Bad Economics In The Communist Style

With respect to the Republican coalition to end democracy in the USA, I usually focus on the big players: fascism, theocratism, anarchism, blends like Christo-fascism, fake anarchism / “libertarianism.” Maybe this week I can say a few words about communism? May seem a bit odd and near to false equivalence. I’m not sure we here in the USA even have a proper anti-democracy communist party, nor politicians, pundits. The closest I’ve seen is the odd online anti-democracy “leftist,” and I usually rather suspect they’re fascist trolls. Nevertheless, for the sake of completeness, let me just say a few words this time on what I perceive as some unhelpful elements in certain strains of ostensibly “leftist” thinking that seem to me to parallel bad economics in the conservative style quite closely.

As with the suppression of normative or ethical issues and feigned replacement with positive issues in bad economics in the conservative style, resting on confusion about positive and normative, science and ethics, so also with Marxian scientific “materialist” analysis. This materialist analysis leads communists to their famous critique of what they call “capitalism,” in which the economic “system” based on material conditions of production, dominate and mold political systems, like bourgeois democracy, as well as ideologies, values, and so on. This seems often to lead those interested in this line of reasoning to downplay the significance of voters discussing normative or ethical issues, including those in Marxian economics, as well as the ability of voters in democracy to revise market systems. Instead, improvement of the (economic) “system” is meant to be a technocratic issue in which those who know are meant to do what’s required, after which the thinking of the people reactively comes along, an idea that has famously led them down anti-democracy, authoritarian paths. 

Ironically, this determination democracy is not important, captured by economic power, merely a rubber stamp or way of legitimizing the economic system, can lead these “leftists” to make common cause with anti-democracy fascists as far as the goal of ending democracy. Historically, one pattern has been for communists and fascists to work together to end democracy, then slug it out on the streets to determine which group of proposed technocrats will administer the economic system the ostensibly correct way. Sometimes one, sometimes the other. In the case of 21st century USA, of course, we would be talking about fascism as the result of any such anti-democracy revolution. We have a powerful, popular, well-funded, right wing, anti-democracy fascist movement in the USA, but no real anti-democracy communist movement.

Materialism surely has a kernel of truth. Without the internet and its ability to allow random individuals to bypass the power of the gatekeepers, I wouldn’t be writing fascinating little threads like this one, but it’s not only that, surely. Ideas matter. Philosophy matters. Fighting bad economics in the conservative style is all about making plain the normative or ethical choices that must be made, including relating to economic policy, establishing voters should discuss, decide them using democracy. Bad normative economics obscures those normative or ethical choices, downplays the significance of voters, democracy in addressing them, portrays them as a positive, scientific or logical matter of immutable laws of nature of one sort or another. We should fight bad economics in all its forms. Economic systems entail normative, ethical choices that should not be resolved by ostensible ethical arbiters or technocrats of either right or left wing varieties who may, of course, discuss, give ideas, in a democratic setting.

The science of economics, the positive bit, not normative evaluation but prediction of empirical phenomena, or fact, logic, math, is different. Thus, fighting bad normative economics depends crucially on being able to distinguish normative issues from positive issues. But there’s no real distinction between positive and normative issues you say, harkening back to a bit of bad philosophy from the 1970s? Fine. Next time. Positive and normative. Again. Because that’s the way I roll.

Recapitulation of Bad Economics

I thought I might take a step back this week and do a general recapitulation of my program of distinguishing real neoclassical welfare economics from anti-democracy bad economics in the conservative style and, more generally, of defending the ethos of democracy.

The basic issue I’m concerned to address is a rhetorical bait and switch between two often conflated but distinct intellectual artifacts: (real) neoclassical welfare economics on the one hand, and anti-democracy bad economics in the conservative style on the other hand. Neoclassical welfare economics is a normative or ethical theory taking a similar form to a positive or scientific theory with which it is often confused or conflated, “neoclassical economics” (note no “welfare"), which is not about normative issues but empirical prediction. Although I sometimes talk about the positive or scientific theory and have long been interested in some issues derived from philosophy of science relating to the status of that intellectual artifact, my primary area of interest recently is the normative or ethical version. Rather than do a general characterization of neoclassical welfare economics and bad economics in the conservative style first, then give particulars, let me switch it up this time and talk about three particulars first, then generalize to what’s going on.

