Sunday, January 11, 2015


180. Economics is not free of values but blind to them

 Economic science claims to be value-free. It does not make choices, it says, but only calculates the economic consequences of choices made in politics. But that calculation is based on theory and methods that derive from a utilitarian ethic, and the choice of an ethic is a choice of values, even if that choice is not deliberate and has been imbibed in the nursing of economists. As a result economics is blind to the values that it tacitly adopts. It does not occur to economists to put them up for debate, and if you do it they don’t know what you are talking about.

Utilitarian ethics looks only at the consequences of acts, in the form of welfare. Intentions and the quality of motives are immaterial. The foundation of this ethics lies with the 18th century philosophers Jeremy Bentham and John Stuart Mill, and was introduced into economics by Adam Smith. And then striving for self-interest turned out to be a motor of prosperity.

For Adam Smith self-interest was to be subordinated to collective interest, but in the later development of economics self-interest of the autonomous individual came to reign supreme.

In economics, utility as a consequence of action is considered to be universal and all encompassing. All outcomes can be assembled under a single measure of utility, of which one can next calculate the optimum. Apples and oranges can be added up. Preferences can always be specified for everything, and regimented neatly into a consistent ordering.[i]

Utilitarian ethics stands in contrast to the duty ethics of the philosopher Kant. There, it is quality of motives that matters, regardless of the consequences of acts. The central moral precept is that one must act according to principles that one can rationally want everyone to follow. Lying is bad because you would not want everyone to lie. This is a form of the ancient ‘golden rule’ of ‘Do not do unto others what you do not want done upon yourself’. This is not about self-interest, and the individual is not autonomous.

A third form of ethics, for which I plead, in this blog, is virtue ethics, which goes back to Aristotle. That is about both motives and consequences of actions. ‘Virtue’ sounds moralistic, but it is about values such as sincerity, truthfulness, empathy, reliability, loyalty, responsibility, commitment, willpower, courage, consistency, …

Those values are not necessarily commensurable, not reducible to a single measure, and which values count, and for how much, depends on conditions. In the preceding item in this blog I offered a way of tracing morality in different aspects of actions.
 
The balancing of disparate values is a task for politics and should not be relegated to economists. The core of that process is debate, not calculation. Civilisation counts


[i] E.g. satisfying the axiom of transitivity: if A is preferred to B and B to C, then A is prefered to C. It has been shown in the economic literature this does not apply when utility has several incommensurable dimensions.