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| What's the story with economics? | What's the story with economics? |
| (about 21 hours later) | |
| What's morality got to do with it? Economics = numbers, doesn't it? In his regular column, Michael Blastland looks for the real story of economics. | What's morality got to do with it? Economics = numbers, doesn't it? In his regular column, Michael Blastland looks for the real story of economics. |
| How do you feel about economics? | How do you feel about economics? |
| a. It's all about money, a gospel of the spreadsheet that feeds greed and selfishness. It's a tool of the powerful. It even dares put a price on life. | a. It's all about money, a gospel of the spreadsheet that feeds greed and selfishness. It's a tool of the powerful. It even dares put a price on life. |
| b. It loves you no less if you're generous. It's honest in facing hard choices - like who to save and who not in healthcare. It has a moral commitment to freedom and studies poverty every bit as much as wealth. | b. It loves you no less if you're generous. It's honest in facing hard choices - like who to save and who not in healthcare. It has a moral commitment to freedom and studies poverty every bit as much as wealth. |
| c. It's a science, stupid. Cut the morality tosh. | c. It's a science, stupid. Cut the morality tosh. |
| Economics is a subject that polarises like few others. To some, it's an immoral calculating machine. | Economics is a subject that polarises like few others. To some, it's an immoral calculating machine. |
| To others, it's an amoral - not immoral, but amoral - science, descriptive pure and simple. | To others, it's an amoral - not immoral, but amoral - science, descriptive pure and simple. |
| To still more, it has a positively moral commitment to freedom by trying to increase people's choices. | To still more, it has a positively moral commitment to freedom by trying to increase people's choices. |
| What's puzzling is that morality so often comes thumping into it - when the subject has been taught for generations as if morality was someone else's job. | What's puzzling is that morality so often comes thumping into it - when the subject has been taught for generations as if morality was someone else's job. |
| The economic historian Roger Backhouse says there was an historic split from "normative economics" - what we should do - to "positive economics" - the description of what we do in fact. | The economic historian Roger Backhouse says there was an historic split from "normative economics" - what we should do - to "positive economics" - the description of what we do in fact. |
| Some seem to blame this approach for the crash, implying that it somehow separated economic ideas from what people really are. Off goes the money into some virtual world that's nothing to do with me, back comes profit. So goes the parody. | Some seem to blame this approach for the crash, implying that it somehow separated economic ideas from what people really are. Off goes the money into some virtual world that's nothing to do with me, back comes profit. So goes the parody. |
| An interesting question is whether this intellectual divorce might change in the light of the global economic mess of the last few years, in which much of the anger has been righteous. At least one leading economist, John Kay, thinks we should go back to talking about political economy, instead of economics, to show that moral values are still inescapably in there. | An interesting question is whether this intellectual divorce might change in the light of the global economic mess of the last few years, in which much of the anger has been righteous. At least one leading economist, John Kay, thinks we should go back to talking about political economy, instead of economics, to show that moral values are still inescapably in there. |
| Weasel words | Weasel words |
| A few years ago, it seemed money needed no excuse. Now greed seems evil again. Well, to some it does, as they rail against bankers or corruption. To others the pursuit of self-interest is still the surest way to prosperity for all. What's more, they argue, it's also the most moral. | A few years ago, it seemed money needed no excuse. Now greed seems evil again. Well, to some it does, as they rail against bankers or corruption. To others the pursuit of self-interest is still the surest way to prosperity for all. What's more, they argue, it's also the most moral. |
| Because for everyone who sees self-interest, another will see self-reliance, a virtue. Some want higher tax for the common good; others see tax as theft or waste. "The common good?" Weasel words for dependency, they say. | Because for everyone who sees self-interest, another will see self-reliance, a virtue. Some want higher tax for the common good; others see tax as theft or waste. "The common good?" Weasel words for dependency, they say. |
| And that's the problem with morality in economics. It makes the dry economic calculus for rational, utility-maximizing individuals a good deal more elusive. "Good" and "bad" sure complicate the sums. | And that's the problem with morality in economics. It makes the dry economic calculus for rational, utility-maximizing individuals a good deal more elusive. "Good" and "bad" sure complicate the sums. |
| But here's what's odd about those sums. With the exception of John Kay, who is prepared to consider the possibility that morality might cost, I've seldom met anyone who doesn't think their morality pays off. | But here's what's odd about those sums. With the exception of John Kay, who is prepared to consider the possibility that morality might cost, I've seldom met anyone who doesn't think their morality pays off. |
