Greb Mankiw discusses the intersection of economics with social and political philosophy. I would add that social and political thought is based on ontology, epistemology, ethics and aesthetics.
Aesthetics, you ask? Yes, one area of criteria lies in the direction of symmetry, simplicity, elegance, and economy. In fact, the chief criteria of conventional economics are aesthetic rather than ontological (causal), epistemological (descriptive), or ethical (right). If a model is elegant in its construction and economical (efficient) in operation, then it is to be preferred normatively.
Moreover, as Mankiw observes, the assumptions of economics models, being social in that they involve relationships of individuals and groups in society, and political in that they involve government, are based on assumptions that are derived from a particular social and political philosophy.
Points to Professor Mankiw for coming clean on this essential point. He recognizes the obvious, namely, that economists of different political persuasions generally agree with the economics of those sharing their persuasion and differ from those with opposing social and political views. This cannot be merely coincidental. It's rooted in the assumption, which are inherently normative, making different approaches to political economy performative rather than purely descriptive, as they are often represented. Most often, facts are marshaled to prove normative points without disclosing the normativity of assumptions and the performativity of intent underlying the arguments for policy based on "economic science."
However, his own stance is highly questionable from the philosophical (rational) standpoint. Nevertheless, he has put his finger on what the debate in political economy needs to be about.
Greg Mankiw, the chair of the economics department at Harvard, has an instructive article in the New York Times. He tells us that behind all of the models that economists routinely use to sway public policy in one direction or another lies a particularly political philosophy, held and encouraged by the modeler herself.Mankiw the Political Philosopher
I couldn’t agree more. Economists study social phenomena, which are created and understood by humans. As such, these phenomena are always being manipulated and swayed by new ideas and beliefs. There is thus an inherent feedback between the ideas that social scientists come up with and how those ideas end up affecting and propagating through the very social world these scientists claim to be studying objectively.
Most economists do not understand this important feedback. They literally think they are doing positive science, when in fact the ontology of the social world mandates that their endeavor is a normative one.
So kudos to Greg Mankiw for understanding the inherent normativity of economic theory. When it comes to the rest of his article, however, issues abound.
Econolosophy
"Economists study social phenomena, which are created and understood by humans. As such, these phenomena are always being manipulated and swayed by new ideas and beliefs."
ReplyDeleteAnd Mankiw is manifestly swayed by the "new belief" of Darwinism...
Tom this guy doesnt get it either though:
ReplyDelete"What do you do? Do you attempt to redistribute away from those benefitting from the technological change and toward those displaced by the change, or do you do nothing for fear of doing more harm than good with the redistribution effort?"
To this guy, TINA to either 'redistribution' or a 'go F yourself form of nothing'... like those are the only two options we have.
What if we have a big natural disaster and a bunch of people lose out, people are killed, infrastructure is destroyed, places of employment are destroyed, people are thrown out of their jobs, etc.... is this guy saying the only two choices are
1.'do nothing' (ie 'go F yourself too bad you should have made a better decision than to live in tornado alley', etc...) or
2. tax a bunch of people who dont live anywhere near the disaster site who may have their own set of challenges in their own locale to "get the money!" so govt finance ministers can go into the damaged area with the additional settlement balances that will obviously be needed in that destroyed community in order to transact in re-building efforts?
This is where MMT can come in as a no brainer but yet people like Mankiw and apparently this guy both think "we're out of money!" and "borrowin' from the Chinese!".... pretty sad for two people who are allegedly smart..
rsp,
Right, the all thinking is screwed up because almost no one gets how the present monetary system works and acts like we are still on the gold standard.
ReplyDeleteNeoclassical economics is based on scarcity of resources including money, which is only scarce under convertibility into a real asset like gold or silver. But that's not true for currency sovereigns in a non-convertible floating rate system. So we are continually compensating for a scarcity that isn't.
But I think that the issue runs deeper. The belief of liberal economists is that a "free market" delivers the optimal result and government intrusion needs to be minimized for economic benefit generally, assuming trickle down.
On the other extreme are the liberal democrats who hold that the basic premise of democracy is justice as equity and rights.
