The Sacrificial Rites of Capitalism We Don’t Talk About — Lynn Parramore

Lynn Parramore reviews Suprita Rajan's A Tale of Two Capitalisms, which is about the intersection of economics with anthropology and sociology and the distinction between homo economicus of economics and homo communis (aka homo socialis) of anthropology and sociology — and ethics.

Ethos (ἦθος, ἔθος; plurals: ethe, ἤθη; ethea, ἤθεα) is a Greek word originally meaning "accustomed place" (as in ἤθεα ἵππων "the habitats of horses", Iliad 6.511, 15.268),[2] "custom, habit", equivalent to Latin mores.

Ethos forms the root of ethikos (ἠθικός), meaning "moral, showing moral character".[3] As an adjective in the neuter plural form ta ethika (τὰ ἠθικά), used for the study of morals, it is the origin of the modern English word ethics.

In modern usage, ethos denotes the disposition, character, or fundamental values peculiar to a specific person, people, corporation, culture, or movement. — Wikipedia

The etymology of the term "ethics" reveals that it can be traced to the customs of a people and later morphs into the dual meaning of the spirit of a people and the character of an individual. From this emerges the contemporary meaning of "ethics" as both individual and social in terms of right action and community-approved behavior.

While an act may not be illegal, that is, contra to positive law, it may be unethical in terms of an unwritten "law" as a tradition. Thus, liberalism is permeated with traditionalism. This is often overlooked in the narrow interpretation of liberalism, as in "Well, I didn't break any laws" as exculpatory. That excuse doesn't fly with the public.

INET
The Sacrificial Rites of Capitalism We Don’t Talk About
Lynn Parramore, Senior Research Analyst

Crossposted at Naked Capitalism

Ron Baiman — On the Neglect of Class in Neoclassical Macroeconomics

A lack of awareness of the importance of changes in class structure (via income distribution) is another important distinction between mainstream Neoclassical (NC) Keynesian macroeconomics and the Keynesian-Kaldor PK macroeconomic tradition that Friedman is working out of. Left PK heterodox economists incorporate class analysis as a fundamental driver of macroeconomic outcomes, whereas it is largely absent in mainstream NC macroeconomics as a fundamental driver of economic growth.…

The D & S Blog
On the Neglect of Class in Neoclassical Macroeconomics
Ron Baiman, Chicago Political Economy Group

Beatrice Cherrier — Theory vs data, computerization, old wine and new bottles: Morgenstern and Econometric Society fellows, 1953

[Oskar] Morgenstern proposed that candidates be required to“have done some econometric work in the strictest sense” and be “in actual contact with data they have explored and exploited for which purpose they may have even developed new methods.” Though remembered as the coauthor of one of economics’ most prominent theoretical treatise, The Theory of Games, Morgenstern also had a longstanding interest in statistical work. His feeling was that the Econometric Society and Econometrica editors overvalued “purely abstract work,” while stimulus should be give, to “papers involving data.”

The Undercover Historian
Theory vs data, computerization, old wine and new bottles: Morgenstern and Econometric Society fellows, 1953
Beatrice Cherrier

Yuriy Gorodnichenko and Gérard Roland — The role of culture on democratisation

Heresy! Economics professors bringing in sociology. The horror of it. Who knows where this could lead. And look where it led Kenneth Boulding, who left economics to participate in the development of general systems theory.

Social science studies usually explain democratisation of countries with the increase in incomes. In contrast, this column argues that culture is a neglected but important determinant of democracy. The findings show that countries with individualist culture democratise earlier than collectivist cultures that may remain stuck for a long time with relatively efficient autocracies.....

We compare decisions of collective action under an individualistic culture, giving social status reward to standing out and innovativeness, and a collectivist culture emphasising conformity and embeddedness in large groups (tribes, clans).

• Individualistic culture tends to create a demand for democracy, as individual freedom is fundamental for self-achievement. Equality before the law and limited government provided under democracy help protect individual freedom.
• Collectivist culture instead focuses more on the necessity of a benevolent ruler to create stability between different clans and groups. The emphasis is more on hierarchy and order, and freedom can be seen as endangering stability.