| If you think government should get off our backs and encourage self-reliance - for moral reasons of course - you probably think cutting it will be good for the economy too. | If you think government should get off our backs and encourage self-reliance - for moral reasons of course - you probably think cutting it will be good for the economy too. |
| If you think the government should help people more, you probably also think with uncanny conformity that this would be good for economic growth. | If you think the government should help people more, you probably also think with uncanny conformity that this would be good for economic growth. |
| Whatever our morality, it's efficient. Funny that. | Whatever our morality, it's efficient. Funny that. |
| Does it suggest that inside every economic rationale there's a moraliser trying to get out? Or that behind every moral belief there lurks self-interest? | Does it suggest that inside every economic rationale there's a moraliser trying to get out? Or that behind every moral belief there lurks self-interest? |
| But that's only one perspective on economics. We left hanging some of the others. | But that's only one perspective on economics. We left hanging some of the others. |
| Over to you | Over to you |
| Maybe economics is not really moral at all. Maybe it's mechanical, the study of a great sorting machine. Or maybe it's neither, the economy being more like a great animal, the sum of the wills and instincts of millions of capricious individuals, like you and me. | Maybe economics is not really moral at all. Maybe it's mechanical, the study of a great sorting machine. Or maybe it's neither, the economy being more like a great animal, the sum of the wills and instincts of millions of capricious individuals, like you and me. |
| These three perspectives are how we tell the story of economics in a new BBC Radio 4 series. | These three perspectives are how we tell the story of economics in a new BBC Radio 4 series. |
| The point is that there's not just one story of economics, which feels as if it means more separate things to more people than perhaps any other subject I know. The standard definition - the study of the allocation of scarce resources - scarcely scratches the surface. So what does it mean to you? | The point is that there's not just one story of economics, which feels as if it means more separate things to more people than perhaps any other subject I know. The standard definition - the study of the allocation of scarce resources - scarcely scratches the surface. So what does it mean to you? |
| Michael Blastland presents The Story of Economics, a three-part series on BBC Radio 4, starting on Wednesday 16 March at 1630 GMT. Listen via the BBC iPlayer or download the programme podcast. | Michael Blastland presents The Story of Economics, a three-part series on BBC Radio 4, starting on Wednesday 16 March at 1630 GMT. Listen via the BBC iPlayer or download the programme podcast. |
| Here is a selection of your comments. | Here is a selection of your comments. |
| Classical political economy was concerned about people and morals, despite what its so-called supporters on the right and angry critics on the left claim. Most of these have never read that which they praise or condemn. The laissez-faire physiocrats believed in a commons and equal ownership of the rent of land, as well as freedom of choice. Adam Smith praised the more equitable distribution of inexpensive land in America as the more natural order of things in an economy. Henry George reconciled freedom and equality, individualism and communal charity in his classic, "Progress and Poverty." All these have been forgotten by the faddish mainstream of left- and right-wing politics, Marxian and numbers-game neoclassical economists, yet remembered by distributists, decentralists, agrarians, and classical political economists. Will this receive equal time and fair play in your program? I have my doubts. The classical economists likely must remain the villains of the left and the distorted heroes of the right, both who have never read them. | Classical political economy was concerned about people and morals, despite what its so-called supporters on the right and angry critics on the left claim. Most of these have never read that which they praise or condemn. The laissez-faire physiocrats believed in a commons and equal ownership of the rent of land, as well as freedom of choice. Adam Smith praised the more equitable distribution of inexpensive land in America as the more natural order of things in an economy. Henry George reconciled freedom and equality, individualism and communal charity in his classic, "Progress and Poverty." All these have been forgotten by the faddish mainstream of left- and right-wing politics, Marxian and numbers-game neoclassical economists, yet remembered by distributists, decentralists, agrarians, and classical political economists. Will this receive equal time and fair play in your program? I have my doubts. The classical economists likely must remain the villains of the left and the distorted heroes of the right, both who have never read them. |
| Brad VanDyke, Spring City, USA | Brad VanDyke, Spring City, USA |
