Purveyors of Bad Economics As The Last Logical Positivists

Last week, I did a post on the positive versus normative distinction in neoclassical welfare economics, and I mentioned the old 1950s philosophical doctrine of “logical positivism.” I suspect it may be the basis of a rare four tier level issue. Let’s discuss.

Recall a “level issue” for me is where the same or similar issue or issues can arise at different points or levels of a discussion, which can then be conflated or confused with one another to comical effect. An example in neoclassical economics involves subjects tautologically maximizing their “utility” by making choices, while economists advocate for choosing to maximize total social “utility.”  Talking about maximizing “utility?” Mind the level to avoid confusion. I’m sure there must be some formal term for what I’m calling a level issue, probably in Latin. Unfortunately I don’t know the proper name, and I can’t be bothered to investigate it just now, so let’s just call it a level issue, shall we?

As I’ve discussed before, neoclassical economics may appear purpose built to generate level issues because of the ease with which one can shift between or combine different perspectives, actors and roles: economist, non-economist observer, theoretical cipher, real subject. For example, I’ve discussed a level issue involving the fact that, because of the restrictive nature of the “utility” used in neoclassical welfare economics, economists qua economists are not meant to express ethics relating to resolving interpersonal conflicts of preferences. In a market system, the resolution of interpersonal conflicts of preferences takes place on the basis of economic power, so economists qua economists are not meant to have ethics relating to the definition, distribution, use of economic power. The ostensible rationale for setting those issues aside, rendering neoclassical welfare economics an ethical half-theory, is the desire to avoid the controversial ethical issues associated with resolving interpersonal conflicts of preferences.

That issue is logically distinct from whether the theoretical ciphers being studied have preference rankings, and hence “utility,” involving such ethics and living in what they consider an ethical society. Nothing in the definition of “utility” prevents it. They apparently do not, because if they did, interpersonal conflicts of preferences that cannot be resolved on the basis of “utility” would be potentially ubiquitous and would conflict with any normative conclusions economists may wish to make regarding the ciphers. Note this rationale is different from the first rationale, which applied to economists qua economists, to neoclassical welfare economics as a theory. This rationale pertains to subjects in the form of defined, artificial ciphers, and the desire to make theoretical conclusions. 

This is one of the issues that arises when one takes “utility” from out the Fairy Land of Economic Theory and its particular unreal restrictions, and tries to plonk it down in reality, where, of course, real subjects have preferences relating to ethics, are not ciphers. That’s what creates issues in the context of the liberal ethos, which suggests laws are typically required to resolve interpersonal conflicts of ethics, while bad economics in the conservative style wrongly interprets neoclassical welfare economics as saying there aren’t any. If you’re keeping track, the issue of theoretical ciphers not having preference rankings relating to the ethics of resolving interpersonal conflict is often discussed under the rubric of “methodological individualism,” where it’s commonly conflated with positive issues. Actually, I suppose that may be a good example of a straightforward issue in the ethical argument presented in normative economics, neoclassical welfare economics, being confusingly associated with issues relating to scientific method in positive economics.

Now by theoretical subjects, ciphers, I meant subjects in roles other than businesspeople qua businesspeople, because they’re famously meant to maximize profit, money, not “utility.” They’re not meant to consider ethics, or preferences about ethics, for yet another reason. The relation of theoretical ciphers in the form of businesspeople qua businesspeople to their real world counterparts may, of course, be different from the relation of other theoretical subjects to their real world counterparts. Real world business may require certain things.

Anyway, that issue, in turn, is logically distinct from whether non-economist observers, distinct in the world of theory from economists qua economists and theoretical ciphers as subjects, may have ethical beliefs relating to resolving interpersonal conflicts of preferences. In realistic contexts, as opposed to theoretic contexts, that is to say, in reality as opposed to the Fairy Land, the distinction between “non-economist observer” and subjects, now real people rather than arbitrarily defined theoretical ciphers, breaks down. The conventional take is, yes, of course, non-economist observers are meant to have views on the ethics of resolving interpersonal conflicts and hence about the definition, distribution, use of economic power. Someone must or we simply have a world with no ethics. 

