Conservatism And The Ethics Of Economic Power

It occurs to me as far as the ethics of economic power in conservatism goes there are at least five different perspectives in play. You know I like solving puzzles, clearing up confusion, that sort, so let me just say a few words about that this week. 

What got me thinking about this topic was that I was discussing the ethics of economic power with a conservative the other day and as soon as I broached the subject he responded with “ethics of economic power” and a laughing emoji, implying the very concept comical. That is, indeed, one of the distinctive conservative takes on the ethics of the definition, distribution, use of economic power. That there’s no such thing. It’s unimportant. No one has ethical views about economic power. But interestingly it’s not the only one. Let’s discuss.

Conservative views on the ethics of economic power are heavily influenced by the theory of neoclassical welfare economics but not directly, more commonly via the twisted version found in anti-democracy bad economics in the conservative style. As you may recall, I discuss often how the ethical half-theory of neoclassical welfare economics eschews consideration of the ethical issues involved in resolving interpersonal conflicts of preferences, needs, wants, desires, and thus the allocation of scarce resources. In economic contexts, those ethical issues involve the definition, distribution, and decision to use economic power in markets to resolve interpersonal conflicts of preferences. Thus, those ethics, the ethics of economic power, are exogenous to neoclassical welfare economics. As such, in realistic situations, if any ethical concerns arise relating to resolving interpersonal conflicts of preferences or allocating scarce resources, any questions of justice, fairness, equity, (real) utilitarian concerns about welfare, that theory expresses indifference. This distinctive and idiosyncratic form of ethical half-theory can create a lot of confusion, and the different takes on the ethics of economic power in conservative thinking derive from the different forms that confusion may take.

One form of confusion holds that neoclassical welfare economics itself expresses ethics relating to economic power, use of markets, allocation of resources, using only the ostensibly limited normative inputs involving individual preference ranks and unreal conditions. This leads some conservatives to suppose neoclassical welfare economics provides a scientific, mathematical, logical defense of certain ethics relating to economic power, markets, resolving interpersonal conflicts, allocating resources. Those conservatives wrongly interpret any disagreement relating to the ethical conclusions they falsely attribute to neoclassical welfare economics to be a matter of others not understanding the simple inputs, logic, math involved.

Other conservatives understand the exogenous nature of the relevant ethics, but simply assume them as givens in the guise of supporting status quo legal judgments on those issues. However, the ethics of supporting status quo law are exogenous to neoclassical welfare economics. Those conservatives propose they’re being neutral or indifferent to the ethical issues exogenous to neoclassical welfare economics by accepting the views expressed in status quo legal arrangements. However, that’s not the correct form of indifference, so it’s fake indifference.

Other conservatives mistake the program of generating an ostensibly uncontroversial ethical half-theory by eschewing consideration of interpersonal ethics for the absurdly controversial program of economists qua economists promoting amorality as far as interpersonal ethics. Those conservatives propose attempts to discuss the ethics relating to resolving interpersonal conflicts of presences, allocating scarce resources, including those relating to economic power and markets, are themselves, unethical.

Other conservatives are confused by the arbitrary restriction of preferences in economic models and use of false, simplifying assumptions in positive, predictive models and suppose neoclassical economics says people, in fact, have no interpersonal ethics. Those conservatives typically propose any attempt to discuss interpersonal ethics, equity issues, fairness, justice, real utilitarian concerns about real welfare as well-being, the ethics of economic power and markets, to be unreal, empty virtue signaling. Ethical views relating to appropriate, proper, ethical resolution of interpersonal conflicts of preference, allocation of resources, in economic and market settings about economic power, are important for most or all, and usually enthusiastically albeit often indirectly promoted.

Other conservatives acknowledge the significance of the ethical issues relating to the definition, distribution, use of economic power, express their own ethics honestly, and make no pretense of basing their theories on anything in neoclassical welfare economics. Those conservatives are doing just fine in my book. People should explicitly discuss the ethics of resolving interpersonal conflicts of preferences, allocating resources, the ethics of the definition, distribution, use of economic power. I may disagree their views, of course.

I’m just saying, if one’s impulse upon hearing someone broach the ethical issues relating to economic power, markets, resolving interpersonal conflicts of preferences, allocating resources, is to fire off a laughing emoji, one might not actually understand the real issues.

Freedom and Unfreedom

Some anti-democracy conservatives may suppose authoritarian government stopping voters in democracy “distorting” or “interfering with” markets the epitome of freedom, liberty. Some pro-democracy liberals may suppose the opposite. Let’s discuss that this week.

I suppose the conservative view by far the simpler of the two, so let’s do that first. “People want to do something in existing markets, but voters operating in a democracy use government to prevent it, regulate it, alter it; thus (democratic) government reduces freedom.” I don't suppose I need to say much about that argument as it’s a mainstay of political discourse in the USA, where people frequently expend copious quantities of hot air banging on about “free markets,” the perils of (democratic) government “controlling” the economy, that sort.

