Provocation # 77. The mechanical turn in Economics. Consequences.
With Adam Smith, and hints before in Ricardo and others, Economics took the path of treating the economy as a natural object that should not be interfered with by the state. This fit the Newtonian ethos of the age, science was great, science was mathematics; science was true right and good.
But along the way the discussion in for example Montaigne and Machiavelli – about the powers if imagination, myth, emotions, sentiment, human relations and community – was abandoned by the economists (Adam Smith had written his Theory of Moral Sentiments 20 years earlier and sort of left it behind, though the Wealth is still concerned with human well being). Gibbons Decline and Fall was published in 1776, same year as Smith’s Wealth, but hardly read today by most economists.
In philosophy and the arts (romanticism among others) there was great engagement in these issues economics was trying to avoid.
The effect of ignoring the human side of lives was to undermine the social perspective of the “political,” by merging it with the individually focused “interest.” So instead of exploring the inner structure of interest (or later utility or preference), or community feeling and the impact of culture, these were assumed to be irrelevant to the mechanics of the market.
Those who wanted economics to be a science were motivated by the perception that “being scientific” was appreciated by the society of the time and was the path to rock-solid truth. But the move towards economics as a science also happened to align with a view of the landed and wealthy that the economy was working for them so don’t touch it. We get the equation, embracing science = conservative. This is still with us because of the implication that the market is god or naturally made rather than socially constructed. Since economics is the attempt at a description of the economy, it was mor or less locked in to the naturalist approach which ignore things like class and ownership and treated capital as part of economic flow rather than as a possession that was useable as social and political power.
Even now economics still continues as if it were part of the age of Descartes and avoids most social, historical and philosophical thought about the nature of man and society. Names like Shaftesbury and Puffendorf, very much read I their time, are far less known now than Hobbes, Descartes, Ricardo, Mill and Keynes. Karl Polanyi is much less well known than Hayek. We do not learn of the social history such as the complex interplay in Viennese society among those who were classmates and colleagues such as Hayek, Gombrich, Popper and Drucker. The impact of Viennese culture is not known to many economists.
The result is an economics that supports an economy that is out of control because the feedback loops through society and impact of the quality of life – and resentment are not recognized in a dehumanized economics and so can’t have a feedback correcting effect.
The solution however is not to look for simplicity but to embrace a kind of complexity that honors nature, humans, politics, and the way they are dealt with in philosophy, arts, investigative reporting , anthropology and history. Because the way forward cannot be a simple project of the past. We are in more danger than that.
Before the enlightenment, late feudalism and the Renaissance,
the scholastics had made their version of the natural law the basis for a universal moral and political code that demanded that all human beings be regarded in the same way, no matter what their culture or their beliefs. It also demanded that human beings respect each other because they share a common urge to “come together,” and it required them to offer to each other, even to total strangers, help in times of need, to recognize “that amity among men is part of the natural law.” Finally, while Hobbes and Grotius had accepted the existence of only one natural right—the right to self-preservation—the scholastics had allowed for a wide range of them—
From Anthony Pagden Why the Enlightenment is still important.
After the Hobbes and Descartes..(before Smith)
Also from Pagen
The Enlightenment, and in particular that portion with which I am concerned, was in part, as we shall now see, an attempt to recover something of this vision of a unified and essentially benign humanity, of a potentially cosmopolitan world, without also being obliged to accept the theologians’ claim that this could only make sense as part of the larger plan of a well-meaning, if deeply inscrutable, deity.
The reason this is so important is that the simple and ethical view in say Smith (and many other classical economists if read) that it was wrong to let the poor starve because of manipulated grain prices, was replaced by a more mechanical view of society that denied human intelligence except as calculators of self interest – is a return to the Hobbesian world leading to a destructive society: climate, inequality, corruption. Today the poor are hemmed in by so many regulations and procedures (real estate, education, police) that the persons are now starved, but not perceived to be suffering, by a blinded society. Economics in its current form – most economics papers and courses – do not touch the third rail of class, or pain.