Below you will find a summary of the last chapter of the last edition of Robert Heilbroner's great work, "The Worldly Philosophers" (Touchstone,Simon and Schuster, 1999) which as I've said anyone interested in the future of our country ought to read. Heilbroner, died this past winter. Some obituaries and commentary can be found on the blog, http://www.j-bradford-delong.net/cgi-bin/mt_2005-2/mt-tb.cgi/147 . Summary of important points will follow in the next post.
Heilbroner reminds us that if we don't know the history of our country, the history of the economy of our country and the thought that has gone into economics, we are trapped in a box which keeps tumbling down the path of greed, exploitation, environmental degradation and growing social inequity in the world and in our own country. When we examine history, we discover that there isn't one single capitalism, some inexorable path which we have no power to change. There are many paths we can go down that are, essentially capitalist paths, or paths which can encourage economic freedom while they incorporate civic responsibility, respect for the common weal, where one can find help where help is needed, where creativity is not stifled, but along which compassion can flourish. It is wise to remember that in fact capitalism is based on a negative perception of human nature as essentially selfish: acquisitive, and that our neoclassical US capitalism hopes if you will that the needs of society can be met by indulging in human acquisitive and competitive instincts. Finally, we must recognize that socialism is not the only alternative.
Below are selections and some summary sentences from the final chapter, "The End of the Worldly Philosophy?" from the second version of the seventh edition of Heilbroner's Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers. Of course it would be best to plunge in and read the whole book. It's really delightful, though that sounds counterintuitive when it comes to economics.
....I would remind my readers that the "end" has two meanings: termination and purpose, a dual significance we must bear in mind as we go on....
....I think it is best to go back to beginnings, by reminding ourselves of what economics is ultimately about. Needless to say, it is not merely a discussion of the figures, forecasts and government pronouncements that are the stuff of the daily economic news. Neither is it the supply and demand diagrams and equations familiar to every economics student. At its core, economics is 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.
So far what we have mainly stressed with respect to these explanatory visions and analyses is their extraordinary variety....In this final chapter, hoiwever, I suggest we look at this array from another perspectdive -- not so much emphasizing surface differences as searching for a common structural core.
[Heilbroner then summarizes what he considers the major pre-capitalist epochs for which he says the ideas of "economics" are not necessary.]
....[I]t was the slow displacement of medieval tradition and feudal command with a social order that did indeed require a new mode of clarification. The social order would in time be called capitalism; its means of organizing material life an economy and its new explanation system economics.
I can be brief in describing the changes brought by capitalism. The first was a dependency on the acquisitive drive as the principal means of organizing the production and distribution of society's material needs...._N]ever before, in any society, had the pursuit of wealth been legitimated, much less celebrated, for everyone. Kings of course, ; adventurers, perhaps; the lower classes -- never.
Second, capitalism consigned both the guidance of production and its pattern of distribution to the encouragements and discouragements of the market....[T]he provision of the very stuff of life by competitive buying and selling is an arrangement that has no parallel in any other social order.
Third, capitalism is the first society to place its overall guidance under two authorities, one public, one private, each with its powers and its boundaries to power. The public authority -- the government -- wields force and establishes law, but does not set itself up to carry on the everyday tasks of production and distribution. This is largely the prerogative of profit-seeking individuals, who produce what they wish, hire thsoe willing to accept the wages and conditions they offer, and let go those who do not, but who cannot themselves dragoon labor power, as did the pyramid builders, or physically punish inefficient workers, as could the feudal lord.
These three innovations set the stage for the visions of all the great economists....
....[It] is not the ever-growing presence of mathematics that is the crucial change in the economics of our time. Numbers abound in any social order that relies on modern technology. All industrial systems generate and require a mass of quantitative information that would have been unimaginable before the advent of high-speed production and near instantaneous communication....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. The point is, rather, that there is no alternative to using mathematics in its many forms to elucidate many of the analytical purpsoes for which economics exists. [Italics in this paragraph are mine. EKB]
....[H]owever, mathemaitzation is not the all-important change with which our chapter is concerned. Mathematics today pervades economics, formalizes it, and becomes its favored mode of expression, but no one actually confuses mathematics with economics. The deeper, and to my mind, more significant change is the increasing appearance of a new concept as the vision -- indeed the essence -- of economics, and the corresponding disappearance of another much older one. The new vision is Science; the disappearing one, Capitalism.
