Was Adam Smith Wrong About the Invisible Hand?

Another "economics is a speculative philosophical discourse, not a deductive or inductive science" argument:

Economics: The Invisible Hand of the Market, by Peter Steinfels, NY Times: Duncan K. Foley [has a] ... new book... [F]or his survey of more than 200 years of economic thought, ... he chose the title “Adam’s Fallacy: A Guide to Economic Theology.”

Adam? Theology? The Adam in question is ... the founding father of modern economics, Adam Smith.

So what is “Adam’s Fallacy”? ... It is the idea that the economic sphere of life constitutes a separate realm “in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome,” Professor Foley wrote, a realm unlike all the rest of social life, “in which the pursuit of self-interest is morally problematic and has to be weighed against other ends.”

“This separation of an economic sphere,” he wrote, “with its presumed specific principles of organization, from the much messier, less determinate and morally more problematic issues of politics, social conflict and values, is the foundation of political economy and economics as an intellectual discipline.”

Professor Foley’s book is simultaneously an introduction to economic theory and a critique of it. ... How “Adam’s Fallacy” will serve as an introductory text is for others to decide. What is pertinent here is the author’s contention that economists, all along, have been writing theology. ...

What he means, he wrote, is that “at its most abstract and interesting level, economics is a speculative philosophical discourse, not a deductive or inductive science.”

Historically, economics has not only shed light on how a capitalist market system works, it has also suggested what attitudes people should take about those workings and about the moral conflicts accompanying them.

“These are discussions, above all, of faith and belief, not of fact, and hence theological,” Professor Foley wrote.

“Economics functions in a theological role in our society,” he added in an interview in which he paraphrased Milton, “to justify the ways of the market to men.” Economists, moreover, are “becoming priestly figures, with arcane knowledge” and special powers, he said.

Economic laws are cast as universal and invariable. They are even presented as natural laws akin to those of mathematical physics or evolutionary biology.

From the bedrock belief that the pursuit of private self-interest will ultimately benefit the whole society stems a willingness to abide harsh economic measures and consequences, ranging from large-scale unemployment to the destruction of traditional cultures.

The danger of these “illusory comforts of Adam’s Fallacy,” Professor Foley writes, is that they obscure hard truths. Contemporary capitalism, in his view, is a successful, resilient and adaptive system for creating material wealth. But it is not a stable, self-regulating one. Left to its own devices, for example, it will not “solve the problems of poverty and inequality." ...

Some people argue that economics should employ its own allegedly value-free techniques to produce a menu of options, each with specified costs and benefits, that it submits to the rest of society for moral judgment.

Others argue that the relationship is invariably more dialectical. Other sources of morality have something to say about the technical concepts and methods of economics, and economic theory in turn may shed light on those other sources of morality.

These matters fall outside the reach of “Adam’s Fallacy.” Professor Foley has a more modest aim.

Economists, he wrote, often speak of the need to teach people to “think like economists.” But “thinking like an economist comes hard to many people,” he added, “and I personally am grateful for that fact.”

He wrote the book, he said, “to give people more confidence in their own moral judgments” about economic issues.

The attacks on economics get tiresome. The main thesis is that Adam Smith's invisible hand doesn't work, that the pursuit of self-interest is not guided by an invisible hand to the best societal outcome. There aren't enough details given about why the author believes this to fully evaluate the reasoning behind the assertion, but some of the reasoning is discussed. The author says:

“These are discussions, above all, of faith and belief, not of fact, and hence theological”

Why does this disqualify economics as a science? Theories aren't facts. Theories can be falsified by the evidence, but no amount of experimental work can ever confirm they are true. All science is, in this sense, based upon "faith and belief, not of fact, and hence theological." There's nothing unique about economics in that regard.

The author also says:

Historically, economics has not only shed light on how a capitalist market system works, it has also suggested what attitudes people should take about those workings and about the moral conflicts accompanying them. ... “Economics functions ... to justify the ways of the market to men.”

To say that economics is not a science because some people use it to justify markets is also puzzling. Suppose that biology discovers that a certain disease is spread through hand-shaking. Suppose also, for the sake of argument, that hand-shaking is a controversial cultural practice. If biologists use their results to advocate against shaking hands when meeting, to tell people what attitude they should have about hand-shaking, or if others use the results to justify their ideologies, does that disqualify biology as a science?

What the author has in mind, I think, may be those people who advocate market systems over command and control systems, or systems where government is heavily involved in the private sector, i.e. a welfare state. Some of these people do seem to display an almost religious fervor for the market system.

Though it is rarely taught anymore, there is a branch of economics known as comparative systems. This discipline looks at different ways society can organize itself, capitalism, socialism, communism, syndicalism, anarchism, hybrid systems, etc., and then compare the economic outcomes.

For this argument, let's focus on capitalism and socialism. Suppose that the poorest of the poor are better off under socialism than capitalism, they have a place to live, health care, etc., but average income is very low. Thus, the poor do a bit better overall under socialism, but most people do not fare as well as they would under capitalism. I was trained that I cannot judge which is better. Under capitalism some people would be better off, some worse off, and hence it entails a value judgment to advocate for one over the other. My job is to fully characterize the outcomes, not to say which is best.

But this can be taken a step further. Because mean income is so much higher under capitalism, it may be possible to make everyone better off and nobody worse off by moving from socialism to capitalism, though it would take some redistribution of income to the poor. That we don't do so is a political choice, but capitalism is still the better system since everyone can potentially be made better off.

The point is that the job of an economist is not to "justify the ways of the market to men," or to advocate one system over the other on an ideological basis. It is to understand and then explain how economic systems and markets work so that people can make informed choices. Economists never said that people shouldn't make "'their own moral judgments' about economic issues" as implied at the end of the article.

Finally, I also object to being told that economists:

[A]bide harsh economic measures and consequences ... [such as] large-scale unemployment

There are economists who devote their lives to figuring out how to reduce these problems within the economic system we have chosen. We as a society chose capitalism over, say, a command and control system because it delivers a higher mean income. Economists fully recognize the costs that come with that choice such as those associated with business cycle fluctuations and we do our best to overcome them. We also fully understand the income distribution issues the author noted above so I'm not sure what the objection is there. Nobody ever said we'd end up in the middle of the Edgeworth box.

[See the post below this one for an attempt to explain the claim that "thinking like an economist comes hard to many people."]

Comments

[evagrius]

Sorry. I have to agree with Foley. Economics is like theology, a speculative philosophical discourse.

True, it does have an empirical basis, ( but so does theology- all one has to do to find that basis is read about the mystical experiences of the saints and their reflections about them, otherwise known as Scientia Cordia ), but once it moves from that, it becomes as speculative as any other philosophy.

I think the problem is really very easy to point out. Economics is not about particles of matter and their actions. It's about human beings and their behavior.

Economics is between "hard science" and psychology/ philosophy/theology, that is, how and why humans behave the way they do.

No need to be touchy about it. It's better to acknowledge it than to pretend it isn't there.

The reasons for so many questioning economics must have a basis in fact.

After all, Foley himself is an economist. He isn't afraid to acknowledge its speculative foundation.

[DRR]

Brad DeLong already took this guy and his book to task at his site a few months back. I think the guy even posted in the comments.

[DRR]

"I think the problem is really very easy to point out. Economics is not about particles of matter and their actions. It's about human beings and their behavior."

Hence it is a social science. That it may possess certain dogmas, not unlike the other social sciences, is not to preclude it's status as a "science."

[Adrasteia]

I also agree with Foley. The vast majority of economists are not in the business of making clearly testable and falsifiable hypotheses, they are not practicing science.

[anne]

Peter Steinfels:

So what is “Adam’s Fallacy”? ...

It is the idea that the economic sphere of life constitutes a separate realm “in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome,” Professor Foley wrote, a realm unlike all the rest of social life, “in which the pursuit of self-interest is morally problematic and has to be weighed against other ends.”

What is the problem with questioning the philosophical bases of economics and why should such an investigation by an economist be tiresome? The questions raised are extensions of Benjamin Friedman's much praised thoughts, and reflect a quite modest sense that there needs to be a consideration of the philosophical groundings in and for economics.

[GeorgeNYC]

I have a BS in econonmics. I frankly liked the subject. It is fascinating to play with sttistics and charts. At its core I thinlk economics is like applied mathematics. There is a certain utopian belef system at work. Somehow if we all could just live by the market the world woulfd be perfect.

I certailnly disagree with Foley (but I will probably read his book) but I also strongly disagree with the criticism of his position. I think that economics, at times, is used like relifgion. It sure seems to justify just about everything that has to do with government regulation of anything.

Your argument of "capitalism" v. socialism is completely off the mark. While Foley ignores ome of the key insights from econmics, you ignore the limitations of econmics. Under what conditions do markets work perfectly? Is it really true that without ANY government intervention markets will wor perfectly? What about the "rule of law"? What about contract enforcement? what about the grant of limited liability to corporations?

What if we simply do not want a society where wealth is in the hands of a few? What if we are willing to forgo overall wealth to achieve that purpose.

Everything that you argue for is infused with value judgments at a certain level. I think that "economics'" has become our new religion in that its teachings become perverted as they are used to justify certain positions. How many times do I hear politicians appealing to the "freedom" inherent in the "market" without really understanding what that means.

Foley is wrong about what econmics is but he may not be wrong as to what it has become.

[anne]

http://economistsview.typepad.com/economistsview/2006/11/what_you_may_no.html

November 17, 2006

What You May Not Know About AIDS in Africa

[T]he questions I wanted to answer ... were being asked by anthropologists, sociologists, and public-health officials. ...

These disciplines believe that cultural differences—differences in how entire groups of people think and act—account for broader social and regional trends. AIDS became a disaster in Africa, the thinking goes, because Africans didn't know how to deal with it.

Economists like me don't trust that argument. We assume everyone is fundamentally alike; we believe circumstances, not culture, drive people's decisions, including decisions about sex and disease....

