Thursday, September 25, 2008

on economics 2

I've mentioned elsewhere the tendency to think of economics as more-or-less a set of natural laws (e.g. the free market), and this correlates with its being taught (usually) as more-or-less a science. Yet it is also, intrinsically, an arena of human activity - and so it is always also open to moral analysis. This isn't as clearly the case about other sciences such as physics. This leads us to a dilemma of how to characterise economics, and what the human response to it should be.

Is economics primarily to do with science, a matter of nature? If so, then because it is a realm of human endeavour, it needs restraints and regulations placed on it from outside.

Is economics primarily to do with the human, a human construction, and hence a matter of history rather than nature? Then there are presumably resources within economics - human, moral resources - which can place checks and balances on economic activity.

Or is economics (as I suspect) some third thing, incorporating both? Economics thus may be seen as a human, social construction, one with a history* and as any contingency, may be otherwise, and yet which also includes regularities about which general and mathematical observations may be made. In this case, as above, economics - whether the teaching of economics and its statistical analysis, or even the actual acts of trading and business-keeping - are not free from moral analysis and constraint, but ought to be expected to serve humanity (broadly construed).

There is certainly more to be said here, but this is another modest foray into thinking through a topic which is turning into an ongoing project for me.

* The specific economic arrangements- whether tending towards modern socialism or towards modern capitalism - are virtually unthinkable 200 years ago, and literally impossible 1000 years ago. There is nothing more necessary or self-evident or 'natural' about our current arrangements than there is about our driving automobiles.

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Anonymous Anonymous said...

Economics certainly isn't a science in the way physics is a science, and economics "laws" certainly aren't like physical laws. Economics is generally referred as being more (hard) science-like than other social sciences because of its tendency to rely heavily on mathematical formalisms in developing and testing its theories (which has the advantage of making it clear in an intellectual discussion what everyone is assuming and arguing). However, since economics is trying to describe human behavior, it generally has to settle for describing and predicting aggregates and averages.

In terms of supply and demand, what economics is saying is that while you certainly can pass a law to set prices either above or below the market clearing "supply meets demand" price, if you do you will inevitably have certain consequences (shortages if you decrease the price, or surplus supply if you increase the price). Society may choose for moral reasons to do so despite this, but economics is describing the consequences that will happen. Most of economics is what is called "positive economics", which mostly makes claims about consequences like "If you want to achieve X, then you should do Y", or "Doing X will cause Y to happen". Another part of economics ("normative" economics) does tend to make "ought" claims, often in favor of efficiency and maximizing total surplus, but also often in terms of a "Pareto improvement" (i.e. a change that hurts no one and makes at least some better off). But as I said, the majority of economics doesn't depend on a particular stance on, for example, the equity versus efficiency tradeoff.

Friday, September 26, 2008 1:46:00 AM  
Blogger Jason said...

Thanks for your informative comment.

I'm afraid right now I haven't the time to respond at length, except to say that this characterisation, while certainly a standard (and clearly expressed) account of economics, it is also what I am contesting. I realise that the way that economics has evolved historically as a discipline is that they have decided to focus on certain questions and not others, fine: all I am saying is that it doesn't need to be that way and there might well be good reasons why it should change. (Economics as we know it has been around for roughly 200 years; why wasn't it around before? What historical contingencies played into its original creation and current synthesis? The same could be said, of course, for other social sciences such as sociology, but that only broadens the question, doesn't get rid of it.)

I realise I need to say much much more to be persuasive here, particularly to someone like you who clearly knows the field from inside, and that I need to more fully elaborate my intuitions.

An important distinction to make might be between (1) the discipline of economic analysis as it has developed, and (2) the practices associated with the market.

Yet I am still not persuaded that either (1) or (2) may be exempted from moral analysis, as they both involve human contingencies, situations which may be otherwise. (To give a specific example, demand - in all but a few categories - is not self-evident, and is often specifically a human creation. If everyone in the world were to have the lifestyle of a typical American, we would need five earths to sustain it; clearly, in the mid to long term anyway, we need to understand that this kind of demand is not merely given but created and may be reconfigured.)

I don't deny that economics - as any discipline - may have more descriptive moments, and that historically economics and the other social science disciplines grew up at a time when there was profound pressure to appear more 'scientific' (i.e. disinterested and purely descriptive).

Perhaps in the end, my dissatisfaction is with the discourse surrounding economics and economic practices: economics as a discipline may take its more modest, descriptive role, but humanity needs a much richer, more supple discourse surrounding material exchange.

Friday, September 26, 2008 9:04:00 AM  

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