| There are some misconceptions here. First off, it's not economists who come up with a monetary value for a human life - it's actuaries. The major misconception is that economics is a science. In a science, theories are advanced and experiments developed to prove or disprove them. Once the results of the experiments are known, it becomes apparent whether the theory is correct or not. If not, the theory is modified and new experiments arranged. If it is correct, the sum of human knowledge has increased. Economic theories are advanced regularly, but it is virtually impossible to prove or disprove them by experiment. Rather, historical data is cited which matches the theory. Economics is therefore a subject of opinion, not provable fact. It therefore has more in common with philosophy, or indeed politics. | There are some misconceptions here. First off, it's not economists who come up with a monetary value for a human life - it's actuaries. The major misconception is that economics is a science. In a science, theories are advanced and experiments developed to prove or disprove them. Once the results of the experiments are known, it becomes apparent whether the theory is correct or not. If not, the theory is modified and new experiments arranged. If it is correct, the sum of human knowledge has increased. Economic theories are advanced regularly, but it is virtually impossible to prove or disprove them by experiment. Rather, historical data is cited which matches the theory. Economics is therefore a subject of opinion, not provable fact. It therefore has more in common with philosophy, or indeed politics. |
| D S Taylor, Bristol | D S Taylor, Bristol |
| Many microeconomic concepts such as marginal cost, marginal revenue, are amoral and are descriptive of firm behaviour. At the macroeconomic level substantial disagreement still exists as to income distribution, government actions to alleviate recessionary forces ala Keynes, etc., arguments that are more concerned with ideas of morality. | Many microeconomic concepts such as marginal cost, marginal revenue, are amoral and are descriptive of firm behaviour. At the macroeconomic level substantial disagreement still exists as to income distribution, government actions to alleviate recessionary forces ala Keynes, etc., arguments that are more concerned with ideas of morality. |
| Dr. Edward Scott, Phitsanulok, Thailand | Dr. Edward Scott, Phitsanulok, Thailand |
| Socialistic tax and spend economics limits the risk of poverty, but also limits opportunities for wealth. Capitalistic economics gives more opportunity to get rich, but the risks of hardship are greater. The reason it's possible to make plausible moral arguments for or against both the main economic positions is because what seperates them is an attitude to risk vs reward and not an attitude towards self-interest vs public-interest. When we realise this, and get away from fruitless moralising about 'rewarding greed' vs 'encouraging self-reliance' or 'rewarding laziness' vs 'helping the unfortunate', we will get a more rational discourse on economic policy. | |
| Ray D, Turku, Finland | |
| Economics is no different from politics - both are about how people interact within the societies in which we live. There is an aspect of both areas of study that is entirely objective and amoral - the part that asks "what is the data regarding how people behave ?" and "how do the choices people make affect the world around them?". It is, however, a mistake in logic, reason and science, to turn an "is" statement into an "ought" statement. Human beings can make moral decisions that run counter to the trends that data might suggest. The Joseph Knight case in Scotland, for example. This case - where a 'slave' brought back from the colonies was freed in the face of arguments that such a decision would immeasurably harm Scottish trade - shows that an "ought" argument from outwith the sphere of economics can affect economic realities. | Economics is no different from politics - both are about how people interact within the societies in which we live. There is an aspect of both areas of study that is entirely objective and amoral - the part that asks "what is the data regarding how people behave ?" and "how do the choices people make affect the world around them?". It is, however, a mistake in logic, reason and science, to turn an "is" statement into an "ought" statement. Human beings can make moral decisions that run counter to the trends that data might suggest. The Joseph Knight case in Scotland, for example. This case - where a 'slave' brought back from the colonies was freed in the face of arguments that such a decision would immeasurably harm Scottish trade - shows that an "ought" argument from outwith the sphere of economics can affect economic realities. |
| Andrew A Morton, Lockerbie, Scotland | Andrew A Morton, Lockerbie, Scotland |
