The US Civil War And Bad Economics

I thought this week I might discuss some possible connections between the rise of anti-democracy sentiment in the USA, bad economics in the conservative style, racism, bad religion, slavery, and the US Civil War. Why? Some things just never get old.

Those educated anywhere except perhaps some of the southern US states of the old CSA may understand the important role slavery played in the economy of colonial North America and the early USA. Kidnapped Africans were once a very important category of private property in the USA. Laws supporting slavery were originally created by the quasi-democratic or democratic governments of the colonial powers of old Europe, later the USA itself. They expressed the views of the voters on one aspect of the ethics of economic power: the definition of economic power. The ethics of the definition of economic power is about who should legally own what and why. It subsumes property “rights,” although that formulation is famously prone to equivocation between the notion of legal “rights” and ethical “rights,” two very different things. Many voters influenced by pseudo-scientific European racism, bad religion, and one supposes a healthy dose of greed, supported the institution of slavery for the first hundred years or so of the existence of the USA as a sovereign nation. However, in the mid-nineteenth century large numbers of voters in the USA began to turn against the ethics of economic power expressed in the institution of slavery and vote against it, leading to severe social and political tensions culminating in the US Civil War. 

One may say the US Civil War was fought largely over the ethics of economic power and, in particular, the perceived relationship between democratic government and laws generated by democratic government defining that economic power, that is, legal property “rights.” In a sense, there were (at least) two levels of intellectual controversy going on (and you know how much I love level issues): One concerned the ethics of slavery, the merits of racism, religious issues. One concerned the role of democratic government, liberty, freedom, rights. In the view of many southern slaveholders and hangers on whose fortunes or livelihoods depended on slavery, voters via democratic government had no ethical right to pass laws changing the definition of economic power, coming for what they saw as their private property. In the minds of the old Confederates, the war was about tyrannical democratic government trying to take away their liberty or freedom to own others as their slaves, trampling upon their property “rights,” stealing from them, picking their pockets, and so on. Indeed, a common take among southern conservatives even now is that the US Civil War was about “states’ rights,” in particular, states’ rights to decide the issue of slavery, rather than the federal government, as opposed to the ethical and legal issues of slavery, per se. Why states’ rights, in particular? Presumably because they felt they had the votes at the state level to get what they wanted. If not, one assumes the issue would have been local rights, and if not local then individual rights. The man issue was rights superseding democracy.

Of course, not all southern conservatives were on the same page on that. Some supposed the main issue was indeed the ethics of slavery and became vociferous proponents of racism, insisting slavery was ethically proper given the proposed differences between the “races.” Some of those racists developed a hatred for the science, education that called their racism into question, later extending it to science, education calling into question other random dodgy theories as on economics, religion, human sexuality and gender, climate change, and so on. Obviously, the supporters of “race” based slavery developed an underlying hatred for multi-“racial” democracy, which did not respect the proposed science of racism, and involved what they saw as the wrong sort of people having voting rights.

Yet other southern conservatives busied themselves with an obnoxious, ostentatious, belligerent form of Christianity meant to establish, broadcast their own supposed religious, moral superiority as an antidote to the notion support for slavery implied a deficiency in that area. The religiously oriented expressed a natural hatred for democracy as well, as voters might pass laws inconsistent with their theological findings, including about slavery, and especially for democracy espousing separation of church (religion) and state, as in the US Constitution.

The heirs to the conservatives of the old CSA found a natural home in anti-democracy bad economics in the conservative style and its sequelae, which obscure the ethics of economic power and the role of voters, democratic government, in establishing laws in that area. One can’t help but detect some geographical difference in the acceptance and promotion of bad economics in the conservative style, related fake anarchism / “libertarianism,” and even utopian real anarchism, all of which seem especially strong among southern conservatives. Similarly, one can’t help but detect a geographic difference in attitudes toward racism, religion, science, education, democracy, the US Constitution, the law, our national government, although views typical of the old CSA are now typical in rural areas, small towns throughout. It wouldn’t be unusual today to drive though a rural or country area in the northern USA, once the land of proud yankees fighting for democracy, the US Constitution, law, the USA, against slavery, only to find the stars and bars of the old CSA wafting in the wind. Thus, as others have noted, it is tempting to see the struggle against anti-democracy sentiment based in bad economics in the conservative style, bad religion that lusts after worldly power, and racism, as simply a continuation of the US Civil War by other means. The cultural themes of the old slave-based south may indeed have risen again, giving sense to the renewed quest for a “national divorce” by the likes of Rep. Greene (Republican - Georgia). One wonders, will pro-democracy culture, the old northern yankee spirit, rise as well? And how does this all too American framing of our current brush with anti-democracy sentiment align with European style fascism, so popular in so much of the USA just now? Quite well indeed, but I suppose that must be an issue for another day, quite a long post already. 

