In case you haven't read either Heilbroner's Worldly Philosophers" or the extract of his final chapter in a previous post, below you will find a summary. In the US right now, we live and act in a human-created economy, not in some supernatural system driven by mysterious, inexorable, forces. Thank God. But pause here only briefly in gratitude. We must examine and restructure our economic life prontito. This means Democrats have to stop drifting around in the void looking for the right "message" as much as we have to disabuse the Republicans of the notion that they are royals. Damn the Democrats! This is as much their fault as it is the Republicans who at this point are very happily and easily filling the void. The Democrats are sitting around, for the most part, like a bunch of cowardly ninnies sending out talking points and pleas for money and a lot of hot air, Barney Frank and a few others excepted. They are trying to find the right clever words a la Lakeoff and Luntz to say absolutely nothing.
The world is changing rapidly before our eyes. We can either look at it full in the face and learn from it and join it or crumple like Rome, only much, much faster. Let's go for a few clichés: the deadly entanglement of corporate and government greed and right wing religion is driving us to our downfall. A little extra on the right-wing religious danger: their anti-science attitude and the fake education they provide in their schools may be damning millions of our young people to an economically marginal existence.
Heilbroner and history are important because they put us in our place. If we can face our place, we can adapt. If we want to turn into donkeys like Pinocchio and his buddies who found themselves trapped when they fell for the line about going to playland forever, then we can follow our current path.
A short summary of Robert Heilbroner's Final Chapter, "The End of Worldly Philosophy?" with liberties taken in the arrangement of material.
FIRST OF ALL; Heilbroner calls the present version of economics paraded before us by Alan Greenspan, et.al. "dessicated residue." In other words, dead, dried up, useless for any decent purpose, Alan Greenspan's mumblings of mysterious mantras meant to magically channel our economy into smooth sailing waters notwithstanding. This doesn't mean that economics, or various kinds of capitalism are useless: just what passes for them in the current Administration.
Economics, according to Heilbroner, is "an explanation system" for the purpose of enlightening us about the workings, problems, and prospects of the economy. The economy in the modern world is a "complex social entity." That is, it's not just numbers, it's not simply raising or lowering interest rates to prevent inflation. It IS a system within which virtually all of us exist to meet our material needs and to provide them for other people. It is COMPLEX because it is a bunch of interlocking systems which undergird our national and international lives. It ISN'T all there is to life: there are spiritual, familial, creative, artistic, community sides -- sides more important to our identities and our ability to find meaning and hope in our lives. But we cannot extricate ourselves from the economy as we pursue our greater endeavors.
Capitalism differs from previous social organizations. American capitalism developed from English and German roots and Heilbroner traces our origins back through these societies. It's important to note that there are other economic historians who are more expansive. This will be important in another post, if I ever get to it.
In any event, in our own cultural sphere, capitalism differs from previous historical epochs because it depends on "the acquisitive drive as the principle means of organizing the production and distribution of society's material needs." Previously, the dominating form of goods distribution was in the hands of kings and feudal structures. Rather than the general human "acquisitive drive" being important, power and custom were.
In northern and anglo Europe pre-capitalism, only the wealthy could be wealthy. And only the upper castes of society could be wealthy. The sons and daughters of the wealthy who were left out by inheritance rules (primogeniture) and failure to marry became priests, monks and nuns with fair frequency. The poor were in fact always with us by inherited position. In the feudal system, serfs took care of the growing and making of stuff. They didn't stand a chance to profit from it. Later on, there was a lower middle class, urban dwellers often, who were craftsmen. They had to rise through a guild system which was rigid and did not allow for much innovation and certainly not for making excesses of money.
Capitalism as it developed differed in that people didn't produce by custom or fiat or because that's how it was always done or because the king said that's what was needed. Instead, individuals of whatever rank who were fortunate enough to be ingenious or to have a bit of extra cash or something to buy and sell goods with and the smarts to use these assets imaginitively could make more money than he (and sometimes she) needed. The provision of life's necessities came to be through systems of "competitive buying and selling." I want to add here, as Heilbroner does in his book, that these systems, too, have led to many dreadful iniquities which were of great concern historically as well as they should be right now.