| The idea of removing morality from economics strikes me as preposterous and, well, immoral. Any system that deals with human interaction cannot be divorced entirely from morality. This is true of medicine, education, transportation, law, psychology, even computer interfacing...and, yes, economics. Granted, I AM in one of these distinct camps - it is my belief that rewarding self-interest rewards selfishness. A cursory examination of a Psychology 101 textbook will tell us that when a behavior or attitude is rewarded, that behavior or attitude is strengthened. Thus, I believe that an economy that rewards self-interest above all other things will result in humanity as a whole becoming more selfish over the course of generations. And I don't believe that I've been misproven thus far. | The idea of removing morality from economics strikes me as preposterous and, well, immoral. Any system that deals with human interaction cannot be divorced entirely from morality. This is true of medicine, education, transportation, law, psychology, even computer interfacing...and, yes, economics. Granted, I AM in one of these distinct camps - it is my belief that rewarding self-interest rewards selfishness. A cursory examination of a Psychology 101 textbook will tell us that when a behavior or attitude is rewarded, that behavior or attitude is strengthened. Thus, I believe that an economy that rewards self-interest above all other things will result in humanity as a whole becoming more selfish over the course of generations. And I don't believe that I've been misproven thus far. |
| Steven, Kentucky, US | Steven, Kentucky, US |
| Economics isn't is a morality play. Economics shows that people respond to incentives. If someone believes it is the bankers' "fault" for the crisis, it is only the fault of the incentive structure that causes people to make decisions. This means that if we were in the same position, we would probably make similar choices. In macroeconomics, doing "good" is not always rewarded- a recession can occur in an economy for reasons that are not systemically good or bad. The only way that economics is moral is in its underpinning assumptions. That people are better off if they have more things they like. That there can be situations in which everyone can be made better off. Results such as "people are best off when free to choose what they buy for themselves", while may seem to have moral consequences, are mathematical implications of these fundamental principles. | Economics isn't is a morality play. Economics shows that people respond to incentives. If someone believes it is the bankers' "fault" for the crisis, it is only the fault of the incentive structure that causes people to make decisions. This means that if we were in the same position, we would probably make similar choices. In macroeconomics, doing "good" is not always rewarded- a recession can occur in an economy for reasons that are not systemically good or bad. The only way that economics is moral is in its underpinning assumptions. That people are better off if they have more things they like. That there can be situations in which everyone can be made better off. Results such as "people are best off when free to choose what they buy for themselves", while may seem to have moral consequences, are mathematical implications of these fundamental principles. |
| Jonathan Cassier, London | Jonathan Cassier, London |
| I got turned off on economics early when my high school teacher on the subject defined it as 'how man allocates limited resources to satisfy unlimited wants'. "A dismal science", I read somewhere else. As a newly minted engineer on my first job in the boondocks, however, I could not avoid turning to it. It was a good a guide as any in designing various agricultural structures such as reservoirs and irrigation systems. I now believe economics does not deserve its bad rep. On the contrary I think of it as 'the science of values'. | I got turned off on economics early when my high school teacher on the subject defined it as 'how man allocates limited resources to satisfy unlimited wants'. "A dismal science", I read somewhere else. As a newly minted engineer on my first job in the boondocks, however, I could not avoid turning to it. It was a good a guide as any in designing various agricultural structures such as reservoirs and irrigation systems. I now believe economics does not deserve its bad rep. On the contrary I think of it as 'the science of values'. |
| Boj, Manila | Boj, Manila |
| When I did an economics degree in the 1960's, economics was described as the study of how to distribute scarce resources in society. The assumption was that the demand for resources was practically infinite but the supply was limited. Keynes changed this by discussing effective demand i.e. what people could actually afford. This approach seems completely lost now. When I studied organisation theory, the concept of sub-optimality was introduced. This too is being ignored. If it is assumed that there is a goal to provide the best result for the maximum number of people then the concept of "trickle down" or allowing the rich to get richer does not result in the poorer people getting more. Sub-optimality allows one section of society to profit at the expense of the rest of society. Does all of this involve moral judgements? Of course it does - and so it should. | When I did an economics degree in the 1960's, economics was described as the study of how to distribute scarce resources in society. The assumption was that the demand for resources was practically infinite but the supply was limited. Keynes changed this by discussing effective demand i.e. what people could actually afford. This approach seems completely lost now. When I studied organisation theory, the concept of sub-optimality was introduced. This too is being ignored. If it is assumed that there is a goal to provide the best result for the maximum number of people then the concept of "trickle down" or allowing the rich to get richer does not result in the poorer people getting more. Sub-optimality allows one section of society to profit at the expense of the rest of society. Does all of this involve moral judgements? Of course it does - and so it should. |
| Michael Lynn, Borehamwood | Michael Lynn, Borehamwood |
