I thought this week I might go over, yet again, what I suppose puts the “bad” in bad economics in the conservative style with an eye to establishing it’s not the normative content, per se, but how it’s identified, expressed, explained, discussed. Good times.
One apparently common view of how neoclassical welfare economics is meant to work is that it should accept as given existing laws relating to economic power, the definition, distribution, use of economic power to resolve interpersonal conflicts of preferences in markets. The ethical indifference to how interpersonal conflicts of preferences are resolved associated with the conceptual restrictions imposed by preference rank “utility” is interpreted in that case as accepting status quo laws, ethics relating to economic power, whatever they may be. It’s a position I often discuss under the rubric of “fake indifference” because it leads to paradoxical results if one attempts to rigorously follow through the implications of “utility,” which is another common view of what neoclassical welfare economics is meant to be about. What happens is that neoclassical welfare economics ends up seeming to offer normative advice on the optimal resolution of interpersonal conflicts of preferences when the definition of “utility” on which it is ostensibly based precludes it and was specifically designed to do so. What’s happening is support for status quo laws, values on economic power, even if one intends supporting them whatever they may happen to be, is itself an additional normative input, value proposition, that is clearly not based on “utility.” That additional value proposition, not based on “utility,” relating to economic power, resolution of interpersonal conflicts, allocation of scarce resources using markets, may, of course, be quite controversial. It requires identification, explanation, discussion, evaluation.
“Utility” was famously re-defined as individual preference ranks ostensibly to avoid controversial interpersonal ethics, particularly in a theoretical context (i.e., the Fairy Land) using false factual premises like perfect rationality, perfect information. That’s the whole point. But the point does seem sometimes lost on those accustomed to ignore the normative or ethical content of neoclassical welfare economics, who often see the redefinition of “utility” as more about positivist concerns, scientific restrictions on what we can observe. If one then tacks on an additional, unrelated value proposition supporting existing laws on economic power, markets, using those to support particular resolutions of interpersonal conflicts of preferences, that’s a big deal, it changes the entire nature of the exercise. Specifically, neoclassical welfare economics would then not be ethically uncontroversial when applied to the real world, and not just because of the false factual premises and other obvious differences between real people and theoretical ciphers such as preferences on ethics. It would also be ethically controversial because it contains pro-status quo value propositions, not based on “utility," relating to economic power, markets, the resolution of interpersonal conflicts of preferences, allocation of scarce resources, that are clearly controversial. It becomes a bait and switch in which hapless students, observers, may incorrectly suppose one can derive answers to controversial ethical issues relating to resolving interpersonal conflicts of preferences, allocating scarce resources, based on individual preference ranks alone.
And that, for me, is what puts the “bad" in bad economics. It’s not really the normative content supporting certain views on the ethics of economic power, resolution of interpersonal conflicts of preferences, but how that additional normative content is presented, or rather not. Before rushing into the substance of the controversial ethical issues involved, can we at least agree at a more general level we should discuss those issues honestly, sincerely, openly? Not try to pull a fast one on people? Not try to con them, trick them, mislead them? Because that’s really all I’m trying to do with my little campaign against bad economics in the conservative style. I’m not trying to argue how interpersonal conflicts of preferences should be resolved, where scarce resource should go. I just want people to talk about it better. Don’t get me wrong. I have thoughts on those issues, like everyone else, and I’ll be happy to tell you about them, and probably sometimes I do. We can discuss, vote. Just that’s not what I’m on about when I discuss anti-democracy bad economics in the conservative style.
