I was thinking the other day of the damage done to the USA not just by bad economics in the conservative style but also by the neoclassical welfare economics on which it is loosely based. Maybe this week I can wax philosophical, just a bit?
The most controversial ethics, those most likely to lead to disagreement, conflict, are likely those addressing how to resolve interpersonal conflicts of preferences, such as over scarce resources, including via law, the very ethics exogenous to neoclassical welfare economics. One might have an ethical opinion about other people’s behavior in isolation, of course, but seems relatively difficult to contrive ethically controversial cases. Apple or orange? Who cares? Person doesn’t know apple poisoned? Well, maybe. Or is it his or her business to know? But two people fighting over some scarce resource, let’s say a vaccine? That’s rather more likely to result in ethical controversy, conflict, disagreement, isn’t it? Should person A or person B have it? Why? What’s so special about A’s claim relative to B’s or vice versa? Let’s say A is sick but poor, and if we use a non-market allocation system based on medical need, A gets the vaccine. B is not sick but economically powerful, and if we enforce a market solution based on economic power (and desire), B gets the vaccine. Controversial? Maybe. Does it matter if we’re not talking about a vaccine or anything else necessary for life like food, water, shelter, whatever? How about who gets the big shelter, the one with room for a pony? Anything change? Just saying. There are some potential issues.
Neoclassical welfare economics famously punts on such issues by focusing on individual preference rankings, confusingly labeled as “utility,” which cannot be used to address or resolve interpersonal conflicts of preferences. That’s what makes the theory an ethical half-theory. The ostensible rationale is to investigate what one can say without taking up controversial ethical issues, and the answer, of course, is very little indeed, because in reality we’re always faced with resolving interpersonal conflicts of preferences, allocating resources. People can get a little confused on that point because in the Fairy Land of Economic Theory, in which such issues and such ethics are banned, neoclassical welfare economics becomes a full ethical theory, capable of sustaining certain conclusions about optimal arrangements, etc. It’s why it’s always so important when dealing with someone working with neoclassical welfare economics to determine when they’re talking about the Fairy Land of Economic Theory, where certain results and conclusions apply, and when reality, where they may not apply. Bad economics in the conservative style, as I define it, plays games in that area, tries to muddy the water, conflates the Fairy Land with reality, incorrectly applies conclusions and results to reality that fail to account for the exogenous ethics that pertain to reality.
What happens when an entire society’s thinking on economic issues, the allocation of scare resources, is based on neoclassical welfare economics and the Fairy Land of Economic Theory? Important, vital, albeit controversial ethical issues go unaddressed, undiscussed. Until one fine day someone suggests changing the definition, distribution, use of economic power (extent of the market) and hence changing the resolution of interpersonal conflicts of preferences, the allocation of resources. Then the suppressed conflict comes flooding back. Or again, what happens when an entire society’s thinking on economic issues, the allocation of scare resources, is based on bad economics in the conservative style? Important, controversial ethical issues are slipped in, undiscussed, in a confusing, opaque, misleading, way. To reduce conflict and confusion relating to the ethics of economic power, the allocation of scarce resources, we must stop trying to avoid them, sweep them under the rug. Seek to understand real neoclassical welfare economics, especially its theoretical limitations. Understand and reject bad economics in the conservative style, which tries to slyly slip in exogenous normative or ethical content through the back door. Demand honest, sincere discussion of the necessary normative or ethical inputs. Don’t settle for misleading, opaque rhetoric.
One can’t understand the role of democratic government in market-based economic systems without understanding it as a mechanism for addressing and temporarily, contingently, resolving via law, regulation, policy, potential controversial ethical issues relating to economic power. One can’t understand the ethos of democracy without considering the fundamental basis of ethics, private versus social ethics, the role of voters, and the importance of debatable, changeable social ethics respecting the majority will for creating a stable, peaceful society. To stem the rise of anti-democracy, fascist sentiment in the USA, we must address the sickly and unhelpful legacy of bad economics in the conservative style; we must explain neoclassical welfare economics correctly, including its limitations, its ethical half-theory structure. To stem the tide of violent political extremism, we must learn to discuss the ethics of the definition of economic power (property), distribution of economic power, use of economic power (extent of the market) sensibly, calmly, rationally, agree a mechanism to debate, address.
