Philip Pilkington — To What Extent Is Economics an Ideology and to What Extent Is It a Useful Theory?

Short lead in to forthcoming book.

Naked Capitalism
To What Extent Is Economics an Ideology and to What Extent Is It a Useful Theory?

Philip Pilkington
Crossposted at PPs blog, Fixing the Economists

James Kwak — Moral Worldviews and Empirical Beliefs

Discovering the obvious. Values tend to shape beliefs about fact.

Funny thing, Twitter. My most-viewed tweet ever is the following:

"A survey of 131 economists found that their answers to moral questions predicted their answers to empirical ones." https://twitter.com/neelkashkari/status/731448820697989125 …

Baseline Scenario
Moral Worldviews and Empirical Beliefs

James Kwak

Neil Wilson — The Left's Love of Higher Law

One thing I've noticed during debates over the past year or so, is that those on the Left are particularly keen on the concept of Rule According to Higher Law. When they lose elections they always want to appeal to some higher body to stop any changes being made by the winners. (This seems Kantish in origin - perhaps the philosophers can shed more light?)

I don't think that this is remarkable since liberalism is dominant politically in the West since the Enlightenment and especially with the end of political monarchies and aristocracies after WWI. The Left and Right hold competing views of liberalism.

It's a paradox of liberalism that liberalism seeks to make itself the only acceptable political paradigm once it is installed. Moreover, different views on the spectrum of liberalism take themselves to be the very definition of liberalism and therefore seek to install themselves as the optimal alternative within a liberal contexts when they accede to power.

The tension is between freedom and control. In engineering design, it is generally assumed that an optimal balance between freedom and control needs to be achieved in order to produce the highest level of capability consistent with getting the work done.

So it's likely explicable through a combination of optimizing and preferences in articulating the design problem. Preferences is where the normative aspect comes in, and it is arguable that "higher law" is Kantian, or deontological rather than consequentialist.

I don't see this as problematic in that humans tend to rationalize their preferences in terms of values. Humans also disagree over what constitutes values to some degree and quite a bit over prioritizing values, especially when they conflict in situations.

This is especially the case in political and legal affairs since positive law and institutional arrangements, which are human constructs, are inherently normative owing to the human context in which they are embedded.

The difference in liberal political theory tends to be over competence. The Right is conservative and conservatism is based on the principle that some are better than others. So this is reflected in the conservative approach to liberalism, which prefers republicanism, in which elites control the levers of power and are the final arbiters.

On the other hand, the Left generally subscribes to the wisdom of crowds and prefers democratic decision-making and determination of criteria.

But just because someone or some party adopts a label doesn't imply that they are actually going to behave like that. Presently, the Right is more or less consistent but the Left, no so much, at least with respect to the political leadership.

3spoken
The Left's Love of Higher Law
Neil Wilson

James Petras — The Myth of ‘Value-Free’ Social Science Or The Value of Political Commitments to Social Science

Introduction: For many decades, mainstream social scientists, mostly conservative, have argued that political commitments and scientific research are incompatible. Against this current of opinion, others, mostly politically engaged social scientists, have argued that scientific research and political commitment are not contradictory.

In this essay I will argue in favor of the latter position by demonstrating that scientific work is embedded in a socio-political universe, which its practioners can deny but cannot avoid. I will further suggest that the social scientist who is not aware of the social determinants of their work, are likely to fall prey to the least rigorous procedures in their work – the unquestioning of their assumptions, which direct the objectives and consequences of their research.

We will proceed by addressing the relationship between social scientific work and political commitment and examining the political-institutional universe in which social scientific research occurs. We will recall the historical experience of social science research centers and, in particular, the relationship between social science and its financial sponsors as well as the beneficiaries of its work.

We will further pursue the positive advantages, which political commitments provide, especially in questioning previously ignored subject matter and established assumptions.
We will start by raising several basic questions about scientific work in a class society: in particular, how the rules of logical analysis and historical and empirical method are applied to the research objectives established by the ruling elites.….

A major purpose of scientific method is reduction of subjectivity in the interest of greater objectivity. However, since meaning is context-dependent, it is not possible logically to achieve complete objectivity by isolating the positive from the normative. It is also empirically suspect in that cognitive science has shown that the rational and non-rational are deeply entangled in brain functioning. Since it is not possible to stand outside of point of view, it is also impossible to be sure that one has identified all hidden assumptions. The proper course of rational enquiry is to identify and acknowledge the most significant assumptions that are involved in a model, whether it be conceptual or mathematical.