For the liberal take, one must first appreciate the role of government power and law in creating markets, making and enforcing laws defining economic power (legal property rights), distributing economic power via markets, inheritance, etc., and using economic power, markets. This issue seems often a great annoyance for many conservatives, who frequently prefer to argue markets do not rest on government power but things like Natural Law, the dictates of divine entities, a mystical meeting of the minds that would hold even without laws, and so on. That enters into the real or utopian anarchism I discuss often enough. For now, let me just say what happens in real anarchy is a rather ugly, violent, brutal affair, and the first thing people in those conditions try to do is make government, law, orderly markets, etc. 

The laws of interest here relate to the ethics of economic power I often discuss as exogenous to the ethical half-theory of neoclassical welfare economics that govern how interpersonal conflicts are resolved, where scarce resources go, what is produced, who gets what. The result of any real market hinges directly on prior government decisions, law, expressing someone’s views on the ethics of economic power, defining economic power in some way, distributing it in some way or ways, deciding when markets are appropriate, and so on. This raises the question of who is the exalted someone serving as the ethical arbiter for society on issues relating to economic power, allocating resources, expressed in law? Is it voters in a democracy, or some individual or group of individuals and, if so, why? For conservatives, it’s not an issue. They feel that someone should clearly be them. They or their representatives should be the ethical arbiters of such issues. They suppose they know the objectively correct ethical answers and all others need do is respect, obey those answers. Liberals, in contrast, may be hesitant to associate freedom in any general sense with any real economic system unless ethics and laws governing the use and results of markets are subject to the consent of the governed, no matter how unencumbered market behavior may be thereafter. For example, if some Grand Poobah theologian were to declare that, by Natural Law say, he owns ninety percent of all, but once that’s in place, we should just use markets to resolve any further disputes over resources, a liberal may question if that truly represents freedom. That is to say, liberals may associate with the concept of freedom the ability to express one’s views on ethical issues relating to the definition, distribution, use of economic power in markets. They may disagree freedom is simply accepting the views of autocrats.

Once we get past that issue, we get into an interesting example of a “level issue,” here whether it matters if democratic government addresses the ethics of resolving interpersonal conflicts of preferences, allocating resources, one way or another way. Conservatives typically propose a vast ethical difference in democratic government power if voters jump in late in the process and decide, say, a vaccine should be allocated by medical need, after having previously agreed general issues of economic power, conditions for markets. Similarly, for conservatives, there is a vast conceptual difference between deciding the legal rights, mechanisms, that distribute economic power via labor and capital markets, inheritance, whatever, and steps to “re-distribute” that economic power via taxes, policies, whatever. This thinking underlies their distinction between an “activist” democratic government and a “small,” “limited,” or “inactive” democratic government. Both address the same issues, fulfill the same functions, but one does it one way, the other a different way. 

Liberals, in contrast, are less prone to see active democratic government an outrage against freedom, and suppose voters who created markets may decide, for whatever reason, to later revise or even not use markets in some contexts. To them, it’s all basically the same issue. For liberals, there’s no essential difference in democratic government being involved at one stage of the process or another, the same ethical issues are involved, about resolving interpersonal conflicts of preferences, allocating resources, only the mechanisms differ. For liberals, the same ethical reasoning that applies to laws creating markets may be applied to regulating, revising, or not using markets at all, for whatever reason voters agree, such as so-called “market failures,” or “equity concerns,” or what have you. From the liberal perspective, there’s little substance behind the distinction between a distribution and a “re-distribution” of economic power, and they tend to think more in terms of voters deciding via democracy to distribute economic power in various ways. This generates liberals’ conviction that if the governed, the voters, are prevented by law, authoritarian government power, from expressing their views on the relevant ethical issues, cannot debate, offer opinions, vote on such matters, then they are not truly free. This comports with the US Constitution, which does not prohibit voters from taking up such issues, and allows voters to discuss economics, economic policy, economic goals, and more generally the resolving on interpersonal conflicts of preferences, allocation of scarce resources. In that way, what appears to conservatives as the “freedom” of what I call “small fascism,” authoritarian government limited to expressing conservative views on economic power, markets, economic policy, becomes for liberals a form of tyranny, unfreedom. 

Although one can discuss the issues in terms of conflicting ideas of “freedom,” they’re really more directly about who is meant to decide the ethics of resolving interpersonal conflicts of preferences, the allocation of resources, ethics and laws about economic power. The conservative insistence it’s all about their own ostensibly greater interest in “freedom” suggests they’re using the concept as a red herring, similar to using religious “freedom” to support Christo-fascism, state religion, or in the old days “liberty” to support slavery.

Equity and Bad Economics

I thought this week I might return to the concept of “equity” as it appears in neoclassical welfare economics and in loosely related anti-democracy bad economics in the conservative style. Seems always quite a lot of confusion in that area.