As I have mentioned previously, the categories of the vertical axis of the Political Compass would be more accurately labeled "law & order" at the pole now labeled "authoritarian" and "freedom" for the pole now labeled "libertarian."

Because of these cultural differences, when there is a window of opportunity for collective action in an individualistic society, however infrequent, revolt against autocracy will always occur, independent of the quality of autocracy, and will lead to democracy. In contrast, in a collectivist society revolts against good autocrats will be rarer. Windows of collective action will thus lead either to democracy or to the establishment of a higher quality autocracy. Collectivist societies may thus remain ‘stuck’ with a relatively high quality autocracy. In the long run, individualist societies will thus end up with a democratic regime, whereas collectivist societies will end up either with democracy or with a high quality autocracy. The implication is that individualist societies will end up more often having democratic regimes than collectivist societies, even if collective action occurs less often than in collectivist societies that might be better in coordinating collective action.

The problem with this analysis is cognitive bias toward individualism and therefore "democracy." The authors focus too much on the poles and thereby creating an excluded middle range that include most political systems today. There is no government on earth today that is a true democracy as a government of the people, by the people and for the people. However, there are still some absolute (despotic and nepotistic) autocracies like Saudi Arabia. The so-called democracies are republics that are actually oligarchic plutocracies. What the authors call "democracy" is actually plutonomy, or as US founding father John Jay, the first chief justice of the US Supreme Court, is reputed to have said, "Those who own the country should govern the country." This was largely the view of the other founding fathers and the US Constitution as well as the discussion around it reflect this bias.

Another matter that the authors overlook is the fact that freedom assume security, whereas security can exist independently of freedom. Therefore, individualism alone is not a sufficient condition for democracy.

Again, societies rarely have become successfully democratic in other than a minimal way of holding period elections without the development of institutions that support law and order in a democratic society. The United States was an anomaly in that it was a new nation, on one hand, and secondly, most of the people involved at the beginning were British. Britain has a long history of power gradually being devolved from the crown to powerful feudal lords, beginning with the Magna Carta, and then from the landed aristocracy to include an upper class of landed gentry under the manor system and then the owners of capital. As result institutions were already either in place or patterns available for adoption by the new government. Imposing democracy on countries without such an institutional heritage and developmental process has generally not worked as well as hoped for.

My conclusion is that since the authors are economists, they have a strong cognitive bias toward methodological individualism that has shaped their thinking on this matter. They need to think it through more deeply. Culture has many more factors that individualism and collectivism, and even though terms are biased in that they carry a connotative charge instead of being purely denotative. Conversely, some sociologists who do not operate under the cognitive-affective bias of individualism might see what the authors call "collectivism" as "tribalism," which implies a strong emphasis on social fabric and social capital, whereas "individualism" implies a weak emphasis on social fabric and social capital. Psychologists might see he individualism of homo economicus as implying alienation and detachment, and the holism of homo socialis as implying adjustment and connectedness.

Interestingly, the only real democracy was evidenced by so-called primitive people. Even Athens, the so-called cradle of democracy, was based on a slave economy that gave the Athenian (male) citizens the leisure to debate the issues. Some time ago, I saw a documentary of a tribe of about two hundred people in Panama that made decisions collectively by consensus sitting in a circle with all members of the tribe, even very young children. Everyone had their turn and the youngest children, who obviously didn't know what was going on yet, were encouraged to say something, which everyone listened to intently, too. As far as I know, the closest we got in the US  was the New England town meeting.

But I am glad to see economists venturing off the reservation.

vox.eu

The role of culture on democratisation

Yuriy Gorodnichenko, Associate Professor in the Department of Economics, University of California – Berkeley, and Gérard Roland, E. Morris Cox Professor of Economics and Professor of Political Science, University of California, Berkeley; and CEPR Research Fellow

Eric Schliesser — On The Moral Sciences

The eighteenth century term “moral science” (or “moral philosophy”—‘philosophy’ and ‘science’ are often treated as synonyms at the time) does not quite mean what we might think it means. And so when people urge on us to remember that economics was once a moral science and should be reformed back into some such science, they often reveal their ignorance about the past of economics (recall).

