rules to regulate s on the conduct of persons who are thought not to be up to the challenge of behaving ethically on their own.
How’s that working out? Meet any ethical lawyers recently?
I haven’t met any lawyers, ethical or otherwise, for several years since I’ve been out of practice. But I have kept up on the changes in my state’s standards of professional responsibility, and guess what? The standards keep changing. Some actions that were no-no’s in the past are perfectly OK now, and vice versa.
When I was in law school, 40 years ago, a fellow student who have been a philosophy major pointed out that a “standard of professional responsibility” and an “ethic” are two different things. In particular, an ethic is not something that changes from year to year based on the arbitrary votes of members of a regulatory consumer protection agency, while a standard of professional responsibility is something that does.
Political economy is an issue of money and power. Morality has nothing to do with it. By ignoring history the author is able to marginalize the class war that is being waged.
“Nothing appears more surprising to those who consider human affairs with a philosophical eye than the easiness with which the many are governed by the few, and the implicit submission with which men resign their own sentiments and passions to those of their rulers. When we inquire by what means this wonder is effected, we shall find that, as force is always on the side of the governed, the governors have nothing to support them but opinion.” -David Hume, Of the First Principles of Government
Working class Americans experienced wage growth between the 1930s and late 1970s due to the fact they retained a semblance of social power. The primary source of this power was collective bargaining. Labor began to lose political power with the passing of Taft–Hartley Act in 1947. When this bill was passed by a coalition of Republicans and southern Democrats it was criticized as a “slave-labor bill” as it legalized right-to-work laws that underminded collective bargaining.
Despite their relative decline of political power from the New Deal years, labor unions were still able to wield economic power and bid wages up. When the working class lost it’s last shred of political power under a southern Democrat president (Carter) it’s economic power began the terminal decline we are still suffering from. The election of another Democrat from the South (Clinton) further eviscerated labor through the massive re-distribution of wealth to the rich through policies like the management of foreign trade to the detriment of labor, (offshoring, free-trade agreements, etc) importing cheap labor, (under the guise of immigration) and skewing the tax code to their own benefit.
The political coalition of Republicans and southern Democrats has been wildly successful. They’ve even managed to convince a large majority of Americans, both “liberal” and “conservative” alike, to support political policies that only favor the oligarchy’s economic interests. The economic orthodoxy of “market forces” (read: money power) to dictate the course of our political economy has remained relatively unchallenged… even in the midst of an economic crisis.
With the advent of Occupy Wall Street this might have begun to change. Millions of Americans have finally discovered which line of the class divide they are on.
Unions lost more than power over governmental processes. They lost the support of a younger generation who accurately saw industrial union members as interested only in their own economic welfare, not that of labor generally. Most of their gains were made at the expense of the unorganized, not the rich.
False. This was an effective propaganda tactic in the class war.
The bolstering effect of labor unions on wages affected non-union wages. In countries with high rates of labor unionism the distribution of wealth is much narrower than in nations with lower rates of unionism. In the aftermath of the fall of the Soviet Union the neo-liberal revolution has had an detrimental effect on every single country’s working class. We are witnessing the dismantling of the last bastions of labor power in the present.
The younger activists of the New Left turned on Labor/Old Left over social issues. They forgot that the Old Left built the economic prosperity they enjoyed. An even more troubling development of that particular era was when liberals no longer provided political cover to social democrats and socialists.
Speaking as an old labor lawyer who saw how things work in the real world, I agree with j gibbs on this one. Under U.S. labor law, unions do not represent workers, they represent work. That’s why the law calls what they represent a “bargaining unit.”
Thank you for illustrating the quote by Hume. Who has made those labor laws since the Wagner Act? How do you account for the stagnation of the American median wage and the massive disparity in the distribution of wealth? I think we both know all those answers.
“Unions are bad for workers.”
“Tax cuts create jobs.”
“Economic growth is good unless wages start to increase. When that occurs it’s inflation.”
Nice to Naked Capitalism shine a spotlight on academics like Sandel and the above who refuse to separate economics/politics from ethics/justice. We need to analyse the underlying values and assumptions…
Economistic metaphor: compared altruism, sympathy, generosity, virtue and empathy to scarce commodies like fossil fuels, which are depleted with use. (Larry Summers, Dennis Robertson, Kenneth Arrow-see quotes below).
