teaching economic philosophy: economics, ethics and …

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

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TEACHING ECONOMIC PHILOSOPHY: ECONOMICS, ETHICS AND THE SEARCH FOR THE RIGHT

MAXIMAND

L.A. Duhs1 University of Queensland [email protected]

ABSTRACT

Economic philosophy is not often taught, and is not necessarily easily taught. It involves enquiry into implicit assumptions within orthodox economics and within alternatives to it. It seeks to highlight why it is that some critics object that neoclassical economics is too atomistic, hedonistic, and rationalistic, or why others lament that there is much hidden metaphysics in Friedman and his Chicago School colleagues. It addresses the issue of whether - in a reversal of the view that economics is the imperialistic social science - significant philosophical assumptions have been silently but inescapably imported into orthodox economics. This paper seeks to facilitate the presentation of such material with illustrations selected from social economics, development economics, and critiques of utilitarianism.

Keywords: teaching economics; economic philosophy; implicit assumptions.

J.E.L. Classifications: A12, A13, A23, B15, Y8.

1. INTRODUCTION

Many regard economics as synonomous with utilitarianism. That is not necessarily so, however, and critiques of utilitarianism in the professional literature are accompanied by a series of specifications of alternative maximands, putatively superior to the maximisation of aggregate utility. Posner, Rawls and Sen are the three to have achieved greatest recognition in the economics literature for their challenges to the utility maximand, but others to have broached the subject include Schumacher, Higgins, Myrdal, Etzioni, Cropsey, Austrian School 'economic personalists' and Harsanyi. These challenges have commonly been ignored in mainstream courses, but in recent years Sen's status as a Nobel Prize winner who may legitimately be regarded as an economic philosopher has increased the readiness to take such matters seriously.

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Thanks are due to AJEE referees whose helpful comments led to significant improvements in this paper.


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In this setting, three themes are addressed in this paper. First, consideration is given to the issue of ethics in economics. This includes an appreciation of issues basic to Paretian welfare economics, and requires an understanding of what Sen (1977) calls 'rational fools' in the orthodox economics literature. Secondly, the development economics literature is used as a vehicle for illustrating some issues in economic philosophy. This involves issues related to the fact/value dichotomy in positivistic method, and raises questions about the distinction between chance and choice. It also involves questions about the definition of just what it is that is being developed. Thirdly, consideration is given to social welfare functions, which are commonly conceived in terms of utility maximisation, but which admit of the alternative specifications advocated by Posner, Rawls, Sen, Cropsey and others. Posner finds social utility maximisation to be deficient largely because of utility distortions attributable to the depraved, whereas Rawls finds utility maximisation to be deficient because of utility distortions attributable to the deprived. Whereas Rawls argues the need for some form of economic floor or safeguard for the worst-off, even if what he provides is no more than utilitarianism made contemporary, Sen similarly seeks to assist the deprived by removing 'unfreedoms' in order to facilitate the development of their human capabilities. He therefore commends his 'capabilities approach', which does more to undermine the acceptability of a utilitarian calculus, and which argues instead for something closer to the maximisation of the development of human capabilities as understood in Aristotelian terms. He too has his critics, and fundamental questions remain unresolved in the literature.

If nothing else, that does at least have the advantage of providing meat for economic philosophy students to chew. While the literature related to economic philosophy is diverse and somewhat abstruse, one submission made here is that there is much advantage in the teaching of economic philosophy in focussing on the various meanings imparted to six key words in that literature: the nature of 'man'; 'freedom'; 'rationality'; 'equality'; 'science' and teleology. Five of those words seem deceptively simple.

2. SOME PROMINENT CONTROVERSIES IN SOCIAL

ECONOMICS AND THEIR ROOTS IN ECONOMIC

PHILOSOPHY

2.1 Sen and the Link Between Economics and Ethics

Sen's is one of the few eminent voices raised in recognition of the need to take economic philosophy more seriously. He contends that


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modern economics has allowed too large a gap to grow between economics and ethics. He considers that all the propositions underlying the general consensus on traditional welfare economics are eminently contestable, and duly dismisses Pareto optimality as “a very limited kind of success” (1987:32). Indeed, as he sees it, Pareto optimality may come “hot from Hell” (1987:32), and is a condition which remains entirely compatible with leaving some people in extreme misery while others roll in decadence and luxury. This leaves it “an extremely limited way of assessing social achievement” (1987:35) which (merely) captures the efficiency implications of utility accounting. Accordingly, a utilitarian/Paretian approach can yield results at odds with our basic intuitions, and Sen objects at least tacitly that an ethical framework must be rejected if it is inconsistent with those basic intuitions. Significantly, in developing his critique of utilitarianism he further objects that “to identify advantage with utility is far from obvious” (1987:38), and if some interpretation of advantage other than utility is accepted, then Pareto optimality would cease to be even a necessary condition, let alone a sufficient one, for overall social optimality (1987:35-39; also 1979a, 1979b). For him, welfarism - in which social welfare is a function of personal utility levels alone - is therefore potentially disastrous. It follows that Sen's position on values and ethics in economics will be well removed from that of Chicago School economists, for whom utilitarianism and value relativism remain sacrosanct. Policy differences between them are obviously of little relevance until one first addresses what separates them in terms of the a prioris of their respective economic philosophies. There can be few better places to start a course on economic philosophy.

Sen emphasises (1987; 2000) that economists should pay more attention to the implications of libertarianism and utilitarianism in apprehending issues of value relativism, historicism and political philosophy within orthodox economics. He concludes (1987:51) that “it cannot be doubted that the issue of rights and freedom places an important question mark on the general approach of welfarism (including inter alia utilitarianism and Pareto optimality).” He offers various grounds for departing from welfarism (just as Cropsey emphatically did in 1955) which “may all provide grounds for rejecting self-interested behaviour” (1987:54). One such ground arises when importance is attached to the “agency aspect” of a person - meaning that a person may have reasons for pursuing goals other than individual self-interest. Another arises if a notion of well-being is adopted that differs from utility. Given a view of well-being based upon some “objective” circumstance (eg a person’s functioning achievements or capability development) – and not primarily on preference – the simplicity of the underpinnings of the fundamental


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theorem of welfare economics (which links competition to efficiency) will be undermined. On such an “ethics related view of social achievement” (1987:4) evaluation cannot be stopped short at some arbitrary point like satisfying “efficiency”. A third ground arises insofar as Sen accepts that self-interested behaviour can also be a seriously inadequate yardstick in ethical approaches that emphasise rights and freedoms. The “moral acceptance of rights may call for systematic departures from self interested behavior. Even a partial and limited move in that direction in actual conduct can shake the behavioural foundations of standard economic theory (including the fundamental theorem). At least tacitly, Sen is objecting that the economics-as-imperialist-science doctrine has affirmed important ethical positions by silently rejecting not only the agency aspect of a person and the notion of human rights but also the possibility that human well-being can reflect anything other than subjective personal preference. There is food for thought here, and experience does indeed show that economic philosophy students appreciate the opportunity and obligation to confront such issues. For Sen - in the institutionalist tradition as against the libertarian tradition - it follows that human beings must be free from serious external constraints (provided by adverse circumstances including poverty) before they can meaningfully be said to be free in the sense of being free to do as they please. Beyond that, his criticisms of the limited ways in which 'rationality' is defined in economics - merely as deductive consistency or as self-interest maximisation - give rise to questions as to whether human rationality can be applied only to the choice of policy means or can also be applied to the choice of human ends or goals. He thereby implicitly questions the orthodox conception of matters of teleology in economics and social science.