Here, by contrast we find a patently absurd sup[posedly a-philosophical and surely a-moral sense of what economists are and should be about. I suggest the contrasts raised by Duncan Foley should be thoroughly welcome.

[anne]

http://delong.typepad.com/sdj/2006/09/the_childish_ba.html

September 22, 2006

The Childish Babbling of a Say...
Edited by Brad DeLong

Duncan Foley (2006), Adam's Fallacy: A Guide to Economic Theology (Cambridge: Belknap Press: 067402399).

It must be a theology book, for Duncan Foley has worked a miracle, a dark miracle. He has created in me--me! J. Bradford DeLong!!--something that I thought would never happen: the desire to say something good about Jean-Baptiste Say.

Foley has done this with a book that claims that Adam Smith holds to a:

P. 3: moral fallacy... urges us to accept direct and concrete evil in order that indirect and abstract good may come of it... [while] neither Smith nor any of his successors has been able to demonstrate rigorously and robustly [how].... Smith's rationalization... requires... wholesale denial of the real costs of capitalist development...

Let's get this clear. Foley thinks that it is immoral to weigh "indirect and abstract" goods that come from capitalist development against "direct and concrete costs": that doing so is "wholesale denial of the real costs of capitalist development." That is what Foley calls "Adam[ Smith]'s Fallacy." ...

[anne]

http://delong.typepad.com/sdj/2006/09/hoisted_from_co_5.html

September 27, 2006

Hoisted From Comments: Duncan Foley "Fairness" to the Past (Wie Es Eigentlich Gewesen Department)
Edited by Brad DeLong

Duncan Foley writes, apropos of his history-of-economic-thought book, Adam's Fallacy:

I use "Adam's Fallacy" in the book to refer to two things. First is Adam Smith's claim that the pursuit of self-interest, which is morally problematic (not necessarily immoral, but in need of examination) in most human interactions, is unambiguously a social good in the context of competitive market interactions.

Second, I take this problem as representing a deeper issue that runs through Adam Smith's writing and the work of all the political economists I discuss in the book. This is the idea that there is an economic sphere of life subject to special laws, either moral or scientific. The book makes an extended case that this "fallacy" (which is not just Adam's) runs through the history of political economy and economics.

Whether or not I actually committed all of the Follies Brad identifies I leave to readers of the book to judge.

I think the way Smith uses Say's Law reasoning to support his analysis of free trade is a fair example of the way "Adam's Fallacy" works in his discourse. The discussion links up with the chapters on Malthus and Ricardo, Marx, and Keynes.

There is a broader issue about the impact of labor productivity increases on society, which is the "destructive" aspect of Schumpeter's "creative destruction". Cost-reducing technical change may not reduce employment in the sector in which it occurs, but it can have (and has in many cases) devastating effects in other sectors and economies. It is hard to look at the polarized world economy today without acknowledging this.

I don't think the lack of a long-run trend in unemployment in and of itself can settle the question of Say's Law, at least in the form "aggregate supply in the willingness of input owners to sell their resources creates its own aggregate demand", because in the long run the aggregate supply of inputs is adjusting, along with aggregate demand. The classical and Marxian analyses of macroeconomics, in which population is endogenous, are a good example of this.

I did not, as I say in the Preface, write the book to be "fair" to Smith or Malthus or anyone else. (As far as I can tell, all these guys are doing fine without my help.) I did write it to raise questions and prompt debate about the presumptions of economic policy discourse. I'm glad Brad de Long has taken me up on this and generated this discussion.I did not, as I say in the Preface, write the book to be "fair" to Smith or Malthus or anyone else. (As far as I can tell, all these guys are doing fine without my help.) I did write it to raise questions and prompt debate about the presumptions of economic policy discourse...

[ken melvin]

I think economics are still at the earth as center of the universe stage.

[Bruce Webb]

The problem is not that economics calls itself a science, it is that many of its practitioners mispresent what kind of science it is. They want it to be hard and tough and predictable, as if it were just a science like engineering physics or computational chemistry. Instead like broad swaths of biology and many other sciences it is broadly speaking observational, and seeks to bring pattern and order to that perceived reality.

But the process of explaining reality in patterns and ordered series is that reductionism immediately starts creeping in and then orthodoxy hardens around that established paradigm.

An an interesting example of this outside economics (so as to reduce the heat) was the initial reaction of the evolutionary biology and paleontology community to the Alvarez's suggestion that mass extinctions were caused by a large meteor impacting in Mexico. Otherwise known as the Alvarez Asteroid Impact Theory. While largely accepted today, at the time on campus at Berkeley it generated a huge controversy with most of the scientific community denouncing it in the strongest terms as "Junk science". Not wrong, but so obviously wrong as to be rejected out of hand.

There were reasons for this, some paradigm based and some sociological (neither Alvarez was a paleontologist - that Luis had a Nobel Prize in Physics meaning little on that particular scale), but was common between that flap and the current one is the sense of wounded outrage. How dare outsiders challenge the fundamentals: Free Trade Good! Examining Its Results on the Distribution of Pie Slices Bad! Wages Are Set by the Market!

That so many economists are sounding defensive argues that maybe they have something to be defensive about.

[Bruce Webb]

And to follow up on Ken, the recent revision in data series retroactively for three years was pretty much the equivalent of adding a new epicycle to an orbit.

Except that Ptolemaic based astronomy was at least upfront that they were fitting their data to the curve, even if that meant changing the curve itself.

http://www.daviddarling.info/encyclopedia/E/epicycle.html

It is pretty hard to accept something as a hard science when both the data and the data measures are subject to regular revision. At a minimum it makes year to year comparisons a little difficult and is a huge conceptual space away from "falsificationism".

[Dan Hirschman]

Out of curiosity, has anyone here read another recent history of economic thought book, "Knowledge and the Wealth of Nations" by David Warsh? I mention it because, although Warsh is very sympathetic to economics and its mission (and practitioners), at many points in the story of the development of modern economics (and particularly the economics of growth and attempts to answer the "Why are some nations poor and others rich?" question), the leading economists of each era end up seeming incredibly certain about theories they know cannot explain some of the biggest puzzles (such as increasing returns and the overall growth of developed countries).

Perhaps, like others here have mentioned, this is no different than the arrogance in any science, but to me it seems a bit worse in economics. Natural scientists have the benefit of controlled experiments, which often let their discoveries sort've asymptotically approach the most correct version, whereas social scientists are left struggling with always muddy data. But that's something that seems to distinguish Economics and, say, Sociology: Economists (and this is probably a dramatically unfair and generalizing statement, so please hammer away at it) build models from assumptions, and then compare them to data. The assumptions seem to have as much to do with the history of economic thought and the capability of the mathematics and computation they are working with at any point as some objective and rigorous observations of markets and human behavior. Sociologists, again unfairly, build a new model from every dataset and put these models in comparison to older models from similar datasets, without nearly as much clarity, but also with (seemingly) less certainty.

Perhaps an example would help: Milton Friedman wrote strong, certain words against minimum wage laws - certain that these laws created unemployment, especially among the poor and low-skilled. What was his data? Economic models. Economist David Card, and others, have since gone out and looked at some pseudo-experiments, and found the picture is not nearly so clear - perhaps there is a small window in which the minimum wage can go up, and unemployment will not, a bit of stickiness in the labor market.

Perhaps these ramblings are far off, but I fear that the usefulness of economics is sometimes tempered by its seeming certainty in spite of a paucity of evidence on some issues, and that can lead to attacks of the form "economics is a religion".

[Bruce Webb]

No, not rambling at all Dan. An important point, at least from my outside perspective looking in.

[Adrasteia]

Ha! Except for the very rare exceptions like Milgram , the majority of 'social scientists' merely plot data to curves, never the other way around.

They're no more scientists than string theorists.

[Dan Hirschman]

Out of curiosity, has anyone here read another recent history of economic thought book, "Knowledge and the Wealth of Nations" by David Warsh? I mention it because, although Warsh is very sympathetic to economics and its mission (and practitioners), at many points in the story of the development of modern economics (and particularly the economics of growth and attempts to answer the "Why are some nations poor and others rich?" question), the leading economists of each era end up seeming incredibly certain about theories they know cannot explain some of the biggest puzzles (such as increasing returns and the overall growth of developed countries).

Perhaps, like others here have mentioned, this is no different than the arrogance in any science, but to me it seems a bit worse in economics. Natural scientists have the benefit of controlled experiments, which often let their discoveries sort've asymptotically approach the most correct version, whereas social scientists are left struggling with always muddy data. But that's something that seems to distinguish Economics and, say, Sociology: Economists (and this is probably a dramatically unfair and generalizing statement, so please hammer away at it) build models from assumptions, and then compare them to data. The assumptions seem to have as much to do with the history of economic thought and the capability of the mathematics and computation they are working with at any point as some objective and rigorous observations of markets and human behavior. Sociologists, again unfairly, build a new model from every dataset and put these models in comparison to older models from similar datasets, without nearly as much clarity, but also with (seemingly) less certainty.

Perhaps an example would help: Milton Friedman wrote strong, certain words against minimum wage laws - certain that these laws created unemployment, especially among the poor and low-skilled. What was his data? Economic models. Economist David Card, and others, have since gone out and looked at some pseudo-experiments, and found the picture is not nearly so clear - perhaps there is a small window in which the minimum wage can go up, and unemployment will not, a bit of stickiness in the labor market.

Perhaps these ramblings are far off, but I fear that the usefulness of economics is sometimes tempered by its seeming certainty in spite of a paucity of evidence on some issues, and that can lead to attacks of the form "economics is a religion".

says...

"Left to its own devices, for example, it will not “solve the problems of poverty and inequality." ..."

Economics is not intended for these purposes. It explains simply market relationships that give rise to the generation of wealth. The distribution of the latter is a matter for governments to decide.

Amazingly simple, that. How did Foley miss it?

As regards the question of inequality: If 80% of the wealth generated by the American economy goes to only 20% of its population and about 60% of European wealth is enjoyed by 40% of its population, how does one explain the difference?

In two words, taxation and redistribution. And, wouldn't Adam Smith agree?