Appropriate metaphor: compare virtuous acts to muscles that grow stronger with exercise.
Sir Dennis Robertson developed the idea of “liquidity trap”: during a Cambridge UK Speech at the bicentennial 1954 of Columbia University entitled: What does the economist economize?
“The economist can help by promoting policies that rely whenever possible on self-interest rather than altruism or moral considerations. By doing this the economist saves society from squandering its scarce supply of virtue. If we economists do our business well, we can, I believe, contribute mightily to economizing of that scarce resource, love, the most precious thing in the world.”
Economist Kenneth Arrow Nobel prize winner in Economics in 1972, leader of neo-classical school of economics, in a 1970s book review of Titmuss book:
“Like many economists I do not want to rely too heavily on substituting ethics for self-interest. I think that it is best on the whole that the requirement for ethical behaviour be confined to those circumstances where the price system breaks down.. We do not want to use up, recklessly, the scarce resources of altruistic motivation.”
Larry Summers, former president at Harvard University, former Secretary of the Treasury, during the morning prayer (2001-2006), entitled “What economics can contribute to thinking about moral questions.” In response to questions, he restated the Robertson thesis that altruism is a rare commodity that needs conserving:
“We all have only so much altruism in us. Economists like me think of altruism as a rare good that needs conserving. Far better to conserve it by designing a system where peoples’ wants will be satisfied by allowing people to be selfish and saving that altruism for our families and our friends and the many problems in this world that markets cannot solve.”
All morality is applied. Morality which is unapplied we usually call hypocrisy.
Morality is also inherently social. If you were the only person on the planet, morality would have no meaning. Built into morality is the idea that the Good is defined in relation to some other (god) or others (society). But if it’s just you, there is no such outside relation or measure. Whatever you do is whatever you do. Of course, you probably would not be thinking about any of this because you would not have socially produced tools like language and culture to do so.
This is where utilitarianism and morality collide with each other. Utilitarianism is about the production of the greatest utility for the greatest number. This is calculated by aggregating the individual utilities together. What is left out of this, and what the author I think is getting at, is the social dimension. Utility is an individual measure, even if a fairly unquantifiable one. It does not have to have any awareness of the whole, of society. Morality and the good do.
I have often written on this topic. What we are talking about here is the social Good, that is the kind of society we as a group want not just for ourselves (utilitarianism) but for each other (morality). It is this which makes up the social compact or contract which binds us together.
Utilitarianism does not contain this. Modern economics exploits this lack in order to legitimize and defend inequality. Consumerism is just an offshoot. If you have flat screen TVs and cable, then you should not care that most of the nation’s wealth is not held by “the greatest number” but by a very, very few.
I admire how your clarity of writing and thought. Here, again, you have enlightened us. Your analysis of morality – utility is spot on. Bravo!
Most economists view the economy in a very narrow framework. Take China, for instance. The overwhelming consensus amongst mainstream economists is that it is an enormous economic success. They will point to rising GDP to substantiate that.
What they fail to note is the tremendous cost, especially in urban areas where air and water quality have been severely impacted by the massive industrialization. But the fact that people have to wear masks, use air purifiers, and get cancer from the water, well that doesn’t count to most economists for some reason.
With regard to morality, how is moral that China’s environment is being destroyed so that a few US industrialists can became billionaires?
Mill’s “utilitarian principle”–the greatest good for the greatest number–was proposed as an ethic, a contribution of moral philosophy, no less that Rawls’s very different ethic of the “difference principle,” which approves of inequalities that would advance the greater good of the least advantaged in society. It’s just name-calling to assert that utilitarianism is an “amoral” position, when it really is one morality, that adherents to another morality may disagree with. People who think that there is some generally acceptable and agreeable objective morality would do well to reconsider Nietzsche’s “Geneaology of Morals,” which, even though it is a just-so story, does teach the valid point that what one views as moral and immoral may depend on what sort of person one is to begin with. And when considering debates between conflicting views, as with Mill vs. Rawls, one does well to remember that though they can’t both be right, they can both be wrong.
Both are defective because neither looks at society as a whole. Both are summations of units whose value can not really be determined.
I hope Rumplestatskin was successful.
Some of the recent morals and actions backed by “sound economics theory” are equivalent to terrorist bombings of innocent civilians.