Let’s look this week at the difference between ignoring some issues and being indifferent to some issues in the context of neoclassical welfare economics and fake distributional indifference in bad economics in the conservative style.
Say we have status quo A and alternative B that differ with respect to the resolution of some interpersonal conflict of preferences. We should be indifferent to A and B under the limited, ethical-half theory of neoclassical welfare economics based on a certain sort of “utility.” “Utility,” when defined in either of the two ways consistent with neoclassical welfare economics, cannot be used to resolve interpersonal conflicts of preferences. The resolution of such conflicts depends on ethics exogenous to that theory. That’s the correct version or interpretation, which renders neoclassical welfare economics relatively ethically uncontroversial by avoiding the lion’s share of ethics, which involve the issue of how to resolve interpersonal conflicts of preferences (needs, wants, desires, etc.).
If one instead interprets neoclassical welfare economics as suggesting one should “ignore” the differences between A and B, rather than acknowledge them and express indifference to them, one might suppose economists are meant to support A, the status quo policy option. For example, some people support status quo A and others support alternative B on some exogenous ethical grounds, economists are meant to “ignore” the controversy over A, ignore those who support B, and thus directly or indirectly, explicitly or implicitly, support A. That’s the incorrect version or interpretation, which conflates indifference with ignoring and transforms neoclassical welfare economics into a potentially contentious, controversial ethical or normative theory that supports the status quo.
It’s superficially plausible, it works rhetorically, because neoclassical welfare economics does indeed imply economists qua economists may ignore the substance of exogenous ethical arguments not based in “utility” as outside the scope of that theory. However, neoclassical welfare economics does not imply economists qua economists may ignore the fact outcomes differ with respect to “utility,” or ignore the consequent indifference or neutrality that should logically ensue under the normative argument in that theory.
The same general error lies behind the false yet commonly promoted “efficiency versus equity tradeoff” we get if A happens to be “economically efficient” (defined with respect to “utility”) and B is not. I discuss it often enough, but let’s discuss it again here. The normative argument in neoclassical welfare economics is based on “utility.” The only reason we care about “economic efficiency,” defined with respect to “utility,” is what it says about “utility.” It doesn’t have its own independent normative significance apart of “utility.” If we can’t rank outcomes on the basis of “utility,” it’s theoretically incorrect to say neoclassical welfare economic theory still allows us to rank them by whether they’re “economically efficient” or not. It works rhetorically because one can easily lose track of the distinctive, confusing, relative quality of “utility” in neoclassical welfare economics that generates distribution indifference and just suppose instead it’s all “utility,” so “economically efficient” outcomes must always rank higher in some way. If one is confused on this point, one may suppose neoclassical welfare economics ranks A superior to B, because A is “economically efficient” and B is not, and proposes a tradeoff in terms of lost “efficiency” if moving from A to B to accommodate exogenous ethics. That’s fake distribution indifference. It gives the wrong answer. It is theoretically incorrect. The normative argument in neoclassical welfare economics does not rank A normatively superior to B under the conditions specified. It expresses indifference between A and B. As an aside, one may sensibly propose a tradeoff between “production efficiency” defined with respect to output and “equity,” but the idea only total output matters is a form of distributional ethics, and the argument in neoclassical welfare economics concerns maximizing “utility” not output. So that particular tradeoff doesn’t really make sense if “equity” just means distributional ethics, and it’s not a theoretical result from neoclassical welfare economics but an argument from macroeconomics involving the effect on output of changing patterns of economic power.
The same general sort of error relates to the fake “anarchism” one commonly sees in which existing laws relating to the definition, distribution, and use of economic power in markets to resolve interpersonal conflicts of preferences (the ethical issue of the extent of the market) are equated with having no laws, no coercion, no government, no expression of ethics on resolving interpersonal conflicts. Again, the argument involves “ignoring” the exogenous ethics about resolving interpersonal conflicts of preferences and thus, following bad economics in the conservative style, may incorrectly be thought consistent with, or even implied by, neoclassical welfare economics. However, by ignoring the differences in “utility” between A and B, ignoring true distributional indifference, that argument is actually inconsistent with the limited normative content of neoclassical welfare economics, which proposes differences in “utility” normatively significant in the sense of generating indifference.
Also, the argument really only ignores exogenous ethics about resolving interpersonal conflicts of preferences in favor of a typically implicit more general form of exogenous ethics suggesting there’s something normatively significant about the status quo, A. The argument doesn’t really work as advertised, doesn’t really get one anywhere in a philosophical sense, because supporting the status quo because it’s the status quo is just as much a form of exogenous ethics as the sort that supports A or B on more substantive grounds. Why is that error not immediately identifiable as such? I suppose because ignoring some exogenous ethical issues and going with whatever status quo mechanism we have to resolve interpersonal conflicts of preferences conveniently comports with the exogenous ethics of some.
The argument there’s really nothing ethically justified about any mechanism for resolving interpersonal conflicts of preferences, including the status quo one, leads to the dead end of real anarchism. It fixes the fakery of fake anarchism, but becomes ethically implausible. Again, it seems safe to say most people prefer to live in an ethical society, not under the law of the jungle. They will have ideas relating to how society should resolve interpersonal conflicts of preferences that don’t involve violence and brute force. I know I do. Do you?
Fake distributional indifference can take many forms but its false, misleading, confusing, rhetorical nature leads always away from real neoclassical welfare economics toward misleading, anti-democracy bad economics in the conservative style. We should fix bad economics in the conservative style.