In economics, for instance, there are varying approaches based on different methodological assumptions. The proper course is to articulate the assumptions as completely as possible instead of assuming ideologically that a particular approach is superior in every way, superseding other approaches.

Nor is the assumption that there is one "correct" model that alone is "value-free" merely coincidental.

After World War II, wealthy business elites and capitalist governments in the United States and Western Europe established and funded numerous research foundations carefully selecting the functionaries to lead them. They chose intellectuals who shared their perspectives and could be counted on to promote studies and academics compatible with their imperial and class interests. As a result of the interlocking of business and state interests, these foundations and academic research centers published books , articles and journals and held conferences and seminars, which justified US overseas military and economic expansion while ignoring the destructive consequences of these policies on targeted countries and people. Thousands of publications, funded by millions of dollars in research grants, argued that ‘the West was a bastion of pluralistic democracy’, while failing to acknowledge, let alone document, the growth of a world-wide hierarchical imperialist order.

An army of scholars and researchers invented euphemistic language to disguise imperialism. For example, leading social scientists spoke and wrote of ‘world leadership’, a concept implying consensual acceptance based on persuasion, instead of describing the reality of ‘imperial dominance’, which more accurately defines the universal use of force, violence and exploitation of national wealth. The term, ‘free markets’, served to mask the historical tendency toward the concentration and monopolization of financial power. The ‘free world” obfuscated the aggressive and oppressive authoritarian regimes allied with Euro-US powers. Numerous other euphemistic concepts, designed to justify imperial expansion, were elevated to scientific status and considered ‘value free’.….

The result was "weaponization" of knowledge.

The transformation of social science into an ideological weapon of the ruling class reflected the institutional basis and political commitments of the researchers. The ‘benign behavior’ of post-World War 2 US empire-building, became the operating assumption guiding scientific research. Moreover, leading academics became gatekeepers and watchdogs enforcing the new political orthodoxy by claiming that critical research, which spoke for non-elite constituencies, was non-scientific, ideological and politicized. However, academics, who consulted with the Pentagon or were involved in revolving-door relationships with multi-national corporations, were exempted from any similar scholarly opprobrium: they were simply viewed as ‘consultants’ whose ‘normal’ extracurricular activities were divorced from their scientific academic work.

In contrast, scholars whose research was directed at documenting the structure of power and to guiding political action by social movements were condemned as ‘biased’, ‘political’ and unsuitable for any academic career.….

In other words, academic authorities replicated the social repression of the ruling class in society, within the walls of academia. Their principle ideological weapon was to counterpose ‘objectivity’ to ‘values’. More specifically, they would argue that ‘true social science’ is ‘value free’ even as their published research was largely directed at furthering the power, profits and privileges of the incumbent power holders.….

You can see where this is going. Neoliberalism.

Twenty-five years ago, the concept ‘reform’ referred to progressive changes: less inequality, greater social welfare, increased popular participation and more limitations on capitalist exploitation of labor. Since then, contemporary social scientists (especially economists) use the term, ‘reform’, to describe regressive changes, such as deregulation of capital, especially the privatization of public enterprises, health and educational institutions. In other words, mainstream academics transformed the concept of ‘reform’ into a private profitmaking business. ‘Reform’ has come to mean the reversal of all the working-class advances won over the previous century of popular struggle. ‘Reform’ is promoted by neo-liberal ideologues, preaching the virtues of unregulated capitalism. Their claim that ‘efficiency’ requires lowering ‘costs’, in fact means the elimination of any regulation over consumer quality, work safety and labor rights.

Their notion of ‘efficiency’ fails to recognize that economies, which minimizeworkplace safety, or lower the quality of consumer goods (especially food) and depress wages, are inefficient from the point of view of maximizing the general welfare of the country. ‘Efficiency’ is confined by orthodox economists to the narrow class needs and profit interests of a thin layer of the population. They ignore the historical fact that the original assumption of classical economics was to provide the greatest benefit to the greatest number.…

Once their political commitments define the research ‘problem’ to be studied and establish the conceptual framework, they apply ‘empirical’, historical and mathematical methods to collect and organize the data. They then apply logical procedures to ‘reach their conclusions’. On this flawed basis they present their work as ‘value-free’ social science. The only ‘accepted criticism’ is confined to those who operate within the conceptual parameters and assumptions of the mainstream academics.

