I saw some conservative pundit proposing “equity” is an “evil word” that causes communism and leads to war. Made me realize bad economics in the conservative style is not the only bad take on neoclassical welfare economics. Let’s discuss that this week.
The ethical half-theory of neoclassical welfare economics famously excludes ethical considerations relating to resolving interpersonal conflicts of preferences between people, the lion’s share of ethical thinking, an issue commonly referred to as an “equity” issue. “Equity” just means fairness, justice, ethical correctness relating to resolving interpersonal conflict. It’s a general concept that doesn’t really restrict one’s thinking about ethics, the basis on which one supposes interpersonal conflict should be resolved.
Real neoclassical welfare economics, in which the normative or the ethical content is meant to be relatively uncontroversial, cannot be used in isolation to make any real policy recommendation, it must be combined with exogenous normative, ethical inputs, say from voters. Those ethical issues involve the definition of economic power, the distribution of economic power, and the use of economic power to resolve particular interpersonal conflicts of preferences (extent of the market, when to use markets, when to use other mechanisms), etc. Anti-democracy bad economics in the conservative style deals with the ethical half-theory issue by slyly slipping in exogenous normative or ethical decisions and pretending or implying they’re part of neoclassical welfare economics, uncontroversial, etc. In anti-democracy bad economics in the conservative style, particular instances of real markets are presented as normatively or ethically significant because of underlying normative or ethical views relating to the definition, distribution, use of economic power. Those normative, ethical views typically involve support for certain legal property “rights,” certain mechanisms for distributing economic power (often labor and capital markets, inheritance, etc.), use of markets to resolve interpersonal conflict, allocate scarce resources. So anti-democracy bad economics in the conservative style deals with the ethical half-theory structure of neoclassical welfare economics by transforming it into a full ethical theory by surreptitiously supplying exogenous normative or ethical inputs to address equity.
However, bad economics in the conservative style is not the only way to play games with the distinctive, unusual ethical half-theory structure of neoclassical welfare economics. Another way is to imply only the normative or ethical content in that theory has standing. That approach likely comes from the old logical positivist philosophy linked to neoclassical welfare economics under the conceit it’s science rather than a normative or ethical theory. It leads to distinctive confusion about the positive normative distinction. The typical expression is what I call “positive normative” economics, in which the positivist notion ethics is “nonsense” (because not science) is combined with the notion neoclassical welfare economics is just a positive logical analysis of some such nonsense. Under this view, economists are justified working through the logical implications of whatever ethical nonsense was there when they got there, but not in evaluating it or worrying about the role of additional ethical nonsense that wasn’t there. They’re far above that. In that view, economists qua economists are perfectly justified presenting neoclassical welfare economics as a full ethical theory on behalf of those who might hold such views, be interested in that sort of nonsense, while not worrying about the role of “equity” concerns. That rhetorical maneuver can render the conclusions of neoclassical welfare economics absurdly controversial when applied in realistic contexts, as most people will have ethical views about how to resolve interpersonal conflicts of preferences, allocate resources fairly, etc. However, under the positivist conceit, economists are not meant to discuss, evaluate, defend that normative or ethical content, help anyone determine if it’s plausible or implausible, controversial or uncontroversial, etc. That would be a job for ethical philosophers.
In contrast, the opening post suggests yet a third way to deal with the ethical half-theory structure of neoclassical welfare economics: present thinking about equity, the ethics of resolving interpersonal conflicts of preferences, allocation of resources, etc., as evil. “Evil” is a normative or ethical concept, so the argument here does not involve slipping in equity arguments, or suggesting they’re nonsense, but that correct ethics says one should be an egoist who finds any ethics relating to resolving interpersonal conflict unethical. It’s an extremely controversial ethical position many would presumably find implausible. Again, resolving interpersonal conflicts of preferences makes up the lion’s share of most ethical theory. What one does in the absence of interpersonal conflict is generally not an issue.
The ethical half-theory structure of neoclassical welfare economics has created much confusion and conflict manifesting in a number of different ways. It’s clear academic economists have failed to adequately explain it, aggressively address it. They should step up their game.
