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The Higher Calling of the ‘Dismal Science’ of Economics

The Higher Calling of the ‘Dismal Science’ of Economics

Last updated on: July 29, 2016 at 12:59 pm by Acton Institute

The Higher Calling of the ‘Dismal Science’ of Economics 2016-07-29T12:59:52-04:00 Acton Institute

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By Dylan Pahman

supply-demand Economist and theologian Paul Heyne once asked the question, “Are economists basically immoral?” He asked this because economists have a frustrating tendency to interrupt the high moral aspirations of others with complications about how, in the real world, life is not so simple.

When other people are concerned with social justice and love, they have a knack for focusing on things like costs and logistics, seemingly putting a price on doing the right thing. Is this just an annoying habit of a small subset of social scientists, or might it be a moral calling? It is common today, especially among economists, to conceive of economic science as “value-free” in a fairly radical sense. Often this conception is credited to Milton Friedman, who wrote in a 1953 article, “Positive economics is in principle independent of any particular ethical position or normative judgments.” To be fair to Friedman, in the same article he admits there is a place for normative or morally-informed economics. But his characterization of positive economics has become a standard way of understanding economics as a whole. Economists just run the numbers. What people do with them is up to them and their own value systems.

Conversely, some people maintain the opposite, insisting that economics is not and cannot be value-free at all. In Christian circles, this is a common stance among social justice activists, distributists and so-called “radical orthodox” thinkers, though it is not limited to them. The basic idea is that the discipline of economics assumes a whole anthropology and ethics, whether or not economists admit it. As such, it should not be considered a science and should not have any independence from ethics at all. Economist Wilhelm Röpke characterized this perspective, which he rejected, as “heteronomous” in a 1942 article because it denies the autonomy of economic science in favor of subsuming it under ethics or philosophy, i.e. under a different rule (hetero+nomos) than its own.

The first group tends to conceive of economics as purely positive or “value-free,” while the second tends to view it as purely normative. But who’s right? Both sides have good arguments in their favor. The positivist can rightly point out that one does not need to read Aristotle’s Nicomachean Ethics, for example, to be able to understand supply and demand. Many of the basic concepts of economics are accepted by all or nearly all major economic schools and require no moral training to intellectually grasp and empirically observe. The heteronomist, however, can rightly point out, as Anthony Randazzo and Jonathan Haidt put it in their recent Econ Journal Watch article on bias in economics, that “‘value-free economics’ is no more likely to exist than is the frictionless world of high school physics problems.”

We live in a world of right and wrong, and we all have views about morality that cannot be debunked by any amount of statistical analysis or conceptual modeling. In his essay “Economics and Ethics,” Heyne said, “Scientific knowledge grows by testing, but it is scientists who do the testing, not ‘objective reality.’” All reality has a subjective, and thus value-laden, aspect to it. Scientists, and thus also economists, are people too, and they cannot escape the moral aspect of their nature. Can this debate be settled? Is there some other way that we could conceive the relationship between ethics and economics? I think there is, and I’m not the only one. As I’ve already noted, Friedman was not a strict positivist, and Paul Heyne certainly was not a heteronomist. In fact, from its very beginnings, modern economics, then called political economy, was understood to be both moral and autonomous, combining “value-free” empirical observation with ethical, social and political concerns in a way that no other science could. For example, the classical economist Richard Whately, who, according to Ross Emmett, professor of political economy and political theory and constitutional democracy at Michigan State University, was “probably the only person who has ever gone straight from economics professor to archbishop,” wrote in his 1840 Lectures on Political Economy:

If we really are convinced of the truth of Scripture, and consequently of the falsity of any theory … which is really at variance with it, we must … believe that that theory is also at variance with observable phenomena; and we ought not therefore to shrink from trying that question by an appeal to these. It is for us to “behave ourselves valiantly for our country and for the cities of our God,” instead of bringing the Ark of God into the field of battle to fight for us.

This last reference is to the story of Hophni and Phinehas, the crooked sons of Eli, the priest of Israel in 1 Samuel. They brought the Ark of the Covenant to war with them as if it were a magical charm to give the soldiers of Israel good luck in their fight against the Philistines. “And when the ark of the covenant of the Lord came into the camp,” reads the Scripture,

all Israel shouted so loudly that the earth shook … So the Philistines were afraid, for they said, “God has come into the camp!” And they said, “Woe to us! For such a thing has never happened before … Be strong and conduct yourselves like men, you Philistines, that you do not become servants of the Hebrews, as they have been to you. Conduct yourselves like men, and fight!” (1 Sam. 4:5, 7, 9)

Did God grant the Israelites good fortune? Sadly, no.“So the Philistines fought, and Israel was defeated, and every man fled to his tent … Also the ark of God was captured; and the two sons of Eli, Hophni and Phinehas, died” (vv. 10–11). Similarly, contends Whately, knowledge of the Bible or the moral teachings of the faith cannot magically replace knowledge of economics, and it is at our own great peril that we presume otherwise.

Yet Whately, for that, did not believe that economics lacked a moral calling. In fact, he is known to have used his economic expertise to bolster his moral arguments against the slave trade. Indeed, economics earned the appellation “the dismal science” not because economists were so greedy and pessimistic. Rather, as David M. Levy and Sandra J. Peart write:

[Thomas] Carlyle attacked [J. S.] Mill, not for supporting Malthus’s predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact—that economics assumed that people were basically all the same, and thus all entitled to liberty—that led Carlyle to label economics “the dismal science” (emphasis added).

So faith and morals are no substitute for economics, but economics still needs to serve ethics. And at its best, that is what it has sought to do.

William Nassau Senior, Whately’s friend and colleague and first professor of political economy at Oxford, even believed that economics would one day be ranked “among the first of moral sciences in interest and utility.” Senior had good reason for this conviction. “The pursuit of wealth, that is, the endeavour to accumulate the means of future subsistence and enjoyment, is, to the mass of mankind, the great source of moral improvement.” He continues,

When does a labourer become sober and industrious, attentive to his health and to his character?—as soon as he begins to save. No institution could be more beneficial to the morals of the lower orders, that is, to at least nine-tenths of the whole body of any people, than one which should increase their power and their wish to accumulate: none more mischievous than one which should diminish the motives and the means to save.

We might think of psychologist Abraham Maslow’s hierarchy of needs, in which he argued that most people need basic provision before they can be expected to attend to higher aims of life. But Senior is saying something more. Arthur Brooks, president of the American Enterprise Institute, has shown that happiness correlates with “earned success” rather than “learned helplessness.” A person struggling to get by lacks the opportunity to (materially) give, which, according to Brooks, also correlates with happiness. Giving is also a moral duty of all who are blessed with wealth. As Christ himself put it, “It is more blessed to give than to receive” (Acts 20:35).

Thus, if freedom from subsistence-level living correlates strongly with happiness and offers the opportunity to plan for the future and help others in hardship, isn’t it certainly a moral calling to discover the principles and policies conducive to those ends, such as private property, industry, credit and trade? And that is precisely what economics, even ostensibly conceived as “value-free,” is meant to do. It’s a high moral calling if there ever was one, inconvenient and annoying as it may sometimes be. Though supply and demand curves may still elicit eye rolls from those concerned with moral matters, I daresay there is yet something sacred even there.

This article first appeared in the Summer 2015 issue of Acton Institute’s Religion & Liberty.

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