"Efficiency" is the neoliberal weapon of choice, as if efficiency were synonymous with effectiveness. It is not.

The antidote? Organized opposition.

Lots more in the post.

The Official James Petras Website
The Myth of ‘Value-Free’ Social Science Or The Value of Political Commitments to Social Science

James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

Lars P. Syll — NAIRU — more religion than science

Lars P. Syll’s Blog
NAIRU — more religion than science
Lars P. Syll | Professor, Malmo University

Read along with Michal Kalecki, Political Aspects of Full Employment,

The reasons for the opposition of the 'industrial leaders' to full employment achieved by government spending may be subdivided into three categories: (i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment. We shall examine each of these three categories of objections to the government expansion policy in detail.

Zubin Jelveh, Bruce Kogut And Suresh Naidu — Economists Aren’t As Nonpartisan As We Think

Did "we" think they were nonpartisan. Everyone has assumptions, many of them hidden even from oneself. It's called ideology.

The purpose of scientific method is to reduce subjectivity and increase objectivity. Subjectivity cannot be eliminated so that perfect objectivity is achieved. Cognitive science reveals that reason and feeling are inseparable components of conceptualization based on brain function.

So we set out to test the idea of nonpartisan economics on a large scale. In a recent paper, we researched whether economists’ political leanings were associated with their professional work.3 The answer: yes. 

Our main proxy for research was the text that appeared in academic papers. To identify political leanings, we had to figure out a way to measure the ideology of any economist — not just people like Krugman and Mankiw. Luckily, there’s a growing body of research on how to detect people’s ideology (or mood or personality type) from the way they write….

Five Thirty Eight
Economists Aren’t As Nonpartisan As We Think
Zubin Jelveh, Ph.D. candidate in computer science at New York University’s School of Engineering working on computational social science; Bruce Kogut, professor at the Graduate School of Business and the Department of Sociology at Columbia University, and Suresh Naidu, assistant professor of economics and public affairs at Columbia University

Christina McRorie — The Emptiness of Modern Economics: Why the Dismal Science Needs a Richer Moral Anthropology

It’s tempting to conclude that Piketty understands and delivers what the public wants from economics: a return to classical political economy. More than a few reviews of his work make this exact claim; he’s been hailed as the Smith, Mill, or Marx the twenty-first century has been waiting for. 

If only it were true. Or, to be fair, completely true. Piketty’s work is certainly a welcome step in the right direction, but it doesn’t make him the new Adam Smith. Empirical attention to the sweep of history was not the only thing that enabled the grand theorists of classical political economy to make sense of market life for their readers. The other half of what made political economy—the forerunner of economics—so compelling was its ability to take on “big questions” by connecting economic matters with moral and philosophical concerns, often by way of what might be called moral anthropology. 

For those longing for a revival of political economy in the tradition of Smith, even Piketty’s remarkable turn to richer data doesn’t fully satisfy their hunger for a fully worked out exploration of the connection between economics and larger philosophical and moral questions. These questions are about more than mere markets and politics; they pertain directly to the moral dimensions of economic life.

Because early economists such as Smith (1723–90) were also moral philosophers, they took up such questions naturally. They assumed that theories of justice and normative reflections on society were inseparable from their theories about pricing, the distribution of resources, and national wealth. They assumed that their field could advance only if all such concerns were part of a seamless whole. 

This may seem a surprising history for a discipline that has long been known as the “dismal science,” on the grounds that its business is to make gloomy statistical predictions backed with the authority of science. The little-known origin of the phrase, however, had to do precisely with philosophical arguments over anthropology, and nothing at all to do with statistics. Nineteenth-century historian Thomas Carlyle used the term in a pro-slavery essay to attack the profession of political economists such as John Stuart Mill, who supported slave emancipation on the basis of their egalitarian beliefs about human nature.2 It’s a mark of how much economics has changed that—rather than serving as a badge of honor—the title now generally conveys a sarcastic commentary on the discipline’s total lack of philosophical, or humanistic, aspirations.…

Are humans intrinsically self-interested or selfish? And if so, does this nature participate in some larger order—either spontaneous or divinely planned—in which self-interest invariably redounds to public benefit? Can we be described, without remainder, as rational utility-maximizing actors? Or does this characterization fail to capture, in some real manner, the complicated way in which our selves are morally constructed, and the complicated ways in which our behavior develops? And, inching toward more modern issues, is it really the case that interpersonal utility comparisons are impossible to make, and fruitless besides?