In neoclassical welfare economics, “utility” refers to individual preference rankings and the fundamental normative proposition relates to individuals expressing their own preferences. Assumptions are introduced to remove ethical controversy about that proposition. For example, assuming full or perfect information and rationality eliminates situations where one might dispute the ethics of not interfering with others following their own preferences, so no false beliefs, addictions, mental illness, delusions, manipulation, and so on. Anti-democracy bad economics in the conservative style applies those same conditions to ethical reasoning in realistic contexts, in which those conditions appear as false factual premises, which should lead one to reject that ethical theory as inapplicable in that context. Rhetorical justification comes in two forms: one positive, one normative. The positive version says because those false factual premises are used as false simplifying assumptions in ostensibly successful empirical engineering models, we can think of them as true. That’s false. The normative version swaps out the false factual premise for a normative proposition people should be fully or perfectly rational, informed. That adds content to the normative argument in neoclassical welfare economics and requires additional factual premises for evaluation.

Moving on, neoclassical welfare economics addresses a world in which the theoretical subjects are presented as not having preferences about potentially controversial social ethics, government, economic power, politics, law, the normative significance of preferences, and so on. Again, anti-democracy bad economics in the conservative style attempts to inappropriately apply those same conditions to ethical reasoning in realistic contexts and, again, the justification can take two forms: a false factual premise or a dodgy external ethical proposition. The positive version is people do not, in fact, have preferences on social ethics, don’t care about fairness, justice, the welfare of others, and so on, based again on faulty reasoning relating to the ostensible empirical usefulness of theories with that false simplifying assumption. The normative version is people shouldn’t have such preferences, shouldn’t be concerned about social ethics, fairness, justice, the welfare of others, etc. Again, that adds dodgy content to the normative argument in neoclassical welfare economics, which does not argue that.

How about one more, then I’ll generalize a bit about what’s going on? In neoclassical welfare economics, economists qua economists are not meant to delve into controversial ethical issues relating to resolving interpersonal conflicts of preferences, allocating resources. It’s called distributional indifference, and it supports certain results that hold within the rarefied theoretical context of neoclassical welfare economics involving the normative status of perfectly competitive market outcomes. Anti-democracy bad economics in the conservative style attempts to apply those results in reality without accounting for the fact others, interlocutors, subjects, even economists not qua economists, may and do have ethical beliefs relating to resolving interpersonal conflict.

What’s going on in these and similar instances? Neoclassical welfare economics is (ostensibly) about eschewing, avoiding (most) ethical controversy using various theoretical stratagems. It results in a normative or ethical theory with very little or no content relevant to reality. The main finding of neoclassical welfare economics is a negative result showing how little one can say about economic issues, allocation of resources, markets without taking up potentially controversial normative or ethical issues, which I suggest require democracy to address. Anti-democracy bad economics in the conservative style is the proverbial evil twin of neoclassical welfare economics. It suppresses awareness of the theoretical stratagems used to avoid ethical controversy and instead ignores, suppresses, fails to account for them in reality. Anti-democracy bad economics in the conservative style finds the opposite of what neoclassical welfare economics finds. It concludes one should prevent voters, giving their ethical views relating to economic issues via democracy, from “interfering with” or “distorting” markets. Where real neoclassical welfare economics is limited indeed, strives to avoid ethical controversy; bad economics in the conservative style is the opposite: expansive, aggressively engaging in ethical controversy, the proverbial bull in the china shop.

In practice, confusion between the two intellectual artifacts involves playing with terms like utility, welfare, optimality, efficiency, value; rhetorical stratagems like level issues, actors and roles, fake indifference, roadblocks; confusion between normative, positive. One locus of confusion is switching back and forth between two different contexts: reality, on the one hand, and the arbitrary, restricted, theoretical context of neoclassical welfare economics, on the other hand, which I often call the Fairy Land of Economic Theory. Another way of describing that locus is misrepresenting what is, from the perspective of reality, the ethical half-theory (at most) of neoclassical welfare economics, as a full one, reminding me I sometimes have fun noting how critics can say the same thing in different ways. Such issues make up most of my discussions of bad economics in the conservative style. But my even larger goal is defending the democratic ethos, so I sometimes address what I see as the other main bases of the rise of anti-democracy fascism in the USA: racism, bad religion. (That last is more relevant for my Twitter program than this blog, which focuses on economics, but maybe those other issues sometimes appear here as well.)