Let me give greater specificity to this charge by citing from ...Principles of Economics by N. Gregory Mankiw and Economics by Joseph Stiglitz. Both authors enjoy the highest professional esteem, and have written texts that are models of clarity, intelligence, and accessibility. Let us now see if they illustrate my points. I cite first from the Introduction of the Mankiw book:
Economists try to address their subject with a scientist's objectvity. They approach the subject of the economy in much the same way as a physicist approaches the study of matter and a biologist approaches the study of life: They devise theories, collect data, and then analyze these data in an attempt to verify their theories.
We shall consider the implications of taht central placement of science in a moment, but what of my assertion regarding the abandonment of the description of the economy as capitalist? I turn now to Stiglitz's two-volume text to see what he has to say about the matter. The answer is simple: the word does not appear in its 997 pages of text. For all intents and purposes, Capitalism does not exist in this two-volume introduction to economics.
Selective citations are, quite properly, regarded with suspicion. I could, perhaps, ask skeptical readers to repair to the nearest public library and compare a randome selections of volumes of the American Economic Review, the flagship journal of the American Economic Association, or its British counterpart, The Economic Journal for any ten years prior to the 1950's and a like number from the last decade. I think I can guarantee thta the skeptic will discover in the second group a pronounced increase of references to the methods of science and a precipitous decrease in the presence of the word capitalism....[W]hy these changes have taken place:
Let us look first at science. There is more than one reason why...the concept of science [might have] become a more and more explicit part of the vision of economists. The first...is that students of the workings of the economy, like students of the workings of nature, seek regularities of behavior as a first clue to the discovery of the 'laws' that are perhaps the most important achievement of science. Without knowledge of the laws of gravity, we could neither explain (or predict) the orbits of the planets or the trajecgtory of an airplane. The question, then, is whether there are not also lawlike aspects to economic behavior?
I say 'lawlike' because individuals' behaviors are obviously more complex than that of objects moving through space. When the price of clothing goes up, the quantity of clothing we buy is likely to go down; but it may not, if our fancy is caught by an advertising campaign. Nonetheless, no one would deny that there is a general relationship between the prices of goods and the quantities bought by buyers -- as prices change, quantities bought usually change in the opposite direction.
Moreover, this same kind of generally predictable stimulus-response relationship can be found between changes in our incomes and our spending on consumer goods, or changes in the rate of interest and business spending on investment. Thus, economic behavior is marked by a degree of predictability for whichit is difficult, or even impossible, to find similar examples in other areas of social life, such as politics. Equally remarkable is that changes in economic stimuli normally bring about movements in opposing directions, depending onour roles-- namely, whether we are buyers or sellers. This is another property that marks off economic from non-economic life. Indeed, it is this bilateral effect of price stimuli on behavior that makes markets a means of imposing social order, not disorder, a unique stabilizing effect that again relates economic behavior to some self-balancing natural processes.
Thus it is not surprising that the realization early dawned that a market system bore a certain resemblance to the natural processes to which science directed its attention. There is no doubt wherein lay the attraction of this resemblance. If economics coudl become a true branch of sicence, it would enormously increase our capacity to predict the course of events, as well as the outcome of attempts to change that course. To be sure, economic science would no more give us complete control over our future thatn physical sicence gives us control over the course of gravity, but unquestionably it would increase our ability to foresee the consequences of changing the workings of the economic system, and thereby to choose themost favorable course of action. Why, then, whould we not applaud the increasing tendency to envision economics as a science?
Thre are two reasons. Marshall himself noted one. Although beguiled by the sciencelike aspects of economics, he warned that "economics cannot be compared with the exact physical sciences for it deals with the ever-changing and subtle forces of human nature." We speak of the laws of physics or chemistry as describing the behavior of the electrons and mesons that the scientist studies, but there is an unbridgeable gap between the "behavior" of these elements of nature and those of the human beings who constitute the objects of study of social science. 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. On a word, aside from pure physical reflexes, human behavior cannot be undrestood without the concept of volition--the unpredictable capacity to change our minds up to the very last moment. By way of contrast, the elements of nature "behave" as they do for reasons of which we know only one thing: the particles of physics do not 'choose' to behave as they do.
A second objection seems quite different, but is actually the other side of the same coin. It is that the social life of humankind is by its very nature political. That is, all societies, once they move from the level of hunting and gathering...create categories of privilege and disprivilege....As those last words make clear, capitalism is no exception to this general statement. Are such crucial economic matters as the distribution of wealth or income determined by the counterpart of gravity? Are tazes, the rights of inheritance, or the existence of sweatshops expressions of immutable laws of nature? Or are they the highly mutable determinations of the sociopolitical order in which we live?
