I thought this week I might step back a bit and just say a few short words about the difference between “bad economics” of the sort I generally discuss, namely right wing misinterpretations of neoclassical welfare economics, and the corresponding notion of “good economics.” Just to clarify some things.
When I bang on about “bad economics” of the sort I mean, I’m not suggesting or implying there’s only one form of “bad economics” out there, nor that there might not be forms of “good economics” beyond neoclassical welfare economics, correctly interpreted. Indeed, I find the latter rather limited, as I’ve pointed out on numerous occasions. I wouldn’t be particularly put out if people decided eventually to throw it off entirely. I’m not raining on heterodox economists’ parade. No, I’m concerned with the particular form of “bad economics” I usually discuss, and the corresponding notion of “good economics,” because that’s the particular form of bad economics that is so ubiquitous and influential in our culture right now and creates so much confusion and conflict.
Bad economics proposes we obtain the most freedom or liberty, and generate an optimal economic system, under a “small” or “inactive” government committed to doing nothing beyond enforcing property laws and other laws needed to support economically efficient markets. Well, I suppose there’s an even further dumbed down version that doesn’t worry about market structure, “market failures,” etc., and just talks about things like laissez-faire, “capitalism,” and “The Free Market.” But I’m usually talking about the slightly more advanced version, the version many economists have trouble perceiving. Only an economist really committed to the cause of bad economics would discuss real economic issues using typically vague, ill-defined, misleading trigger words like “capitalism” and “The Free Market,” or fail to appreciate such long standing and established concerns in neoclassical economics as market structure and “market failures.” Bad economics and related folk economics like “libertarianism,” fake market based anarchism, and “Austrian" economics, lead inevitably to support for non-democratic, market supporting fascism, a fact surely appreciated by most purveyors of bad economics. It’s what makes addressing bad economics and folk economics so important.
When one gives up democratic government, yes, one prevents other voters having government “interfere” with the ostensible natural wonder of a particular instance of an economically efficient market, particularly in ways one coincidentally may not like, but one also gives up any say in the matter. One loses freedom or liberty.
When one gives up democratic government, one trusts the plutocrats and technocrats sitting atop the postulated “small” authoritarian government will choose to keep it that way. But one no longer has any say in the matter, and if they choose to take up some other issues later, well, I guess one is just out of luck, isn’t one? One loses freedom or liberty.
When one gives up democratic government, one no longer has a say in the social ethics of one’s society including issues like the ethics underlying the distribution of economic power, the ethical assessment of the economic system in terms of fairness or justice or human welfare, or the extent of the market, that is, decisions relating to when to use economic power in markets to resolve interpersonal conflicts of preferences, allocate scarce resources, etc., that are exogenous to neoclassical welfare economics. Those will be decided for you. One loses freedom or liberty.
Good economics, in rather stark contrast, highlights the need to address issues in social ethics including distributional issues and the extent of the market. An understanding of the subjective nature of ethics makes one realize the resolution of those ethical issues can only ever be temporary, contingent, subject to revision. Good economics helps one understand real freedom or liberty is maximized under an activist democratic government that is willing and able to revise the economic system as appropriate, and that talking about ethically optimal economic systems or outcomes is nonsense without the people, via democratic government, determining on a continual basis what that is.
Concerned to fight against right wing fascism arriving at least initially in the form of “small” market-based authoritarian government? Concerned about the erosion in the understanding of, and support for, political democracy? You should help fight the pervasive and baleful influence of bad economics.