We can’t push these questions aside. Nor should we. They float around, behind, and beneath most of our conversations about market orders, wealth inequality, and the future of capitalism. And this is so precisely because the discipline of economics cannot avoid being about human nature and human behavior. As much as a century after Adam Smith, economists still took this for granted. In 1890, economist-philosopher Alfred Marshall opened his famous textbook,Principles of Economics, with the claim that
Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man.26 

The fact that economics today has largely set aside the big questions proper to this study—both empirical and normative—has left it with a gaping hole of meaning at its center. Piketty’s remarkable work begins to fill the void by returning attention to big-picture questions about real peoples’ lives. But even Capital in the Twenty-First Century fails to restore fully the humane breadth of the earliest discussions of political economy. Surely, such breadth is called for as we try to talk together about the common good and the future of our economic arrangements.

Nice article by an ethician that is familiar with the literature of economics as it relates to the big picture and the big issues that conventional economics assumes away and the world suffers for it. While economists bears some of the blame, it is a result of the compartmentalism of knowledge that has taken place since liberal education as education for life was replaced by practical education as preparation for a career in a field. Definitely worth a read.

The Hedgehog Review | VOL. 16 NO. 3 (FALL 2014)
The Emptiness of Modern Economics: Why the Dismal Science Needs a Richer Moral Anthropology
Christina McRorie

ht Mark Thoma at Economist's View

Christina McRorie is a fellow of the Institute for Advanced Studies in Culture and a doctoral candidate in the Department of Religious Studies at the University of Virginia. Her research focuses on ethical issues raised by the global economy and consumer society.

George Lakoff — The New York Times Uncovers Conservative Attacks and Then Prints One; Both Are on the Front Page

As the great linguist Charles Fillmore discovered in 1975, all words are cognitively defined relative to conceptual "frames" -- structures we all use to think all the time. Frames don't float in the air; they are neural circuits in our brains. Frames in politics are not neutral; they reflect an underlying value system. That means that language in politics is not neutral. Political words do not just pick out something in the world. They reflect value-based frames. If you successfully frame public discourse, you win the debate. 

A common neuroscience estimate is that about 98 percent of thought is unconscious and automatic, carried out by the neural system. Daniel Kahneman has since brought frame-based unconscious thought into the public arena in what he has called "System 1 thinking." Since frames carry value-based inferences with them, successfully framing public discourse means getting the public to adopt your values, and hence winning over the public by unconscious brain change, not by open discussion of the values inherent in the frames and the values that undergird the frames....

The reason that those of us in the cognitive and brain sciences write so passionately about framing issues is that unconscious thought and framing are not generally understood -- especially in progressive circles. Most progressives who went to college studied what is called Enlightenment reason, a theory of reason coming from Descartes around 1650 -- and which was historically important in 1650. The Cartesian theory of how reason works has since been largely disproved in the cognitive and brain sciences.

The Cartesian theory assumes that all thought is conscious, that it is literal (that is, it fits the world directly and uses no frame-based or metaphorical thought), that reason uses a form of mathematical logic (not frame-based logic or metaphorical logic), and that words are neutral and fit the world directly. Many liberal economists have been trained in this mode of thought and assume that the language used in economic theory is neutral and just fits the world as it is. They are usually not trained in frame semantics, cognitive linguistics, and related fields. The same is often true of liberal journalists as well. Both often miss the fact that conservatives have successfully reframed economic terms to fit their values, and that the economic terms in public discourse no longer mean what they do in economics classes.

Part of what the Cartesian theory of reason misses is the real brain mechanism that allows the conservative communication theory to be effective. By framing language to fit conservative values and by getting their framing of the language to dominate public debate, conservatives change the public's brains by the following mechanism. When a frame circuit is activated in the brain, its synapses are strengthened. This means that the probability of future activation is raised and probability of the frame becoming permanent in the brain is raised. Whenever a word defined by that frame is used, the frame is activated and strengthened. When conservatives successfully reframe a word in public discourse, that word activates conservative frames and with those frames, the conservative value system on which the frames are based. When progressives naively use conservatively reframed words, they help the conservative cause by strengthening the conservative value system in the brains of the public.

