The Central Conceit Of Bad Economics

The central conceit of bad economics in the conservative style is to ignore the role of economic power and thus also the ethics of economic power, exogenous to neoclassical welfare economics, to conclude market results ethically optimal. Let’s discuss.

In markets, interpersonal conflicts of preferences as over the use of scarce resources are resolved using economic power, plus some desire, of course. Desire with no economic power does not call forth resources, and economic power will call forth resources with only a modicum of desire. That’s why theoretical results from real neoclassical welfare economics are predicated on excluding “equity” concerns, that is, concerns about the fairness, justice, ethical quality of the distribution of economic power or more generally the resolving of interpersonal conflicts of preferences. As indeed there are always disagreements relating to interpersonal ethics, the resolving of interpersonal conflicts of preferences, the distribution of economic power, the use of markets, evaluation of market results will always devolve upon the controversial interpersonal ethical involved.

Bad economics in the conservative style uses various rhetorical stratagems to suppress or ignore the role of economic power and the ethics involved to underhandedly support exogenous normative propositions relating to use of markets, distributions of economic power, allocation of resources. I often discuss the more arch and thus interesting to me rhetorical maneuvers one finds in high level bad economics in the conservative style, as fake indifference, roadblocks, positive analysis of normative theory, “methodological individualism,” actors and roles, etc. However, one needn’t do all that to see the phenomenon in question. Sometimes I hear remarkable quick takes from bad economists. 

One conservative economist told me economic power and thus budget constraints are irrelevant to consumption decisions, which is why poor people can buy good coffee. Yes, according to that fellow, where resources ended up going in markets was purely a matter of where people wanted them to go, as their consumptions decisions were not contained in any way by their economic power or budget constraints. Poor people simply didn’t want anything. Another conservative economist told me economic power is theoretically relevant but as a near enough approximation we can assume everyone has the same economic power, so it drops out of the equation, illustrating a very typical yet unfortunate mixing of positive and normative methods in economics. As a matter of fact, we do not all have the same economic power. Indeed, the US is famous for its unusually unequal distribution of economic power with many poor people and a small tail of vastly rich people. And course, it’s economic power, not bodies, that matters to markets. Of course, hypothetically, if everyone did have equal economic power, I suppose consumption decisions would more directly relate to differences in desire, but if one wants to understand the role of interpersonal ethics in real economics, try suggesting to someone we just equalize economic power. That’s because strength of desire as illustrated for example in preference ranks looms large in neoclassical welfare economics as it’s the only ethical issue allowed, but in reality, its significance pales in relation to interpersonal ethics concerns like equity, fairness, justice, welfare, etc.

My point here is just to clue people in to the overall objective addressed by the large body of dodgy rhetoric in bad economics in the conservative style: resolving interpersonal conflicts of preferences one way, not another; allocating scarce resources to one objective, not another.  Of course, given everyone has views on interpersonal ethics, it’s perfectly fine for one to propose ethics supporting one’s preferred resolution of interpersonal conflicts of preferences, distribution of economic power, use of markets, allocation of scarce resources, economic objectives, equity. That’s not what I mean by “bad economics,” although if one heard the explicit ethical arguments one might well disagree with them and consider them bad leading to “bad economics” of another sort. I suppose that’s one of those level issue that lurk behind so much confusion and conflict. (I call as a “level issue” any situation in which the same concept or term is applied at different points in an argument, as the “bad” in “bad economics” may refer to either inept philosophy with missing elements or proper philosophy with implausible ethical inputs or false factual premises.) No, I call it “bad economics in the conservative style” because it does what is known as a bait and switch, with the less controversial ethical half-theory of neoclassical welfare economics serving as bait, which is then switched out for a much more controversial ethical full-theory on the sly.

US Conservative Use Of The Term “Communism”

I thought this week I might discuss the following rhetorical question and answer. Q: “What do adherents of anti-democracy bad economics in the conservative style call those who understand and promote real neoclassical welfare economics?” A: “Communists.” I thought of this the other day after hearing yet another conservative, right wing, Republican fascist banging on about “communists” everywhere, the communist threat to the USA. I looked around. “Where? Are they under the bed?” Slowly it dawned on me. He meant me. I was the communist.

The issue, unsurprisingly, has to do with normative beliefs relating to equity and interpersonal ethics. Such beliefs are famously excluded and thus exogenous from real neoclassical welfare economics due to the idiosyncratic and more than a little confusing definition of “utility” in that theory. Real neoclassical welfare economics is incapable of evaluating economic results. Doing so requires additional exogenous normative inputs, from somewhere, and although the notion is not developed in that theory, if one supports the democratic ethos, one supposes from voters, the governed.

Bad economics in the conservative style misinterprets real neoclassical welfare economics to say one should not “distort” or “interfere with” markets, one should simply strive toward any near enough approximation to an unreal theoretical “perfectly competitive” market or if there, stay there. They pursue this argument, meant to mimic the results of discredited classical economics with its rather more conventional definition of “utility” and “welfare,” using various clever rhetorical maneuvers including terminological equivocation, conflation of issues, word play, etc. Working through the rhetoric bad economists use to switch out real neoclassical welfare economics for bad economics in the conservative style is the mainstay of what I write about it. It’s great fun but it’s slow going because the rhetoric is rather clever, arch, tricky. I’d like to do it all every time, right now, but I’m rather afraid it might make eyes glaze over or even heads fall off. So here I’ll just say what’s going on, leave it at that.

To return to our theme, those who support bad economics in the conservative style do so to rhetorically promote and defend certain views on equity, ethics, the resolving of interpersonal conflicts or preferences, allocation of resources, that are external to real neoclassical welfare economics. Because they associate their favored conservative normative or ethical views with their flawed understanding of economics as bad economics in the conservative style, they call as “communists” those with differing normative views or even those who support voters registering different views. In this way, they will label as communists anyone who correctly understands conventional, traditional, neoclassical welfare economics for what it is, eschews bad economics in the conservative style, and understands the importance of democracy and voter input for normatively optimal economic policy. 

I’ve pointed out the irony involved before in calling as “communists” those who support democracy and its role in economics given the main or one of the primary problems of communism, at least in the eyes of many liberals, is its anti-democracy authoritarian nature. But yes, if one is an adherent of anti-democracy bad economics in the conservative style, one may well see what one considers “communists” everywhere, just anyone who understands real neoclassical welfare economics, and anyone who supports democracy, the US Constitution.