The Poverty of Economics

What is the purpose of economics? To explain and describe the production and distribution of goods & services? Perhaps it is simply that. Though what good is an understanding of how trade, production and currencies work if it is divorced from an understanding of the underlying goal of the system? The study of economics has and always will be an utterly value-laden discipline, though unfortunately it seems like it is often portrayed as a disinterested 'science', only concerned with the ways things are. In reality, economic analyses always bring with them unstated assumptions. Much of modern economic policy, disguised in the language of efficiency and individual freedom (see my post on Economic Nihilism) serves to benefit those who already wield vast economic power. To adopt the language of the occupy movement, who are economies built and maintained by and for? The 99% or the 1%?

These value-laden assumptions that underlie all of economics need to be brought out into the open and laid bare. I cannot take the discipline of economics seriously unless something of a dialectical approach is brought to the fore of the public discourse. Ethical justifications that take into consideration the real world implications of economic policy and the associated patterns of distribution need to be taken into account. Economics isn't simply about impersonal forces, it isn't physics—though some pretend it is— it's about people, and so often this seems to be ignored. What good is economic growth if large portions of the population are struggling to get by?

In a discussion I was involved in on a message board this week about living wages and government funding for education, a laissez-faire capitalist argued that tertiary education should be entirely user-pays. What was his justification for this? Simply that subsidised education is a "market distortion". No other justification was given initially. This extremely value-laden justification was simply offered as an a-priori truth. "Market distortions are bad." Understandably, as this discussion was taking place in a forum where some kind of evidence is considered necessary for claims he was asked to explain why market distortion was bad. His response was that it removes the education market from its optima.

The laissez-faire capitalist mentioned in the last post was no dunce either. He's well educated and certainly has reasons for why he believes what he does (what I think of those reasons is another matter entirely), but simply offering a-priori justifications for economic beliefs as if they are based on something other than value judgements seems standard faire in modern political economic discourse. As you probably gather, I reject this paradigm entirely. The neoliberal quagmire of so-called efficiency our discourse has become trapped in needs to be abolished in favour of a much more humanistic and ethically focussed one.

Admittedly I do not devote much of my spare time to studying mainstream economics, so while these ideas seem somewhat original to me, I realise that they may have been said many times before by people much more in touch with economics than I.

Economic Nihilism

As promised in the first post on nihilism and socialism, I am going to elaborate on what comes to mind when I use the term 'economic nihilism'. I am not using it to describe a complete lack of economic interaction, simply a situation where no value is ascribed to any distribution of economic power, and typically where patterned distributions are ascribed a negative value.

In this context a patterned distribution is basically any doctrine that prescribes how much or how little economic power any individual can hold. So in a system without anything like this where no inherent value (positive or negative) is given to distributions, there is nothing one could say against a situation where one individual has 1000 times as much power and wealth as another, or if a small group of individuals collectively held more power than the rest of society as a whole. There is nothing just or unjust, good or bad, right or wrong with this scenario, it simply is.

People who advocate such systems tend to actually go further than this. Rather than just have a valueless distribution they place value on the lack of patternicity. It is the system of complete economic self-determination, or "economic freedom" as they would describe it, that has value and not the outcomes of such a prescription. As I argued in my post Nihilism and Socialism, this concept of 'economic freedom' is misleading at best, as actual freedoms in such a system are completely contingent on possessing wealth and power.

I think it is more than a little hypocritical for people who advocate such an economic system—which in other circles might be called full neoliberalism, laissez faire capitalism, anarcho-capitalism or the awful misnomer libertarianism—to go on to make ethical judgements about the consequences that arise from a system of economic nihilism. If the concentration of wealth and power due to unrestricted individualistic greed results in corrupt political processes, poverty and famine then that system should be held accountable.

Before I get accused of mischaracterising the position of economic nihilists, I will acknowledge that they appear to believe sincerely that their economic doctrines if applied fully will bring about an equitable distribution. I do not share their apparent faith in the 'goodness' of humanity. Nor their belief in the rationality of human action. I find both of these positions to be unpalatable, and extremely naive. This perhaps deserves a post of its own in the future.

In the world today on a global scale we already have a predominately non-patterned economic distribution. There are small pockets of patternicity around the world, but most of these are relatively weak. Some countries like North Korea, or the United Kingdom have a patterned distribution that goes, I would argue, in the wrong direction. The ruling class in the DPRK live in affluence, while large portions of the population struggle to be fed. Meanwhile in the UK, most of society live a largely non-patterned existence, while the royal family lives in opulence at the expense of the populace. However, situations like this are rare. Most of the inequality and class differentiation by wealth and power in the world today occurs through predominately un-patterned means.

So I hope I have made it clear what I mean by 'economic nihilism'. I think it is a much more descriptive term than things like 'laissez-faire capitalism' when referring to the actual consequences—the distributions of wealth and power—of such economic systems.

Nihilism and Socialism

Continuing from the last post, I do not think it is possible to have anything that could be described as meaningful self determination without a political/economic system like socialism, and that in a fully capitalist system it is impossible.

What does it mean to be able to determine one's own course in life? I would imagine that under any definition, the ability to decide what to do with your life would be fundamental; to be able to choose your own educational path, and to choose a career path. However I would argue it can not involve anything akin to laissez-faire capitalist (or anarcho-capitalist) notions of liberty, which I shall call economic nihilism (more on this in a later post). This is because in order to be able to choose educational and career paths you first have to have options available to you. Under a system of economic nihilism however, having options available to you is not universal, or inherent in the system, in fact such a system rejects from the outset any patterned distribution.

Even the most one-eyed capitalist enthusiast will likely acknowledge that under such a system, the distribution of liberties and freedoms mirrors the distribution of wealth. Those with the greatest amount of wealth would have almost unhindered levels of self-determination while those, who by no fault of their own are born into poverty on the other hand have nothing of the sort. Wealth and income inequality as you are probably aware are at a staggering level which compounds this objection to the system; this means that there are very few people with a lot of freedom and a large capacity for self-determination and a lot of people with very little of either. However, even in a mixed economy, with lower entry levels into education through subsidies, government funding for arts, and a strong safety net for unemployment even those from the lower ends of the socio-economic distribution hypothetically have a chance to 'make it'.

This concept of 'making it' from conditions of relative poverty I find problematic too. This is because the concept itself is rooted in competition. It is all about rising to the upper echelons of the socio-economic distribution and the increase in quality of life and self-determination that goes with it. What would a system look like that is built around the ideal of maximising self-determination across the board? I envisage a society where all are provided for and losing your job doesn't mean destitution. Every individual would have equal access to a quality education throughout their lives, meaning that education is free. If it is a wage-based economy, the minimum wage would be tied to a maximum wage, to ensure that whatever path one takes in life they and their potential children will not be disadvantaged. The point of this is that such a system would at the very least resemble something that would be described by most as socialism.