[John H. Morrison]

I believe that the hypothetical example where handshaking transmits disease is not apropos to the problem. In this example, we have biologists and medical researchers discovering a fact of nature: handshakes transmit disease. Then ordinary morality declares that disease is bad, and the medical community uses that value judgment to urge that we abandon handshaking.

In the case of economics, I've seen too many persons -- they might not be genuine economists, but rather economic ideologues, "Free-Market Economists," "Social Darwinists" (unrelated to genuine Darwinists) who use economics to define what is right and wrong. The equivalent to the above hypothetical would be to say the following: biology declares handshaking to transmit disease. Biology has endorsed the transmission of disease, and therefore, we must not oppose the transmission of disease.

For example, if the free market produces large-scale unemployment, job insecurity, poverty in the elderly, environmental destruction, etc., those are the most efficient results, and we must not oppose them.

I don't believe that real economists make that kind of argument, but I've seen that argument (disguised in doublespeak to make it more palatable) numerous times from economic ideologues.

[James G]

Economics is not the only field which has become a religion: It appears that Climate Science is one too; where skeptics are treated as heretics and hounded out of their jobs or refused funding. But then I'd define religion as "the abject refusal to consider any real data which might disagree with your theories". Anyone here guilty of that? Actually I see the same happen in computer programming but curiously not in engineering, possibly because we absolutely need to be correct or people might die. When you don't need to be correct you can afford to be arrogant.

I live in France which according to most economists is a socialist basket case. Hence it's a good test case of socialist versus capitalist economic theories. Here there are no poor people; none at all, all public facilities work and work well, most people own their own house outright, health care is the best in the world at a cheap cost, pensions are good and well-funded so far. GDP is high, crime is low. Industry isn't a dirty word and it still makes a profit. Education is excellent and is the cornerstone of a meritocracy where engineers are regarded as the elite (a nice change). Socialism in practice therefore isn't anti-capitalist, it just provides a nice safety-net when it's needed. It doesn't prevent you getting rich, it just prevents you being poor. Did I mention that 80% of it's electricity is from nuclear power: How clever was that? The one stumbling block is unemployment but here the unemployment figures at least can be trusted; they are not fiddled with as they are in the UK or the US.

A semi-prominant US capitalist recently wrote something like "France is finished; you can't fire people and they don't allow you to go bankrupt. How can anyone start a business here?" What strange priorities! And he is typical. He also bleated later about possibly losing his new beachhouse in Nicaragua now that Ortega is back in power. Ortega, for the record, had previously taken over unproductive land from the wealthy and put productive homesteaders on it. An act similar to that of the USA all those years ago. Was that wrong too or do I smell hypocracy in the air?

[ken melvin]

From "Whence I sit":

And what of the poseur’s (Ayn Rand) followers? The libertarians? The Darwinists? ( Much dogma liest spread about amongst this lot. Beware thee thou step!) Like Strauss, the Trotskyites, and many another immigrant ‘intellectual’, the poseur could never be bothered to understand the intricacies of democracy and would have leave be shed of the whole mess, insisting it needed be replaced forthwith with whatever it was she was peddling. Even amongst this lot of economic charlatans, the poseur stood out by her lack of respect for the facts. Her greatest appeal was to those who knew least. The libertarians, with ties to the poseur, to McKinley Babbitt and to Rove Bush are of a small-minded lot. (Seems some libertarians were selected while at University for brainwashing by one of their professors.) Usually quite good at one or two technical tasks and often of the management class; they think themselves entitled. To the working class, they say, “Let them eat crumbs.” Knowing little of matters other the business model, they are convinced that government should operate like a business. Little good telling them of the different roles and purpose. Morality? Hey these guys believe that anything is OK as long as you don’t get caught and that anyone who does get caught deserves to be punished. Meanwhile, the Darwinists think they understand Natural Selection, that it explains their income bracket, that “it’s” the way society works, and that it follows that the best economics and system of governance are those based on Natural Selection. Perhaps not surprisingly, biologists think that economics and government should mimic the laws of nature; physicists, that the model, and government, should be changed so that both obey the laws of physics. What were economists to do but announce discovery of the laws of economics?

[Bruce Wilder]

Adam Smith was a moral philosopher. From 1752 to 1763, he occupied the Chair of Moral Philosophy at Glasgow University, from which position he published his Theory of Moral Sentiments, which I can testify is quite good. The Wikipedia article on Adam Smith discusses the "Adam Smith problem", which is really the problem that people, who read Smith don't understand his view of selfishness. Smith was no moral simpleton, but a student of Francis Hutcheson and friend of David Hume, whose views were sophisticated and realistic, and involved a good deal of acute observation of what people really did. (For those concern with personal moral character and committment, it may be noted, as Wikipedia, does, that Smith devoted a good deal of his income to secret acts of charity.)

What one ought to get from "The Wealth of Nations" and from economics, in general, in my view, is the desirability of a set of institutions, which properly and productively channel self-interested behavior to serve the general welfare. The really unfortunate thing about the famous "invisible hand" is that so many seem to understand it to mean no hand at all, which was certainly not Smith's understanding.

Smith understood deeply that "the pursuit of self-interest is morally problematic". For the humanists of the Enlightenment, this was the central moral problem. In an ethics in which human happiness or welfare is the sole concern, and in which authority and revelation provide no foundation, reason must find ways to reconcile conflicts between an individual's good and the good of others, and between an individual's pursuit of his own welfare and the general welfare.

Economics, as I learned the subject, actually concerns itself quite a lot with the "moral" problems associated with reconciling individual selfishness with the general welfare. From Bentham's utility to Pareto efficiency to externalities, a great many, key economic concepts and ideas are focused on analyzing this central moral problem.

If there is some truth in the criticism, it would be found in a slavish and misguided devotion to certain "methods" in economics -- not technical methods, but theoretical methods of framing problems, which are then allowed to prejudice conclusions.

In the pursuit of a "positive economics" of "objective" prescriptions, economists are taught, as Professor Thoma notes, to abstract away from individual preferences, and in doing so, they sometimes feel obligated to forgo all consideration of substantive preferences. In the right context, this is simple professionalism, an expert molding his technical judgment to defer to the value judgments of his client. But, often, economists -- particularly conservative economists -- abuse this method, making of it a supposedly objective argument for "neutral" policies, which, in practice, further and protect narrow, selfish interests, or attack the legitimacy of the policy preferences of political majorities.

Milton Friedman, a fierce advocate for a "positive economics", was sometimes guilty of this kind of abuse, and John Kenneth Galbraith's sweeping critiques of the modern American economy were undertaken with a self-conscious rejection of that professional forbearance.

At bottom, though, I doubt that Foley's take on "the moral problem" is what irritates economists, like Professor Thoma. The critiques seem to economists to be basically philistinism: they are presented as excuses for rejecting economic thinking.

To non-economists, they seem to be rejections of economists' arrogance.

I don't know if there is any useful way of reconciling the two views. Certainly, the critics know their market, and the intellectual quality of arrogance-rejecting of critiques is not likely to improve. And, economists, as far as I can tell, like their arrogance.

[PW]

I haven't read Foley, only Steinfels' piece in the NYT. I think Foley (per Steinfels) nails it -- and remember Brad DeLong's bitter post about him. Of course economists are going to be pissed off. Well, not all...

Steinfels writes: "Secularization has meant that in a cultural tranformation, major areas of human activity set themselves up as quasi-autonomous with their own standards, authorities and guiding principles. Economics, like science and politics, and then law, the arts and other fields, declared independence from rule by religion, custom, intuition or 'speculative philosophical discourse,' [Foley] wrote." Really wonderful use of the word "secularization."

This is an old battle.

[PW]

Bruce Wilder's comment is excellent, just first-rate.

[anne]

Excellent comments.

Steinfels writes: "Secularization has meant that in a cultural tranformation, major areas of human activity set themselves up as quasi-autonomous with their own standards, authorities and guiding principles. Economics, like science and politics, and then law, the arts and other fields, declared independence from rule by religion, custom, intuition or 'speculative philosophical discourse,' [Foley] wrote."

Really wonderful use of the word "secularization."

PW

says...

BW: "GDP is high, crime is low."

GDP has stagnated in France for almost a decade.

You were obviously out of town when the ghettoes erupted earlier this year. Want a walk on the wild side? … go to any football game at the Stade de France in north Paris.

"Industry isn't a dirty word and it still makes a profit."

Eighty percent of the CAC40 members make ALL of thier profit outside of France, thier home country being barely breakeven.

"Education is excellent and is the cornerstone of a meritocracy where engineers are regarded as the elite (a nice change)."

Education is free, not excellent. The French complain continually of kids exiting schools not even knowing how to read and write. Researches go abroad to have the equipment to do research, the money for education and research goes to barely building maintenance.

Of the top 100 universities, listed by the Institute of Education at Shanghai Jiao Tong University, the first French university is in the seventies.

"Socialism in practice therefore isn't anti-capitalist, it just provides a nice safety-net when it's needed."

Couldn't agree more. But welfare is so ingrained, one does not need to really work. Which is why unemployment has been ranging from 9 to 12% for over a quarter of a century.

But, capitalism still and likely always will have a negative connotation in this country. To think otherwise is to deny the works of Zola and, Lord knows, that would be heretical in this country that wallows in the past and has little concern from the future. Why should it? It copies most trends that come from the states.

But, one thing is for sure. The French social model, with it high upkeep in taxation and therefore unemployment, has less inequality than the US.

(Le plus ça change, le plus ce foutu pays reste la même chose. Mais, on l'aime bien toute de même. Il y a un savoir-vivre comme nulle part ailleurs au monde. Sauf peut-être l'Italie ...)

[anne]

http://www.harvardmagazine.com/print/010678.html

January, 2006

Growth is Good: An economist's take on the moral consequences of
material progress
By J. Bradfold Delong

The Moral Consequences of Economic Growth
By Benjamin M. Friedman

[What is necessary is to view the arguments of Duncan Foley as continuing argument of Robert Heilbroner, Benjamin Friedman and Brad DeLong on the development of a more profound philosophical grounding for economics than mere utilitarian thinking. After all, Kant did live. The pretense of economists to be a-philosophical is foolish as Brad DeLong has pointed out, while more than utilitarian thinking is morally essential.]

