"Economics is the Dope of the Religious People"

This is from Joan Robinson. It's about using economics as an ideological defense of wealth. Keep in mind as you read this that it was written in 1936, not today.

A lot of the discussion is about tax cuts, and I was amused at the end where she says that even though her opponent wasn't clever enough to think of it, to be fair, there is a way a tax cut can affect employment. She then goes on to foreshadow supply-side arguments, then dismisses them as unlikely to have much of an impact in alleviating short-run economic difficulties.

The introduction to this section of the book where this essay appears (the fourth volume of Collected Economic Papers by Joan Robinson) says that "Keynes read the drafts and I cut out anything that I could not persuade him was correct..." And, though it doesn't relate to the essay that follows, given the charges that the traditional Keynesian model ignores inflation, this is an interesting statement (it is in reference to an essay called "Full Employment" in the same section), "It is certainly absurd to suppose [Keynes] was not aware of the prospect of inflation setting in when near-full employment is maintained for a run of years." Here's her essay, "An Economist's Sermon":

An Economist's Sermon: Economics is the Dope of the Religious People, by Joan Robinson, 1936: Consider the case of a man to-day who has an honest intelligence, a strong social conscience and an independent income.

His intelligence tells him that he has no particular right to enjoy a privileged position. 'Right' is a vague phrase. A doctor has in a sense a right to a motor-car because it makes him do his work better than he could without it. And if he uses it to visit his friends as well as his patients, no harm is done to anyone. But our man is too honest to try to persuade himself that his own comfort really makes very much difference to the amount of benefit that he does to other people. His conscience tells him that he would be doing a good act if he endowed a hospital with his wealth and worked for his living. But his inde­pendent income is not easy to give up.

He cannot keep all three - integrity of mind, a quiet conscience, and the privileges of wealth. One must be sacrificed. If he is a saint he sacrifices the wealth - but we will suppose that he is not. If he is a man of no definite religious creed he can keep his mental honesty and his income by sacrificing his conscience. He can say "I am a selfish individual. I don't pretend to have any better right than anyone else to a comfortable life, but I propose to enjoy it if I can."

But if he belongs to a definite religion this line of escape is impossible for him. Conscience is more precious than anything else. Without its approval he can have no peace. He will have to sacrifice his honesty of mind instead, and make up arguments to show that it is right for him to be better off than the majority of his neighbours.

Now, it is here that the economist is a godsend to him. The economist is a self-appointed expert. It is his business to know about these things. A man may have an honest and independent mind and yet take on trust the opinion of experts on a subject that he has not time to master for himself. If the economist tells him it is all right, then he can keep his integrity, his income and his conscience all intact.

One of the main effects (I will not say purposes) of orthodox traditional economics was to fill this want. It was a plan for explaining to the privileged class that their position was morally right and was necessary for the welfare of society. Even the poor were better off under the existing system than they would be under any other. There is a significant passage in the reminiscences of Alfred Marshall. As a young man, a mathematician and philosopher, before he had embarked upon economics, he began to be troubled by social conscience:

From Metaphysics I went to Ethics, and thought that the justification of the existing condition of society was not easy. A friend, who had read a great deal of what are called the Moral Sciences, constantly said: "Ah! if you understood Political Economy you would not say that."

Marshall himself did much to break down the doctrine that no matter how much poverty and distress there may be it is still true that all is for the best in the best of all possible worlds. But even in the system of economics as it was handed down by Marshall the main theme is still the justification of the existing system.

I will put forward ... examples of the products of traditional teaching: First, the doctrine that increased wealth of the propertied class brings about an automatic increase of income to the poor, so that, if the rich were made poorer [through income transfers], the poor would necessarily become poorer also. ... The whole basis of the argument lies in a simple confusion of thought.

But that is not the concern of our honest inquirer with capital of his own. He can take the word of the experts and rest satisfied. If the experts' arguments do not hold water it is not his business to put them right. And see how comforting their word is. If poor relief did the poor good, the awkward question might arise whether he ought not to contribute to the aid of the poor more than the State demands, or ought not to vote for a government that would demand more. But if even poor relief does the poor positive harm then he can go on enjoying his comfortable life without distress of mind. ...

My last example is taken from a letter to The Times of the Bishop of Gloucester. At the time of the "National Crisis" in 1931 it was considered necessary to introduce emergency measures to balance the budget. In the name of "equality of sacrifice" an addition was made of 6d. to the income tax and a cut of 10 per cent in unemployment benefit. In 1934, the budgetary position being favourable, the Archbishop of York published a plea in The Times that in the event of a surplus, the restoration of cuts in the allowances of the unemployed should come before any other concessions, including remission of income tax.