What’s my point? Other than that history is interesting, may help one understand the present? Simply, we’re dealing with serious, significant intellectual themes and conflicts just now. Complacency, indifference to the underlying issues seems singularly unwise.

Market Utopianism And Bad Economics

Is this a good time to review how utopian beliefs related to markets (as in “free” markets) are generated by the rhetorical program of anti-democracy bad economics in the conservative style? Seems like it’s been a while. This post might require some familiarity with real neoclassical welfare economics and the normative arguments made in that theory relating to “utility,” “social optimality,” and so on. If you’ve never heard of it before, maybe catch you next time? In a couple of weeks?

Real neoclassical “welfare” economics is a normative argument based on individual preference rankings (confusingly called “utility”) discussing the normative optimality of certain market structures under certain conditions. Sound familiar? Perfect competition, that sort? The theory famously explicitly sets aside, ignores, ethical issues relating to resolving interpersonal conflicts of preferences, allocating scarce resources, which make up the lion’s share of ethical philosophy. That’s why I call it an ethical half-theory (at most). When one applies normative neoclassical welfare economics in realistic contexts, one must step outside that theory to think about the difference between the factual premises used in that theory and reality, but also about the exogenous ethical issues set aside in that theory. Certain normative results are specific to the theoretical world of neoclassical welfare economics, that is, specific to particular factual premises and the setting aside or ignoring of certain ethical issues most or all individuals care about, every society must and does address. One of those results is famously a proposition about any “perfectly competitive market” result being normatively optimal relative to the normative consideration of individual preference rank (only), and being normatively indistinguishable from any other such result.

Setting aside the very real and significant issue of the relation of the factual premises required for that normative or ethical result and reality, the main issue here is that that result does not hold when one re-introduces the exogenous normative or ethical content. When one re-introduces the exogenous ethical content, any person may view any instance of such a market result normatively inferior to any result that differs from it along the dimension of the resolution of interpersonal conflict of preferences, allocation of resources. This includes not only different perfectly competitive market results, but other market or non-market results. Nor is it the case that attaining any one such result necessarily makes it easier or more feasible to attain any other, and indeed may complicate it. For example, it may complicate it if the distribution of economic power is linked conceptually to some component of such a market, for example, labor and capital markets. Indeed, such complications may logically rule out such change, not just make it more costly or difficult. Thus, the ethical half-theory of real neoclassical welfare economics implies normative indifference to attaining or maintaining any particular real instance of a perfectly competitive market, as well as to the use of markets, economic power, to allocate resources in any given case.

Bad economics in the conservative style uses rhetorical techniques including what I call “fake distributional indifference” to give a different result, basically by treating reality like the world of economic theory, or equivalently treating the ethical half-theory as a full one. In bad economics, economists are cast as expressing their own full ethical theory resting on very simple, uncontroversial premises, with which others may disagree, saying we should strive always to establish or maintain any real instance of a perfectly competitive market. This places economists in the role of ethical arbiter, taking sides on ethical issues relating to the resolution of interpersonal conflicts of preferences, the allocation of scare resources, jumping into the ethical fray while pretending otherwise. It’s rhetorical chicanery. It leads to utopian beliefs about markets because it generates the idea economists propose any real instance of a perfect competitive market is ethically or normatively optimal based on very simple, relatively uncontroversial normative or ethical inputs or propositions. This then leads to anti-democracy sentiment because it portrays no useful role for activist democratic government in market systems, for example, to transmit the ethical views of voters relating to the relevant exogenous normative or ethical issues involved. It leads to bad economists presuming to call the ethical shots, lambasting other people, voters, democracy, for daring to “interfere with” or “distort” what they deem ethically correct results, supporting anti-democracy fascists wanting technocratic control of economic policy. It’s not real neoclassical welfare economics, which presents no argument for preferring any real instance of a perfectly competitive result to any other market or non-market result that differs from it according to how interpersonal conflicts of preferences are resolved.

Of course, there are normative or ethical arguments one can make for any given real instance of a market result being normatively optimal based on ethical beliefs relating to the definition, distribution, use of economic power to resolve interpersonal conflicts of preferences. Those arguments are not utopian per se, and if they’re explicitly made they have the same status as any other ethical theory of that sort, something for voters to evaluate according to their subjective moral senses. However, it’s not real neoclassical welfare economics. It’s also not what I call bad economics in the conservative style, because as I’m fond of saying, what puts the “bad” in bad economics is not that I personally disagree with the normative propositions involved but the fact they’re hidden, implicit, opaque, unclear.