In such a context it follows that for Sen (2000: 280), “the role of values cannot but be crucial”. It also follows that orthodoxy has a lot to answer for. The metric of exchange value assigns zero value to everything except commodity holdings (e.g. rights, morbidity, education), and there is at least a crypto-teleogical theme in Sen that sets him apart from the neoclassical orthodoxy. Economics is not the all-powerful imperialist social science for him, but one which needs to be supplemented by careful thought about matters exogenous to economics, including the understanding of human capabilities and thus the understanding of the nature of humankind, human well-being, human development, and human teleology. Sen's concern is to show that the standard propositions of modern welfare economics depend on (merely) combining self-seeking behaviour with willingness to judge social achievement by some utility based criterion. This is the root position of the way in which values, ethics and issues of social optimality are apprehended in orthodox economics, but


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as Sen depicts it, it is no more than a representation of the way the world would look if those underpinning assumptions held true. For Sen (as also for Schumacher, Myrdal, Cropsey, Etzioni, Higgins and Nevile) it is apparent that significant political or philosophical assumptions have been silently imported into orthodox economics.

In short, there is an Aristotlelian element in Sen – one that carries the implication that the judgement of social achievement relates to the goal of achieving “the good for man” (Sen, 1987:4; 2000:14, 24, 285-289). This is at least a crypto-teleological view, and one that is poles apart from the a-teleological view of values, ethics and social optimality embedded in Chicago School utilitarianism, libertarianism and economic imperialism. This Aristotelian element in Sen is enlarged by Cropsey, and is further considered in section 4.4.

Those interested in the roots of ethical controversies in economics therefore do well to pay some homage to Sen for his success in again 'legitimising' debate about such questions within economics. There is no more accessible, or more significant, place from which to start in the teaching of economic philosophy.

2.2 Economics and Ethics in Social Economics: Etzioni, Lutz & Lux,

E.F. Schumacher, C.K. Wilber and the International Journal of Social

Economics

A sub-group of economists, broadly known as social economists, respond to questions similar to those raised above by Sen. They find reason to object to the conception of the nature of man implicitly embedded in orthodox teaching, and seek to construct a superior understanding of social economics rested on more acceptable philosophical premises as to what is 'man', and consequently what are human needs and 'rational' human behaviour. In Etzioni's words (1988: xii), “At issue is the nature of man”. Similarly, Lutz and Lux complain (1988: 104) that “something important” is missing from the conception of man in orthodox economics, just as Schumacher objects (1974: 77-83) that “Economics is being taught without any awareness of the the view of human nature that underlies present-day economic theory”. In discussing 'what's wrong with economics', Benjamin Ward (1972) objects that neoclassical economics is too atomistic, hedonistic, and rationalistic, and in discussing 'the moral dimension' of economics, Etzioni uses almost identical words in criticising it as “individualistic, hedonistic and rationalistic”.


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Etzioni finds the missing ingredient in the neoclassical conception of 'man' in Kant. E.F. Schumacher, J.C. O'Brien (1996; 1992), C.K. Wilber (2004) and 'economic personalists' (Gronbacher 1998) find it in the Bible. Cropsey finds it in Aristotle. Indeed, Cropsey anticipates much that is in Sen, as well as Schumacher's view that there is a virulent 'metaphysical disease' rampant within the teaching of orthodox economics. More pointedly - mirroring the above objections of both Ward and Etzioni - Cropsey's view may be paraphrased as an objection to the inappropriate foundations of neoclassical economics in atomism (or sui generis individualism), hedonism (or utility equals advantage and is thus the root of The Good Life), and rationalism (or the implicit metaphysical teaching that human reason is but the handmaiden of the passions, such that reason partakes of the choice of human means but not the choice of human ends themselves). The common teaching of Etzioni, Schumacher, Cropsey and Sen is that there is much misconception in the present (implicit) teaching of the relationship between economics and ethics.

Etzioni's conception of man (1991) requires recognition that people are not just self-interested, are not interested solely in efficiency, are not isolated in their existences as individuals but are reflective of groups, and generally prefer a mix of work and leisure over leisure alone. He rejects the utilitarianism and individualism of orthodox economics. He objects that consumption is not the sole end of economic activity. The practical consequence of this for socio-economists of his stripe is that there is need to recognise the role of social justice along with efficiency, and need to recognise the importance of protecting institutional integrity. Furthermore, there is a need to accept the significance of moral foundations for social interaction – not only for the family and community – but also for the efficacy of the market itself, which ultimately rests on trust and integrity. There is significance in 'psychological income' for a productive labour force, and a need to recognise that the harmfulness of unemployment has commonly been underemphasised. Socio-economists recognise a hierarchy of universal human needs and recognise concomitant human rights. They object to the reduction of differentiated human needs to undifferentiated 'utility'.

C.K. Wilber (2004:148) reflects the Catholic social economics tradition. He castigates the unwarrantedly narrow interpretation of Adam Smith commonly delivered to economics students (as Sen also does) and argues that what Smith teaches in his Theory of Moral Sentiments is that what is required for success in creating a liberal society is adherence to a common social ethics. On Wilber's interpretation, the hero for Smith is not self-interest, but ethical prerequisites. Moreover, in terms of 'scientific' methodology, he further objects that while positivists assert that failure to