In writing about science morale, Condorcet, for example, understood "by this term all those sciences that have as their object either the human mind itself, or the relations of men to another.”[1] Moral sciences were opposed to physical sciences, and distinguished by the kinds of causes to be discussed. Moral sciences dealt with moral causes; and ‘moral’ meant something like ‘social.’ For example, institutions, norms, education, language, emotions, and property-relations (etc.) were all often thought of as moralcauses. (By contrast, geography, climate, mechanics, and matter-theory (etc.) were all physical causes)....

Another point of interest:

Now, Adam Smith has a traditional and demanding understanding of virtue. His most explicit definition is as follows: “virtue is excellence, something uncommonly great and beautiful, which rises far above what is vulgar and ordinary” (The Theory of Moral Sentiments 1.1.5.6,).

This is The Greek conception of virtue.

Arete (Greek: ἀρετή), in its basic sense, means "excellence of any kind".[1] The term may also mean "moral virtue".[1] In its earliest appearance in Greek, this notion of excellence was ultimately bound up with the notion of the fulfillment of purpose or function: the act of living up to one's full potential.

It is particularly Platonic.

Like other ancient philosophers, Plato maintains a virtue-based eudaemonistic conception of ethics. That is to say, human well-being (eudaimonia) is the highest aim of moral thought and conduct, and the virtues (aretê: ‘excellence’) are the requisite skills and dispositions needed to attain it.

It is also Aristotelian.

Aristotle emphasized the importance of developing excellence (virtue) of character (Greek ethikē aretē), as the way to achieve what is finally more important, excellent activity (Greek energeia). As Aristotle argues in Book II of the Nicomachean Ethics, the man who possesses character excellence does the right thing, at the right time, and in the right way.

Aristotle's ethics, or study of character, is built around the premise that people should achieve an excellent character (a virtuous character, "ethikē aretē" in Greek) as a pre-condition for attaining happiness or well-being (eudaimonia). It is sometimes referred to in comparison to later ethical theories as a "character based ethics". Like Plato and Socrates he emphasized the importance of reason for human happiness, and that there were logical and natural reasons for humans to behave virtuously, and try to become virtuous.

 Plato and Aristotle connected moral virtue with the good and beautiful. That is to say, the criterion of "right" is both ethical and aesthetic. Smith would call this the "moral sentiment."

Aristotle emphasizes throughout all his analyses of virtues that they aim at what is beautiful (kalos), effectively equating the good, at least for humans, with the beautiful (to kalon).^[9]

Plato and Aristotle held that happiness (Greek: eudaimonia) is the result or by-product of a virtuous life, that is, a life dedicated to excellence understood as unfolding one's full potential as a human being as well as a particle individual. This pursuit is the meaning of philosophy not as a study but as a way of life. In this sense, it has the a similar meaning to the ancient Indian concepts of dharma and yoga.

Quite evidently, even though this ethic is consequentialist, it is based on a notion of happiness or satisfaction far removed from the Utilitarian concept of utility that lies at the foundation of the neoclassical economic assumption of rational utility maximization. It is also different from Adam Smith in The Theory of Moral Sentiments. The following quotes are from Wikipedia.

The Theory of Moral Sentiments begins with the following assertion:

"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrows of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous or the humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it."

Smith departed from the "moral sense" tradition of Shaftesbury, Hutcheson, and Hume, as the principle of sympathy takes the place of that organ. "Sympathy" was the term Smith used for the feeling of these moral sentiments. It was the feeling with the passions of others. It operated through a logic of mirroring, in which a spectator imaginatively reconstructed the experience of the person he watches:

"As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. Though our brother is on the rack, as long as we ourselves are at our ease, our senses will never inform us of what he suffers. They never did, and never can, carry us beyond our own person, and it is by the imagination only that we can form any conception of what are his sensations. Neither can that faculty help us to this any other way, than by representing to us what would be our own, if we were in his case. It is the impressions of our own senses only, not those of his, which our imaginations copy. By the imagination, we place ourselves in his situation."