So economic and political liberalism clash.
There are points on both sides and the trick is harmonizing economic and social and political liberalism, since liberalism has been the dominant force in the West historically since the late Renaissance and the dominant force globally since WWII.
I think that MMT has to be viewed in the context of this dialectic in terms of what it contributes, namely, that under the present monetary regime money scarcity is an illusion due to ignorance that is easily dispelled with knowledge.
Then we can argue about how much monetary incentive is required to drive innovation and therefore how much inequality is to be tolerated by a society in which affordability allows for distributed prosperity not through redistribution but through currency creation. along with this is a discussion of how much government contributes to innovation based on past performance, where the government contribution has been not only huge but instrumental.
This suggests that a cooperative approach can produce more optimal results socially, politically, and economically than a heavily competitive one based on individual incentive.
Then it boils down to essentially moral arguments over individualism and socialism that don' really have much to do with economics at all but rather harmonizing the trifecta of liberty, egality, and community.
I too think grounding the conceptual life in human nature is essential.
ReplyDeleteOn the one hand there is greed, anger, desire, and arrogance. On the other there is something very beautiful, noble, friendly and serene; an energy in the human heart, which can only be hinted at in one indefinable word – Divine. It has to be felt to be experienced and understood. Underlying the conceptual world rests our human nature: an ocean, from which the conceptual life arises like waves. It is foolish to think that the conceptual life is not influenced accordingly. Which brings us back to consciousness (awareness) and being.
For example, you are the consciousness, being, awareness that exists and has always existed back and behind of both your mind and persona. Because of the nature and development of qualities in your consciousness, mind has been able to picture to you an image of the world 'as you see it'. Ditto for every consciousness and mind around you. These ‘pictures’ have great impact on both our emotions and actions; our impetus, cycles, and direction. In fact, quite often they drive us. People think that by changing the pictures in the mind (like changing the slides in front of a projector) the consciousness will change. In reaction Yes, but this is true profoundly, only in as far as the pictures help to unfold the being; to change the state (fabric) of being.
One well known conceptual image for this process is the lotus seed, buried deep in the mud, growing up through murky waters into beautifully clean air, in response to the sun. It does not really matter what is in the lotus ‘mind’ so to speak. The lotus will grow anyway given the right environment; however if the lotus ‘mind’ could only understand its development, that would help. If this mind could then also develop to become conscious of the ‘being’, the ‘consciousness’ within the form of the lotus plant, whose ‘eye’ into its environment is mind (once it is clear) then it would truly rejoice in its development of form, and pushing up into the sunlight. Withal, acorn trees do not sprout from lotus seeds, nor do lotus seeds get much nourishment out of dollar bills and coin, or pomp and ceremony. Such a lotus would find mind pretty humorous if it wasn’t so self-destructive!
Hence the confusion in the world. People are fighting over pictures in the mind, the realisation of which they hope will someday, fulfil them. Ask yourself why get so involved with such pictures; and part of the answer may be, 'Well, I want a better world'! You also may have an idea tucked away somewhere, that this would help make you feel content. And I agree we need a better world and people should be content, and clear about essentials and lifestyle. For me, this means a clear conceptual life; and pictures based on the nobility in human nature. We grow from revelation to revelation: the rest is all background noise. It is a change in consciousness (being) that changes mind. For those in this world who become conscious of the Self within, they did not learn it in a university. Something unfolded within, and mind was simply a witness; and probably one who misinterpreted the change in consciousness, unless it knew better.
So, my comment is, back and behind all of the processes in our human world, there is a very natural process - call it self-knowledge, self-consciousness, self-awareness - all predicated on evolution of consciousness itself; and the biggest factor in that evolution is knowledge of SELF. This is the missing piece from the jigsaw puzzle of the world: it is also Key in my understanding.
Providing better pictures in people's minds has ever been the task of educators, philosophers, the intelligentsia etc. Communicating these pictures to the masses the task of our creative story-tellers in what we call the Arts. Obviously the more direct route is working with consciousness itself. There is an inside and an outside, and Knowledge eventually (the power to discriminate) besides making pictures of a beautiful world, leads within.