Bad economics in the conservative style creates confusion and conflict, presents as normatively or ethically uncontroversial things that are controversial, obscures ethical issues and the role of democracy in market systems. It’s cynical, insincere, corrosive, and anti-democracy.

The Positive Normative Distinction and Bad Economics

Maybe this week I can have another go at the positive normative distinction, since I contend without it one can never really hope to come to grips with anti-democracy bad (normative) economics in the conservative style. Sound like fun? Let’s do it then. I’m especially concerned to address a bit of unhelpful bad philosophy, based in perfectly fine but commonly misunderstood philosophy of science from the 1970s, that tends to complicate discussions of bad economics in the conservative style.

Positive propositions relate to observable, empirical phenomenon, facts, statements of what “is.” Normative propositions relate to ultimately subjective values, ethics, statements of what one supposes one “ought” to do. They are fundamentally different sorts of propositions. That distinction is crucial to understanding anti-democracy bad economics in the conservative style because the relevant issues involve normative propositions, both those actually in neoclassical welfare economics and those slipped in through the back door in bad economics.

Now in the philosophy of science of the 1970s, at least, a great deal was made of potential normative influences on the conduct of generally positive science in terms of research programs, development, funding, etc., but even at the level of theory evaluation. The points are perfectly valid. Scientists are humans who have normative beliefs, values which may enter into their thinking relating to the everyday conduct of science, what they choose to study, investigate, what they try to ignore, hope to conclude true or false, etc. In general, these interactions may raise the specter of bad science. For example, many medieval scientists were quite interested in establishing the sun traveled around the earth, rather than vice versa, to accommodate religious views having normative implications as well. They gave it a shot, but of course eventually they determined no, actually the earth travels around the sun. That’s how the math worked out. That was reality. Some likely kept trying to work it out differently, but at some point the evidence was overwhelming, science moved on. The point is that the development and conduct of science, including even the evaluation of scientific theory, the degree of evidence required for any group of scientists to move on, accept a result established, may sometimes involve normative considerations.

Did philosophy of science in the 1970s thus suggest no distinction may be made between positive and normative propositions? That ultimately whether the earth goes around the sun or vice versa is just a matter of subjective normative or ethical belief? Of course not. No, it established simply the conduct of ostensibly positive science, addressed to positive, empirical, reality may be influenced by normative considerations, they may interact. That’s all. On the normative or ethical side, one sees even more obvious interaction. An ethical theory will generally involve both factual premises, the truth of which will matter if that theory is meant to be applied in reality, and logic, hence, one may say any applied ethical theory is not purely normative but will contain positive elements as well. Does the presence of positive elements in normative ethical theories meant to establish what one ought to do in some real situation mean there is no distinction between positive and normative propositions? Of course not. Only that applied ethical theories involve both.

The interactions between normative and positive considerations in generally positive science or generally normative ethics is sometimes interpreted to mean one should not identify science as positive, ethics as normative. One sees the technical point, but some care seems wise. What can easily happen if one misstates or overstates the significance of the interactions between positive and normative propositions in science and ethics is one may end up seeming to imply science is ultimately subjective or ethics ultimately objective, empirical. It can also lead to methods of positive evaluation being applied to normative propositions and vice versa, for example, one may lose the distinction between a false but simplifying assumption in a positive theory and a false factual premise in a normative, ethical theory. That sort of confusion between positive and normative is rhetorically quite useful for anyone wishing to hide or draw attention away from the specifically normative or ethical content of neoclassical welfare economics, as well as related bad economics in the conservative style.

Ironically, many critics of bad economics in the conservative style espouse that sort of language because they feel it a useful response to the frequent contention by proponents of bad economics that their normative conclusions are based only on positive science, logic, or math. The argument confusingly conflates a criticism of positive, scientific economics as bad science with a criticism of normative economics, either neoclassical welfare economics or related bad economics in the conservative style, as bad ethical philosophy. Two different issues. Might the conduct of positive economics be influenced in some way by normative considerations? Yes. Does normative economics involve positive factual premises? Yes. Under those conditions, is there any point to distinguishing positive and normative economics? Yes, of course.

Addressing anti-democracy bad economics in the conservative style requires understanding the specifically normative inputs and conclusions of neoclassical welfare economics, how they’re meant to be evaluated given factual premises, contrasting them with those of bad economics. One cannot effectively address bad economics in the conservative style if one conflates the relevant issues in normative, evaluative economics with potential normative elements in the evaluation of positive neoclassical economic theory as predictive science, a different issue.