I was having a little conservation with another economist online the other day who presented neoclassical economics as a normatively neutral collection of theoretical techniques and concepts one could use to argue for any normative or ethical position “if you’re clever enough.” You may have encountered this theory before. Economics as a toolbox or a collection of tools are common ways of expressing the idea. He seemed obviously a well meaning, socially conscious sort of fellow who had in mind using the toolbox to say something normatively or ethically sensible, so he clearly had good intentions, but we were at a bit of a loggerheads for a few moments because his train of thought seemed to run smack into my determination to establish that neoclassical welfare economics, in particular, is not neutral in a normative or ethical sense as many would like to suggest, but explicitly or implicitly contains opaque, contradictory, and indeed controversial and even implausible value propositions, dodgy factual premises, and frequently misinterpreted normative conclusions. As is usual in such cases, the problems was resolved once we realized we were equivocating on terms. Both statements are correct. He was discussing “neoclassical economics” broadly conceived. I was discussing “neoclassical welfare economics.” What a difference a word can make, right?
In my writing in this blog, I try to remember always to spell out my primary concern is “neoclassical welfare economics” as opposed to just “economics” or even just “neoclassical economics.” That’s because what I’m mostly interested in talking about is a particular normative or ethical argument that comes complete with value inputs, factual premises, logic, and normative or ethical or value outputs or conclusions.
In this blog, I’m not talking about a neutral, content free, arbitrary collection of conceptual tools one can take up or not or revise or manipulate however one likes to say whatever one likes, which is one common formulation of what orthodox “economics” is all about. And if I do ever take that up for some reason or other, rest assured I’ll take pains to establish that’s what I’m talking about.
I’m also not talking about positive, scientific, essentially arbitrary models meant only to predict empirical phenomenon, in which the modeling assumptions can be as divorced from or as close to reality as one likes, which is a one common idea of what “neoclassical economics” is all about. Again, if I start talking about such a thing for some reason or other, I’ll be sure to let you know in no uncertain terms.
I’m also not talking about positive, arbitrary, mathematical optimization problems delivered in a neutral if-then format with the if statements accurately and completely identified and no explicit statement or implicit suggestion of endorsing the if statements, the value propositions, the normative or ethical proposition thus represented, which is another common idea of what “neoclassical economics” is all about. Yes, you got it. If I ever feel the need to start talking about that one for one reason or other, I’ll let you know.
No, what I’m talking about unless I indicate otherwise is the normative or ethical theory expressed in traditional neoclassical welfare economics involving evaluative, value laden concepts like total social utility maximization, social welfare, Pareto optimality, economic efficiency, the supposed optimality of perfectly competitive markets, etc. I’m talking about what amounts to a rather confused and disjointed ethical theory containing value inputs in the form of explicit or implicit normative or ethical propositions and factual premises and generating normative or ethical conclusions. What conclusions? The normative or ethical conclusions from the Fairy Land of Economic Theory stating we should move toward a generalized perfectly competitive, Pareto optimal, economically efficient outcome, or if already at one, stay there, and its evil twins from bad economics. Evil Twin One, that in realistic situations we should move toward any particular instance of a perfectly competitive, Pareto optimal, economically efficient outcome, or if already at one, stay there. And Evil Twin Two, that any particular instance of a perfectly competitive, Pareto optimal, economically efficient outcome is preferable to any real outcome without those characteristics.
I’m talking about economists giving practical economic policy advice, advocating for certain policies, in realistic contexts, based ostensibly on normative neoclassical welfare economics, and the normative and ethical issues, oversights, and errors generally associated with that project that lead directly to what I call bad economics.
I’ve found one of the main hurdles in addressing bad economics is that the field of economics is squishy, vague, amorphous, and difficult to pin down. No one seems ever to be talking about the same thing. The math may be rigorous, but that’s about all that is. Certainly not the normative or conceptual content. We should simplify economics. Talk about one thing at a time. Interested in the opaque, inconsistent, misleading, just plain old bad ethical philosophy expressed in normative neoclassical welfare economics and even more so by its monstrous offspring, bad economics? Great! So am I! Interested in predictive scientific modeling or econometrics? Sorry. Not really my cup of tea just now.
