Can we talk this week about the relationship of bad economics in the conservative style to so-called macroeconomics? It’s a bit of a digression from my usual concerns, but the term came up the other day and it got me thinking about it.
If one is familiar at all with the field of economics, one may have encountered one way of dividing it up in terms of so-called microeconomics and macroeconomics. As with everything else in economics, the distinction is complicated by the confusing hash of normative and positive. In a positive context, there is some sense to the reference to scale whether microeconomics is defined as a dodgy sort of “science” of individual and firm behavior, arbitrary and consciously unrealistic engineering “models” of the same, or a random toolbox of mathematical optimization techniques. In a positive context the basic idea is that microeconomics addresses smaller scale economic phenomena than macroeconomics, which studies systemic outcomes like output, employment, growth, etc. That bit seems fairly reasonable.
However, as anyone who has ever read one of my tweets will surely appreciate, I’m rather more interested in normative economics than positive economics, and in the context of normative economics, neoclassical welfare economics, the distinction between microeconomics and macroeconomics appears rather less sensible. That’s because neoclassical welfare economics is really macroeconomic in scale, dealing with markets, market systems, economic systems in general, but closely related to the theory and method used in microeconomics, so-called neoclassical economic theory. That means the subject matter of neoclassical welfare economics overlaps that of macroeconomics, and indeed can be seen an alternative or competitor to macroeconomics, serving at times as an impediment to policy prescriptions emanating from macroeconomics.
Recall that neoclassical welfare economics is a normative or ethical half-theory based on normative inputs about how to behave toward other people expressing preferences, but confusingly discussed in terms of an idiosyncratic definition of “utility,” and generating normative outputs relating to social optimums based on that utility. As I point out often enough, it’s an ethical half-theory because the normative argument it contains is developed in and for an arbitrary, stylized world that differs from the real world in certain respects and from which certain real world ethical issues have been banished.
If neoclassical welfare economics is an ethical half-theory, then macroeconomics (defined to exclude it) can be viewed as an ethical non-theory. That is to say, there are no normative inputs in macroeconomics, no definition of normative optimality, no normative conclusions. One may infer someone is interested in certain outputs and so on, but there is no explicit argument in macroeconomics they should be. If there are normative inputs, they operate as with other sciences through the interest and motivations of practitioners, the issues studied, etc.
The important point here is that among the outputs of interest in macroeconomics one notable omission is “utility” of the sort defined in neoclassical welfare economics, the maximization of which is the ostensible goal of neoclassical welfare economics. That means policy prescriptions emanating from neoclassical welfare economics and macroeconomics will always address entirely distinct goals or objectives. There’s no reason to expect congruity between the policy prescriptions of the two theories. The vacuity, the practical emptiness and irrelevance, of real neoclassical welfare economics properly applied in real contexts can easily disguise this fact. However, that is not at all the case with expansive bad economics in the conservative style, which adds normative content relating to economic power and markets. Viewed through the lens of bad economics in the conservative style, the relationship between neoclassical welfare economics and macroeconomics can become quite fraught and contentious leading to confusion and conflict, popular misunderstandings, etc. That is particularly the case when one considers the tendency of bad economics in the conservative style to conflate “utility” with outputs of interest in macroeconomics, adding to the confusion.
Addressing ubiquitous bad economics in the conservative style should be of at least as much interest to macroeconomists as to microeconomists working with the neoclassical economic theory that underlies neoclassical welfare economics. It’s really an issue for all economists. Macroeconomists may not be interested in the methods of neoclassical economics as a basis for studying macroeconomic issues, or in real normative neoclassical welfare economics, but they may be interested in addressing bad economics to make space to discuss macroeconomic policy.
