Rediscovering the Missing Element of the ‘Dismal Science’

Redeeming Economics
Play

This next Liberty Law Talk is with John Mueller, author of Redeeming Economics. Modern economic thought focuses on production, exchange, and consumption. Much of Mueller’s focus, however, is on final distribution, or the notion that a great deal of our economic activity is really about providing benefits or gifts to those we love. Mueller returns to Aristotle to articulate why this missing element is so important for understanding economics. In his Politics, Aristotle described the economy by using a household model oikos, the root of our word economics, where agents distribute goods to increase the flourishing of family members and friends. Augustine of Hippo, Thomas Aquinas, and the Scholastic school, as noted by Joseph Schumpeter in his History of Economic Analysis, refined and developed this notion of final distribution as a prime component of economic analysis. Our conversation turns to this missing element and seeks to understand what it adds to economic thought and what has been lost by its omission.

John D. Mueller is the director of the Economics and Ethics Program at the Ethics and Public Policy Center. He is also the president of LBMC LLC, a firm specializing in economic and financial-market forecasting and economic policy analysis. Mueller’s articles have been published in the Wall Street Journal, the Weekly Standard, the Washington Post, and the Harvard Business Review.

About the Author

Comments

  1. Ralph says

    This is a fantastic work on the history of ideas and, specifically, economics. It relates the philosophical basis for much of what has been proposed in economics, and explains why the assumptions led to the failure of the theories. This work demonstrates the fallacious assumption of modern intellectuals that they are somehow more qualified than anyone in the past to manage the affairs of others.

    Much of the intellectual discussion of the last several hundred years has been spent reinventing the wheel after prior conclusions were disregarded because they were related by clergy and were not a part of some of the various modern attempts to produce a unified theory. Real life is more complicated than that.

    This book is a great companion to Rodney Stark’s history, The Victory of Reason, and is a wonderful discussion of the fundamental ideas of economics and its intellectual history.

  2. Ralph says

    In a society in which the family is the primary unit and exchanges are guided by utility and scarcity, but the family measures distribution, government policy must be justified given the additional burden it places on the family’s preferred distribution goals. The Left would argue that religion requires that we “love our neighbor as ourselves.” But that rule is reciprocal as well, and a good neighbor would not place a negative value on me and make demands that reduce my ability to meet my family’s wants and needs.

    The “missing element” of families prioritizing distribution according to scarcity is also a good model for policy makers who would be forced to account for their redistribution policies. In a system where “greed is good” the government can be leveraged as a part of the market without moral compunction. In a society that understands the individuals’ weighing of scarce resources and distributing, government policy, and the individual politicians, must account for the weights they assign in spending.

    Understanding economics in this way provides a yardstick that not only more accurately explains what individuals and families actually do, but also helps focus on what politicians do that hinders our individual preferences. It also provides a system for explaining why transfers are unjustified without the individuals’ consent. Exchange in the market assigns a zero weight to the other (sometimes we may buy at a higher price or sell low as an act of kindness, in which case there is a nonzero positive weight assigned). Crime, theft or fraud, is understood as a negative weight assigned to another, but transfers of any kind without consent also bear that negative weight, even if the transfer is based on legal policy. Just as proper exchange must be voluntary, so distribution must be as well.

    If economics were taught this way, there would be an explanatory method available to force justification for policy alternatives. In a society where “greed is good,” government coercion becomes justifiable in the hands of redistributionists. Much as slaves were assigned a 3/5th representative proportion, government policy often belittles individuals based on other criteria. Understanding economics in this way captures that perspective, demonstrates the moral equivalence to dehumanizing and demands a justification.

    This understanding also provides the explanation for the behavior described in Arthur Brooks’ Who Really Cares.

    For a similar disscussion listen to Russ Roberts’ podcast with Deirdre McCloskey on econtalk.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>