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maintain the fact/value dichotomy will result in “a disastrous slide into relativism” (p148), anti-positivists contend that it is precisely the pretense of value neutrality in positivistic social science that is itself the real harbinger of just such a disastrous slide into relativism. For Wilber and Catholic social economics the implicit positivistic teaching of the equality of all values is in fact a dangerous metaphysical teaching, and one that ultimately inclines towards nihilism and social decline. In this they have something significant in common with both Cropsey and Schumacher. Kristol (1973) and Samuels (1976:409) express similar concerns. Wilber observes that a certain shared 'world view' shapes the analysis offered by neoclassical economists, and this view reflects a set of (contestable) value judgements, primarily including (a) that people are rational and self-interested; (b) that the goal of life is to pursue happiness as understood in utilitarian, relativistic terms; and (c) that competition and market forces lead to efficiency and optimal outcomes. Wilber's list might therefore be re-worded as an objection to rationalism, hedonism and welfarism, which plainly bears close resemblance to the above tripartite objections of both Ward and Etzioni. Social economists stress that such value judgements as underpin the 'world view' of neoclassical economics need to be openly debated, rather than tacitly assumed. Accordingly, J.C. O'Brien (1992) directs attention to teleological questions in asking 'what is the end of it all'. Social economists have no doubt that the implications for social advance of value relativism and value-neutral positivist methodology are of transcendent importance, but complain that the issue is rarely deemed relevant to the teaching of economics. For them, what is taught implicitly in welfare economics is potentially more important than what is taught explicitly, and there is again obvious material for provocative courses in economic philosophy.

2.3 Austrian School 'Economic Personalists'

Also confronting the need to close the distance between economics and ethics is a sub-division of the Austrian School of economics. From its inception in 1998 The Journal Of Markets and Morality has set out to establish a fully Christian social science. Founded by Austrian School Catholics who call themselves 'economic personalists' this group seeks to combine Catholic moral philosophy and Austrian School respect for individual freedom. Its advocates therefore seek to remove what they see as the skewed conception of human nature in economics and social science – a conception which tends to be overly rationalistic, utilitarian and/or weak regarding the metaphysical dimensions of human life. For economic personalists (Gronbacher 1998; Woehrling 2001) the policy consequence of


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this philosophical position is that support should be given neither to unfettered markets nor to government regulated markets, but to morally constrained markets. What economic personalists support therefore is not Statist intervention but the constraints of natural law as promoted by a moral code conveyed through voluntary associations including family and church. In effect, personalists pursue a morally healthy market place which not only distinguishes between freedom and mere licence but which also facilitates reduced transaction costs via a morally healthy society. Economic personalists – who also seek the consummation of one's humanity via entering into community with others – thus see themselves as offering a new contribution to the search for a synthesis of market and moral principles. Given their attachment to both Austrian School economics and to Catholicism, the economic personalist position is similar to, but not identical with, the social economics associated with Etzioni, Wilber or the International Journal of Social Economics.

Personalists contest the implicit conception of the nature of man embedded within orthodox economics. For their own part they tend to define man in terms of the capacity for love, however, rather than in terms of the common capacity for reason and speech, as Cropsey (and Straussian philosophers) do. There is no coincidence of views here. Nor is their view coincidental with what Etzioni has in mind, with its origins in Kant, rather than in the Bible. Personalists recognise individuality, but their view is not synonomous with sui generis individualism. They resile from individualism as atomism (c.f. Ward; Etzioni), which they see as the opposite of solidarity or brotherhood, and hence seek to reflect some generic features of humankind. In consequence too, economic personalists understand 'freedom' in the way outlined in various Papal Encyclicals and that makes their understanding of 'freedom' quite distinct from the understanding provided by Chicago School libertarians. For them, “freedom” is not mere licence to do whatsoever, but freedom to pursue a teleologically superior human end.

While Austrian School Catholics assert the superiority of their conception over earlier Catholic and protestant attempts to provide a synthesis of markets and morality, critics will of course object that family and church have been with us for a long time and presently seem to show an inclination to decline, rather than regenerate into viable moral regulation of economic activity. Such critics will therefore be inclined to say that the economic personalist position – which essentially combines free market dogma with Papal teaching that people should love their neighbours – is little different from hoping or praying that the world could be made a nicer place. Supporters, on the other hand, will argue that Adam Smith wrote the Theory of Moral Sentiments as well as the Wealth of Nations, and that


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contemporary economics teaching is at fault for losing sight of the importance for the market mechanism itself of an underpinning set of moral sentiments.

It should be apparent from section 2 of this paper that much suitable material for economic philosophy courses arises in the context of social economics in terms of the metaphysics underlying various economic perspectives and in terms of the definitions adopted of such commonly used and seemingly non-controversial terms as 'freedom' and 'rationality'.

3. DEVELOPMENT ECONOMICS

3.1 THE MYRDAL VERSUS BAUER RIFT OF THE 1970S

In the context of third world development, Myrdal was a prominent voice of the 1960s and 1970s. He argued the case for challenging and confronting extant social and cultural practices, for various forms of state intervention, and for foreign aid from rich countries. He saw institutionalised inequality as a significant barrier to development. P.T. Bauer (1971) on the other hand took exception to interventionist stances in general and to Myrdal's advocacy in particular. Whereas Myrdal argued that value-neutral positivistic social science was literally an impossibility, Bauer was dismissive of the presumptuousness of those who contended that they could identify a higher standard than the extant values of the individuals in a given community group. For Bauer, Myrdal's insistence that it was necessary to challenge some traditional values and beliefs smacked of an arrogant, socialistic anti-scientific willingness to judge some values to be better than others. Myrdal and Bauer were plainly poles apart in terms of their underlying a priori positions. Their respective interpretations of the fact/value dichotomy left Chicago writers such as P.T. Bauer and H.G. Johnson lamenting that Myrdal would not accept facts as facts - since in Johnson's words (1972) some people may in fact prefer Buddhism to Bendixes and the inner vision to television. People do not necessarily wish to pursue the modernisation ideals that Myrdal took for granted as desideratum. In turn, Myrdal lamented that Bauer and Chicago failed to distinguish chance from choice, insofar as some socially institutionalised value systems (including religious customs) merely reflected historical chance, rather than any meaningful choice by the individuals who now live within them. For Myrdal, to base economics and social science on a sterile statement of extant 'facts' – e.g. of environmentally constrained 'choice' of religion - was thus in fact to rest social science on the unsubstantial foundation of 'chance'. Accordingly, Myrdal endorses 'tough states', and thus reveals a crypto-teleological


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element in recognising a need to promote a social development which transcends particular cultural idiosyncrasies (e.g. widow burning or the caste system) even when they are widely accepted. Nonetheless, the notion of absolute values is as unacceptable for Myrdal as is the opposite notion of a complete value relativism. For him, there cannot be a view except from a viewpoint (1968:32), and viewpoints are the product of living in a particular time and place. It followed for him that there cannot be any absolute or timeless values, but only historically relative values. It also followed for him (as it does for Sen), however, that individual subjectivism was limited by life experience, education and the like, so that individual valuations were not automatically sacrosanct, as they are for Bauer and other Chicago School economists. Consumer sovereignty is thus a notion limited by experience - which it remains too for Todaro (1994:87). Accordingly, in the interests of development, Myrdal sees it as both possible and necessary to confront and transcend even some popularly supported value systems. Myrdal was therefore unsympathetic to “soft states” which perpetuated or tolerated customs and values which impeded what he (or history) considered to be progress, and unsympathetic to those whose 'scientific method' was in fact based on a confusion of chance with choice.