However, the suggestion some early twentieth century economist may have been motivated by “logical positivism” in their quest to view normative economics as positive, to make economics a “pure” science, throws that into question and takes us to yet a fourth level of considerations. The logical positivists were fascinated by science to such an extent they famously declared anything not verifiable according to empirical experience, data, such as ethical beliefs, for example, to be literal nonsense. This suggests some may suppose the reason economists are meant to not take up certain ethical issues is not to avoid potential controversy but because ethics is, in fact, nonsense. The same rationale may apply to all actors in all roles, theoretic ciphers and real people. It’s an ultimately nihilistic view, because of course if ethics is nonsense, then the ethics endogenous to neoclassical welfare economics involving “utility” is also nonsense, any argument for certain economic arrangements, market structures, is nonsense. I usually ignore the possibility anyone seriously considers ethics nonsense. Logical positivism exited the building long ago. But might some philosophically clueless purveyors of bad economics still be pursuing the amoral dreams of the old logical positivists? Interesting idea. Do you know enough about neoclassical welfare economics to understand it ignores certain ethical issues relating to resolving interpersonal conflicts of preferences? Fine. That’s one level thinking. Which actor, in what role, why, and how is it meant to relate to reality? Confronting anti-democracy bad economics in the conservative style means understanding the normative or ethical argument being made in neoclassical welfare economics and how it relates to reality. Lots of funny business in that area. Have a care.

Positive and Normative in Economics

I had an interesting conversation the other day about the usefulness of the philosophical distinction between normative and positive in the context of neoclassical welfare economics and bad economics in the conservative style. Let’s discuss that this week.

To understand the issue, it helps to know some history. What eventually became neoclassical economics has intellectual roots going back to 18th century moral philosophy, and it retains notable normative, ethical content to this day in the form of neoclassical “welfare” economics. However, by the early 20th century, with all hands on deck fighting the perceived threat from “leftist” economic ideas, orthodox economics including the normative bit was very purposefully recast as a “pure” science, with an ostensible aspiration to be “like physics.” In their zeal to be seen as scientists, many economists adopted some of the views of the philosophical “logical positivists,” who were famously so monomaniacal in their focus on empirical science they proposed at one point ethics was literal nonsense, unworthy of discussion. This led some economists to attempt to portray the normative or ethical content in neoclassical welfare economics as a positive analysis of certain words and concepts, with no implication anyone should attach normative significance to it, a sort of science of words, logic, math. Rather comically, the argument pertains to any ethical theory involving normative propositions expressed in words and related by logic, so all of them, which could then ostensibly be viewed as positive rather than normative theories, science rather than ethical philosophy. That bit of rhetorical tomfoolery is something I often refer to as the conceit of “positive normative” economics. It’s tomfoolery because it’s the presence of normative propositions that make a theory a normative or ethical theory, not the supposition anyone takes it seriously. It’s also transparently false. Economists themselves are the main audience for, and main proponents of, the ethical or normative ideas expressed. They clearly use them to make policy recommendations. The notion they’re simply helping others with their logic and math is false. No, the reality is what we now know as neoclassical economics retains two major components: a positive component, based ostensibly on empirical prediction, objective fact, science, and a normative component, based in subjective ethics, value propositions, etc. The critical discussion of the positive versus normative distinction follows suit, with one line of discussion addressing positive economics and deriving from philosophy of science, and one line addressing normative economics and deriving from ethical philosophy.

Let’s break it down. The first line of criticism of the notion neoclassical economics is a “pure” science as the old physicist wannabes proposed is that normative issues may influence the development of any science, such as science, but particularly a science about humans. This line of criticism is a theme from the philosophy of science, in which philosophers have proposed normative motivations may influence the practical conduct of science in various ways including individual scientists’ motivations, research agendas, funding, etc. In addition, some have floated the concept of “understanding” as an independent evaluative criterion for science, in addition to empirical prediction, and in any science but especially a science addressing humans, “understanding” may easily devolve into normative appealing storytelling, ideology. This line of criticism seems commonly presented as refuting or seeking to refute the positive versus normative distinction. However, I would suggest it doesn’t seek to refute the distinction at the level of propositions, but something a bit different. What it’s really refuting, or at least calling into question, is the idea of a purely positive science developed without normative influences, and especially but not necessarily exclusively in the case of a science about humans, without potential normative evaluation and effects via “understanding” / storytelling.

