From: Michael Gurstein <[EMAIL PROTECTED]> > "People don't recognize it, but their contributions helped make > everybody's life a lot better," said Robert Brusca, chief > economist at Nikko Securities International in New York. Since economists do not explicitly define "better" -- let alone measure it -- one might ask how Brusca could possibly know? In fact, he doesn't -- Brusca is imposing his personal values on others. It's the politics of economics. NORMATIVE AGENDA In the 1870s, William Stanley Jevons explicitly defined economics as normative: "... the mechanics of utility and self-interest ... to satisfy our wants to the utmost with the least effort -- to procure the greatest amount of what is desirable at the expense of the least desirable -- in other words, to maximize pleasure, is the problem of economics." [1] VALUE-LADEN TERMS In pursuit of the normative agenda, economics adopted value-laden terms: "The vocabulary of physics is amoral -- not antimoral, but amoral. Mass, force, and velocity have no moral implications because the laws describing them have no alternatives. The vocabulary of economics, in contrast, abounds in ethical terms. It is impossible to define 'good,' 'service,' or even 'utility' without making ethical judgments. Every object has mass, but not every object has utility. Moreover, some people may consider a certain object a good while others do not, but there can be no disagreement about the equivalence and direction of action and reaction. There is no other or better way for a body to fall in a vacuum than s=˝gt2; this is not because physicists don't happen to be interested in making this a better world. There is no unchanging price for a bushel of wheat; and this is not because economists don't happen to be interested in a stable universe. The price of wheat depends upon what people do, but bodies fall as they do regardless of what people do or think. "Economics is not value free, and no amount of abstraction can make it value free. The econometricians' search for equations that will explain the economy is forever doomed to frustration. It is often said that their models don't work, because, on the one hand, the variables are too many and, on the other, the statistical data are too sparse. But the physical universe is as various as the economic universe (they are, to repeat, both infinite), and Newton had fewer data and less powerful means of calculation than are at the disposal of Jan Tinbergen and his econometrician followers. The difference is fundamental, and the failure to understand it reduces much of modern economics to a game that unfortunately has serious consequences." [2] CIRCULAR ARGUMENTS NC doesn't generate "hypotheses" which are subject to falsification, it generates "truths" based on circular argument. "Those who believe society can best be understood as a series of markets begin by positing a rational, calculating individual whose goal is to maximize 'utility.' This premise says everything and nothing, since it is true by definition in all cases. But it is a key aspect of the market model, since it is the behavioral part of the logical argument that whatever the market decides must be optimal." [3] "There is at the core of the celebration of markets a relentless tautology. If we begin, by assumption, with the premise that nearly everything can be understood as a market and that markets optimize outcomes, then everything else leads back to the same conclusion -- marketize! If, in the event, a particular market doesn't optimize, there is only one possible inference: it must be insufficiently marketlike. This epistemological sleight of hand is an astonishing blend that blurs the descriptive with the normative. It is a no-fail system for guaranteeing that theory trumps evidence. Should some human activity not, in fact, behave like an efficient market, it must be the result of some interference that should be removed or a stubborn human refusal to appreciate markets. It cannot possibly be that the theory fails to specify accurately how human behavior works." [4] POLITICS What do get if you combine a normative agenda, value-laden terms, and the "truth"? Politics: "No other discipline attempts to make the world act as it thinks the world should act. But of course what Homo sapiens does and what Homo oeconomicus should do are often quite different. That, however, does not make the basic model wrong, as it would in every other discipline. It just means that actions must be taken to bend Homo sapiens into conformity with Homo oeconomicus. So, instead of adjusting theory to reality, reality is adjusted to theory." [5] [1] p. 25, ADAM SMITH'S MISTAKE, Kenneth Lux; Shambhala, 1990 http://www.amazon.com/exec/obidos/ASIN/087773593X [2] pp. 38-39, THE END OF ECONOMIC MAN, George Brockway; Norton, 1995 http://www.amazon.com/exec/obidos/ASIN/0393313522 [3] p. 41, EVERYTHING FOR SALE, Robert Kuttner; Knopf, 1997 http://www.amazon.com/exec/obidos/ASIN/0394583922 [4] p. 6, Kuttner. [5] pxviii, DANGEROUS CURRENTS, Lester Thurow; Random, 1984 (cited in Peet, 1992) http://www.amazon.com/exec/obidos/ASIN/0394723686 Jay -- www.dieoff.com