Myrdal simply does not accept the Chicago School definitions of consumer sovereignty, freedom, rationality, teleology, value relativism, or value-neutral scientific method (Duhs:1982). His view remains dependent on recognising the prior importance of some form of political philosophy which places severe limitations on the doctrines of utilitarianism and libertarianism. Within the more contemporary development literature, it should be noted that just as a tension remains in Myrdal's rejection of both unbridled value relativism and value absolutism, so a similar tension remains within Sen, as will be seen below, insofar as he lauds Bauer's scientific merit and celebration of individual freedom (Bauer 2000, Introduction by Sen) while nonetheless retaining some Myrdalian notions of what constitute 'unfreedoms' that need to be removed.

The Myrdal / Bauer rift might be dated in one sense, but the issues that spawned it remain capable of enlivening debate in contemporary economic philosophy classes.

3.2 Sen's Capabilities Approach to Development

For Sen, poverty entails more than mere income deprivation. He directs attention instead to the development of human capabilities and rights, and away from the metric of exchange value and the maximisation


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of income (Sen 2000). For him, poverty should be measured in terms of any shortfall in the fulfilment of a range of 'human capabilities', and the pursuit of 'the good life' therefore requires some understanding of what is natural to mankind. This entails at least some attempt to ponder matters of human teleology - or just what it is that constitutes 'development'. Economic philosophy issues thus again rise to the fore in this contemporary development literature. Sen's message is that human “unfreedoms” are decreased as human capabilities are increased, and his concept of fairness or justice requires an equalisation of “capability shortfalls”, rather than a maximisation of subjective utility. To a greater extent than is ever apparent in Bauer he accordingly stresses the need to recognise that State and market are complements, not substitutes, and for him there is an obvious case in poor countries for State provision of universal primary education and basic health facilities. Sen criticises a utilitarian approach to development as inadequate because poverty and deprivation distort the way individuals perceive their utility prospects. He criticises a libertarian approach as inadequate because it fails to appreciate the distinction between positive and negative freedoms i.e. between freedom from external constraints and freedom to do whatsoever one chooses. He criticises a Rawlsian approach because it mis-specifies the 'primary goods' which should be made available to all citizens at a floor level. He therefore looks to Aristotle for a justification of a 'human capabilities' approach, which calls for conscious effort to develop the human capabilities with which all of us are endowed in some measure. In short, his approach requires a specification of what is natural to man, and what is therefore necessary for the development of such 'man'. This leaves Sen well removed from the neoclassical orthodoxy.

For Sen (who reflects elements of both institutionalist and neoclassical traditions, but not the libertarian tradition), it follows that human beings must be free not only from legal restrictions but also free from adverse conditions before they can meaningfully be said to be free to do as they please. Despite Sen's willingness to praise Bauer, his own a priori conceptions of man, freedom, rationality, equality, utilitarianism, justice and teleology are by no means identical with Bauer's, and he recognises that ethical approaches that emphasise rights and freedoms require more than mere self-interested market-based behaviour. In significant part, Sen's influence in the development literature of the last decade or two derives from his ability to cause the profession as a whole to become more receptive to the breadth of understandings possible for these terms.

Given the status of Joseph Stiglitz in the development economics profession, a related point worth noting is that he, like Sen, stresses that State and market should be viewed as complements. There are thus some


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commonalities between Sen and Stiglitz in their respective critiques of orthodox development economics and in terms of the policies they advocate, but it remains the case that Sen's objections to accepting Pareto optimality as maximand are quite distinct from Stiglitz's critique (1994) of theoretical sloppiness in the way in which Pareto optimality has commonly been pursued by orthodox economists. Stiglitz is more concerned to stress that in the presence of missing or incomplete markets, laissez-faire policies may not achieve Pareto optimality, whereas Sen is more concerned to dispute that Pareto optimality is itself a goal worth aiming for. Nonetheless, the Post Autistic Economics group (www.paecon.net) quotes Stiglitz to the effect that “[Economics as taught] in America's graduate schools ... bears testimony to a triumph of ideology over science”.

3.3 Higgins on economics and ethics in the new approach to

development

Higgins (1978) argued that there was much wrong with the orthodox approach to development economics, and with the notion that what must be maximised is an additive social welfare function. In Higgins' view, it is in development economics that the philosophical disarray of orthodox economics is most apparent, and, accordingly, it is from that seedbed that he expects the next revolution in economics to emerge. On the strength of the foregoing, Sen's supporters will credit Higgins with prescience, and contend that Sen's case for changing the maximand from that of conventional welfare economics to one of capability development and equalisation of 'capability shortfalls' is the start of just that revolution. In keeping with Sen's analysis, it follows that any such revolution will have its roots in Aristotle, as well as in Smith.

All in all, it is apparent that development economics presents those wishing to teach economic philosophy with provocative material, ranging from the implicit conception of the nature of man to challenges to the cultural relativity of values, and critiques of positivistic scientific method.

4. UTILITARIANISM AND WELFARE ECONOMICS: THE

SEARCH FOR THE RIGHT MAXIMAND

Social optimisation means little if the wrong objective function is being maximised. Posner, Sen, Myrdal, Cropsey, Etzioni, Schumacher, Rawls and others have all argued that orthodox economics is troubled by exactly that problem, and that the glib and unchallenged presentation of a


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utility based social welfare function as maximand is far from adequate in the teaching of economics. In fact, a range of alternatives to utility maximisation is available in the literature, although it is doubtful that many economics students presently confront them.

4.1 Posner and a wealth maximisation objective

Posner (1979) argues that utility maximisation is not the best available social maximand, largely because utility calculations can be distorted by the presence of 'utility monsters'. While such utility monsters may perversely derive utility by doing things to other people, wealth maximisation presupposes voluntary transactions, which in turn require that people do things for other people. Accordingly, Posner argues that utility maximisation should be replaced as social maximand by wealth maximisation.