The second line of criticism of the notion that neoclassical economics is a “pure” science is that neoclassical welfare economics contains explicit, overtly normative propositions in a way other sciences do not, and thus, in fact, is not a science like physics. This line, of which I am a proponent, argues it’s vitally important to recognize this normative or ethical content as such because the proper methods of developing and evaluating normative arguments are fundamentally different from those of positive arguments. What sorts of differences are we talking about? One involves evaluation, which for a positive proposition, an “is” statement, involves objective fact, but for a normative proposition, an “ought” statement, involves evaluation relative to subjective moral sensibilities. A difference in methods is that false, simplifying assumptions are arguably acceptable in a positive “theory” / model empirically evaluated as a unit, while for an ethical theory to be appropriate to a particular context any factual premises must, in fact, be true. This line is not about denying interactions between positive and normative. A normative or ethical theory meant to apply to reality may be defined by the presence of normative propositions, but it will also contain positive elements: logic, factual premises, etc. Similarly, a positive theory may be about fact, but normative motivations and influences may intrude, and normative beliefs may complicate or distort empirical evaluation, as can the goal of generating normatively appealing storytelling, which some may simply suppose bad science. Positive economics can, of course, be “bad economics” in the sense of being flawed, compromised, ideologically motivated, inferior, pseudo-science. It’s not really my area, but it seems quite likely to me, and I support efforts to improve the science of positive economics. However, the “bad economics in the conservative style” I focus upon is explicitly normative economics, about what we ostensibly “ought" to do, not what “is,” about values, ethics, evaluation, optimality, welfare, goals, objectives, etc. It’s not about science, positive economics. The positive logic of normative economics seems to me pretty sound. It says what it says. However, I perceive a great deal of confusion about what it says, particularly about real world policy issues, which I suppose are generated and cultivated by confusing bits in that theory.

Those who delve into normative issues relating to positive economics, in the tradition of the philosophy of science, often suppose they’re refuting the claims of quaint old “economics is a purely positive science” rhetoric, and to some extent they are. However, by implying the only real issue is how normative issues can affect positive economics, implying normative economics does not present its own distinctive issues, such critics are, in a way, supporting the misleading rhetoric of the old economics as pure science camp. The two distinct lines of discussion about the presence, relation, interaction of positive and normative in economics, in terms of propositions, but also models, theories, broader normative effects, motivations, influences, etc., are complementary, not contradictory.

Democracy, Economic Power, And Government Capture

Conservatives in the USA are an interesting lot. They do all they can to ensure economic power has an outsized role in our democracy, then use “government capture” as a rationale to eliminate democracy. Let’s discuss that bit of rhetoric this week.

To understand the rhetoric, one must understand “conservatism” in the USA is actually composed of two rather different groups, one that loves the status quo distribution of economic power, and one that is critical of the status quo distribution of economic power. Both groups oppose democracy but for different reasons. The status quo group hates democracy because they think it may “interfere” with status quo economic power. The anti-status quo group hates democracy because they blame it for the status quo distribution of economic power. They can be tricky to distinguish not just because they’re both anti-democratic but because of clever rhetoric involving terms like “the free market.”

According to the status quo group, “the free market” is basically the current market but without democracy to interfere with it. This group typically doesn’t see a role for government addressing market failures, market structure, etc., because those are part of existing markets and government “interfering” on that basis is just as threatening to the status quo as any other sort of “interference.” The status-quo group tends to disparage democracy as “mob rule,” “collective” decision making, etc. They see democracy as potentially or actually effective, and threatening, harming, aggressive toward status quo economic power. That’s the group that supports economic power having an outsized role in our democratic system, opposes reform of campaign finance and lobbying laws, supports putting conservatives justices on the Supreme Court to get more rulings like Citizens United, etc.