This was extremely prescient in that it anticipates contemporary discoveries of cognitive science regarding the operation of mirror neurons.

However, Smith rejected the idea that Man was capable of forming moral judgements beyond a limited sphere of activity, again centered around his own self-interest:

"The administration of the great system of the universe ... the care of the universal happiness of all rational and sensible beings, is the business of God and not of man. To man is allotted a much humbler department, but one much more suitable to the weakness of his powers, and to the narrowness of his comprehension: the care of his own happiness, of that of his family, his friends, his country.... But though we are ... endowed with a very strong desire of those ends, it has been entrusted to the slow and uncertain determinations of our reason to find out the proper means of bringing them about. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst, the passion which unites the two sexes, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them."

 But here Smith goes off the mark, arguably in his own day in Britain, and especially with respect to the British colonies. Smith was at heart an apologist for the rising bourgeoisie.

"The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species."

This is not too different from the ideas of the ancient Greeks however. Slavery constitutes the principal form of capital, and Aristotle argued that slavery was natural since some were better than other.

Digressions&Impressions

On The Moral Sciences

Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Science

Bill Mitchell — The superiority of economists!

Its the Friday lay day blog and today I briefly discuss economists. What a topic! There is an interesting article just published in the Journal of Economic Perspectives that examines the way economists think of themselves and other social science disciplines. It is a horror story really. Having been immersed in the profession for many years now, I sometimes forget how bad it is. Here is what the study found. The title is a deliberate double entendre. It is more about the way economists think they are superior rather than any absolute finding of superiority....

Smackdown follows.

Bill Mitchell – billy blog
The superiority of economists!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Simon Wren-Lewis — Encouraging dialogue between economists and social scientists

Encouraging that the mainstream is talking about this.

Mainly Macro
Encouraging dialogue between economists and social scientists
Simon Wren-Lewis | Professor of Economics, Oxford University

Thomas Piketty - "There Is No Economic Science"

Thomas Piketty - "There Is No Economic Science"

h/t Jan Milch

Bill Black — Gary Becker’s Nobel Prize for Getting It all Wrong: The Family

George Stigler celebrated Gary Becker as theoclassical economics’ schwerpunkt that led their blitzkrieg assault on other social sciences. Stigler proudly called economics the “Imperial” discipline. The idea that imperialism was a desirable trait is a typical example of Stigler’s blindness to history and human suffering. Stigler famously proclaimed that economics alone was actually a social “science” because only it had a theory of human motivation (maximizing self-interest)....

In this five part series I discuss these four areas and Becker’s role with regard to financial crises. Stigler was incorrect about other social sciences lacking a theory of human motivation or ignoring rationality and incentives. The series will become part of the book that I am co-authoring with Wesley Marshall on economists and economics that studies the manifold failures of recipients of the Sveriges Riksbank Prize. Theoclassical economics’ reductionist dogma of human motivation is one of its great weaknesses of these Prize winners. One of the ironies that I will develop in this series of articles about Becker’s embarrassing forays into other disciplines is that he abandons the dogma that all behavior is self-interested in his work on the family, uses the dogma in the fields of crime and addiction where it makes particularly poor sense and produces a series of errors, and inadvertently demonstrates the circularity of the dogma in his work on discrimination and on “rational addiction.”

New Economic Perspectives
Gary Becker’s Nobel Prize for Getting It all Wrong: The Family
William K. Black | Associate Professor of Economics and Law, UMKC

Theoclassical economics can simultaneously shrink the “pie” and in the infamous words of Citicorp’s ode to “plutonomy”:

“In a plutonomy there … are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the ‘non-rich’, the multitudinous many, but only accounting for surprisingly small bites of the national pie.”

Becker never evinced the slightest understanding of how discrimination systematically denies its victims the ability to make “the most of life.”

Bill does an excellent job of showing how Becker was both an intellectual fool and an ideological tool, not to mention being emotionally impoverished and morally deviant*. So much for his "rationality." And as Bill adds, "I need to emphasize that I am not making any of this up." Summary, "All of this is incoherent and bizarre."