[Adrasteia]

In the pursuit of a "positive economics" of "objective" prescriptions, economists are taught, as Professor Thoma notes, to abstract away from individual preferences

Giving us monstrosities like the Efficient Market Hypothesis.

NOT SCIENCE!

Economics is not the only field which has become a religion: It appears that Climate Science is one too; where skeptics are treated as heretics and hounded out of their jobs or refused funding.

Climate science is a lot like Economics. Except instead of abstracting away individual preferences in their models, they abstract away the x and y axes. Much like economists, they also abstract away the need for regression testing on historical data.

NOT SCIENCE!

[anne]

No; as biology is a different order of science from physics and chemistry, so economics is a different order of science from biology. What is necessary is a more robust philosophic grounding of the models constructed and research conducted by economists. What sort of science can economics be, is the philosophic question?

[anne]

Climate science is science from physics to biology, and is thoroughly well established:

http://www.nytimes.com/2006/11/21/science/21prof.html?ex=1321765200&en=df27dd90f13cbf34&ei=5090&partner=rssuserland&emc=rss

November 21, 2006

An Antarctic Ecosystem Shows Signs of Trouble as a Tiny Worm Turns
By AMANDA LEIGH HAAG

In the freeze-dried landscape of the Antarctic Dry Valleys, ridges and rocks chiseled by the scouring winds seem frozen in time, with little evidence of change from one season to the next. But to the researchers who return there year after year, much is changing, and the change is alarming.

Diana H. Wall, director of the Natural Resource Ecology Laboratory at Colorado State University in Fort Collins, is to make her 16th trip to the continent next month. Each austral summer, Dr. Wall and 9 or 10 colleagues return to study the tiny roundworms called nematodes, which occupy the top rung of the food chain in this pared-down ecosystem.

The polar desert of the Dry Valleys was once thought to be sterile and lifeless. But now the valleys are known to be home to three species of nematodes, spongy mats of moss and algae in the nearby streams and frozen lakes, and an abundance of bacteria.

Dr. Wall and her team of "worm herders" — as they are called by the helicopter pilots who ferry them to their remote field camps — study the process of carbon turnover, how carbon travels through the ecosystem.

In soil, turnover works this way: molecules containing carbon provide fuel for organisms; as the organisms die and decay, the carbon is released back into the soil in the form of nutrients. Eventually, it is exhaled out of the soil by the respiration of microbes and soil invertebrates.

"The cycling of carbon is the basis of life," said Ed Ayres, a postdoctoral researcher working with Dr. Wall.

Scientists still know little about how these soil organisms function. But by digging around in what some might consider just plain dirt, the researchers are finding that one very small worm is playing a critical role in the Dry Valleys ecosystem — and that its survival may be in jeopardy.

The creature is an Antarctic nematode, Scottnema lindsayae, just one millimeter long. In a temperate forest or even a hot desert, nutrients that cycle through an ecosystem form a vastly complicated web, far too interconnected to tease out the contributions of individual species. But in the parched landscape of the Dry Valleys, the researchers can decipher what role each species plays and how important each one is to the overall health of the ecosystem....

[Mark Thoma]

anne

I don't see the connections you are trying to draw, i.e. that Foley is a continuation of Friedman, etc.

[anne]

Yes; climate science is many philosophically established secure sciences. Economics simply needs more attention to philosophy, as Brad DeLong shows even in arguing with Duncan Foley. I would suggest that China calls to question much about fundamental economic development models; what then?

France, oh dear, forgive me, but I do so like France in so many ways for all the problems and problems there are. There seems to be something driving Americans to continually ridicule the French even as they would do quite a bit to wander Paris or bike the countryside. Last I noticed, there were even a few, only a few though, French thinkers left for all the low school rankings. Oh dear.

[Adrasteia]

I would suggest that China calls to question much about fundamental economic development models; what then?

That should be obvious. We simply need to create a new universe which fits the obviously correct models.

[anne]

Duncan Foley is simply questioning as Benjamin Friedman what are the conditions of growth that make growth "good" and how is good growth to be generated.

[evagrius]

Steinfels writes: "Secularization has meant that in a cultural tranformation, major areas of human activity set themselves up as quasi-autonomous with their own standards, authorities and guiding principles. Economics, like science and politics, and then law, the arts and other fields, declared independence from rule by religion, custom, intuition or 'speculative philosophical discourse,' [Foley] wrote."

Secularization is essentially the process by which metaphysics has been relegated to an obscure corner. Metaphysics is not some esoteric activity concerned with astrology or ghosts. It's essentially the systematic reflection on Being- that is, why is there something rather than nothing or, in a more pointed way, what is the purpose of living?

Traditional societies concerned themselves quite a bit with these questions, beginning with myth, then religion followed by philosophy/ theology.

Contemporary society does not concern itself with those questions leaving it to individuals to discover a response to them. Hence the rise of fundamentalism, cults, psycho-babble movements etc; all witnessing to the fact that there doesn't seem to be an accepted general response to those questions.

Economics, like the other sciences and much of art and culture does not concern itself with this question, ( not that it should), but it does not have any foundation in a response to those questions- that's the problem with it, the other sciences and art and culture.

[Mark Thoma]

I thought Foley was objecting to the partitioning of the rational economic agent for purposes of economic analysis.

[Robert]

On Foley's book. On the paper that provides the focus for Warsh's book.

[James G]

Re:France
Yes I wasn't in Paris during the riots and like most folk I wasn't affected by a few dozen rioters five hundred miles away. I was out of town too during the LA riots and during the Liverpool/Birmingham riots. You'll notice that it was immigrants rioting not the French. But I didn't say France is perfect, it's just better by comparison. When I say crime is low I'm comparing it with the USA, Southern Spain and the UK where I've lived before. Compared to those countries, especially the USA, crime is way low. I can assure you that the British are coming here in droves because they prefer it here. Thankfully they are coming with cash.

By GDP I meant total, not growth. To economists growth is everything. But the GDP growth in the UK and US is highly based on debt. France could have a housing bubble too and have spectacular growth but the French I talk to don't treat their houses like an ATM, in fact they complain about rising prices. The British and Americans that I talk to can't get enough of rising house prices. They want to sell and move up all the time. It's sheer lunacy. But someday that debt all has to be paid back. Who is more sensible in the long term?

The French automobile industry still makes a profit; Does Ford? Does GM? The UK doesn't even have a car industry now. And what is Ford/GM's biggest problem now? Health care and pensions costs. The thing few people seem to realise is that all the social costs that the French pay up front are all paid some way or another by everyone else in US/UK but they are in private health care, private security, private pensions, hence apparently invisible. Except that I know so many people in the UK and the US who need to work two jobs to cover all their payments. The French just don't need to. And if you get a major illness in the USA forget about getting re-insured. That has happened to two of my wifes relatives. Both of whom are facing massive costs if a relapse occurs. Two days in hospital that'll be $50,000, thank you. No insurance? You'll have to wait... and wait.

Also profit is profit, regardless. France buys far more foreign companies capital-wise than it sells so they must be doing something right.

The unemployment figures in the UK had been manipulated about 30 times by Margaret Thatcher taking off the long-term employed, the school-leavers etc. Sheffield Hallam University counted unemployment the old way and it came to 10%. Apparently the USA accounting office does the same, even inventing jobs that should come from future GDP growth. French unemployment is therefore no worse than the UK, which is obvious to anyone who has lived anywhere North of London. Furthermore all the new employment in the UK under Tony Blair has been fast food restaurants or government employees.

I admit that is it too difficult to employ someone here and too costly to run a business. I see lots of work here for builders, plumbers etc and a serious shortage of trained people to do it. At some point though someone in government will wake up to that idiocy.

When I say excellent education I mean comparatively speaking. My 5 year old daughter was speaking perfect French in about two months. I cannot believe how good the school is compared to my schools. Universities are another matter but I can assure you that French engineers are generally far more knowledgable than their UK or USA equivalent. That is from absolute direct experience as an engineer working in the Nuclear, Aerospace and Oil industries.

Everyone copies trends from the States. Why not France? The US excels at innovation and marketing. It is their greatest gift. However my main point is that given the free-market model versus the moderately social model. I much prefer to live in the latter, regardless of what economic theory says. I note that the economist thinks France needs a Margaret Thatcher. Ha ha ha; only if you want to decimate your industrial base and triple unemployment. Resist this argument at all costs please.

So relax; enjoy your country. It's not as bad as they try to tell you. BTW I agree totally about the 'savoir-vivre' and I share your feelings about Italy too.

[anne]

Not to worry, the French stock index is up 11.6% a year in dollars over the last 10 years, while we are up 8.2%. I'll take the 41.5% margin. Oh, I even like Italy and for lots more than just the shoes.

[evagrius]

"I thought Foley was objecting to the partitioning of the rational economic agent for purposes of economic analysis."

That's correct. Removing the human subject from its metaphysical ground is precisely what science does. When this is done while recognizing the metaphysical background it is acceptable. But when it's done completely, leaving no metaphysical consideration, it becomes an aberration and is inherently destructive.

I use the term human subject rather than rational economic agent for precisely this reason.

I know...it's only philosophy and doesn't amount to a hill of beans but it still has to be said sometimes.

[Mark Thoma]

This comment is repeated from above. I think Veblen had this nailed long ago (this quote is on my web page):

Thorstein Veblen (1857–1929) on Rational Maximizers:In all the received formulations of economic theory, whether at the hands of English economists or those of the Continent, the human material with which the inquiry is concerned is conceived in hedonistic terms; that is to say, in terms of a passive and substantially inert and immutably given human nature. The psychological and anthropological preconceptions of the economists have been those which were accepted by the psychological and social sciences some generations ago. The hedonistic conception of man is that of a lightening calculator of pleasures and pains, who oscillates like a homogenous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He is neither antecedent nor consequent. He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-imposed in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before. Spiritually, the hedonistic man is not a primer mover. He is not the seat of a process of living except in the sense that he is subject to a series of permutations enforced upon him by circumstances external and alien to him.