The guidance of capitalist societies, according to Heilbroner, historically has been in the hands of what are supposed to be two separate authorities. The public authority, the government, "wields force and establishes law." It doesn't itself carry on production and distribution. On the other hand, private, profit-seeking individuals do just this, though, theoretically at least, under a watchful public eye.
In sum, the making, selling and buying of goods in modern capitalist societies is in the hands of the none-government. Law and justice and protection of rights and conflict resolution and the general maintenance of the common weal -- the common good -- is seen to be in the hands of the government, which of course is supposed to mean in our hands, the hands of us the people.
SO....what's gone wrong with economics (not to mention the economy):
First of all, we give economics much more credit and power than it deserves.
- Economics "is ultimately...an explanation system whose purpose is to enlighten us as to the workings, and therefore to the problems and prospects of that complex social entity we call the economy."
- Economics is not mathematics. Mathematics' "ever-growing presence" is not "the crucial change in the economics of our time....While there is no alternative to using mathematics...to elucidate many of the analytical purposes for which economics exists...this is not to say that mathematical models reveal how best to act on the information that bombards us: the predictive capacity of econometrics .. the modern combination of statistics and economic theory -- is by no means notable for its accuracy," Alan Greenspan, present day business economists and our government notwithstanding . [Italics mine]
- The most significant recent change in capitalist economics is the substitution of the "vision of science" for that of Capitalism. This should not be confused with the notion that economics is a science, because it is not. But by thinking of it as Science, we give it a lot more weight than it deserves -- and ask far fewer questions than we should, generally because we think we can't understand what's going on and because we think it's boring. Come on, folks, wake up!!! Situation boring but critical, to paraphrase an old European saying.
- Economics/capitalism should not be confused with science because human beings are a lot more complicated than the consistency of apples falling to the ground.. There are some generally predictable stimulus-response relationships in human economic behavior, but, as Marshall, cited by Heilbroner, pointed out, "economics cannot be compared with the exact physical sciences for it deals with the ever-changing and subtle forces of human nature." Heilbroner goes on, "When scientists explain the phenomenon of, say, light, with reference to the behavior of electrons, no one supposes that each electron has 'decided' whether or where it is to move. In contrast, "when economists explain the phenomenon of price changes by the behavior of buyers and sellers, they cannot describe their object of study without assuming that each individual person has decided to act as he or she did....Human behavior cannot be understood without the concept of volition--the unpredictable capacity to change our minds up to the very last moment."
- "Social life of humankind is by its very nature political." Crucial economic matters such as wealth distribution and income are not determined by immutable laws as gravity is. "They are highly mutable determinations of the sociopolitical order in which we live."
- The idea of a scientist's objectivity falls apart in economics. There is no "objectivity" in social arrangements: there is nothing inevitable or preordained or replicative about social arrangements. The existence of a growing class of poor people does not have to be accepted as a scientific truth. One can't take an objective stance about poverty.
- Power and obedience exist in all "stratified societies" (and I would suggest non-stratified ones as well).
- Current economic thinking and activity does not take into account power and obedience...politics, if you will.
- We must pay at least as much heed to politics, social science, REAL science, ethical formulations, and diplomacy as to economic insights for our society to survive. Capitalist economists CAN add insight about how the market system currently functions. It CAN examine historical and current capitalisms (there are many, from Scandinavia and Europe to the United States and increasingly China and India) and bring to light what practices lead to what outcomes: for instance, in the US we have a culture of "greed and social indifference." We have forgotten that capitalism has previously and successfully existed as a "bifurcation of power into two interpenetrative but still independent sectors: public and private. But for the well-being of us, the independence and oversight of the public is equally important as the independence and creativity of the private. Historically, in Europe government has functioned to keep the market as prosperous as possible in the context of maintaining the well-being of the common weal, or common good. Where government has been pushed out of this role, countries have gone broke and the gap between rich and poor has grown into a gaping hole. Not to speak of what we are doing to the planet....