Posner's notion has clear policy implications for the literature on law and economics and indeed for the law courts. He recognises that wealth maximisation as social maximand has its shortcomings – e.g. insofar as the poor will not fare well under his approach, and those without money will figure in the results only insofar as they matter to those with money in the marketplace – but nonetheless contends that his maximand is less rejectable than available alternatives. He sees significant deficiencies in any of the recognised ethical theories – including both utilitarianism and Kantianism. Utilitarianism is too exposed to the excesses of the depraved (as against the demeaned perceptions of the deprived, which was the problem for Sen), while Kantianism is too squeamish in view of its endorsement of categorical imperatives. On Posner's logic, babies available for adoption should be auctioned off in a baby market, rather than allocated by a process administered by a Government department. As Posner sees it, an auction would have both efficiency and equity advantages, insofar as it would not only add to national wealth via efficiency-inducing transactions, but would also ensure that available babies went to those who value them most (i.e. to those with the greatest willingness to pay). For him, wealth creation is the superior maximand, and in the context of the economics of law the courts should therefore seek to mimic market results. In terms of human rights, critics object that under Posner's system the only constraint on human behavior is the budget constraint and one has a right to do anything at all, subject only to the ability to pay. This is exactly what Austrian School personalists object to. A consequence of Posner's wealth maximand is that economic efficiency metamorphoses into a de facto definition of jurisprudence. The concept of economics-as-imperialist-social-science can scarcely be taken further than that.


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4.2 Rawls and constrained utility maximization

Rawls (1972) is another to object to maximisation of aggregate utility. His objection is that utility maximisation sacrifices too willingly the interests of the poor, in the interests of the overall total. Accordingly he sees social progress as occurring only when the absolute position of the poor is itself improved. To that end, he therefore advocates acceptance of a 'maximin' criterion, on the ground that he argues that most people share a risk aversion when forced to judge social arrangements and inequalities from behind a 'veil of ignorance'. For him, what is needed is overall social progress, subject to provision of a guaranteed floor level of welfare. For Bloom, this is a mere party game, however. The 'veil of ignorance' so important to the derivation of Rawls' position is not part of Nature and never actually existed. Bloom therefore dismisses Rawls as an irrelevance – notwithstanding that Rawls has attracted significant attention from several luminaries in economics, including Arrow, Harsanyi and Sen (all Nobel laureates) – since what people would do in a hypothetical situation has no practical relevance for what actually guides people in reality or in nature. For Bloom, Rawls therefore represents no more than utilitarianism made contemporary, with a particular twist to give it appeal in the welfare state climate of its times.

4.3 Sen's conception of freedom as maximand

As is apparent from sections 2.1 and 3.2 above, Sen is critical of the idea that income is a suitable maximand for social policy, more especially since poverty involves more than just income deprivation. Following a more Aristotelian path, his concern in specifying an appropriate maximand is to argue that what is first necessary is a careful stipulation of what constitutes human 'development'. For him that means the development of human capabilities, for which purpose the removal of various “unfreedoms” is a necessity. In acceptance of the fact that the freedom of agency that we individually have is inescapably constrained by circumstance, he stresses that there is a complementarity between individual agency and social arrangements, leaving Sen (2000:xii) to expound the view that “Expansion of freedom is viewed, in this approach, both as the principal end and as the principal means of development”. He sees the idea of 'development as freedom' as radical (2000:5), with an obvious policy reach and the potential to recall some of the lost ethical heritage of professional economics. A fuller understanding of the development process requires us to accept, so Sen tells us (2000:14), that


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“it is simply not adequate to take as our basic objective just the maximisation of income or wealth, which is, as Aristotle noted, 'merely useful for the sake of something else'. For the same reason, economic growth cannot sensibly be treated as an end in itself. Development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy.”

Whether freedom, like wealth, is merely useful for something else remains a good question, however, and one which preserves a wedge between the positions of Sen and such explicit or implicit critics as Cropsey.

4.4 Cropsey's critique of welfare economics: an alternative conception

of capability maximization

Cropsey's 1955 critique is a hard-hitting attack on the neglect of the metaphysical propositions embedded in orthodox welfare economics. In essence, he objects to the sui generis individualism (or 'atomism' as some others call it) and value relativism he sees as the silently assumed core of welfare economics teaching. As far as he is concerned, what is taught implicitly is far more important than what is taught explicitly.


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Table 1: Social Maximands etc: Comparative Table

Utilitarianism Posner Rawls Sen

Bentham: nature has placed man under two

sovereign masters: pain and pleasure.

James Mill

J.S. Mill: modified Bentham's original

teaching: “better to be Socrates dissatisfied

than a fool satisfied”.

Goal: Seek the greatest happiness of the

greatest number.

Posner 1979 “Utilitarianism, Economics and

Legal Theory”: Wealth is a surer guide than

utility to social advantage.

There is a difference between doing things for

others, and doing things to others.

Goal: Seek wealth maximisation, not utility

maximization.

Rawls: A Theory of Justice 1971

Utilitarianism is accepted today but it does

not suffice.

Utilitarianism fails insofar as it gives scant

treatment to the poor/disadvantaged.

Goal: Rawls contends that a prerequisite to

meaningful social progress is that the floor

must be lifted ie the poorest section of a

community must be made better off before

an improvement in average welfare can be

said to be indicative of social progress.

Sen: Nobel Prize 1998

Defers both to Adam Smith and to Aristotle.

There is much to criticise in orthodox welfare

economics.

Pareto optimality may come hot from hell.

To identify utility with advantage is far from

obvious.

Goal: Adopts freedom as chief desideratum:

development as freedom and freedom as

development.

Advocates equalizing capability deprivation as

a means of removing ‘unfreedoms’ and as an

element of a preferable maximand.


141 141

Utilitarianism Posner Rawls Sen

Criticisms:

Rawls: utilitarianism gives too little regard to

the poor or deprived.

Posner: utility is distorted by the depraved

('utility monsters').

Sen: subjective utility is not necessarily the

same thing as personal advantage. There is

much to criticise in orthodox welfare

economics.

Heilbroner: utilitarianism is tautological and

irrefutable, and essentially unhelpful.

Cropsey: objects to the way utilitarianism and

welfare economics treat distinctly

differentiated goods merely as sources of

undifferentiated utility.

Etzioni: respects a hierarchy of higher and

lower human needs and so objects to

undifferentiated 'utility' as a catchall category

(similar to Cropsey).

Nietzsche: hostile to utilitarianism, since

pleasure is not necessarily good for us and pain

is not necessarily bad for us. Creativity

commonly requires persistence through pain.

Criticisms:

There are problems with the wealth

maximisation maximand, but Posner contends

that the problems with utilitarianism - and other

alternatives to it - are even greater.

Problems with wealth maximisation include:

(i) those without money count only insofar as

they matter to someone with money

(ii) wealth maximisation grants the right to do

anything at all, subject only to the budget

constraint

Problems with utilitarianism include

(i) recognising the domain (e.g. are foreigners

and the unborn relevant?)

(ii) 'utility monsters'.