The question bears on Mankiw's statement that economists "try to address their subject with a scientist's objectivity." But what does it mean to be "objective" about such things as inherited wealth or immiserating poverty? Does it mean that those arrangements reflect some properties of society that must be accepted, just as the scinetist accepts the arrangements studied through a telescope or under a microscope? OR does it mean that if we were scrupulously aware of our own private endorsements or rejections of society's arrangements we could, by applying an appropriate discount, arrive at a truly neutral view? In that case, could one use the world "scientific" to describe our findings, even though the object of study was not a product of nature but of society?
T he answer is that we cannot. There is, of course, ample room for scientific method in analyzing many problems that economics seeks to clarify, including the requirement that economists report the data they observe as scrupulously as possible. But when it comes to policy recommendations, it is impossible to present economic analyses as if they stemmed unchallengeably from the givens of society. This is b ecause there are no such givens comnparable to those of nature. Moreover to admit to the presence of power and obedience in the arrangements of all stratified societies does not thereby allow us to attribute to our explanations the objectivity we seek in our clarifications of nature. It only applies the language by which we describe nature's workings to those of society. If such a pseudoscientific view were to become the aim of economics, it would indeed spell its termination as a worldly philosophy.
....If economics is not to be a science of society, what is to be its ultimate usefulness?
My answer is that its purpose is to help us better understand the capitalist setting in which we will most likely have to shape our collective destiny for the foreseea ble future. Having for many years endorsed athe ideas and objectives of democratic socialism, that is not an easy assertion for me to make. But given the experience of socialism in its twentieth-century forms, it is difficult to expect its benign rebirth in the century to come....especially in the less developed areas where its advent is most likely, [it] will again develop tendencies for political megalomania, bureaucratic inertia, and ideological intolerance.
To be sure, these strains and stresses will exert their destructive force on capitalist societies as well. Ecological dangers, foremost among them global warming, will bring not only the need to conain the damage of climatic change in poor nations, but the even more difficult challenge of reducting climate-warming emiisions in the richer nations that are their source. Add to this the alarming spread of nuclear weaponry on the one hand, and ethnic, racial, and religious hatreds on the other, and the state is surely set for problems and tensions from which the capitalist powers cannot be insulated. Finally, there is the fast growing problem of a globalized economy that arises largely within individual capitalisms, but then escapes their control to become a supranational presence that threatens the sovereignty of the wealthies of them. In sum, here is a prospect as threatening, if not as desperate, for the rich capitalist world as that which confronts the poor capitalist or presocialist one.
------
What could be the purpose of vision and analysis under these conditions? It must be evident that there is little for economics to offer with respect to the political leadership, the diplomatic skills, and the social inspiration that must play crucial roles in preventing these strains from undoing the workability of capitalist societies. Nonetheless, a worldly philosophy has a unique potential to provide the visionary guidance that will help at least some capitalisms make their way as safely as possible through the coming decades.
Let me stress some capitalisms.To say it one last time, the distinctive properties of all capitalisms are the drive for capital, the guidance and constraints of a market system, and the bifurcation of power into two interpenetrative but still independent sectors. To this, however, must be added a capacity for adaptation and innovation that results in a spectrum of capitalist performances, a spectrum that is visible in the intensity of the drive for capital, the degree of freedom accorded to market dispensations, and the location of the boundary between the public and private realms. Thus we have a considerable vareityof capitalist societies despite the general similarity of their economies..witness the gulf between the socially, if not always economically, successful capitalisms of Scndanavia and Europe, and the economically successful but socially disastrous capitalism of the United States: consider, for example, that executive compensations in the top corporations in the United States is twice that of France or Germany, whereas the upward mobility of the Aemrican poor is half that of those country and but a third of Sweden. The first comparison points to a culture of greed; the second to one of social indifference. The combination hardlysuggests the instituional adaptability that will be needed by any nation seeking to minimize the strains fo the decades ahead, much less serve as a model for world leadership.,
It is with respect to these social apsects of capitalism that a reborn worldly philosophy can play its most useful role. Economic analysis, by itself, cannot provide a torch that lights our way into the future, but economic vision could become the source of an awareness of ways by which a capitalist structure can broaden its motivations, increase its flexibility, and develop its social responsibility....
No doubt it will be objected that the realization of such a far-reaching proram would require prodigies of political leadership, and that much of the learning needed to give substance to such a vision belongs properly within te boundaries of other fields of knowledge, from psychology and sociology through political science.
....Economics alone will not guide a country that has no vital leadership, but leadership will lack for clear directions without the inspiration of an enlightened as well as an enlarged self-definition of economics....[I]f the usefulness of the worldly philosophy of the twenty-first century is to match that of the nineteenth and early twentieth, it will need to be both deepened and enlarged, above all compared to the dessicated residue with which we are left today....
===============
....