Liberals, in adhering to the old Cartesian theory of reason, will not be aware of their own unconscious values, will take then for granted, and will think that all they have to do is state the facts and the public will be convinced rationally. The facts are crucial, but they need to framed in moral terms to make moral sense and a moral impact....

The word at issue is "redistribution." The subject matter is the flow of wealth in the society and what it should be. This is a fundamentally moral issue, and the major political framings reflect two different moral views of democracy itself....

The Huffington Post
The New York Times Uncovers Conservative Attacks and Then Prints One; Both Are on the Front Page
George Lakoff | Goldman Distinguished Professor Of Cognitive Science and Linguistics at UC Berkeley

It used to be called "brainwashing" in the Fifties. Now it is called public relations and marketing & advertising.

Meredith Bennett-Smith — Can Exposure To Science Boost Morality? Maybe So, New Study Suggests

The researchers found that while there was no relationship between the students' religious affiliation and their answers, “those who reported greater belief in science rated the date rape as more wrong," according to the study....

"Across studies, we found that believing in science and thinking about science led to more morally normative outcomes," Ma-Kellams told HuffPost Science....

"Many like to think of science as a neutral, purely objective force," she said. "But in reality, the things what we study and investigate and think about influence our very conceptions of right and wrong, acceptable and unacceptable, without us necessarily realizing it."

The Huffington Post
Can Exposure To Science Boost Morality? Maybe So, New Study Suggests
Meredith Bennett-Smith

Tim Johnson — Lady Credit

Economics is can be seen as being primarily concerned with managing resources when faced with scarcity; the maximisation of expected utility. An alternative view is that aspects of economics, particularly finance, are concerned with managing resources when faced with uncertainty. This distinction is not new, Moses ben Maimon, Maimonides, argued that the suffering of mankind is not because they were expelled from the Garden of Eden into a world of scarcity but because they were expelled into a world of uncertainty. In the Garden of Eden humans had perfect knowledge, which was lost with the Fall, and it is the loss of this knowledge which is at the root of suffering: If we know what will happen we can manage scarcity

Magic, Maths, and Money
Lady Credit
Tim Johnson | Academic Fellow, Department of Actuarial Mathematics and Statistics and the Maxwell Institute for Mathematical Sciences, Heriot-Watt University

(h/t geerussell via email)

This post is really about the philosophy of economics set forth in terms of the history of economic thinking. Really insightful and lots of good info. It's not perfect, but very good. You will want to read this one.Yes, MMT and Chartalism make an appearance. 

Hans-Joachim Voth, Nico Voigtländer, Shanker Satyanath — Bowling for Adolf: How social capital helped to destroy Germany’s first democracy

The collapse of the Weimar Republic was a turning point in world history, bringing the murderous Nazi regime to power. This column argues that contrary to most conceptions of social capital, there can be negative outcomes to well-connected societies. Independent of ideology, dense social networks in interwar Germany greatly helped the Nazi party to rapidly and widely disseminate its messages. Putnam’s claims about the benefits of social capital for democracy need to be reassessed.

Of course "social capital" can be used for good or bad. Just look at organized crime, as the authors cite. So social capital is somehow disadvantageous or dangerous, and people need to avoid organizing? Everyone is supposed to "think for themselves"? Out of context?

Physical capital can also be used for good and bad, depending on one's point of view. It was not social capital that made Hitler and the Nazis so dangerous to the world but Germany's physical capital that could be put to military use in producing armaments. Is physical capital therefore potentially negative. Of course. Does that undercut the argument for capitalism?

Social capital is defined as the economic potential of organization and information complexity is social systems. Physical capital is defined as the economic potential of the means of production in social systems. Financial capital is defined as the economic potential of money, credit and other financial arrangements in social systems. Economically, they are amoral to the degree that they are evaluated on money return. But monetary return is not the only consideration, even economically. 

The use of the various forms of capital is not amoral from the societal standpoint in that evaluation of effectiveness in human affairs is broader than monetary and economics assumes this at least implicitly. All human societies are governed by law, and rights are key concepts in law. Rights are communal norms. Excluding non-monetary factors from consideration in effectiveness, e.g., limiting consideration to economic efficiency, is itself a normative judgement.

Vox.eu
Bowling for Adolf: How social capital helped to destroy Germany’s first democracy
Hans-Joachim Voth, Nico Voigtländer, Shanker Satyanath
(h/t Mark Thoma at Economist's View)

William K. Black — Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure

Bill Black's posts are always must-reads at New Economics Perspectives for those into following the money, but some stand out. Today's post is one of those that goes to the core of the problem.