Cropsey would object that Posner has not

improved upon utilitarianism so much as merely

transposed it, by introducing an inappropriate

constraint – the budget constraint – as the one

limitation on human rights.

Criticisms:

Harsanyi: Rawls raises useful questions and

deserves two cheers if not three – but is

ultimately unpersuasive. Rawls introduces

arbitrary and unacceptable discriminations

between the rich and the poor, the healthy

and the sick etc.

Bloom 1975: Rawls is an irrelevance, since

he takes his bearings not from Nature but

from an imaginary state. Rawls is merely

utilitarianism made contemporary to suit the

welfare state of his day.

Cropsey would endorse Bloom's position.

Criticisms:

Sen argues that there are deficiences in

utilitarianism, Rawlsianism and libertariansim.

Sen has won many accolades in recent years,

but his interpretation of Aristotle is very

contestable (see Bloom 1975).

Duhs 2004: If, as Sen says, wealth cannot be

the maximand since it is merely useful for

something else, cannot the same be said of

Sen's choice of 'freedom' as a maximand?


142

Whatever else welfare economics is, it is an implicit covert teaching

of one particular, contentious conception of man and of teleology, and thus of the determinants of man's welfare. That, at least, is Cropsey's message. For him, what is being taught implicitly in welfare economics is what is central to an understanding of man and society – i.e. a view of man as an atomistic being for whom human reason is but the handmaiden of his passions. His objection is that modern economics puts economy before polity, and then presumes to analyse human welfare without first establishing just what welfare is. In its utilitarian teaching, modern welfare economics renders similar goods that are dissimilar, and renders dissimilar individuals who are essentially similar insofar as they are members of a common human species. Cropsey objects that the implicit teaching of such sui generis welfarism is a value relativism which is itself unavoidably a precursor of nihilism. At least in the long term then, Cropsey's understanding is that the methodological short cuts we have taken have not taken us where we wanted to go, but have instead undercut the foundations of the very society we sought to make strong. He thereby anticipates Samuels' observation (1976: 409) that paradoxically the Chicago School may be far more revolutionary than Karl Marx, although this was no part of their intention. He likewise anticipates Sen's observation (1987:79) that sticking to the narrow and implausible assumption of purely self-interested behaviour has taken us on a short-cut to some place other than where we meant to go. In limited measure Cropsey concurs with Sen in seeking to derive an understanding of a social maximand from Aristotle - albeit having objected to utilitarianism, libertarianism and Rawlsianism - Sen nonetheless ends up endorsing a melange of all three. On the other hand, Cropsey's deference to Aristotle is more fundamental and therefore incompatible with Sen's view (2000) of development as freedom and freedom as development. For both Sen and Cropsey, to identify utility with advantage is far from obvious, and Pareto optimality may indeed come 'hot from hell' (Sen 1987:32). They both argue against Chicago School imperialist understandings of the role of values in economics, but they nonetheless remain poles apart in terms of their final conclusions as to the mainsprings of ethical understanding in economics. Following Aristotle, the one - Cropsey - endorses a generic conception of humankind and acceptance of a natural teleology with an attendant ends-oriented conception of human rationality, while the other - Sen - is unwilling to move that far from sui generis individualism despite raising questions about the limiting ways in which 'rationality' is defined in economics (1987: 10-16; 2000: 272). Sen may be right that wealth cannot be the maximand because wealth is merely useful for something else, but Cropsey

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 143

would argue on the same Aristotelian ground that nor can freedom be the maximand (as it is for Sen) since freedom too is merely necessary for the cultivation of something else. Sen is institutionalist enough to seek to remove constraints on the opportunities individuals have to develop their capabilities in such directions as they see fit, but not Aristotelian enough to share Cropsey's acceptance that freedom cannot itself be the ultimate arbiter of 'the Good Life'. Even after 2000 years, debate about values and ethics in economics still turns on the question of whether at least in principle there may be a natural teleology for humankind as such, whether all values are necessarily individual-relative or whether some values may be absolute in keeping with the notion of a species conception of man. (Indeed, on another level, some see this as the root of the present tension between the Moslem world and the West.)

Cropsey's critique is not well known within the economics literature, but critiques offered by others often recur partially to his position. As noted in section 2.1 above, Sen observes that all the propositions underlying the general consensus on traditional welfare economics are eminently contestable. Myrdal (1974: 149) notes that “Hundreds of books and articles are produced each year on 'welfare economics'; even though the whole approach was proved to be misdirected four decades ago.” Myrdal adds an endorsement of Boulding's denunciation of welfare economics as 'a monumentally unsuccessful exercise', which has preoccupied a whole generation of economists with a dead end “to the almost total neglect of the major problems of our age”. He adds (1974:149) that if welfare economics is not entirely meaningless it is meaningful “only in terms of forlorn associational hedonistic psychology and utilitarian moral philosophy”. These sentiments certainly echo Cropsey, albeit Cropsey's barbs go further and contend that this exercise may not merely be futile but also self-defeating for liberal capitalist society. While Myrdal laments that philosophers seem content to leave economists undisturbed in this futile exercise - Cropsey is an evident exception to that rule. In similar vein, Lutz and Lux (1988) conclude that their humanistic economics is really a welfare economics radically different from standard welfare economics. Higgins (1978: 27) joins the choir of complaint and objects that “The so-called 'scientific objectivity' of contemporary welfare economics and the 'positivism' of the latter day Saints of Laissez-faire is another matter. To insist that economists ought not to make value judgements about what constitutes improvements in economics and social welfare is in itself a value judgement of colossal proportions. To argue that a society based on the principle of 'one dollar, one vote' is 'good' is another matter. The economists who support the free market system on 'scientific grounds' are


144

in fact being highly unscientific.” That conclusion too is a resounding echo of Cropsey's case.

Cropsey's argument is abstract and abstruse. But it is penetrating and provocative. It provides traction in the teaching of economic philosophy to many who have not previously confronted such argument or questions. In effect he seeks to secure agreement that no satisfactory social maximand is provided by utilitarianism or by Posner's wealth maximisation criterion or by Rawls's maximin 'correction' of utilitarianism or indeed by Sen's putatively Aristotelian 'capabilities' criterion in its pursuit of development as freedom. He invites enquiring minds to look elsewhere.

