Half Past Noon

Sorry, I got waylaid by health care debates. I should have known better, particularly since I never have anything constructive to say about that topic. Back to Medaille (where at least I’ve achieved a degree of level-headedness).

The Economics of Distributism II: Political Economy as a Science

Medaille kicks off talking about how economists have longed to make their craft (economics) a “perfect” science. He quotes Friedman:

As Milton Friedman puts it, “Positive economics is in principle independent of any particular ethical position or normative judgments. As [J. N.] Keynes says, it deals with ‘what is,’ not with ‘what ought to be.’”

I start with this because I think it’s important to qualify that most of the Christian free market capitalists I know would strongly disagree with Friedman here. In fact, this is something my father taught us early on in life: economics alone doesn’t save you, nor can we live as if economics can’t be touched by our biblical worldview.

Why is this important? Because here we come to one of the downsides of adopting a general label (like “capitalist” or “Reformed” etc.). Labels, as Davey and I have discussed, are inevitable and certainly not all-evil. But I think it’s important to remember that these labels we fight over and try to define are never to be accepted wholly. They must always be accepted with exceptions, because the world never fits in any of those little boxes. Should we even bother with labels? Of course! As Davey pointed out to me, to try and make for yourself an independent patchwork quilt of beliefs is a fruitless and even dangerous exercise. But when we seek to defend such labels, we should do so while noting their weaknesses, while noting where our life experience or other influences have persuaded us to disagree.

Conversely, when we seek to attack another label, we ought to employ the same tactics. Take, for example, my attacks on socialized medicine. Take them as an example NOT because it’s a good one, but because it’s the opposite. I would have been better off focus on specific criticisms, specific things instead of spouting off. (And no, this isn’t an invitation to revisit the topic. Please no.)

Back to the article.

I don’t have much to contribute about the rest. His point about statistics (that they involve judgments and can’t be trusted as objective numbers) is a good one. The final conclusion? Every “humane” science must be concerned with the end of man, which is to say, before we try and decide what economic system is best, we must first wrestle with the question of what is the chief end of man.

Nothing new, and I might add that this isn’t something that the Christian free market capitalists I know would disagree with. (Again.) Perhaps the next post will bring something more controversial.

And finally, we can note that nearly all of modern economics, whether neoclassical, Keynesian, Socialist or Austrian, is built on a mistake about science; in the attempt to make their discipline “scientific” in the mold of physics, they abandoned the only thing that can make a humane science “scientific,” namely the principle of justice and particularly distributive justice.

I was struck by this quote, because it reminded me of Eugen Rosenstock-Huessy’s essay (originally from Out of Revolution) “I Am an Impure Thinker.” In it, ERH contends that much of modern science—specifically physics and metaphysics, the “foundations” of modern science—are concerned solely with dead things. They fail to interact with our world in a “lifely” way. His answer to this problem is simple: “To veer between Ego and It is the secret of man’s soul.” In other words, the key to making our way in science (or in any endeavour) is to find a balance between making it personal (Ego) and studying it in the abstract (It).

I begin with this because, to be honest, I like what ERH says about science better than what Medaille says. Perhaps it’s because I quite understand his claim that “the only thing that can make a humane science ’scientific’ … [is] the principle of justice.” Perhaps it’s because I don’t know what “distributive justice” is supposed to mean. At any rate, I’m uncomfortable with the groundwork that Medaille lays at the beginning of this post. (Not in a “I hate justice!” kind of way, but just in a “I wish I knew more clearly what he meant” kind of way. I promise I’m not being purposefully dense. Here in Canada, for example, we have something called the Human Rights Tribunal which seeks out justice for the victims of “hate speech” and seeks to punish individuals who voice politically incorrect opinions. In their minds, that’s justice.)

Indeed, the theories of Hayek have been tested just as much as have the theories of Karl Marx, and with about the same results: more government power, less economic freedom; under neither did the state whither away, but became an all-encompassing behemoth.

I can buy that, for now. I’m sure that capitalists could offer objections to this, but I’m not well-read enough to do more than accept Medaille’s assertion. However, I do know that Christian economists—even the capitalists (*gasp!*)—would be quick to point out that there is no economic system that can lead to freedom on its own. Without the Gospel, any form of economic planning or justice will quickly lead to slavery. Which is why, I think, Eugen declares we must veer between Ego and It.

In Keynesian states, people cease to be citizens and become mere clients of the state, where even their most ordinary needs are the subject of one or more governmental bureaucracies, and where even ordinary local problems are pushed up to be the responsibility of the most distant levels of government.

Aha! Canada! (Enough said.)

So, in the end I’m willing to buy Medaille’s argument that capitalism does not work. However, I’m not really buying it on the merit of his argument: as a blog post, his examples are necessarily truncated and I’m quite sure that many objections could fairly be made by someone more familiar with the topic than I. The reason I’m willing to buy it is because, in the comments, he describes himself as someone who doesn’t want to ignore history:

But I like to delve into things. I would like to know why a system like Keynesianism gets better results than pure capitalism, when it shouldn’t work at all. Yet work it has, and you and I have lived our whole lives under it, in a time of not only great prosperity and peace, but relative equality (until the last 10 years or so.) This is remarkable. You keep telling me that capitalism works, and I keep asking “When?” “Where?” The system you praise might not ever have existed, but the closer we get to it, the more misery results.

Count me as curious, then: I look forward to seeing distributism explained.

So, I have been prodded and poked out of silence. Here goes.

It appears impossible to escape economic discussion these days. I write this with a sigh, because I happen to find economics a dull topic. Sure, it’s important and worthy of discussion, yadda yadda yadda. I just dislike it. Kind of liking visiting the dentist and flying, economics is one of those things I talk about just because that’s what grownups do.

I don’t have anything profound to say, except that I remain suspicious of both “sides” of the discussion. They’re both so impersonal. And touchy.

Take the capitalists. If you suggest that a businessman is noble for giving something away that he could justly sell for profiit, this camp immediately assumes you’re a devoted follower of Marx and Lenin and all of those horrible people who think that collectivism actually works.

The other side isn’t guiltless either. If you dare talk about wealth as a blessing or the desire to live in a nice house, send your kids to college, or save up an inheritance for them, they immediately assume you’re a selfish middle class wannabe who lacks all compassion.

Yes, these are both slightly exaggerated generalizations, but I’ve met both responses in real life conversations. It’s not that both sides are evil; it’s actually quite the opposite. The people I’ve talked to are very sincere in their desire to make the world a better place. They just happen to emphasize certain things—things they feel have been lost or wrongly condemned—and that unfortunately blinds them from seeing the good and fair points from the other side.

For multiple perspectives on Geithner’s new plan to bribe investors into buying the banks’ leprous assets, check out this NYT Room for Debate.

I’ve been increasingly impressed with Krugman as of late. He loves the welfare state, hated Bush, and has been harping on Income Disparity for years now. But he’s got his head on his shoulders: he’s down on rent control, down on protectionism (he specializes in foreign trade), and down on this new freakish Public-Private Chimera of a plan.

This plan and it’s supporters have too much faith in the markets, I’m afraid. They hope that we can coax the Invisible Hand back to the County Fair so we can sell it some more Snake Oil. If we can get people to spend money on these assets, Geithner and his proponents say, their prices will go up, our wealth will return, the banks will recover, and we can dive right back up to our eyeballs in buttery debt. » Read the rest of this entry «