To his letter the Bishop of Gloucester replied as follows:

"1. 'Unemployment is more than a misfortune for those who are overtaken by it; it is a curse.' So he [the Archbishop of York] tells us. I agree, and therefore it seems to me to be the first duty of the Government to do all in their power to reduce the number of unemployed. It is recognised that one of the most fruitful causes of unemployment is excessive taxation, and in particular a high tax. I am convinced that nothing would ease the situation more at the present time than a substantial reduction of income tax, for it is very largely a tax on industry. We are none of us concerned with the discomforts of those, whether ourselves or others, who are reputed wealthy. But the experience of history tells us that it is always the poorer classes who suffer most from excessive taxation. If a man is compelled to dismiss a certain number of his workmen, it may diminish his profits or comfort, but it ruins the men dismissed.

"2. The result is still more the case if funds diverted from industry are used to increase the amount spent in supporting the unemployed, for all money spent in that way must be withdrawn from paying the wages of working men and will be expended entirely unproductively. It therefore leads automatically to increase the evil it is fighting against.

"3. What I particularly resent is the use of the authority of religion to justify a policy which I believe to be damaging to the country . . . There are generally two policies open to a nation: the one is popular, attractive, sentimental and ultimately harmful to those whom it professes to benefit, the other demands sternness and courage, but will in the end bring a happier time to the people of this country. That I should hope to see the Government adopt."

Stripped of the Bishop's forceful rhetoric the arguments seem to be these: That a remission of income tax would lead to increased spending by the taxpayers, thus increasing employment, while money given to the unemployed would have no such effect. The first paragraph of the Bishop's letter is somewhat obscure and I hesitate to attribute such an extravagance to him, but this argument was openly used by other correspondents on his side of the question.

Alternatively he may be taken to mean that, when a businessman finds that he has less tax to pay, he allots the entire addition to his net income to wages for an increased number of employees. It need hardly be said that this is not a convincing account of business practice. Unless market conditions improve the entrepreneur has no motive for employing more men, and if he does wish to employ more men his usual method of financing is to obtain additional credit. Out of the whole increase of net income to taxpayers due to a reduction of 6d in the income tax it can hardly be maintained that a significant amount will be devoted to building up increased working capital. The argument can only be made to sound plausible to the layman by dark references to the formidable Economic Law...

The Bishop's second point is not ambiguous. He is maintaining that a country which makes provision for its unemployed will suffer from more unemployment than a country which makes none. This is contrary to the "experience of history". For instance, one reason why Great Britain suffered less than the United States from the impact of the present (1936) world slump was because she was already provided with a scheme of public maintenance for the unemployed. Moreover, this argument is contrary to common sense. Suppose that a man is thrown out of work for some external reason, such as a loss of an export market to which his product was formerly sent. When he loses his income he must cut down his consumption and the loss of market is passed on to those trades which formerly supplied his needs. Here also there is unemployment and curtailment of consumption; fresh losses to home industry and further unemployment follow. The more lavish the provision which is made for the unemployed the less is this secondary loss of employment and the smaller are the repercussions at each round which follow from the initial loss. The Bishop's argument is without foundation either in fact or in logic.

It is only fair to say that there is one argument which goes to show that remission of income tax may increase employment. It may enhance the attractiveness to businessmen of schemes of capital expansion. This effect, in times of severe depression, it not likely to be very great, and it is a far less certain and powerful remedy for unemployment than an increase in the incomes of persons who are certain to spend all that they receive on immediate consumption. But however that may be, the Bishop's acquaintance with economic reasoning was not sufficiently great for him to hit upon this argument.

He concludes his letter with an emotional appeal, contrasting the soft and sentimental expedient of increasing the incomes of the unemployed with the strenuous and heroic course of remitting taxation to those "who are reputed wealthy".

But, if economics is the dope of the religious, the chief blame for the excesses of the drug addicts is to be laid upon the manufacturers of the drug the economists who have made it so fatally easy for the rich and pious to preserve an easy conscience by the sacrifice of their honesty of mind.

Comments

[Winslow R.]

"It's about using economics as an ideological defense of wealth. "

I'd say her essay chides economics for being used as an ideological defense of the 'concentration of wealth'.

I don't think Ms. Robinson has a problem with wealth.

Her problem lies with economists that promote policies that lead to the concentration of wealth, be they supply-side arguments or arguments for Taylor-rule based Fed policy.

Both arguments lead to wealth concentration. To defend either would offend Ms. Robinson.