| The economics of today and tomorrow will need to be more moral than the economics of the past; our challenges with sustainability and stability simply compels us to go there, and it is good being there. One mechanism at play, is that sustainability issues (climate, water, food security) pushes more of humanity to the brink of survival, leading to political and social instability. Pervasive access to social networking acts as an accellerant. So, I think option (b) holds true of the economics we need to practice, going forward. | The economics of today and tomorrow will need to be more moral than the economics of the past; our challenges with sustainability and stability simply compels us to go there, and it is good being there. One mechanism at play, is that sustainability issues (climate, water, food security) pushes more of humanity to the brink of survival, leading to political and social instability. Pervasive access to social networking acts as an accellerant. So, I think option (b) holds true of the economics we need to practice, going forward. |
| Dawid Bosman, Pretoria, South Africa | Dawid Bosman, Pretoria, South Africa |
| Economics can have a perverse impact on our lives. Japan is on one hand facing an natural disaster on a massive scale yet the Bank of Japan has to reassure the markets and pump billions of dollars into the markets to stabalise them. Surely at this time we should have a moral understanding to this situation and act accordingly. Alas for some it is an opportunity to take advantage of someone else's misfortune. | Economics can have a perverse impact on our lives. Japan is on one hand facing an natural disaster on a massive scale yet the Bank of Japan has to reassure the markets and pump billions of dollars into the markets to stabalise them. Surely at this time we should have a moral understanding to this situation and act accordingly. Alas for some it is an opportunity to take advantage of someone else's misfortune. |
| Cliff Edge, Harrow | Cliff Edge, Harrow |
| If we're talking science, there is no morality in the spin of an electron, the speed of light, they are observable and measurable facts which can be confirmed by others repeating the same experiments. But even in science there are morals and ethics which guide the conduct of scientists, the way that research is carried out and reported, and considerable debate about some of it as in the issue of animal experiments. The economy is a man-made creation with decisions on how it is run and who beneifits from it being based on human/cultural values - how can morals not be a part of that? The only question is whether or not they are made explicit. To pretend that economics is a science with no connection to morality would indicate a basic lack of understanding of both science and economics. | If we're talking science, there is no morality in the spin of an electron, the speed of light, they are observable and measurable facts which can be confirmed by others repeating the same experiments. But even in science there are morals and ethics which guide the conduct of scientists, the way that research is carried out and reported, and considerable debate about some of it as in the issue of animal experiments. The economy is a man-made creation with decisions on how it is run and who beneifits from it being based on human/cultural values - how can morals not be a part of that? The only question is whether or not they are made explicit. To pretend that economics is a science with no connection to morality would indicate a basic lack of understanding of both science and economics. |
| David Bates, London | David Bates, London |
| There are two kinds of economics. Productive and speculative. They are not the same. However, today they are so intimately linked that the speculative has taken over because it simply feeds on everything else. And it's eating itself away along with the rest. There is also a third sort, a subspecies of the speculative, and that is money lending. Nothing of this has to do with morality, and so there can be no 'case' for or against speculation or any other kind of economy. It has to do with need and survival. That's why we cannot accept that the greed of a few people can be allowed to put at risk the survival of others. And since this can only happen because of free competition, that's what we have to address. The strong will always dominate the weak, unless there are some rules to protect them. The whole thing has to do with regulation. We don't let assassins go about with weapons, do we? Or do we, indeed? | There are two kinds of economics. Productive and speculative. They are not the same. However, today they are so intimately linked that the speculative has taken over because it simply feeds on everything else. And it's eating itself away along with the rest. There is also a third sort, a subspecies of the speculative, and that is money lending. Nothing of this has to do with morality, and so there can be no 'case' for or against speculation or any other kind of economy. It has to do with need and survival. That's why we cannot accept that the greed of a few people can be allowed to put at risk the survival of others. And since this can only happen because of free competition, that's what we have to address. The strong will always dominate the weak, unless there are some rules to protect them. The whole thing has to do with regulation. We don't let assassins go about with weapons, do we? Or do we, indeed? |
| Jorge Silva Marques, Lisbon, Portugal | Jorge Silva Marques, Lisbon, Portugal |