Economic Theories are Prescriptive, not Descriptive

Thatcher and Reagan and intellectuals like Dawkins made being greed and taking whatever you could get, screw the hindmost, acceptable.

Which Dawkins does this refer to? I can’t find any reference to an economist named Dawkins, and the biologist hasn’t written anything of the sort that I’ve read.

Do not post far left bullshit and then pretend that is is science. Ronald Reagan and Margaret Thatcher did not invent greed. Greed goes back to the beginning. It is a primal urge akin to breathing, eating, and pro-creation. So Lenin and Stalin were not greedy. Or for that matter, how about Xerxes, or Ramsies. Take a look at their houses Jackass.

“Greed goes back to the beginning. It is a primal urge akin to breathing, eating, and pro-creation.”

Bullshit. Spoken like a true Spencerian corporate thinker. Greed is a neurological disorder for humans and most mammals. You are mistaking greed for the primal emotion of fear. Show me a study that validates any society evolving from greed rather than as a collective effort and I’ll eat my BVDs.

Greed may motivate personal survival but it can put others at risk and when individuals within groups feel threatened they don’t instill a sense of security necessary for survival. We didn’t evolve as a species that pits individuals against each other. We will ultimately destroy ourselves however as we adopt this flawed notion.

@ someofparts
March 11, 2014

Whatever we pay you, it isn’t nearly enough.
~~~~~~~~~~~~~
Hammer to nail, yes!

Two comments:

The first, minor one is on Dawkins. Dawkins was Simonyi Professor for the Public Understanding of Science at Oxford, a post specifically designed, as its title says, to advance public understanding of science. He’s either incompetent or he knows that his phrasing about the selfish gene says to the general public that science has proven that we are innately selfish. This is a polemical choice.

The second comment concerns how the post-Depression generation came to want desperately to believe in the greed canon. We always have in our mental framework multiple, sometimes contradictory beliefs. A big one that was common throughout the society was that your life would keep getting better if you made a fair contribution to your society, whether in a paid job or as a housewife doing domestic/emotional labor. The cost of middle-class needs rose in the 60s (larger families with baby boomer children, geographic housing patterns that demanded multiple cars, need for children to have advanced credentialing through college, and the like) while average compensation stopped improving. That left people vulnerable to exploitative explanations and prescriptions, especially those that buttressed the self-respect lost as flat income no longer met rising needs. It’s not pretty or uplifting, but I worry about calls for political and social action that start from the premise that those who make up the society are morally too weak.

Hi Ian,

You compare and contrast the 60s and the 80s at some length above, and I’m used to reading (and agreeing) with your arguments on them. However, I just came across two posts by Matt Stoller where he reviews Greta Krippner’s book “Capitalizing on Crisis: The Political Origins of the Rise of Finance.”

His review takes a pretty good shot at half of your critique–that the 80s (led by Reagan and Thatcher) were when things took a turn. Instead, Krippner points to the 60s and 70s as the time of real change, with Reagan and Thatcher simply cementing and popularizing changes that had been happening for almost two decades. The TLDR version of Krippner’s thesis, as explained by Stoller:

A simple way to state Krippner’s thesis is follows. In the 1970s, politicians got tired of fighting over who would get what, and just turned those decisions over to the depoliticized market. This is known as ‘financialization’. Then political leaders didn’t have to say “no” anymore to any constituency group, they could just say “blame the market”. It’s very much akin to the rationalization for inequality one hears from elites these days, that it’s globalization and technology, as if those are just natural trends with no human agency or decision-making involved.

To state her thesis in a less glib manner, it is as follows. The state, in the 1960s, was confronted with three interrelated problems – social, fiscal, and legitimacy crises – and that financialization provided an inadvertent mechanism to deal with them. After World War II, the United States was the only industrial base standing, so its corporations had pricing power and could pass on labor costs to the rest of the world. Social problems could be solved with the standard American lubricant of growth and then dividing the spoils among the groups grasping for them. But as American competitiveness declined in the 1950s and 1960s, and due to the “guns and butter” strategy of LBJ’s financing of the Vietnam War, this growth model began failing. The result was that inflation kicked up, and inflation provided the means by which the state could effectively deny resources to constituency groups without explicitly doing so. In other words, dealing with fewer resources created severe pressure on the New Deal liberal architecture of decision-making, which first revealed itself as inflation.

Relevant links to his posts:

http://mattstoller.tumblr.com/post/76864855963/review-of-capitalizing-on-crisis-by-greta-krippner

http://mattstoller.tumblr.com/post/76968869617/how-myths-disguised-as-history-poison-policy-debates

David Graeber also has some interesting things to say about Richard Dawkins:

http://thebaffler.com/past/whats_the_point_if_we_cant_have_fun

erichwwk,

Theory of Moral Sentiments is a favorite of mine and your quote is highly representitive of Adam Smith’s thinking. Adam Smith…perhaps the misquoted man in history.

Celsius 233 permalink
March 11, 2014
Someofparts
March 11, 2014

Whatever we pay you, it isn’t nearly enough.
~~~~~~~~~~~~~
Hammer to nail, yes!

