I was thinking recently of a sort of paradox involving the normative stylings of anti-democracy purveyors of bad economics in the conservative style, the de gustibus principle, and ethical “level problems” associated with actors and roles. Let’s discuss this week. The apparent paradox, or what seems like one to me, involves purveyors of bad economics explaining to all and sundry what we, as a society, should be doing as far as economic policy, often controversially, while ostensibly espousing a normative theory saying they’re not meant to second guess the preferences of subjects. Something doesn’t seem quite right, and even more troubling, the something that doesn’t seem quite right appears to involve the subjects of economic theory, their ethical views, and democracy. Interesting to think how purveyors of bad economics arrive there, what’s going on. What I suspect is causing the issue here is related to an issue I discussed recently in the context of the “methodological individualism” critique of neoclassical welfare economics, specifically, different levels of ethical thinking involving different implied actors and roles.
Theoretical neoclassical welfare economics involves at least three implied actors: economists, non-economist observers to serve as their interlocutors, and arbitrarily defined and constrained ciphers serving as subjects. The distinction is usually quite apparent in a theoretical context, where it’s clear economists are talking with other observers about an arbitrary, artificial, otherworldly creation I call the Fairly Land of Economic Theory, populated by arbitrary, artificial, otherworldly subjects I call ciphers. If we consider a “one-person” world with no interpersonal conflict, we’re not conventionally thinking of a world with just an economist. We’re thinking about a world with a subject plus implied economists and observers looking in and talking about some ethical ideas. Similarly, when discussing interpersonal conflicts of preferences in a theoretical context, we generally have in mind conflicts of preferences between the subjects, not between one of the subjects and the economist himself or herself or other observers.
As I discussed in the context of the “methodological individualism” critique, one of the otherworldly characteristics of the ciphers appears to be they’re not meant to have preferences relating to social ethics to compete with those of economists or other observers. I discussed the difficulties introduced into the normative argument of neoclassical welfare economics if we have interpersonal conflicts of preferences on the part of the subjects that relate to the ethical results economists themselves are trying to establish for observers. This allows the economist to talk about ethics at one level, about what “society” ought to do, while at the same time upholding the de gustibus principle saying economists are not meant to second guess the preferences of the subjects, including about ethics, at another level. When we talk about certain ethical issues being exogenous to the normative argument of neoclassical welfare economics in a theoretical context, we have in mind the implied non-economist observer addressing those issues, not the ciphers themselves.
However, the economist, other observer, subject distinction, so clear in the Fairy Land, becomes fraught and indistinct in reality. People, real subjects, as opposed to ciphers, have social ethics, and an economist or observer can be a subject, part of the system being studied. This often leads to a certain amount of confusion. For example, is the intended audience for economists’ normative advice the subjects themselves, contra de gustibus? Are we including the utility of the preferences of economists and observers along with those of the subjects? Are all what seem factual premises appearing in neoclassical welfare economics actually factual premises, about what subjects are doing, or are some of them normative inputs, ethical propositions, about what economists propose subjects ought to be doing?
These issues arise from doing ethics for an artificial Fairy Land then trying to apply it to reality without making the necessary adjustments, an issue in turn related to conflating methods appropriate to studying positive and normative issues in neoclassical welfare economics. Although it's easy enough to become confused by the differences between ethical thinking for the Fairy Land of Economic Theory and ethical thinking for the real world, there is one bedrock normative proposition one can use to anchor oneself. “Utility,” as defined in neoclassical welfare economics, cannot be used to resolve interpersonal conflicts of preferences over anything, resources, ethics, whatever, between anyone, subjects, subjects and economists, subjects and other observers, etc. If one doesn’t have that, one doesn’t really have neoclassical welfare economics. One may have some other sort of “economics,” plenty of them about, but one doesn’t have the form of economics that supports what I refer to as anti-democracy bad economics in the conservative style. Why? Because it’s a necessary input for the argument in anti-democracy bad economics in the conservative style that it’s all about getting to any perfectly competitive market outcome, never mind ethics, human welfare, fairness, the views of the subjects, observers, democracy.
One resolves the paradox by acknowledging the differences between doing ethics or giving policy recommendations for the Fairy Land and for reality, between abstract theoretical ciphers and real people, between ethical half-theories and full ethical theories. Neoclassical welfare economics may be ethically dispositive in the artfully constructed Fairy Land, but it says basically nothing on its own in reality, referring all significant ethical issues to resolution by democratic government. Don’t get it twisted. One can, of course, have honest conservative economics, based on explicit ethical or normative propositions and inputs, which one would not classify as bad economics in the conservative style because it would not falsely impersonate neoclassical welfare economics. Anti-democracy bad economics in the conservative style creates a great deal of unnecessary confusion and conflict in our world. We should address it, fix it, help people overcome it and avoid it, with or without the help of economists. It’s really a job for everyone.