5. ECONOMICS AS IMPERIALIST SCIENCE AS AGAINST

ECONOMICS AS A MANIFESTATION OF THE A PRIORIS

OF ECONOMIC PHILOSOPHY

Chicago School economics celebrates individualism and thus the notion of consumer sovereignty. Utility maximisation thus presents itself as the obvious goal or maximand, and self-interest is taken for granted in decision-making. There is no 'higher' standard which transcends the market place, and individual values are therefore merely different, rather than better or worse. On this view, human rationality partakes of the choice of means but not ends, and it is therefore essentially just a matter of benefit/cost calculation which sees some people 'rationally' choose to engage in criminal activity, for example, while others do not. Under the influence of Gary Becker, Richard Posner and others, this Chicago approach has come to infiltrate the psychology, sociology and law literatures in what we know as 'economics as imperialist social science'. Thus 'mob psychology' is revealed to be not a distinctive psychological state so much as a set of circumstances in which the benefit/cost ratio attached to certain individual actions alters simply because in a mob context it is harder to detect which individual did what. Likewise, applying the 'rationality' assumption universally and regarding housebreakers as rational utility maximisers - rather than as sociological victims who need to be understood, not punished - leads to clear legal implications in the imperialist economics approach to crime and punishment. On this imperialist economics view, it follows that sociologists who advocate 'understanding' of criminals rather than punishment serve to reduce the costs of crime to criminals and are therefore themselves part of the social problem.


Needless to say the above conception of economics as imperialist social science has its critics. Socio-economists and economic psychologists want to inject psychology into economics rather than economics into psychology, in order to provide a better fit to how people actually make decisions in the real world, as against in idealised theoretical models. Moreover, there is much hidden metaphysics in this Chicago School view (Kristol 1973), and Chicago definitions of 'freedom', 'rationality', and 'equality of opportunity' are certainly not Sen's, Cropsey's, Etzioni's or Schumacher's. The basis of the Chicago position (as of others) inevitably is an initial axiom or a priori which is itself an undemonstrable article of faith. At the root of Chicago economic imperialism therefore is a particular and contentious a-teleological understanding of the nature of humankind, rationality, freedom, and the relativistic root of human values. Veneration of individual liberty, defined Chicago style, results in value relativism, and ultimately endogenises ethics (in a way to which Samuels (1976:409), Wilber (2004:147-149) and others emphatically object). In consequence, Chicago is necessarily antipathetic to government intervention – that is, to the claim that government knows “better” - since there is no “better” to know.

As Sen notes, such an approach results in a means-oriented conception of human 'rationality' which confines itself to deductive consistency or self-interest maximisation, neither of which Sen finds compelling as a definition of human rationality. Since 'freedom' is a term no more unambiguous than rationality – and there is not only freedom to act as one pleases but also freedom from constraint (including freedom from want) - Sen and institutionalist economists take the alternative view that freedom from constraint is a prerequisite of whether people are in fact free to do as they want in any sense worthy of the term, whereas Chicago economic imperialists (libertarians or economic rationalists) focus on extant material circumstances and a presumptive freedom to do as one pleases. Sen's freedom from constraint includes freedom from adverse circumstance, not just freedom from restrictive man-made laws. It follows that economic rationalists, libertarians or economic imperialists who place great value on individual liberty to do as they please, given extant opportunities, are dismissive of government intervention, which they see as limiting personal freedom, while – on the other hand – institutionalist economists who recognise that various institutional constraints prevent individuals from attaining a higher level of freedom see some forms of government intervention as necessary for the enhancement of personal freedoms. For Sen and others, suitable interventions thus enhance personal liberty, rather than restrict it, and the Chicago School credo is flawed at its foundation. It reveres freedom but lacks an adequate understanding of


146

what that freedom is. Furthermore, for Sen (1987: 15) it is itself irrational “to argue that anything other than maximising self-interest must be irrational”, and it is unacceptably limiting to adopt a conception of human rationality which involves no more than logical consistency or self-interest maximization. The turning points in matters of policy choice in fact arise not from technicalities in economic theory so much as from metaphysical a prioris underpinning the various definitions given to such keywords as rationality, freedom and man.

What must be accepted is that the values reflected in the policies recommended by one or another economist reflects the prior acceptance of one or the other definition of freedom, rationality, equality of opportunity, justice, teleology and the nature of humankind. The utilitarianism and libertarianism at the root of Chicago School economics-as-imperialist-science are therefore unacceptable for Cropsey or Sen. For such reasons, neither Cropsey, Etzioni, Sen nor institutionalists more generally would rush to accept Posner's view that there is nothing wrong in principle with legitimising a market for such 'services' as torture. Aside from the fact that most people would lack the wealth to be able to afford the price that would presumably be demanded, critics of the Chicago School would also object on the less pragmatic ground that there is simply something wrong with a value system that accepts torture as merely one more good or service to be traded in the market place. They wish to reaffirm a qualitative distinction between the pleasures. Whereas Lazear (2000: 99) notes that the pervasive march of economic rationalism into every aspect of human society rests squarely on its claim to be value-neutral science, for Chicago School critics (O’Brien 1992; 1996; Schumacher 1974; Samuels 1976) the Chicago attempt to transcend metaphysics in value-neutral 'imperialist economic science' becomes what Schumacher calls a 'life destroying metaphysics'.

J.W. Nevile properly objects that a rhetorical trick commonly used by Chicago School economic imperialists – or economic rationalists - is to present their policy recommendations as if they are no more than the logical consequences of orthodox economics, despite the fact that that is far from the case. As Nevile emphasises (1998:170), the policy prescriptions of economic rationalists in fact depend more on the values they hold than on the theorems of economics, and the underpinning of their value system lies in the social philosophy called libertarianism. For such reasons Etzioni (1988, 1991) explicitly sees reason to turn economic imperialism upside down. He pointedly rejects the utilitarianism and individualism of orthodox economics. He objects that people are not just self-interested and endorses instead what he calls an individualist-cum-collectivist position (1991: 4; 1988: 1-12). He sees human beings as social animals, and ones with a Kantian disposition to reflect both material selves and moral selves.


Socio-economists object to the way economics reduces all things to undiscriminating utility, and to the fact that complete relativism justifies all choices, no matter how distorted. In re-asserting the need to discriminate between the qualitatively different attributes of different types of consumption they accordingly seek to inject psychology into economics, rather than vice versa. In endorsing the idea of a hierarchy of human needs, they dismiss imperialistic economics as a vehicle for undiscriminating 'rational fools' (Lutz & Lux, 1988: 181-182) who incorrectly presume that people act morally only so long as it makes economic sense (Etzioni, 1988: 63). They therefore see socio-economics as a necessary reaction to economic imperialism. Nonetheless, they too have their critics and they do not themselves say the last word on the way in which philosophy percolates through economics.