Agree

Has anybody heard of a capitalist society going back to cooperation? Good luck with that.

Have we run the experiment long enough to know?

Surprised googly-eyed Any Rand hasn’t come up in this talk of selfishness—after all, she deemed it our highest virtue and god knows her ideas are fundamentally entwined with the free-market pathologies of Friedman and Greenspan. From a review of Adam Curtis’ “All Watched by Machines of Loving Grace”:

“Rand’s Objectivism, we’re told, has given birth to a culture of selfishness among the world’s most powerful. For the uninitiated it discourages altruism and pushes for every man and woman to become solely selfish beings, driving their own interests to the bitter end. There is no time for weakness, religion or irrationality and each person should make their priority their own happiness….

What he reveals is the dangers of human beings at their most selfish and self-satisfying. Showing no compassion or consideration for your fellow human beings creates a chasm between those able to walk over others and those too considerate – or too short-sighted – to do so.”

http://www.telegraph.co.uk/culture/tvandradio/8531172/All-Watched-Over-by-Machines-of-Loving-Grace-review.html

You can see all 3 parts of the documentary here (the 3rd part addresses Dawkins as well:

http://topdocumentaryfilms.com/all-watched-over-by-machines-of-loving-grace/

@ jcapan
March 12, 2014
~~~~~~~~~~~~~~~~~~
Thanks for the link. Definitely much food for thought.
Not sure where I fall in this, but one thing is for sure; we’re having an effect.
The question is; is it within the nature of what is? I think, yes.
We cannot possibly act outside of our nature; whatever manifestation that takes…

Quibbles about Dawkins aside, I think you’re generally on the money with this one, Ian.

One example that comes to my mind is the grocery stores that charge, say, a nickel, for plastic bags. My observation is that the rate of conversion of people from taking bags to bringing their own that this policy brings about far exceeds what could be explained by the added cost, even if we make heroic assumptions about people’s inability to process how small a payment that really is.

What I think, in part from examining what goes through my own mind, is that people prefer to be / feel virtuous by bringing their own bags and cutting down on the waste, but the nickel charge liberates them to do so because they can then justify their decision as being consistent with the dominant social meme of following self-interest, rather than having to justify their decision on the basis of ‘doing the right thing’, which is generally mocked in our society.

How has it come to pass that we (USA in paticular) are re-litigating and arguing competing philosophies on questions that largely were settled issues in advanced societies, including our own, until the past couple of decades?
Seriously, reproductive choice, evolution (remember Scopes trial?), right to unionize, universal medical care, hell, we’re barely discussing living wage or guaranteed leave/vacation. On and on.
Isn’t this all of a peice with the altruism/greed binary? Of course it’s infantile and attempting to reason with those under the thrall of Randism is like trying to reason with cargo cultists, but there it is.
What gives this idiocy such power, besides the constant drone of media saturation?

Mandos, I think you mean argumentum ab annis, not “argumentum ab aulis.”

No, I meant “aulis”. Plural ablative of “aula” (palace), unless I used the wrong word for palace (Latin a bit rusty). The “argument from palaces”—a fallacy title I invented for people who think that ancient emperors’ palaces are dispositive arguments about human nature.

The negative reaction in some of the comments is interesting, in a clinical sort of way. They suggest to me people who are desperately looking for some piddling difference to argue over, to save themselves from having to deal with the implications of the need to “crush” the plutocrats and their apologists.

Of course Reagan and Thatcher did not “invent greed.” That hardly disproves the point Mr. Welsh is making. By dragging in this smelly red herring, the commenter is obscuring the real issue raised by Mr. Welsh: How does a society create a system of incentives and punishments that steer individual desires and actions in a direction that comports with the general welfare?

The genius of the USA Constitution, in my considered opinion, was that it began with an understanding that human nature is deeply flawed, but tried to create a framework of national government in which those flaws were checked and balanced, and in which the promotion, protection, and furtherance of the general welfare was one of three preeminent goals. And to make sure the point was not missed, “general welfare” is mentioned twice: in the Preamble, and in Article 1, the great and famous “General Welfare Clause.”

Unfortunately, this is also the glittering allure of capitalism and its most basic premise: that the individual pursuit of self-interest will, through the magic of the market – and if left alone by the “damn gubmint” – will omnisciently effect the best allocation of society’s resources and provide the greatest pleasure to the greatest number of people.