“Equity” is a normative, ethical concept that means fairness or justness. In the context of neoclassical welfare economics, it’s used to refer generally to all interpersonal ethics purposefully excluded from that theory. That is, in neoclassical welfare economics, “equity” refers also to questions of observable welfare, well-being, often associated with traditional definitions of “utility” but excluded from the definition used in that theory, arguably always but certainly in interpersonal ethics. 

If one reads competent accounts of neoclassical welfare economics that acknowledge the limited, ethical half-theory structure of the theory, you will find equity concerns raised as a perfectly legitimate reason to reject any normative conclusions made in that theory. In careful accounts of neoclassical welfare economics, regulatory “interference” with real markets may be justified either because of “market failure” (that is, the failure of real markets to correspond to false but simple engineering models) or equity. Two issues. Addressing those two issues may imply very different policies. For example, one may address “market failure” by trying to make a real market more similar to the perfectly competitive engineering model, but equity concerns may suggest revising or not using markets at all. In such cases, equity concerns dominate. For example, one may detect “market failures” in the market for a scarce vaccine during a pandemic, but if one supposes vaccines should be allocated by medical need rather than economic power in markets, that will take precedence.

However, despite equity concerns being a legitimate reason within neoclassical welfare economics to reject the normative conclusions of that theory that would hold in the absence of those equity concerns, those concerns are not meant to be discussed or evaluated in the theory. That’s the specification of the ethical half-theory status of neoclassical welfare economics that seems to present such difficulties for some, including conservatives who want neoclassical welfare economics to say something different and more than it does, for rhetorical reasons. Briefly, the ethical half-theory of neoclassical welfare economics does not actually tell one how to allocate scare resources, how to resolve interpersonal conflicts of preferences, or rather, it does, but only if no one has “equity” objections based in interpersonal ethics. Thus, when talking to a competent economist speaking from the perspective of neoclassical welfare economics, one will never end up in an ethical dispute about the normative conclusions of that theory relating to allocating scarce resources or resolving interpersonal conflicts. If one has any equity concerns, that is, concerns relating to interpersonal ethics, those are perfectly legitimate reasons within that theory to revise or ignore those conclusions, and there is no basis within that theory to dispute those reasons.

Those promoting bad economics in the conservative style play with the peculiarity of equity issues appearing in neoclassical welfare economics as an abstract concept while the identification, discussion, evaluation of equity arguments are exogenous to that theory. In their subtly incorrect, false interpretation of neoclassical welfare economics, they propose an economist speaking from the perspective of that theory should ignore or even oppose equity concerns and provide normative advice assuming the absence of equity concerns. In their telling, neoclassical welfare economics does tell one how to allocate resources, resolve interpersonal conflicts of preferences, although if one chooses to reject neoclassical welfare economics by introducing equity concerns, one may of course disagree. Thus, indifference to equity arguments transforms to fake indifference and opposition to equity arguments, and neoclassical welfare economics transforms from accepting equity objections as normatively legitimate to opposing equity objections. In that case, neoclassical welfare economics becomes cast as a full ethical theory and rejecting any of its conclusions based on equity concerns becomes equivalent to simply rejecting all of it, as rejecting any other full ethical theory because one disagrees it. This is rhetorically significant because the explicit normative, ethical inputs to neoclassical welfare economics are relatively uncontroversial, at least under the false factual premises with which they are commonly bundled, so rejecting it is a big deal. It’s a bait and switch. And on the flip side, the presenting of neoclassical welfare economics as a full ethical theory that recommends ignoring equity concerns, promotes amorality in interpersonal context, transforms it into an absurdly implausible and controversial ethical theory. This leads to a whole line of dodgy conservative rhetoric in which equity concerns, interpersonal ethics, are cast as bad, unnecessary, unreal, empty virtue signaling. Obviously, people support interpersonal ethics, want to live in a moral, just, fair, ethical society. Indeed, every real instance of a market will express and be consistent with some set of equity beliefs, which is a rather more plausible explanation of conservative support for those instances than unlikely or at least rare support for interpersonal amorality.

The underlying issue is whether equity, interpersonal ethics, is “in” or “out” of the normative or ethical theory of neoclassical welfare economics. The answer is clear but quirky, odd, tricky. It’s in, but only in a general conceptual way, not fully in, but certainly not out. The issues may then be further complicated by efforts of some economists to bring equity concerns, interpersonal ethics, back into economics via so-called “social welfare functions,” particular economists’ ethical views, in the context of “general welfare analysis.” That enterprise creates its own set of issues, as an awkward, incongruous mix of “utility” as individual preference ranks, undefined in interpersonal contexts, and economists’ personal stylings on ethics in interpersonal contexts. But that’s not really the issue here. The issue is not “economics,” writ large including general welfare analysis, but the theory of neoclassical welfare economics and how it’s misused to support anti-democracy bad economics in the conservative style, a sort of folk economics.

Neoclassical welfare economics says what it says, no matter how limited or attenuated its findings. It can’t be faulted for that. But what it says can easily be mischaracterized, misinterpreted, misused, and it can be criticized for that. Indeed, sometimes it seems purpose built.