The fundamental point is to recognize the hidden metaphysics in the Friedman / Becker / Posner / Chicago position and to recognize the dependence of the policy conclusions of that imperialist economics perspective on the particular definitions of rationality, freedom, equality of opportunity, teleology, and the nature of humankind which have silently been adopted – and taught - within that position. That school of economic thought, like all others, is permeated by a particular implicit political philosophy. In short, it is not economics that is the all conquering imperialist social science, but one or another economic philosophy which has colonised each contending school of economic thought (Duhs 1982; 1994; 1998; 2005).

6. ECONOMIC PHILOSOPHY AND THE MEASUREMENT OF

SUCCESS IN ECONOMICS SCHOOLS

Lee (2005; 2006) objects that a recent European Economic Association project to rank economics departments throughout Europe employs as the grounds for its rankings publications in neoclassical core journals. Publications in heterodox journals don't count at all. Since European funding officials use these rankings when making funding decisions - because these are the only rankings they have - not publishing in core neoclassical journals is detrimental both to heterodox European economists and to their departments. Such rankings in Europe - and elsewhere – obviously constitute a real threat to heterodox economics and have been used to cleanse economic departments of heterodox economists. Conspicuously enough, these core neoclassical journals celebrate technique and mathematical models and do not commonly roll out a welcome mat for papers on economic philosophy. Whether or not economic philosophy is a


148

route to enhanced understanding of economic policy and social life, it is unlikely to be a route to rapid career advancement.

This UK situation is not new and has already been seen in Australia in the form of Economics School Review Committees which have advocated the elimination from the teaching curriculum of economic philosophy subjects. Increased contemporary pressure to publish in 'top 20' Journals effectively tightens the screws on heterodox efforts in Australia, insofar as failure to comply again disadvantages both individual academics and their Schools.

What Fred Lee describes amounts to an act of academic legislation that it is unnecessary and improper to critique the assumptions and metaphysical teachings which in fact stand at the very foundation of economics as a perspective on social life. For orthodoxy, these issues are settled. They need not be debated again, and indeed need not even be presented to the next generation of economics students, who instead will be deemed to be well able to stand on the shoulders of a few giants of the past. For orthodoxy, this remains so notwithstanding that at least some contemporary heterodox economists see good reason to wonder whether Adam Smith, for example, would be willing to recognise as his intellectual progeny many who claim him as their intellectual father. As Lee suggests, a 'top 10' list of heterodox Journals might be a counter measure of some use.

7. CONCLUSIONS

Economics styles itself as the queen of the social sciences. This conception of economics as science implies the need for rigor and precision, and the strongly felt need to be scientific inclines economists to search for tractability in model building. Economic philosophy, on the other hand, does not readily admit of tractability, precision or definitiveness, and hence, as Heilbroner (1996) notes, is not altogether compatible with this image of economics as science.

There are those, however, who see things differently, and who believe that much of the appeal of economics comes from the vitality of debate and disagreement within the profession. For economists of this persuasion, addressing such issues of disagreement is therefore not an embarrassing failure to meet scientific pretensions, but an exciting additional dimension to the practice of economics and social science. Those who see things this way have no doubt that there is an honourable place within the economics curriculum for perspectives courses (Duhs, 1993), and for economic philosophy in particular. Even in more specific


contexts such as welfare economics there is much to be gained by careful examination of the competitive market assumptions which underlie orthodox teaching, as in the case of Stiglitz’s 1994 critique of the understanding and teaching of the First Fundamental Theorem of Welfare Economics. There is therefore even greater importance in thoroughly examining the full set of assumptions, including those of any implicit political philosophy, which underpin the whole corpus of economic theory. That, at least, is the case made here for the importance of teaching economic philosophy.

In the development economics context, it is this difference between the recognised assumptions of economics and the full set of explicit and implicit assumptions that explains the continuing differences between Stiglitz and Sen, despite significant points of commonality. Whereas Stiglitz is primarily concerned to argue that welfare economics wrongly understood leads to mis-directed policy in pursuit of Pareto optimality, Sen is more concerned to question whether a pursuit of Pareto optimality is itself misdirected.

Yet at present many who graduate in economics do so without ever confronting the pros and cons of utilitarianism or of positivism, historicism, the philosophy of science or matters of teleology. They do so without addressing the conception of the nature of humankind embedded within economics, or the way in which alternative conceptions of that nature - and of political philosophy more generally - reside implicitly in competing economic theories, and give content to them. They do so without more than a superficial confrontation of the fact/value dichotomy, and without addressing the question of whether there really are implicit philosophical axioms embedded in the policy positions they endorse. Instead of terminating the teaching of HET, what is needed is the opposite – i.e. the supplementation of HET by the teaching of the history of political philosophy (HPP) and its impact on contending schools of economic thought.

The argument advanced in this paper is that without a basis in such foundational questions, it is not possible to have a fully meaningful perspective on economics or the social sciences. This position is not without pedigree and is certainly the general position of Joseph Cropsey, Amatai Etzioni, Amartya Sen, Gunnar Myrdal, E.F. Schumacher, Joan Robinson, J.W. Nevile, Benjamin Ward, and Benjamin Higgins amongst others. Encouragingly, there are signs of increasing interest in the broad questions of economic philosophy, as indicated by the birth of such Journals as The Journal Of Markets and Morality and the Cambridge journal Economics and Philosophy. The trick remains to have such interest integrated into mainstream economics training, however.


150

Moreover, this is not merely an academic issue. Metaphysical issues may not be fast moving and may not always be of much bite in the short run in relation to the immediate outcome of some specific policy debates, but their long run impact is potentially devastating. Many societies have fallen on their own swords. As Kristol argued in 1973 the real enemy of capitalism is not communism, but nihilism. At least in the opinion of a select minority of economists – including some of the pre-eminent – economics taught in the absence of an appreciation of its implicit philosophical assumptions is incomplete, inadequately understood, productive of “rational fools” and a Pareto optimality which may have been bred in Hell, and is capable of silently contributing to long run social and political problems to which it did not intend itself to contribute. As mentioned above, Samuels (1976: 409) thus concluded that paradoxically the Chicago School may be even more revolutionary than Karl Marx, although that is no part of their intention. Cropsey, Schumacher, Etzioni, Sen and others have all expressed similar concerns about the prospect that value-neutral 'scientific economics' will ultimately lead us towards nihilism and not take us where we meant to go.

Economics may commonly style itself as the imperialistic queen of the social sciences, but it is apparent (Duhs 1982; 1989; 1994; 1998; 2006) that the several schools of economic thought have themselves been colonised by one or another political philosophy, and that without an understanding of such implicit philosophical foundations economics has been poorly taught. The conceptual foundations of the discipline cannot logically be less important than econometric practice, and as should be apparent from the above, abundant material is to be found in the literatures of social economics, development economics, economics as imperialist social science and the search for a suitable welfare maximand to fuel many a worthwhile course in economic philosophy.

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