[Betsy L. Angert]

Dear Mark . . .

I find this article and the following post interesting. My cousin, a lifelong investor, and I used to discuss the realm of Economics endlessly. For me, finances are an emotional topic. For him, managing money is merely a factual pursuit.

As I read“Economics functions in a theological role in our society,” he added in an interview in which he paraphrased Milton, “to justify the ways of the market to men.” Economists, moreover, are “becoming priestly figures, with arcane knowledge” and special powers, he said.

Economic laws are cast as universal and invariable. They are even presented as natural laws akin to those of mathematical physics or evolutionary biology.

From the bedrock, belief that the pursuit of private self-interest will ultimately benefit the whole society stems a willingness to abide harsh economic measures and consequences, ranging from large-scale unemployment to the destruction of traditional cultures.

The danger of these “illusory comforts of Adam’s Fallacy,” Professor Foley writes, is that they obscure hard truths. Contemporary capitalism, in his view, is a successful, resilient, and adaptive system for creating material wealth. But it is not a stable, self-regulating one. Left to its own devices, for example, it will not “solve the problems of poverty and inequality." ...Often, as I enter discussions here, I experience few speak of feelings. Yet, in contrast to the majority, I do. I always find this fascinating for I am known to be a person that prefers and pursues logic; feelings are not my favorite exploration.

However, I do not offer formulas when attempting to illustrate an idea. In economic discussions, I am often met with facts, statistics, and what feels to me a stale data. For me, concepts mean more than figures. Numbers can be adjusted or calculated to meet the needs of an expert.

I think it would be nice if life were so predictable and people so static. As I observe corporate executives or government officials, I personally see insecure people posturing their power. Decisions are often emotional, not based on cold, hard facts. Even if the overriding influence is how can I best make a million, the reason for achieving such a goal is actually emotional.

When General Motors or Ford hands out pink slips, the stock rises; some think it is just that simple. Cause and effect, supply and demand. This to me is as silly as the notion that an innovative design will turn the companies around.

People are effected. The common man or woman no longer has the means to feed their family. Yet, the cry is, "Oh joy, oh bliss, Capitalism works," though only for those with capital. Perchance, Economists might consider emotions do matter. These cannot be tallied.

Betsy L. Angert
BeThink.org or Be-Think

[dissent]

"Economics is not the only field which has become a religion: It appears that Climate Science is one too; where skeptics are treated as heretics and hounded out of their jobs or refused funding."

How annoying - a slam with no supporting argument or data. This kind of argument by analogy doesn't belong here! (Corporate shills, be gone.)

I don't know where this poster is coming from, but here in the USA scientists who are concerned about global warming are subject to govt pressure and even silencing.

The top climate scientist at NASA says the Bush administration has tried to stop him from speaking out since he gave a lecture last month calling for prompt reductions in emissions of greenhouse gases linked to global warming.

The scientist, James E. Hansen, longtime director of the agency's Goddard Institute for Space Studies, said in an interview that officials at NASA headquarters had ordered the public affairs staff to review his coming lectures, papers, postings on the Goddard Web site and requests for interviews from journalists.

Dr. Hansen said he would ignore the restrictions. "They feel their job is to be this censor of information going out to the public," he said. (link http://tinyurl.com/wfycc)

In the USA the overwhelming scientific consensus supporting human caused global warming is repressed in the corporate media, and various thinktanks which pose as disinterested 'skeptics' are actually corporate funded shills. For example, the Greening Earth Society. Although the name implies a group dedicated to restoring wildlands, their "greening" refers to the "greenhouse effect"--these folks WELCOME global warming! At GES, you will learn that CO2 is a great gas we just can't get enough of, that global warming will turn Earth into a veritable garden of Eden, and that those thousands of articles written by climate researchers around the world all rest on shaky ground. They are funded by the Western Fuel Association, which is a $400-million consortium of coal suppliers which has dumped millions into "shaping" the "new environmentalism".

Here's another example. Our newscasts are infested with public relations videos disguised as news reports. The fake reports are called Video News Releases. In June of this year, the PR firm Medialink Worldwide put out a VNR that sought to disprove the link between global warming and hurricanes.

VNR NARRATOR: You've seen it before: winds, floods, the devastation left after a massive hurricane passes through. There's a lot of debate as to what's been causing all of these hurricanes. Some scientists say it's part of a naturally occurring cycle, while others have made the claim global warming is to blame. Dr. William Gray and Dr. James O'Brien, two of the nation's top weather and [inaudible], point to scientific data for the answer.

DR. WILLIAM GRAY: We only have good data with a satellite around the globe, going back about 20 years. And in those 20 years, we see no significant change in the frequency and intensity of hurricanes or major hurricanes around the globe.

VNR NARRATOR: Gray and many of his colleagues believe it's not global warming that’s creating these massive hurricanes, but the cycle of nature itself.

DR. WILLIAM GRAY: Since it’s changed, there's been a lot of people saying, “A-ha, the globe is warming. This is a cause of these last two years’ storms.” Well, we don't think that's the case. Whether this is a way nature sometimes works.

VNR NARRATOR: It’s these changes in the Atlantic salt content and currents that Gray says causes most of the hurricanes on the East and Gulf Coasts. This year the probability of a major hurricane is about 81%. And while this number is a prediction, it's based on science and research, so it never hurts to be prepared. I'm Kate Brookes.

AMY GOODMAN: This VNR was produced for the firm TCS Daily Science Roundtable. Until last month, TCS was owned by the Republican lobbyist, DCI Group. TCS was also the recipient of a $95,000 grant from the oil giant ExxonMobil for, quote, "climate change support." In some markets, the VNR copy was actually read as news by local reporters!! (link http://tinyurl.com/yytk6f)

[john c. halasz]

Whitehead once remarked that exactness in science is a "fake". Since he was no anti-science nut, but vitally concerned with the legitimation of natural science, it's worth unpacking what he meant. Presumably, his point was that the appearance of exactness in natural science is a result of logical idealizations and tightly controlled experimental conditions, whereas that is not ever exactly how reality presents itself to us in the ordinary course of affairs, and that that recognition implies a question about the appropriate applications of models and methods and where their application is not appropriate, but rather leads on to questions that are not addressable in their terms.

Now to my mind economics is not a natural science, but a social "science" and for a number of reasons can not approach the degree of legitimacy and, yes, exactness of natural sciences, even granting the "internal" differences between those disciplines in the former category. But I think part of what is troubling about economics,- or the way it is often treated of,- lies in the failure or refusal to confront the sorts of questions about appropriate application of its models and methods and the differentiation of the sorts of questions that they are adequate to and not. This leads to the complaint, reiterated here, about the simultaneous reification and irrealism of economic theory.

Now Duncan Foley is himself presumably a fully qualified professor of economics, even if of a somewhat heterodox bent, so he can exactly be accused prima facie of failing to understand what he's talking about. (There was, by the way, a better review in the NYRB by Robert Solow.) And, since he's written a book on Marxist economics, he can't be unaware that the accusation of "theology" was already made by Marx, much more intricately and with much greater satirical force. So if he resussicates the old shiboleth about "theology", with its twin attributes of reification and irreality, it's presumably not simply to revive old battles, but rather to repose questions about economic theory as currently practiced, and the appropriateness, valdity, empirical warrants, limits and confusions, (especially between the "positive" and the normative), since such theory contains large claims about the regulation of the fates of multitudes and lays claim to large political influence. (And, of course, if such theory is to be applicable and achieve effective regulations of social affairs, that does beg the question of the political conditions of its applicability.) Such questions are not merely a matter of a self-certifying epistemology, but rather are questions, among other things, about ethical responsibility and even existential authenticity,- (hence the offence taken).

To my relatively untutored mind, at least, some of the basic flaws of the edifice of neo-classical theory are fairly clear. For one thing, the logical idealization of the utitlity preference functions of utility maximalizing individuals, (origially a description of demand-side consumer behavior), though mathematically sweet, do not eo ipso logically generalize across the whole of an economy in terms of marginally analysis as the analytic exfoliation of the supposed "law of supply and demand". To be sure, if there is a highly inefficient distribution of resources, then a series of market exchanges would improve matters to the frontier of Pareto optimality,- (at least, leaving aside the historical injustices presupposed by the differential positions of market participants),- but once such a system of exchanges is set in motion such improvements would have diminishing effects toward the Pareto frontier, especially considering frictional costs associated with further exchanges. In other words, markets of themselves don't produce anything and can't be held to be the unique source of productive efficiency and increases in material wealth. Rather improvements in the productive efficiency of production systems are the primary source of material increase, even if markets can be held to stimulate and promulgate such technical development. But productions systems have constraints and dynamics of their own, which are not necessarily captured by, nor commensurable with market exchanges, not the least of which is the coordination of productive inputs produced by various industrial sectors for each other in order to provide for the reproduction, let alone expansion, of the productive system as a whole. Nor is business organization reducible to the idealization of utility maximalizing individuals, or necessarily explained by the fiction of comparative transaction costs. According to the idealization of perfect competition with constant returns, there would be no profits accruing to business organizations, since the profits would amount to the rate of interest, which suggests that profits accruing to capital realization on the part of business organizations are either due to the incomplete development of idealized competitive markets or to the deliberate exclusion of market competition, which might suggest a whole different set decision criteria involved in business organization other than utility maximalization. And, of course, different markets have different structures, so that they do not behave all in the same way, and such that it is entirely implausible that they would simultaneously and frictionlessly clear with respect to one another in accordance with a mathematical account of general equilibrium. Finally, markets themselves are quasi-institutions,- something denegated in the economic notion of rational expectations,- such that they, together with production systems and business organizations, must interpenetrate with and co-depend upon other social institutions and their criteria, norms and motivations.