In contrast, the anti-status quo group tends to view “the free market” as the “perfectly competitive market” of both real neoclassical welfare economics and anti-democracy bad economics in the conservative style, supposing markets “freely” or naturally tend toward that model. Slightly more sophisticated members of this group may appreciate there’s no basis to suppose a “free” market will tend toward a perfectly competitive market, free of market failure, and will suppose a role for a technocratic, authoritarian government to address such issues. That latter group will not take the “free” in “the free market” literally, and will just think of the term as a funny, folksy way to refer to a perfectly competitive market, no matter how much work technocratic government may need to do to bring it about and sustain it. Alternatively, they may interpret “free” to apply not to the market, per se, but to the people participating in that market, so people in that particular market structure would be freer than they would be under other market structures or non-market decision systems like democracy. The anti-status quo group tends to disparage democracy by arguing it’s been “captured” or unduly influenced by the economically powerful, and that without democracy we would have a more ethically proper distribution of economic power, different from the status quo one. 

The interesting thing, of course, is that the anti-democracy activity of the first group, as far as strengthening the role of economic power in our democracy, is what actually fuels the anti-democracy sentiment of the latter group. It’s a cosy and convenient relationship.

For one who supports the democratic ethos, both forms of conservatism will be seen as flawed. The views of the status quo group are flawed because in any society the ethics of the definition, distribution, use of economic power must be addressed in some way. Under modern subjective secular ethics, the only ethically sensible way, the only stable way, to address those important issues is to refer to the always changing, always evolving views of the people in a particular society, the voters, that is, democracy. In that view, status quo economic power doesn’t have a “right” to that power that supersedes the democratic government and law that granted it in the first place, and democracy isn’t attacking, abusing, being aggressive when voters take another look and potentially revise things. The reasoning of the anti-status quo group is flawed for the same reason. Democratic government involving itself in ethical issues like the definition, distribution, use of economic power does not represent unethical “interference” with things that are none of its business. Addressing the ethical issues associated with economic power is what any and every government must do, and will always do, in any lawful, orderly society. It’s nonsense to portray it discharging its proper duties as “interfering” with past iterations of the same activity. Declaring one personally supports the ethics of the distribution of economic power one supposes will result without democratic government is perfectly fine, but what’s not fine is supposing one’s view must prevail over all others, which is inconstant with the democratic ethos.

The sensible response to concerns about any ethically undue influence of economic power in our democratic system, about “government capture” and so on, is to take steps to improve our democracy, limit the role of economic power, not eliminate democracy. The sensible path for conservatives concerned about ethically undue influence of economic power in our democracy is to take up the issue with the group most concerned to preserve and enhance that influence, their fellow conservatives, in the anti-democracy, pro-status quo camp.

Conservatism in the USA is rhetorically clever, sly, tricksy. To understand it, keep your eye on the ethics of the definition, distribution, use of economic power, and more recently who is meant to decide it, particularly the role of democracy. 

Utopian Anarchism

Can I just do another on politics before getting back to why I’m really here, the struggle against anti-democracy bad economics in the conservative style? Because I was talking with some young people about utopian anarchism the other day and a few thoughts crossed my mind. There is a connection to my usual concerns because one common path to utopian anarchism leads through the fake anarchism of right wing “libertarianism,” which is itself a direct offshoot of anti-democracy bad economics in the conservative style. Let’s discuss.

Recall two distinctive features of anti-democracy bad economics in the conservative style is it obscures the role of economic power in social relations, and it obscures the ethical issues relating to economic power, which are exogenous to neoclassical welfare economics. A distinctive symptom of exposure to anti-democracy bad economics in the conservative style is the conviction society is better, more ethical, if government endorses and expresses particular views on the definition, distribution, and use of economic power, but never delving into the ethical issues involved. “Libertarianism” takes suppression of the role of economic power and the related ethics, including the social ethics of the social mechanisms to address those ethics, government, democracy, to the next level, by supposing their take on the relevant issues implies greater “freedom” or “liberty.” “Libertarians” are famous for incorrectly and inappropriately using the rhetoric of utopian anarchism by pushing their own preferred arrangements relating to economic power so far in the background that, as a matter of rhetoric, they seem to disappear entirely for some people. For “libertarians” posing as anarchists, that is, fake anarchists, “government” is translated to government they don’t personally approve, “law” to laws they don’t personally approve or that interfere with ones they do approve, etc. It’s a sort of selection perception.