Where capitalism and its glittering promise fail, of course, is that “the market” has no mechanism to restrain, punish, or prevent some of the worst predatory behavior by some individuals who are – let us be brutally honest – sociopaths. There is nothing in “the market” that is malum in se. Milton Friedman followed his own logic to its ultimate conclusion, and argued for removing legal prohibitions against all drugs, even heroin, and even prostitution. Only by the imposition of intrusive government laws and regulations do you get market restraint. And this is strictly malum prohibitum: something is wrong only because it is against the law. Wall Street and big corporations spend a lot of money [mis]employing some very bright and talented people to limit or skirt malum prohibitum as much as possible.

Only by conceiving of society and its economy as an interdependent system – as political economy – can you begin to identify and attack economic problems of misbehavior; and, begin to understand the depth of the hostility and enmity of conservative thinking to the USA form of government. Because conservatives and libertarians openly argue that the very idea of the general welfare is the slippery slope to statist totalitarianism.

You know, we call the period leading to the American Revolution the Enlightenment. And reading the works of such as Franklin, and Adams, and Hamilton is pure joy. What they write is enlightening, and it is uplifting. But to read Friedman, von Hayek, von Mises, and, yes, Ayn Rand, is depressing, horribly depressing. There is no nobility of the human spirit in their world view. There is no concern for the welfare of other people. There is only base and disgusting selfishness, made slightly more presentable by renaming it self-interest. Madison, in his classic Federalist discussion of factions, argues forthrightly that factions arise from selfish economic interests, and the most important role of government is to regulate and restrain those interests. The conservative insistence that the markets must have priority over the state is a direct frontal attack on the American system of government, and its constitutional enthronement of the general welfare.

Markets simply do not function for the common good without the state imposing incentives and punishments. Economics will thus always be a flawed way to look at society and how society uses and allocates resources. Political economy is superior to economics exactly because the role of the state is a central concern of political economy.

So, Reagan and Thatcher did not “invent greed.” That still leaves the question of the system of incentives and punishments society must impose to ensure that the impulses of human greed do not overwhelm and gain ascendancy over the impulses of our better natures. Mr. Welsh generally allude to a turning point in the period between the 60s and the 80s. Which immediately brought to mind one of the most powerful, and most important, passages from Ron Suskind’s book, Confidence Men: Wall Street, Washington, and the Education of a President. Suskind discusses the hearings by Massachusetts Congressman Ed Markey, into the Wall Street scandals of the time, the late 1980s:

As for the “type of behavior” that “led us to our crisis,” Markey could cite the moment he saw the culture shift, like some geological event.

It was in 1988, after the 1987 stock market crash, and the prosecution of insider trading and various securities frauds was well underway. “Something very basic, very fundamental, had changed on the Street, and we on the subcommittee couldn’t put our finger on what was different,” Markey recalled. So they decided to bring in an expert. Dennis Levine, one of the major Wall Streeters convicted of securities fraud, was serving time in New Jersey. Markey’s staff got in touch with the Bureau of Prisons and arranged to have him transported for an afternoon to a sub-committee conference room. Levine, who couldn’t be forced to cooperate, was asked what the subcommittee could do to persuade him to come. He said he’d do it for a McDonald’s Big Mac, fries, and a chocolate shake. Once a self-proclaimed “Master of the Universe,” those were the things he’d found he missed the most. Soon enough, Levine, in prison blues, was eating his Big Mac and describing how the rewards on Wall Street had suddenly grown so large, and the opportunities for self-dealing and misuse of insider information—so-called informational advantage—so widespread, that it would only get worse. “He said, we were ‘just at the very start,”‘ Markey recalled, “and that they’d figured out how to turn the investing of others people’s money into a kind of game, where they were constantly changing the rules in a way that was subtly fraudulent, against the basic principles of fairness or fiduciary duty. He said that with this much money to be made for doing very little, it was worth the risk of getting caught doing what you had to do, but that they were working on lowering that risk as well, with lawyers working overtime to make sure many of these activities were legal, or at least hard to prosecute.”

After an hour, Markey said that he and the committee members had heard enough and asked the felon what might be done. Levine, sucking on his shake, thought this over for a minute or two and then said, “You need to send out a slew of indictments, all at once, and at three p.m. on a sunny day, have Federal Marshals perp-walk three hundred Wall Street executives out of their offices in handcuffs and out on the street, with lots of cameras rolling. Everyone else would say, ‘If that happened to me, my mother would be so ashamed.’

“Levine was saying we should take a dramatic stand on principle to reverse the direction we were moving in . . . before things progressed any further and the problems got even bigger,” Markey said. “Culture is destiny and the only way you create real change is by acting in a way that changes the culture.”