So I think there are some reasons for doubt that a theoretical construction of the matter of economics entirely in terms of market operations, (let alone blatent fictions such as "consumer sovereignty"), would suffice to realistically account for the dynamics, effects and growth of economies. Still, I wouldn't claim that neo-classical models and methods would be useless, have no legitimate applications, would afford no insights into economic processes and policies, or be reducible to sheer ideology or cynicism. What's objectionable is the claim that such models and methods can be totalized into a complete system of economic explanation and thereby lay claim to an exclusive theoretical autonomy with respect to all the issues and realities involved.

[cm]

dissent: To reiterate an old pet peeve of mine, in US "news shows" there is little if any separation between reporting, commentary, and what I cannot describe as anything but outright promotion veiled as reporting.

[James G]

"How annoying - a slam with no supporting argument or data. This kind of argument by analogy doesn't belong here! (Corporate shills, be gone.)"

Well I don't have a political or corporate bent either way. I am a quiet environmentalist in fact. And I have been arguing for alternative fuels for 25 years as I happen to think that CO2 is the least dangerous chemical coming out of car exhausts and that the oil industry is a major polluter of the oceans via rigs, tanker spills and petrochem works. I was particularly referring to the shameful treatment of David Bellamy in the UK; a botanist who has done far more for the environment than all the climate scientists put together. Amongst the ballyhoo, he was in fact reminding us that increased CO2, being the best natural fertilizer, was reversing deforestation, as it has in fact shown to have done in many studies, most especially having an effect in the Amazon. The fact is that the beneficial effects of CO2 are rarely considered by most folk so they need reminded. There has also been very little debate about the contribution of water vapour to global warming being hugely greater than CO2; a plain fact which climate scientists acknowledge then fudge with pseudo-science. The models are known to be tuned by forcings to reproduce their initial hypothesis that CO2 causes the majority of global warming. There is other anecdotal evidence of stopped funding; for one source you could read Richard Lindzen's articles. There is even more evidence of the gravy train of government funding if you manage to link your research, in any way, to global warming. However I am personally not in favour of silencing anyone on this subject including Mr Hansen. It needs open, honest debate but we get instead squabbling, name-calling and alarmism based on theories with very little actual science. That makes it more of a religion than a science in my view. I reserve a particular curiosity about Steven Schneider who was predicting an ice age in the 70's and now predicts catastrophe the other way. Scientists publicizing themselves is too often the name of the game, not the science. I also find it annoying that 25 years ago we were told that the earth had heated up 0.6 C in 100 years and that 25 years later it would warm another 6 C. 25 years on we are still told the earth has warmed up 0.6 C and it will warm up 3 C in 100 years. Where did we get this exponential curve anyway? Why it's because CO2 acts as an amplifier to the H20. This assertion is only a guess along with many other such guesses in the models which have since proven to be wrong (eg the methane content falling instead of rising). I personally think there is no need for panic and money spent should be in developing alternative fuels, which if peak oil is correct, will be needed anyway. This is probably the only instance where I agree with George Bush.

[JohnDewey]

Mark Thoma: "Thus, the poor do a bit better overall under socialism, but most people do not fare as well as they would under capitalism."

Where have the poor done a bit better under socialism? in Cuba? in the former USSR?

Mark Thoma: "it may be possible to make everyone better off and nobody worse off by moving from socialism to capitalism, though it would take some redistribution of income to the poor. That we don't do so is a political choice"

We don't do so? Is there a capitalist nation in existence today where income is not being redistributed to the poor?

In the most successful capitalist nation on earth, income is redistributed involuntarily. We collect billions from the wealthy and distribute to the poor through: the Temporary Assistance for Needy Families (TANF) Program; food stamps; EITC; Medicaid and other health programs; subsidized housing; and much more.

Additional income is also redistributed voluntarily. Charitable giving in the U.S. was $248.52 billion for 2004, according to estimates from the Giving USA Foundation.

Perhaps it would be more accurate to say this: "That we don't redistribute as much as some economists believe we should is a political choice".

[James G]

You seem to be mixing up socialism with communism.

I've been wondering how Cubans will react to capitalism when all those displaced persons come home and demand their land back. All of a sudden they'll have to pay rent instead of living rent-free and their pretty good free health care system will probably take a dive too. I guess it will be like Russia when communism collapsed which was an unmitigated disaster aided and abetted by US free marketeers. Not much of an advert for capitalism I'm afraid. Not that I'm a socialist, more a centrist on everything, but "there is no such thing as idealogical truth" to quote Alistair Cooke.

see
http://www.thirdworldtraveler.com/Central_Asia_watch/Wild_West_Goes_East.html

[dissent]

Lindzen was mentioned above, he is considered to be the most reputable of the "global warming skeptics". The skeptics are largely a bunch of energy corporate funded shills, and in terms of science not very reputable, but nonetheless, Lindzen is a serious fellow.

I won't go into the details here but a good expert blog on climate science is www.realclimate.org, and a good discussion of Lindzen's views is at http://www.realclimate.org/index.php?p=222.

[evagrius]

Mr. Dewey- You really need to look up dictionary definitions of certain key words- it would help in your argumentation.

As for the amount of money that you claim is taken involuntarily from the wealthy and given to the poor- it amounts, at most to about 25% of the total federal budget, ( that would include Medicaid and welfare).
I don't think it's that much.

[JohnDewey]

James G.: "You seem to be mixing up socialism with communism."

And why do you say that? I thought most politcal scientists and economists considered communism to be a variant of socialism.

Are you suggesting that the Union of Soviet Socialist Republics was not a socialist nation? I don't think its leaders believed the nation had achieved the pure state of communism as envisioned by Karl Marx.

I'll agree that some former Cubans, as well as conservatives, will not describe Cuba as a socialist nation. But many intelligent people do.

The title of an article in the Nov 16th edition of the Christian Science Monitor is "Cuba won't abandon socialism just yet". Is the Christian Science Monitor also mixed up, as you claim that I am?

A Miami Herald editor recently suggested that "perhaps the root cause of Cuba's workplace fraud is a flaw with its socialist system." Is the Miami Herald also mixed up?

[piglet]

"The attacks on economics get tiresome. The main thesis is that Adam Smith's invisible hand doesn't work, that the pursuit of self-interest is not guided by an invisible hand to the best societal outcome."

Mark, you have lost this point. "Theories aren't facts. Theories can be falsified by the evidence, but no amount of experimental work can ever confirm they are true. All science is, in this sense, based upon "faith and belief, not of fact, and hence theological." There's nothing unique about economics in that regard." Mixing up a theory that can be empirically tested with "faith and belief" is really a low point. One aspect of Foley's work is that he makes explicit some of the "theological" assumptions built into economic theory. If he is right, then those are assumptions that are never subjected to any kind of empirical test. They direct economic theorizing, they determine what questions and answers can even be formulated. The point Foley is making is a really important one. Economists absolutely need to get a graps of the philosophical foundation of science.

Mark about capitalism and socialism: "I was trained that I cannot judge which is better." You must be joking.

[Mark Thoma]

I may have lost to you, your 'beliefs' are clear, but don't concede it's lost generally. You start your argument from an assertion which makes it a bit hollow, don't you think?

Also:

"Mixing up a theory that can be empirically tested with "faith and belief" is really a low point."

I didn't do that. Maybe you can be a bit more specific. What "theological" assumptions of the standard model do you object to? I understand you will never be convinced, but what specifically is your objection to, say, the assumptions behind the derivation of a demand curve?

It's funny that you take me to task for preaching theology and use the fact that I won't make interpersonal comparisons of utility to make your point. Do you see the contradiction there?

[piglet]

Socialism means the socialization of the means of production. There are slightly different definitions of socialism, but please stop equating socialism with a social democratic welfare state. And no, France is not an example of socialism.

[anne]

Piglet:

'One aspect of Foley's work is that he makes explicit some of the "theological" assumptions built into economic theory. If he is right, then those are assumptions that are never subjected to any kind of empirical test. They direct economic theorizing, they determine what questions and answers can even be formulated. The point Foley is making is a really important one. Economists absolutely need to get a graps of the philosophical foundation of science.'

Precisely what Ernst Mayr spent the better part of the last century doing in biology with wonderful success. Mayr explained what was Charles Darwin's implicit philosophical base and differentiated the base from that of physics and chemistry and further delineated and expanded the base.

[anne]

Piglet:

"Socialism means the socialization of the means of production. There are slightly different definitions of socialism, but please stop equating socialism with a social democratic welfare state. And no, France is not an example of socialism."

Nice.

[Mark Thoma]

I can't speak for other graduate programs, but in my first year of graduate school we had to read all the classics on the philosophy of science as part of the micro sequence, and things directed specifically at economics like Friedman's methodology paper were part of the History of Economic Though course we all took. In addition, it was a continuing topic of discussion as we progressed.

The philosophy of science is not ignored - I can't speak for other disciplines, but I'd guess we pay as much or more attention to this than most (partly because this comes up again and again and again in various forms - there's really not much new here).

[piglet]

Mark, let's focus on Foley's criticism, and not on what I may or may not think. (I wrote a comment under "Thinking is hard" which expresses some of my thoughts about economics.) Also, let's be clear that Foley isn't simply dismissing economics, and he isn't implying that every economist is guilty of "preaching theology".

Let's try an analogy that you might like. Much of 19th and 20th century Biology have been criticized for its often crude determinism, a determinism that has spawned now discredited theories such as physiognomy and craniometry and has been used to justify now discredited policies such as eugenics and racial segregation. Genetic determinism is an often implicit paradigm underlying much of biological theory and research, even nowadays. It often determines how research questions are framed. Foley is talking about the basic paradigm underlying most of what is currently being practiced as "economics", and the often implicitly moral or political consequences that economists derive from it. These important questions cannot be adressed by saying that all theories are fallible.

[JohnDewey]

evagrius: "Mr. Dewey- You really need to look up dictionary definitions of certain key words- it would help in your argumentation."

What key words would that be, evagrius?