On the Nobel Sveriges Riksbank Prize: "Economics is the only discipline in which one can achieve top honors for being proven disastrously wrong and having relied on obvious logical and theoretical flaws and abundant evidence."

*Confounding morality with efficiency is deviant. It is tantamount to claiming that morality is amorality. But such is the logic of maximizing self-interest "rationally."
 

Cameron K. Murray — Micro-foundations don't escape Lucas Critique

The fundamental flaw in conventional economic (econometric) modeling is the assumption of regularity that is supposedly supplied by microfoundations. "Microfoundations" assumes rationality and it is rationality that gives individual behavior regularity across individuals. It is the basis from assuming a representative agent as the totality of agents, disregarding supposedly irrelevant differences. Since all agents act rationally, it can be assumed, for example, that they are utility maximizers, and operate regularly irrespective of policy change and institutional difference.

This assumption is contradicted by empirical research in social science. The relationships of elements of a system, in this case individuals, are as important or more important than the individuals themselves in determining system outcomes. Murray cites a report of recent research by Joseph Henrich, Steven J. Heine and Ara Norenzayan of the University of British Columbia, The Weirdest People in the World, that calls into question the suitability of economists making assumptions based on personal introspection about rationality or even relying on psychological research on a limited population. "

As the three continued their work, they noticed something else that was remarkable: again and again one group of people appeared to be particularly unusual when compared to other populations—with perceptions, behaviors, and motivations that were almost always sliding down one end of the human bell curve.

In the end they titled their paper “The Weirdest People in the World?”(pdf) By “weird” they meant both unusual and Western, Educated, Industrialized, Rich, and Democratic. It is not just our Western habits and cultural preferences that are different from the rest of the world, it appears. The very way we think about ourselves and others—and even the way we perceive reality—makes us distinct from other humans on the planet, not to mention from the vast majority of our ancestors. Among Westerners, the data showed that Americans were often the most unusual, leading the researchers to conclude that “American participants are exceptional even within the unusual population of Westerners—outliers among outliers.”

Given the data, they concluded that social scientists could not possibly have picked a worse population from which to draw broad generalizations. Researchers had been doing the equivalent of studying penguins while believing that they were learning insights applicable to all birds.

 Fresh economic thinking
Micro-foundations don't escape Lucas Critique
Cameron K. Murra

Also, as Rumplestatskin, The basic flaw in all economic modelling

The question then becomes, is conventional economics descriptive or performative? Is neoliberalism assumed in the assumptions as a norm?

 

Matias Vernengo — Psychologists and the Surplus Approach

Naked Keynesianism
Psychologists and the Surplus Approach
Matias Vernengo | Associate Professor of Economics, University of Utah

Rumplestatskin — Economics is applied morality

Utilitarianism is the moral foundation of economics. The idea of the greatest good for the greatest number is intuitively appealing. But applying a utilitarian framework relies on value judgments about the desires, and a comparable measure of their intensity, of every individual. Some of the defining debates in economics over the past century have centred around the measurement and comparability of utility between individuals.

Thus any application of economics requiring estimation of costs or benefits is applying a judgment about the worthiness of competing desires of the population at large. That judgment is necessarily a moral one.

Utilitarianism is a subset of consequentialism (outcome-based), which is one of the major divisions of ethical theory along with deontology (rule-based), rights, natural law, divine injunction, casuist (case study), situational (love is higher than law), and virtue (character-based) ethics. Ethics is a subset of axiology or value theory, and also an aspect of theory of action.

Conventional economics simply assumes away millennia of debate and controversy over the relationship of the normative, prescriptive, and descriptive, as if economics is exempt from such considerations. However, the normative and prescriptive is built into human affairs and ignoring it simply creates hidden assumptions and unacknowledged biases.