Bill attacks the rational that the "job creators" are chiefly responsible for creating wealth, so they should be untethered to do so. Bill points out that the argument rest on the false assumption that what is rational is ethical. This permits the rise of criminogenic environments that result in mayhem, which the elite responsible for the problem can largely avoid accountability, in that they control the system.

Once it is admitted that science is positive rather than normative and that economics is a science, then rational choice and action are considered always to be positive. Criminogenic environments are ruled out of economic theory, and so far only a very few people, and fewer academic economists, have been mentioning the primary role played by unethical and likely illegal behavior in the global financial crisis, at least in the United States. However, there is good reason to think that this was the case elsewhere as well, especially with TBTF/TBTJ financial institutions were involved.

So we hear that "no one predicted the crisis," and when it is objected that some did foresee and warn about it, the retort if "no model." Well, if crime and unethical behavior are rule out, how could a model acceptable to the mainstream get any traction there?

New Economic Perspectives
Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure
William K. Black | Associate Professor of Economics and Law, UKMC

The game theoretic Laureates I criticize carefully avoid discussing the plutocrats’ political power...

Re-read Michael Perelman, The Power of Economics vs. The Economics of Power.

I recently attended an important conference in which virtually all of the participants were very market friendly. Their papers were all very thoughtful and made a great deal of sense. Besides being very intelligent, I was pleasantly surprised to learn that the presenters were unusually open to exchanges with people whose ideas differed from their own. 

One extraordinary paper gave an in-depth analysis of the development of Ronald Coase's influential suggestion for environmental regulation through negotiation. I found nothing in the paper with which to disagree: so long as all affected parties could negotiate a mutually satisfactory solution, Coase's procedure seemed thoroughly unobjectionable. Besides the obvious problem of identifying who should have standing to enter into such negotiations, one serious problem remained: the absence of any consideration of power. 

If I have a beef with a company that wants to locate a toxic waste dump that will affect my property values or even my health, it might be conceivable (though unlikely) that a mutually acceptable solution might exist. In reality, lacking power, I would be unlikely to get major corporations to sit down to negotiate with me, let alone receive satisfactorily compensation for their destructive activities. 

Even taking such businesses to court is virtually impossible. In the unlikely case that I would be able to get a hearing at court, any legal help that I might afford is almost certain to be outgunned by the corporation's powerful legal team. 
Most of the other papers at the conference were of a similar bent, showing how markets evolve naturally and work efficiently. Nowhere was there any consideration of power. The participants clearly understood the discipline of economics very well, but that was their problem. Part of the training of economists is the development of an instinct to avoid any consideration of power, other than presumptive abuses of government, which interfere with the functioning of markets. In conventional economics, power is reduced to a metaphor. We have the power of the market or the power of competition, but corporate power is nowhere to be found.

Robert Johnson — Dancing in the Dark: Creating an Economics for the 21st Century

Ask an economist a simple question such as “What is economics supposed to do?” and you likely will get back a blank stare or an absurdly technical response filled with meaningless jargon. Typically you also will be told economics is “value free.” Many economists believe that economics involves just this kind of analysis: objective, dispassionate, apolitical, and unbiased.

However, this is clearly not the case [cognitive science reveals that facts and values are entangled at the level of brain functioning]. Without any substantive debate, economists routinely make recommendations and decisions about what does and doesn’t count in the world. Without admitting it, or even worse, at times without even knowing it, economists make powerful value judgments about what matters in our society.

While doing arithmetic may not be a biased process, deciding what gets included in the equation can be. Yet economists use theories that freeze human values inside antiseptic and sterile notions like “utility” (a technical euphemism that replaces all the nuance of human psychology with a simple process of mental math) while pretending that they are speaking objectively about how to increase wellbeing. Working in this way, economists are simply avoiding the question rather than addressing it.

The point is that economics is supposed to serve society. But fulfilling this goal means having real discussions about controversial and at times politically contentious topics, instead of hiding in the monastery and substituting technocratic dances for debate.

INET
Dancing in the Dark: Creating an Economics for the 21st Century
Robert Johnson | Executive Director of the Institute for New Economic Thinking (INET) and a Senior Fellow and Director of the Global Finance Project for the Franklin and Eleanor Roosevelt Institute in New York.
He recently served on the United Nations Commission of Experts on International Monetary Reform under the Chairmanship of Joseph Stiglitz.