One path to utopian anarchism starts with attraction to the rhetorical use of the concepts of “freedom” and “liberty” in “libertarianism” / fake anarchism while failing to understand the rhetorical program, taking fake anarchism rather more literally than one ought. That’s not the only path to utopian anarchism to be sure. There’s also a nominally “leftist” path that runs through the old counter-culture “hippie” movement of the 1960s with their communes, etc. Utopian anarchism is funny that way. A mysterious place, where right meets left. It’s possible because the complete absence of government, law, actual anarchy, is traditionally neither “right” nor “left.” It’s just a chaotic state of nature in which the most ruthless, violent, egoistic individuals rise to the fore. The trick is what people imagine follows.

This leads to the distinctive undefined quality of utopian anarchism, in which some sort of utopia is introduced as the natural, inevitable result of anarchy, but the particular characteristics of the utopia are variable and bounded really only by one’s imagination. For “leftists" it can be a peaceable, small scale, authoritarian communism, some form of democratic socialism, direct democracy, etc. For “right wingers” it can be fascism, Social Darwinism and the reign of the “fittest,” a religious community, whatever. This is where utopian anarchism can start to become unintelligible to others because, for adherents, it’s not just or even mainly about the anarchy, it’s also about the utopia, which transforms the anarchy, and makes it, for them, “real” anarchy. With the misleading focus on anarchy, and the relative neglect of identifying and delving into the social organization, government, law, etc., particular adherents propose will appear naturally from anarchy, one sees immediately the rhetorical parallels to “libertarianism.” This odd, undefined quality seems generally taken as a good thing by utopian anarchists themselves. One fellow explained to me recently there are many branches on the tree of utopian anarchism, but what they all have in common is they all oppose tyranny, support freedom, etc. I found it largely unintelligible. So utopian anarchists have multiple, conflicting ideas about how to actually resolve interpersonal conflict of preferences, but all those ideas express “freedom” and the rejection of “tyranny?”  Sounds like word play to me.

The final observation I’d like to make about utopian anarchism is there seems a certain religious or faith-based quality to the ideology in the absolute certainty, despite all evidence to the contrary, the preferred utopia will appear on cue. In my experience, one can talk to a utopian anarchist all day long about what has actually been observed to happen when government and law breaks down, when countries fall into anarchy, but it won’t make any difference. Those weren’t “real,” it won’t happen that way next time. Indeed, one utopian anarchist proposed the only reason I doubted whichever utopia he was advocating would appear under anarchy was that I was thinking what “the system” wants me to think. The system wants me to appreciate law, government. I need to free my mind from the system. Ironically, the practical problem I see with utopian anarchists is that in their zeal to escape the ostensible yoke of political democracy, they play directly into the hands of economically powerful fascists, who are also working to bring down democracy. That’s why I quite often refer to utopian anarchists as tools of right wing fascists, apparently unwitting proponents of a decline in freedom and an increase in tyranny, the opposite of their stated or intended goals. It’s also why I requested the fellow concerned the system may have gotten to my mind to please be sure the system hadn’t gotten to his own mind, wasn’t encouraging his support for utopian anarchism for practical reasons, to further the cause of fascism.

The right wing anti-democracy ecosphere in the USA includes not just anti-democracy bad economics in the conservative style, but a host of related ideologies and creeds, “Austrian” economics, “libertarianism” / fake anarchism, utopian anarchism, etc. Rarely do any of them advocate explicitly for authoritarian right wing government, fascism, but they all wish to see an end to our current democracy. In a practical sense, they all support the cause of the economically powerful and the rise of fascism in the USA. It’s why, when we speak of “fascists” in the USA, we’re not necessarily talking about the leaders who may explicitly advocate it. We’re also talking about their clueless tools, their helpers who, as often as not, sincerely suppose they’re fighting fascism.