[kevin quinn]

I urge economists to read Foley's book. (By the way, "this guy Foley" is, for those in the know, an economist's economist, both early in his career when with Miguel Sidrauski, he pioneered in constructing GE models with money and non-convexities; and later, when he became, IMHO, a brilliant, and highly mathematical, Marxist economist whose take on Marx was idiosyncratic and provocative.) The new book is a marvelous example of a heterodox "radical reconstruction" of the history of economic thought that forces one to think about the big questions and the taken-for-granted (but historically shifting) backdrop of economic thinking. As for Adam's fallacy, my own view is related to, but not identical to, Foley's: There is an Adam Smith problem, I think, but it is not a conflict between altruism and selfishness in TMS and WN, respectively (not that Foley says this); it is a conflict between seeing people as a acting for the sake of the world, under the authority of norms that they both inherit and recreate (in some parts of TMS) and seeing people as rootless atoms of self-interest, to be shaped by proper institutions via carrots and sticks (in WN).

[anne]

Mark, I would never think of questioning the depth and breadth of your background. That you have read philosophy I took as a given. But, a biologist who had read philosophy might or might not find a relation in the thought of Plato or Aristotle to a research program. Biologists before Charles Darwin often found Plato a base, however. The base for Darwin was Aristotle, though biologists in general were decades in realizing the implications and only a century beyond Darwin were the implications methodically described.

[evagrius]

Mr. Dewey- read piglet's comments on socialism.

[Mark Thoma]

kevin -

Thanks.

[anne]

Kevin, agreed.

[JohnDewey]

piglet: "Socialism means the socialization of the means of production. There are slightly different definitions of socialism, but please stop equating socialism with a social democratic welfare state."

I've read that socialism does mean state or community ownership of means of production. But is it necessary for the state to actually own the farms and factories? Isn't it enough that the state simply exercise control of economic decision-making and distribution of profits? I've seen arguments that Germany's Nazis practiced socialism, even though private companies continued to own many of the factories.

Is it possible to use the term "socialism" to indicate the degree of control that a government exerts on the factors of production? As a government increases its power over private enterprise - through regulations, taxes, price controls, wage controls, etc - isn't that government moving toward socialism? Or is there a better term to describe the growing power that governments such as the Nazis exercised over capitalists?

I'm neither an economist nor a political scientist, and I would appreciate any help in understanding the terms we're using.

[JohnDewey]

evagrius: "Mr. Dewey- read piglet's comments on socialism."

OK, I did. But that doesn't explain why you feel I misused some word in my post.

evagrius: "You really need to look up dictionary definitions of certain key words"

Again, sir, what key words are you meaning?

[evagrius]

Mr. Dewey-

"Is it possible to use the term "socialism" to indicate the degree of control that a government exerts on the factors of production? As a government increases its power over private enterprise - through regulations, taxes, price controls, wage controls, etc - isn't that government moving toward socialism? Or is there a better term to describe the growing power that governments such as the Nazis exercised over capitalists?"

If one were to use your argument and stretch it to its logical limits, one would have to conclude that no government is the best approach.
Of course, one would also have to conclude that "government" would be some alien entity over which one has no control or influence.

[piglet]

"Is it possible to use the term "socialism" to indicate the degree of control that a government exerts on the factors of production?"

It seems the term socialism is so overused and abused that we better avoid its use unless the meaning is really clear.

"Or is there a better term to describe the growing power that governments such as the Nazis exercised over capitalists?" Capitalists also exercised power over the Nazis. The Nazis have even been described as a dictatorship on behalf of the capitalist class, although we should resist any oversimplification.

[JohnDewey]

evagrius: "If one were to use your argument and stretch it to its logical limits, one would have to conclude that no government is the best approach."

What argument is that, evagrius? Sorry, but the only things I see in my paragraph - the one you quoted - are questions about the definition of a word.

[James G]

Socialism clearly means different things to different people here. Socialism in the USA seems to mean communism to JohnDewey and his references but Thoma clearly separates socialism from communism. Piglet: In Europe, control of the means of production is commonly called Marxism, specifically to separate it from socialism which is itself now just regarded as nothing more than worker protection. Hence France is usually called a socialist state here, if not in the USA. So which one did Thoma mean? Social Democratic Welfare state is not a term I've ever heard used here perhaps because it's too damn long. "Welfare state" yes, by all means, but we have a welfare state IN the country, we don't describe an entire country as a welfare state.

[evagrius]

Mr. Dewey

"Is it possible to use the term "socialism" to indicate the degree of control that a government exerts on the factors of production?"

If that's your definition of socialism, then my argument is correct.

[James G]

I think the Nazis are pretty much regarded as fascists, despite the name. ie. they could control anything they felt like. Funny how that is so like communism or at least Stalinism or totalitarianism.

[georgist]

If one were to use your argument and stretch it to its logical limits, one would have to conclude that no government is the best approach.

Or that "socialism" is not a useful concept. What about national defense, public health, the rule of the law, contract enforcement and so forth - do these not count as "factors of production"?

Now, if you stick to privately created factors of production, then we can talk.

[JohnDewey]

James G,

I think Piglet's definition of socialism - ownership and control of the factors of production - is still the accepted economic definition of the word.

from Merriam-Webster's Online dictionary:
"any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods"

http://www.m-w.com/dictionary/socialism

a broader definition from Wikipedia:
"Socialism refers to a broad array of doctrines or political movements that envisage a socio-economic system in which property and the distribution of wealth are subject to social control.[1] This control may be either direct—exercised through popular collectives such as workers' councils—or it may be indirect—exercised on behalf of the people by the state."

http://en.wikipedia.org/wiki/Socialism

By either definition, Cuba and the USSR were certainly socialist nations. Cuba still is, though slightly less than two decades ago.

Although the Communist Party was in power in the USSR for most of the 20th century, I don't believe the economic system in place there met the economic definition of communism.

from Merriam-Webster's Online dictionary:
"1 a : a theory advocating elimination of private property b : a system in which goods are owned in common and are available to all as needed"

I think it was only the factors of production - not the goods themselves and not private property - that were owned by the Soviet government. If that's correct, then the USSR was not a true form of communism.

[evagrius]

georgist;

What are "privately created factors of production"?

( I'm thinking of such activities as strip mining, agri-business, coal emitting factories, producers that generate toxic wastes, etc; I'm also thinking of employers that cheat both employees and customers etc;).

It's a fine line, isn't it.

[JohnDewey]

James G: "I think the Nazis are pretty much regarded as fascists, despite the name."

I agree that Nazis' political system was fascism. But I also believe their economic system should be classified as socialism, under the broad definition from Wikipedia I provided in my last post.

Is it possible that we disagree because I am referring to economic systems - the capitalism of the U.S. and the socialism of the USSR - and you are referring to political systems - the representative democracy of the U.S., the totalitarianism of the USSR Communist Party, and the fascism of Nazi Germany?

[evagrius]

JohnDewey ;

How can you distinguish political systems from economic systems?

[georgist]

evagrius:

I'm thinking of such activities as strip mining, agri-business, coal emitting factories, producers that generate toxic wastes, etc.

Good point - these are all instances of the "tragedy of the commons", which arises from the private depletion of utterly unmanaged wealth, e.g. clean air, ecosystems, topsoil and the like. Never mind that the actual commons of England were locally managed; despite increasing demographic pressure, they never "failed" catastrophically until they were enclosed.

[James G]

JohnDewey
What a mix up. It certainly explains to me why most North Americans are so set against socialism if they are taught that it's much the same as what we would regard purely as Communism. Anyway I've told you the common usages here so you'll know when you visit.

[evagrius]

georgist- Given the "tradedy of the commons", what do you consider to be "private property" and its rightful use?
( I'm thinking of the "wise-use" movement in the U.S. which basically argues that I can do any damn thing on my land, never mind the consequences to anyone else).

[evagrius]

James G ;

Mr. Dewey is a victim of at least two or three generations of propaganda in the U.S. fixated on the moral sanctity of wealth accumulation without associated moral obligations and "property rights" which supersede any public need or consideration.

[Lafayette]

JG: "It certainly explains to me why most North Americans are so set against socialism if they are taught that it's much the same as what we would regard purely as Communism."

Talk about "conventional wisdom".

Most Americans equate welfare with socialism in a knee-jerk reaction. In fact, they haven't the foggiest notion of what a "social contract" is and the benefits of minimum guarantees to elemental human rights. (No "elemental human rights" does NOT mean just "habeas corpus". The world is way beyond that.)

The Clintons tried to pass the bitter pill with "safety net", but even that wouldn't do. The idea of heroic self-sufficiency is ingrained in the American psyche.

It's an uphill battle to change mentalities. The Dems have their work cut out for them.

Worse, and I suspect it is Hollywood's fault, is the recurrent image of America as an aggressively competitive nation. Television screens worldwide are flooded with images of the eternal battle between good and evil with, certainly, good perpetually triumphant. There are no gray nuances, the world is black and white.

And, the images square well with another icon of the "Amurikun way of life"; that of being Number 1, the winner who takes all, "my hero".

Balderdash.

[John H. Morrison]

Water vapor may be a better greenhouse gas than CO2. However there are two fundamental differences: Water in the atmosphere often forms cloud, which reflect sunlight very well, and water naturally rains out of the atmosphere. CO2 does neither. CO2 will stay in the atmosphere unless something pulls it out.

Richard Lindzen is an Environmental Creationist: he lies (or bull-hockeys) to the public about climate science. He is one of a handful of famous scientists who are the target of my warning: there has to be a special place in hell for scientists who lie to the public about science.