Two Half Hitches — The Steady Devaluation of Human Labor

Oldie but goodie (Feb 12, 2012)

Here are some remarks made by Representative Steve King (R-IA) on the floor of the House of Representatives last year:
"Labor is a commodity just like corn or beans or oil or gold, and the value of it needs to be determined by the competition, supply and demand in the workplace."

That very attitude toward workers was a powerful motivator during the early days of the labor movement. The idea that people were on par with animals, equipment, and raw materials was offensive and demeaning to workers who wanted a better life for themselves and their families.

Samuel Gompers, cigar maker-turned-labor organizer and founder of the American Federation of Labor in the early 20th Century, had a different business ethic related to labor and said this: “You cannot weigh the human soul in the same scales with a piece of pork.”

Labor advocates actually managed to insert a statement affirming the status of human labor in the 1914 Clayton Antitrust Act: “The labor of a human being is not a commodity or article of commerce.”

So, is labor a commodity or not? The recent remarks by Rep. Steve King stand in direct opposition to the those of Samuel Gompers and the Clayton Act. The fight has gone on for decades, but, based on the above chart, it looks like King's side is winning.

Two Half Hitches
The Steady Devaluation of Human Labor
John
(H/t Linda Beale at Angry Bear)

Daniel Little — The philosophy of economics

The philosophy of economics intersects with several different areas of philosophy, including the philosophy of science, ethics, and social philosophy. (Dan Hausman is the leading expert in the philosophy of economics. His The Inexact and Separate Science of Economics is a recent contribution.) The field is concerned with methodology, values, and substance.

The primary focus of the field is on issues of methodology and epistemology—the methods, concepts, and theories of economists. What kind of knowledge is provided by the discipline of economics? How is economic knowledge justified or confirmed? How does it relate to other social sciences and the bodies of knowledge contained in those disciplines?

Second, philosophy of economics is concerned with values—the values of human welfare, social justice, and the tradeoffs among priorities that economic choices require. Economic reasoning has implications for justice and human welfare; more importantly, economic reasoning often makes inexplicit but significant ethical assumptions that philosophers of economics have found it worthwhile to scrutinize.

Finally, the philosophy of economics is concerned with substance—what might be called the ontology and theoretical space of economics. Here philosophers have expressed interest in the institutions and structures through which economic activity and change take place, and have turned a critical eye to the assumptions economists often make about institutions and social processes. Are there alternative institutions through which modern economic activity can proceed? What are some of the institutional variants that exist within the general framework of a market economy? What are some of the roles that the state can play within economic development so as to promote efficiency, equity, productivity, and growth?....

Understanding Society
The philosophy of economics
Daniel Little | Chancellor, University of Michigan at Dearborn

Chris Dillow — Efficiency Vs Sanctity

The point here is that efficiency is not an incontestable value. It collides with others, the belief in the sanctity of some goods.

Economists tend to have a tin ear here - they just don't hear the arguments against efficiency....

I don't say all this to take sides. I do so merely to show that values are contestable, but that a debate about them is possible.

Stumbling and Mumbling
Efficiency Vs Sanctity

Chris Dillow | Investors Chronicle (UK)

I would frame it the way that Peter F. Drucker did, "Efficiency is doing things right and effectiveness is doing the right things." Effectiveness involves choosing goals and this choice involves normative criteria, i.e., "values." efficiency is subordinate to effectiveness, since efficiency is about means and effective about goals, and means are subordinate to goals.

Floris Heukelom — Economics as a doctrinal discipline

This is a provocative post challenging the notion that economics is or can be an entirely empirical science since it is grounded in norms and values, which act as hidden assumptions. Better to admit them, shine light on them and examine them rationally instead of pretending that they don't exist.

Read it at INET | History of Economics Playground
Economics as a doctrinal discipline
by Floris Heukelom
(h/t Matt Stoller at Naked Capitalism)

Yglesias on the positive-normative distinction in economics

Yglesias observes that in the view of Hillary Putnam, "The reason you can't rigidly separate positive from normative economics is that you can't rigidly separate claims of fact from claims of value in general. Human language is too laden with thick concepts that mix the two."

For the record, Ludwig Wittgenstein had already elucidated this point through logical analysis in Philosophical Investigations (1953).