Macrobusiness
Economics is applied morality
Rumplestatskin

Lars P. Syll — Teflon-coated defenders of rational expectations

Those of us in the social science community who have been impolite enough to dare questioning the preferred methods and models applied in neoclassical economics, are as a rule met with disapproval. But although people seem to get very agitated and upset by the critique — just read the commentaries on this blog if you don’t believe me — defenders of “received theory” always say that the critique is “nothing new”, that they have always been “well aware” of the problems, and so on, and so on....

Teflon-coated defenders of rational expectations

Lars P. Syll | Professor, Malmö University

Tarun Khanna — Studying India's Maha Kumbh Mela Festival

Between 2000 and 2010, the population of Delhi burgeoned from 15 million to 22 million while Shanghai's population swelled from 14 to 20 million. Compare that to the recent rise of an impromptu city near Allahabad in India: In the week after January 14, 2013, the first day of the Maha Kumbh Mela festival — during which Hindus gather for a sacred bath at the confluence of the Ganga and Yamuna rivers — around 10 million people had gathered there.

When the event ends five weeks later, approximately 100 million people would have moved into and out of Allahabad. (I say "approximately" because the precise numbers are difficult to come by.) It took 60 years for the population of Istanbul to grow from one to 10 million, and 50 years in the case of Lagos. At Allahabad, though, the population rose from zero to 10 million, give or take a few million, in just a week's time.

That's a slightly unfair comparison because the local government isn't going to put in place all the fixtures of a functional metropolis. However, it's only partly unfair. The Indian authorities do have to pull off the creation of a huge temporary tent city with minimal mishap. An enormous amount of urban planning, civil engineering, governance and adjudication, and maintenance of public goods — physical ones like toilets as well as intangibles such as law and order — and plans to deal with unexpected events goes into the creation of this city. Those are pretty much the main elements surrounding the creation of any city in the world.

There will also be a reasonably efficient dissolution of the city when the Kumbh Mela ends in late February, but that's another story. Some cities have declined over time, but I can't even imagine what it would take for one of the world's major metropolises to unwind.

The Harvard Business Review | HBR Blog Network / HBS Faculty
Studying India's Maha Kumbh Mela Festival
Tarun Khanna | Jorge Paulo Lemann Professor at Harvard Business School , Director of Harvard University's South Asia Initiative, and co-author of Winning in Emerging Markets: A Roadmap for Strategy and Execution (Harvard Business Press, 2010)

Gary S. Becker and Gary S. Becker — Have We Lost the War on Drugs?

After more than four decades of a failed experiment, the human cost has become too high. It is time to consider the decriminalization of drug use and the drug market.

Wall Street Journal
Have We Lost the War on Drugs?
Gary S. Becker, Professor of Economics and Sociology at the University of Chicago (awarded Nobel Prize in economics in 1992), and Kevin M. Murphy, Professor of Economics, University of Chicago Booth School of Business. Both are senior fellows of the Hoover Institution at Stanford University.
(h/t Ed Rombach in a comment at The Center of the Universe)

Even the arch-conservative Hoover Institute (and Wall Street Journal) is taking sense about this issue now. It's long past time to recall the lesson of Prohibition. And that involved repeal of a constitutional amendment. Fixing this self-created problem today is much simpler.

Bill Mitchell on a roll this week

I don't usually link to Bill Mitchell's billy blog, or NEP or Mosler Economics-The Center of the Universe, since I assume that those interested in MMT follow these. However, I do call attention to especially pertinent pieces having a wider scope that others may be interested in. Here are three links to Bill's recent posts that are of general interest.

Bill is located in Australia and his analysis is often related to what is going on the there. But the principles are universally applicable. So just skip over the local data if it is not interest to you.

Bill Mitchell — billy blog

What have mainstream macroeconomists learn’t? Short answer: nothing
(about the recent BIS paper of Claudio Borio)

The humanities is necessary but not sufficient for social transformation

Government budgets bear no relation to household budgets

Peter Cooper — Proposal for an Interim Society Prior to Utopia

With a title like this, how can you not read the whole thing?

Heteconomist
Proposal for an Interim Society Prior to Utopia
Peter Cooper

Peter, you have the outline of a bestselling book here if you care to write it.