I don't really wish to rewrite or cut-and-paste from my own post elsewhere, especially when I have to get up and work tomorrow, so I will link to my earlier article on Lindzen: http://www.tpmcafe.com/node/30137

I wrote it after Tim Lambert caught him brazenly cherry-picking data in support of a blatantly false conclusion for his audience: Link to article

[James G]

The bias in climate science cuts both ways. I can decide to join the movement, find a natural disaster, fires, floods, heatwaves, hurricanes, etc which are usually unpredictable events, then I link it to global warming, get a grant, write a paper which really proves nothing and goes through on the nod because it is regarded as 'good science'. Crucially I add at the end of the paper that more research is needed. I am then on the gravy train for life because nothing can prove or dispove my hypothesis; I need to keep studying it. And everyone loves me for saving the world. Contrast this to the skeptic. He ignores this gravy train and decides to publish the opposite view. There is little research funding available for promoting beneficial effects of global warming. So he may take money from the oil industry which he may get. Meantime anything he writes will be ignored because he has the mark of oil on him. He is called a denier with all the holocaust connotations. He is blamed for causing the deaths of unknown millions of unborn poor people. He will be personally abused (per Lindzen and Bellamy), probably hounded out of several positions of influence (like Bellamy), will not be welcome at any engagements except conservative think tanks which further alienates him. It seems to me that anyone who goes the second way must really believe in what he's doing because of how difficult it makes his life.

See your comment above. "there has to be a special place in hell for scientists who lie to the public about science". So typical. Scientists are wrong all the time. it's part of science. The original GW models were wrong by several degrees 25 years ago. The current models assume methane is rising when it is not. They failed to predict that 50% of the CO2 was absorbed by the sea. Schneider was predicting an ice age in the 70's. Everyone gets it wrong and many are far too alarmist on both sides. This ridiculous and pointless abuse against decent men has to end. Alternative fuels are needed regardless of cooling, warming or whatever so let's spend money on that instead of trying to link every natural disaster to global warming. let's take that 5 billion GW budget and clean up our polluted coastlines and build higher sea walls and levees. The oil companies too are involved both ways. Shell are researching many alternative fuels. BP with Tata are making huge strides in solar panel technology. They are not the enemy; they are part of the solution. We need to work together.

[James G]

"CO2 will stay in the atmosphere unless something pulls it out."

It is pulled out all the time. CO2 is a natural fertilizer. There is less CO2 in the atmosphere than expected because the excess is being absorbed by the sea, crops and foliage. The more the CO2 concentration, the better the growth. It is regenerating the Amazon from it's previous deforestation. If you don't know this then you are not qualified to speak about CO2 at all.

[georgist]

The idea of heroic self-sufficiency is ingrained in the American psyche.

Which is deeply ironic, given that such countries as Hong Kong, Taiwan and South Korea are so much better at "heroic self-sufficiency" than America is, despite their culture emphasizing fealty and authority rather than competition.

[JohnDewey]

James G. :"I've told you the common usages here so you'll know when you visit."

Are you the owner of this site? If not, why should I accept your definition rather than the one provided by Piglet? or the one provided by Merriam-Webster?

Has Professor Thoma provided his definition for the word "socialism"?

I've provided support for my definitions of communism and socialism: links to the Merriam-Webster Online Dcitionary and to Wikipedia. Can you provided links to any such sites where socialism is defined? Can you provide reference to a recent economics text in which socialism and communism are even defined?

I suspect our different opinion about the term "socialism" may reflect the era in which we were educated. I am probably older than most commenters on this blog, and my formal education ended nearly 30 years ago.

I think for many decades economics students were taught the definition of "socialism" to be the one still provided by Merriam-Webster:

"collective or governmental ownership and administration of the means of production and distribution of goods"

More recent economics texts - perhaps the one that you used in college - may not even provide a definition for the word. In their 2001 edition of "Principles of Microeconomics", Robert Hall and Ben Bernanke distinguished economic systems this way:

capitalist, or free market economies - "the people decide for themselves which careers to pursue and which products to produce or buy"

centrally planned communist nations - "a central bureaucratic committee established production targets for the country's farms and factories, developed a master plan to achieve the targets, and set up guidelines for the distribution and use of the goods and services provided"

mixed economies - "goods and services are allocated by a combination of free markets, regulation, and other formas of collective control"

It appears to me that every major economy in the world today meets the last definition. Certainly the U.S. is closer to the first definition than say, Cuba or China. But Hall and Bernanke did point out that "there are no pure free market economies today".

[James G]

"why should I accept your definition rather than the one provided by Piglet?"

I wasn't suggesting that. Keep whatever definition you want. I see now that there is a cultural difference in Europe and the US, regardless of the dictionary. But if you say to some Europeans that socialism is much the same as communism he may be either be very upset or he may think you are an idiot. It's nice to know the cultural differences to avoid a gaffe don't you think? Frankly I don't think that even the Conservatives here accept the dictionary definition, which frankly hasn't kept up with the times. Again I'm talking political, not economical definitions. Maybe we could agree to call it modern socialism, since no socialist party in Europe believes now in controlling the means of production, just in controlling the common infrastructure.

[James G]

Wish I'd written economic rather than economical.

[JohnDewey]

James G: "Again I'm talking political, not economical definitions."

To me, that's the important distinction. The political term "Communist Party" means something very different than the economic term "communism". The political terms "Socialist Party" or "Socialist Workers' Party" mean something very different than the economic term "socialism". I think that's the point piglet was making earlier.

I'm still not sure which definition Professor Thoma meant when he said "let's focus on capitalism and socialism." As he is an economics professor, I had assumed he meant the economic form. As far as I know, that's the Merriam-Webster definition, which I'll repeat:

"collective or governmental ownership and administration of the means of production and distribution of goods"

But only Professor Thoma can clear that up, right?

[James G]

"I wrote it after Tim Lambert caught him brazenly cherry-picking data in support of a blatantly false conclusion for his audience"

I looked at that link. There were as many people saying Lindzen was right as that he was wrong. Some consensus. Furthermore, those saying he was right wrote a lot more intelligently and less abusively than the others. One thing no one mentioned is that if the graph started at 1945 it would show cooling from 45 to the 70's which would make it a lot different. Now that's cherry-picking. The same cherry-picking has been done on the hockey-stick tree-ring and the Vostok data where they tack on totally different data sets. This technique is only valid if there is a correlational overlap. They could have done that because they had the data but the 45 to 75 cooling trend disagrees with the overall warming trend they were trying to sell. How dishonent of them, no? Furthermore the tree-ring proxies stop at 1980. If they continued them to 2005 do you think they would validate the other tacked-on graph. I'd guess no but there's no need to guess: They should collect these samples and update the graph. They won't though; they are too full of their own self-importance.

[James G]

I'm still not sure which definition Professor Thoma meant when he said "let's focus on capitalism and socialism."

I now think he meant Piglet-style socialism but that's not too important because in the UK we have had widespread control of industry pre-Thatcher and almost complete privatisation post Thatcher. I'd say that the poor haven't become very much poorer or richer due to the change, neither have these industries become intrinsically better (in fact some have disappeared altogether). The more important distinction is whether Prof Thoma thinks Cuba and USSR are communist or Piglet-style socialist. I'd guess he'd say the former, which makes a big difference.

[JohnDewey]

James G: "I'd say that the poor haven't become very much poorer or richer due to the change, neither have these industries become intrinsically better (in fact some have disappeared altogether)."

One ecoomics text I was reading last night - the Hall-Bernanke one, I think - pointed out how dificult is the transition period between one economic form and another. They specifically mentioned the Soviet Union, which attempted a quick change from socialism (or central ownership and planning) to capitalism. Among the problems I remember reading about were: protection of property rights; liabilities of the former welfare state; and enforcement of contracts.

I think it is unrealistic to expect grand changes in just a few years when a nation casts off an economic system developed over decades.

[evagrius]

"protection of property rights; liabilities of the former welfare state; and enforcement of contracts."

Those take "government" to enforce-right?

[James G]

"I think it is unrealistic to expect grand changes in just a few years when a nation casts off an economic system developed over decades."

Yes but I'm talking about 20 years now. There were no significant change after privatisation here except that now the UK is a nation who largely makes money out of money rather than by making things but for the poorer (they're not really poor) life hasn't changed too much. Mind you I've been out of Britain for 8 years.

Anyway in my first reply to you I noted that the USSR/Russia transition was bungled by the World Bank with its free-market dogma. At least I read that here:
http://www.thirdworldtraveler.com/Central_Asia_watch/Wild_West_Goes_East.html

I am a stong believer in experience over theory.

[James G]

John
i Can't seem to link that article properly but I think you'll like it. Last bit is:

Wild_West_Goes_East.html

Maybe you can cobble it together with the first bit

[cm]

evagrius: "If that's your definition of socialism, then my argument is correct." -- No, that would be "your interpretation of my argument", as we are already splitting hairs over terminology :-).

And even in my ex nominally-socialist, ex home country, there was (small-time) private enterprise, mostly in specialty trades, although they were mostly grandfathered-in outfits from prior times, and private homeownership. Entrepreneurship and initiative were kept under a tight lid as in every top-down managed command system (compare most "capitalist" corporations). My take is that the powers that be recognized they better not try to replace them, or perhaps they were too small-time to bother with. Anyway it was no free society, and even private entrepreneurs had their prices/rents (and preference in access to materials) regulated by the state. For example, rents were limited to nominal amounts not allowing much upkeep, and the inventory showed it.

[Adrasteia]

How annoying - a slam with no supporting argument or data. This kind of argument by analogy doesn't belong here! (Corporate shills, be gone.)

What's really annoying is that climate scientists scream corporate shill when you tell them to perform regression testing on their data.

Go find any model that has been able to reliably predict the last ten years of climate change using previous samplings. I'll wait.

[JohnDewey]

James G.,

Thanks for the interesting and informative link.

[piglet]

This is really a digression, but I think we will not agree on what Socialism is unless we agree on what Capitalism is, since all socialist movements historically have aimed at overcoming capitalism. Nowadays, of course, socialist (or social democratic) parties have dropped anti-capitalism and are content to ask for reforms within capitalism - regulation (that most honest economists recognize as indispensible for the functioning of capitalism anyway), redistribution (on a very moderate scale), social welfare. Social Security was actually established for the first time in the German Empire in the 1880s, and Bismarck (a deeply conservative monarchist) was definitely not a socialist. That American conservatives nowadays loathe these policies and try to discredit them as "stalinism" or whatever is a rather sick joke of history.

[evagrius]

piglet- That's right. The old terms don't work too well and we don't have new ones.