[James Killus]

I've been trying to locate a quote, I believe it from J. K. Galbaraith, given to (I think) an Ivy League graduating class, or some similar gathering of privilege, to the effect that he sympathized with a group such as them, whose sensibilities were apparently so delicate that no measure was too extreme if it helped their peace of mind, as their tranquility was judged by his fellow economists as the only thing that stood between the economy and total collapse, and only their willingness to shoulder the burden of great wealth could possibly form the basis for a successful society.

Still, every now and then one wonders how the dog in the manger would fare if one burned down the barn.

[alphie]

A little respect for the greatest economist of all time.

He actually said:

"Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people."

Far more poetic than today's ham-fisted apologists for wealth.

[Lafayette]

JR: He cannot keep all three - integrity of mind, a quiet conscience, and the privileges of wealth. One must be sacrificed.

This is what Joan failed to imagine "could happen". With the right self-delusion, a privileged person CAN have all three. Just forget the context, the social markers of the community within which one lives and functions - then the context has no grasp on you. One becomes free of all moral obligation to it.

If a moral person, someone guided by moral absolutes, one is beset, perhaps unfortunately, with a conscience. That conscience gnaws away continuously at our integrity of mind with the question ... our privilege, after all, has it been really, truly merited?

This is not simple humility, but closer to fact. If we have inherited that wealth, then we must assume - forthrightly - that the fortune is unearned income. It's ours by parentage and not by dint of work. If we won the lottery, well that is the same conclusion - - unearned income. We were just lucky.

But, if we woke up one morning, even a bit groggy, and realized that, for instance, there is no common standard for a PC operating system, and we set out to develop and impose one ... and, by gosh, it's a humdinger that spins billions of dollars of wealth. Well, then we might have reason to show some pride in our accomplishment.

That context seems different, doesn't it? Well, does it? Let's look closer.

The billions can be considered earned income, for sure. But, if I were all alone on an island ... even had I discovered the alchemists recipe to turn beach sand into gold, what good would it have done me? What good inventing MS-DOS?

I, you, all of us ... we are nothing alone. We are sad little creatures fighting to survive. It is only in society that we derive a "raison d'être", a justification for our existence. It is the societal context that gives us the referential markers that determine the quality and direction of our lives.

We are one of a whole. As a part of social entity larger than just ourselves we become dependent upon it. It nurtures us, it schools us, it teaches us how to work; all of which allows us to survive better than had we been left all alone on that island.

We owe that social entity (the collective) a great deal. In fact, we owe it our very existence. Which is why whatever that entity has given us, which is well above what others have received, then, we have a moral obligation to share it.

[anne]

Thank you so much, Mark Thoma.

[anne]

There is no end to the shame of scientific deception through this Administration:

http://www.nytimes.com/2007/07/21/washington/21interior.html?ref=washington

July 21, 2007

U.S. Agency May Reverse 8 Decisions on Wildlife
By JOHN M. BRODER

WASHINGTON — The Interior Department said Friday that it would review and probably overturn eight decisions on wildlife and land-use issues made by a senior political appointee who has been found to have improperly favored industry and landowners over agency scientists.

The appointee, Julie A. MacDonald, resigned on May 1 as a deputy assistant secretary for fish and wildlife and parks, after an internal review found that she had violated federal rules by giving government documents to lobbyists for industry. The agency’s inspector general also found several instances in which Ms. MacDonald browbeat department biologists and habitat specialists and overruled their recommendations to protect a variety of rare and threatened species.

H. Dale Hall, the director of the Fish and Wildlife Service, said he had asked the agency’s regional managers to submit for review cases in which Ms. MacDonald might have inappropriately bent the process to fit her political agenda. Mr. Hall winnowed the list to eight instances in which he said he expected that her actions would be reversed.

“We wouldn’t be doing them if we didn’t suspect the decision would be different,” Mr. Hall said in a telephone conference with journalists. “It’s a blemish on the scientific integrity of the Fish and Wildlife Service and the Department of the Interior.” ...

[evagrius]

Thank you for the article.

Amazing that the basic arguments haven't changed in 70 years.
You'd think that there would have been some resolution by now.

Regarding Lafayette's point-

One of the constant tropes used in the U.S. with regards to "welfare reform" was "self-sufficiency". The point was to highlight how welfare reform should guide recipients away from dependence on the government towards "self-sufficiency".
I always irritated those using this phrase by pointing out how inaccurate a phrase it is.
Only one Being is "self-sufficient", God.
All of us, on the other hand, are dependent on each other to a greater or lesser degree, but inter-dependent none the less.
After making this point, the irritated ones always quickly moved on to other topics surrounding welfare reform.
Apparently, they had had very little philosophical education.