Suskind then recalls the difference in how President Obama treated Wall Street executives, and Rick Wagioner, CEO of General Motors, and makes what I consider the most trenchant criticism of Obama’s Presidency. And it is extremely interesting in the context of Mr. Welsh’s discussion of belief systems and their cultural manifestations.

Presidents are among the few mortals who are sometimes graced with chances to change a culture. Throughout a windswept March [2009], the country had been working to dislodge some of the era’s prevailing certainties about markets being efficient, about people—economically, at least—getting what they deserve, along with the concomitant belief that financial barons are brilliant and indispensable, and manufacturing executives are dinosaurs.

With the eyes of the country on him, Barack Obama ended the month by shielding Wall Street executives against these winds of cultural change, while he fired a man who had effectively managed four hundred thousand workers in their making of seven million cars a year—without ever bothering to meet him.

Was refraining from commenting until Tony Wikrent’s remarks, Celsius 233’s remark re quality is faultless.

Would add that economic theories are neither prescriptive nor descriptive, those terms lead only to playing word-games leading nowhere; economic theory attempts to intellectually reflect the complex dynamics of a complex species on a complex world as a model. Anything else is something else, a myth, a dream, a deception, a belief or whatever – it is not economic theory. Economic theory is measured by its clarity in understanding as well as the fidelity it reflects what exists and how that works, the dynamics of reality. Precious few perceptions remain that are distortion free for the species, political economics because of its association with the workings of power and wealth is among of the most distorted subjects, however, by defining terms used some advancement towards a distortion free lens can be obtained, maybe not perfect but improved perception none-the-less. With clarity of perception, clarity of understanding follows as well as clarity in communication. John Maynard Keynes in his ròle as editor of an economic journal wrote a number of biographies, among which he noted the number and variety of characteristics that comprised an actual economist and noted the absolute rarity of that species. Those things have not changed since.

Again kudos to Tony Wikrent for clarity and Celsius 233 for recognition of the quality.

I have always hated the use of the natural selection and survival of the fittest arguments as the authority for cut-throat capitalism. It first of all looks like another instance of our inability to recognize things that don’t fit with our belief: the abundant evidence of animals’ far more complicated emotional lives, for one thing. But for another it doesn’t acknowledge that selection occurs in the context of tremendous prodigality: frogs and fish laying bazillions of eggs; plants putting out more pollen than they can possibly use, for instance, and more broadly the diversity of survival and reproductive strategies. The way nature acts is like “Let’s have lots and lots of really crazy ideas!” This is provision for competition but it is also provision against contingency–shit that happens. And it is also, at last, provision for more adaptation, because in abundance is the possibility for even newer accidentally discovered ways of thriving and evolving. Even mere apparently random movement, like the movements of a sea anemone’s tentacles, can serve this end in some completely unexpected and contingent way. Humans live in a state of continuous mental activity, much more than can be applied to any practical purpose; and yet out of that noodling comes the built structures of imagination, good and bad, in which we live. And then to top it all off, pleasure. So the most evolved thing in nature overall may be something religious people might call grace; everything is more beautiful and abundant than it needs to be. And that’s what somehow keeps it going. Late-stage capitalism is most striking for its intellectual and practical penury. It is increasingly intolerant of anything from which rents or profits cannot be extracted. (Come to think of it it’s not that late: Hugh Smollet’s narrator in Humphrey Clinker, touring England and Scotland, looks at the unenclosed fields of some landowner and concludes that he is an idle wasteful fellow. He can’t connect the enclosed fields with the increase in the number of poor people in the cities, or with the stories of farmers’ sons having to go to sea, to mostly die on ships or in the colonies, because the families have lost their livelihoods.) The mere existence of something unexploited comes to be considered as a waste of what might be made out of it, and mostly what is to be made out of anything is just more money, whatever price can be commanded for whatever can be stripped out of it. All public goods are to be handed over to grifters, and dead elephants are worth more than live ones, and we submit to feed the riches of nature and of our imaginations to people who are incapable of understanding their value.

I am really curious what role mass media is and has played in this acceptance of greed as good? Media competes even with the best parents in raising children since probably the 70s-80s. And IMO, all forms of mass media, from entertainment to news to commercials, is shameless, emotional manipulation of the populace in the pursuit of a variety of goals but primarily money.

So what role is and has mass media played in shaping the acceptance of a dysfunctional vision of society?