Robert Skidelsky — Happiness Is Equality

The king of Bhutan wants to make us all happier. Governments, he says, should aim to maximize their people’s Gross National Happiness rather than their Gross National Product. Does this new emphasis on happiness represent a shift or just a passing fad?

Project Syndicate
Happiness Is Equality
Robert Skidelsky | Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords

As a philosopher, the issue is really getting the definition of "happiness" right. Why is this so? Because it is generally agreed that everyone seeks happiness, as Aristotle notes in Book One of the Nichomachean Ethics. This is the origin of the phrase "pursuit of happiness" in the Declaration of Independence and its recognition as a natural right

Aristotle also observed there that while all agree about the pursuit of happiness, people disagree over what happiness is and what the means to achieve it may be. He examines the various alternatives that were proposed before settling on his own answer.

Is happiness the result of satisfaction of material preferences through rational pursuit of maximum utility? Does happiness result from the successful pursuit of fame, fortune, power, and pleasure, as is commonly supposed? Or is happiness the outcome of fairness and justice, i.e., egality, which is the tack that Lord Skidelsky takes? Or is it attendent upon progressive self-actualization, as Aristotle and Abraham Maslow, for example, claimed. Or is the abiding fulfillment of an ineffable realization the only true happiness, as perennial wisdom teaches?

Or is it something else? What would the criterion be for deciding among alternatives?

And this is before we get into the quality versus quantity distinction and how to assess quality.

Needless to say, this is not properly a question for economics. The settling of economists on a view that Aristotle rejected as adolescent vitiates the entire economic enterprise based on this arbitrary and baseless assumption, selected for computational convenience rather than correspondence with reality.

The difficulty of answering this question about what constitutes happiness arises from different views of human nature and reality itself.

Art Shipman — Yes and Noah

Noahpinion:

Out here in the blogosphere, it is common to hear things like the following:

1. "Economics doesn't work; it has no practical applications."

2. "Economic will never discover any stable scientific laws, because human behavior changes."

3. "Economics shouldn't use math, because math can't describe human behavior."

4. "Economics is not a science."

Yeah, but you won't hear that from me.

Tom?

The New Arthurian Economics
Yes and Noah
Art Shipman

My response at Art's.

Evidence, please.

Hint: "Complex adaptive systems"

Comment either here or there.

And notice, nothing on accounting, where everything that happens "economically" is recorded ex post in terms of actual transaction. Projecting causally from that into the future based on invariance, the basis of scientific law, in a way that is stock-flow consistent? Not so much.

Philip Pilkington interviews Sheila Dow on economic methodology

Philip Pilkington interviews Sheila Dow. It goes right to the heart of the basic issues in terms of choice of methods and the assumptions this choice rests upon.

Five stars.

Naked Capitalism
On Economic Methodology: An Interview with Sheila Dow
Sheila Dow | Emeritus Professor of Economics at the University of Stirling, Scotland, and Convener of the Scottish Centre for Economic Methodology

However, I disagree with Blair's view about gates and fences.

The term ‘structured pluralism’ is intended to signal a difference from a pure form of pluralism; this pure form is the ‘anything goes’ position. At the level of methodological pluralism, structured pluralism means that we can roughly categorise a finite range of approaches (or schools of thought). These schools are communities, with shared understandings of the real world and of how best to build knowledge about it. As a socio-epistemic activity, therefore, economics has to be structured within groupings, and there is a logistical limit to how many schools can function effectively within the discipline. This limited range of schools helps us be methodological pluralists in the sense of allowing us to recognise and learn about other schools of thought than our own.

Once gates and fences are erected they confine thought and reduce options. They inevitably lead to established viewpoints. See Paul Feuerabend, Against Method and Michael Polyani's Personal Knowledge: Towards a Post-Critical Philosophy, for instance.

BTW, light posting this week due to PBS's broadcast of the Met's new production of Wagner's Ring Cycle at the time when I usually do my evening reading of the RSS feed. That gold ring of power that you know already know about through LOTR. It's a pervasive Western teaching story about the spiritual and moral trifecta of love, duty, and power.