Read it at Slate
The Positive/Normative Distinction In Economics Is Nonsense But It Doesn't Really Matter
By Matthew Yglesias

I disagree with Matt that it doesn't really matter. It matters hugely, because obscuring the pervasiveness of the normative and prescriptive in economics and claiming that economic orthodoxy is positive while heterodox economics is not is central to the rhetoric of propaganda designed to justify neoliberalism.

Ravi Batra points out that in eras ruled by acquisitors, intellectuals prostitute themselves for fame, fortune and a share in power by justifying acquisitive behavior to laborers, who make up a vast majority of the population. They do this not through sound reasoning based on true premises and valid logical form, but by obscuring their intent behind a facade of sophistical rhetoric and displays of "expertise" designed to confuse the less-educated.

As Steve Keen artfully shows in Debunking Economics, neoliberalism rests on the "smoke" of sophistical assumptions and "mirrors" of complicated mathematical models that do not represent actual conditions. Thus, the premises are not as represented and the conclusions are also drawn by extending the application of the modeling beyond its scope in order to to convince the rubes that they are getting screwed for "scientific" reasons and there is no alternative other than the boogeyman of "socialism," which "everyone knows" ends in totalitarianism.

Yglesias says, "I think a lot of people who think they disagreement with most mainstream economists about certain things have noticed that most mainstream economists hold a somewhat naive metaphysical position and think that if they can debunk this metaphysical position they've vanquished the beast and now the doors are wide open to a utopia in which economists' critiques of their policy ideas have all been debunked. If mainstream economists are making a mistake in their analysis of the economy, you'll show that by engaging with their analysis of the economy not by engaging with their slipshod freelancing in metaphysics."

I think he is being naive here. The point of much economics is to justify a position that does not work economically, as the only alternative, for example, or the optimal solution.

TINA is often bolstered by the specious claim that every other approach leads to a socially unacceptable conclusion, like "socialism," or "totalitarianism." The focus on supply side is often justified on the basis of that this model of capitalism has generated a global system that has raised many out of poverty and produced the most advanced civilization to date, so let's leave well enough alone. These are specious arguments are successfully deployed to convine the "rabble" to vote against their own economic interests.

 A bevy of think tanks have been funded by acquisitors to justify rapacity in the name of science. They are the go-to sources for the media and their manufactured credibility is used to justify propaganda. So, yes, the blending of fact and value, positive and normative, and descriptive and prescriptive is important and significant socially, politically, and economically in convincing the unsuspecting that their leaders are acting on the best scientific knowledge rather than self-serving ideology.

Daniel Little — Value-free economics?

A recent volume by Vivian Walsh and Hilary Putnam, The End of Value-Free Economics, brings to a fine point a line of argument that has been brewing for fifteen years: is the logical positivist insistence on separating "fact-based" science from "value-based" ethics any longer a tenable one? Most particularly, are there now compelling reasons for declaring that mainstream economics needs to recognize that the distinction is wholly untenable? Is the zeal for insisting on "positive" economics now unsupportable? Should economists at last recognize that Lionel Robbins' strong exclusion of normative language from the science of economics both unjustified and unwise?  Walsh and Putnam argue that the answer to each of these questions is definitive: the strict dichotomy between fact and value in economics can no longer be supported.

Read it at Understanding Society
Value-free economics?
by Daniel Little

Sanjay Reddy - Facts and Values Are Entangled: Deal with It

Are there more poor people on our planet today than there were last year? Many economists would approach this question as mainly a technical problem, a matter of counting. Sanjay Reddy did, too, but soon recognized that a sound answer required making normative criteria explicit. Much confusion and many technical muddles in poverty measurement can be avoided, Reddy says, only if we become conscious and deliberate about how values enter the analysis. Fact and value are entangled, and Reddy shows how recognizing this leads to greater analytical clarity -- this is new economic thinking.

Watch it at INET (video

Sanjay Reddy - Facts and Values Are Entangled: Deal with It

Contemporary cognitive research is demonstrating how this entanglement of positive and normative, reason and feeling, is situated at the neurological level in brain functioning.

This is hugely important from the standpoint of philosophy of economics, ethics, cognitive and behavioral economics, institutional economics, political economy or applied economics, and economic education, in fact to every aspect of economics. Moreover, it relates directly to the current debate over the MMT JG that is now raging in the blogosphere, where we see many lines of argumentation emerging as unabashedly normative.

This is a ten minute video, and it is well worth taking the time to view.