[ilsm]

An acquaintance is quite roman catholic, fairly well to do and quite liturgucal (a ritualized form of piety).

He explains the defense of accumulation by stating it is morally reprehensible to take from the rich.

He goes to pursuit of happiness as wealth was the happiness envisioned.

He is against "liberation theology" as above, as well as taxing rich people.

We have not discussed taxing payroll or income because work and earnings are not accumulative nor part of wealth.

Legalistic and theological thought also assuage the conscience.

"If I were denied my hoard I would be "harmed""; law and theology were designed to control the harm done by one to another in human affairs.

It codified nobility too.

[ken melvin]

Lovely. Thanks Prof. Thoma.

[anne]

http://www.nytimes.com/2007/07/21/washington/21interior.html

"The appointee, Julie A. MacDonald, resigned on May 1 as a deputy assistant secretary for fish and wildlife and parks, after an internal review found that she had violated federal rules by giving government documents to lobbyists for industry. The agency’s inspector general also found several instances in which Ms. MacDonald browbeat department biologists and habitat specialists and overruled their recommendations to protect a variety of rare and threatened species."

We really must understand the extent to which scientific deception and subversion of scientific policy has been part of this Administration from the beginning and in a way that historians have never before recorded. We must ask what this scientific subversion represents and why this has been so and so pervasive.

When I would joke over and over about the directive forbidding government scientists from mentioning polar bears, the seriousness of the problem might have been lost. But, the directive was real and repeated for emphasis and completely indicative of the approach to scien ce an scientists by this perverse Administration.

[Noni Mausa]

Evagrius said: "One of the constant tropes used in the U.S. with regards to "welfare reform" was "self-sufficiency". The point was to highlight how welfare reform should guide recipients away from dependence on the government towards "self-sufficiency".
I always irritated those using this phrase by pointing out how inaccurate a phrase it is.
Only one Being is "self-sufficient", God."

The trope is still annoying even if one assumes a more modest, Robinson Crusoe kind of self-sufficiency.

Look at the difference between the early part of the last century, versus the last couple of decades of it.

In the early days, kids would help the family by gathering branches or spilled coal off the railway lines, would go hunting squirrels or possums or rabbits, or keep a few chickens or a cow, even in big cities.

All those are right off the menu now -- with 8 or 9 out of 10 Americans living in cities, with heating shifted to natural gas, with fireplaces gone except for decorative purposes, with child labour (and cows in the backyard) outlawed, merely ordering people to be self-sufficient is rather like caging a bird and then telling it to feed its young as all its ancestors did -- pure cruelty.

Indeed, the easiest way for modern city folk to scrape along in self sufficiency, in the absence of achieving an oar in the economic trireme or having a plot of plantable land, lies in undertaking various forms of begging or crime -- that is, "pick up coal" from prosperous people who tried their best not to drop it in the first place.

As Screwtape said, "This is so obvious I'm ashamed to have to say it."

Noni

[evagrius]

ilsm ;

Your friens should read the "Fathers of the Church", namely Basil of Caeserea, John Chrysostom, and others.
He should read Aquinas as well.
Obviously he hasn't studied papal pronouncements either.

[anne]

[Notice the following startling assertion:

http://www.juancole.com/2007/07/june-attacks-in-iraq-at-all-time-high.html

July 21, 2007

Iraqi Government Services
By Juan Cole

Sheikh Ahmad al-Safi of Karbala, the representative in that city of Grand Ayatollah Ali Sistani, in his Friday sermon lambasted Iraqi government ministries for failing to provide services. He said he knew for a fact that the Iraqi government had only expended 1% of its allotted budget this year. (The Iraqi government is said to have over $20 bn in reserves, supporting al-Safi's charge). He warned of the rise in Iraq of new dictatorships that resemble the former one (i.e. that of Saddam Hussein).]

[ken melvin]

"He warned of the rise in Iraq of new dictatorships that resemble the former one (i.e. that of Saddam Hussein).] " Ah, Tolstoy was right!

[ilsm]

Evagrius,

It takes a lot of understanding to speak with a neocon of any religious bend.

[anne]

Ken Melvin, please explain the referemce to Tolstoy which interests me. I adore Tolstoy, and students are repeatedly taken with him.

[ken melvin]

Whilst he thinks he is driving the train, Bush is but being let blow the whistle.

[Adam]

A refreshing break from the 'money = success' mindset that has permeated American society.

So tragic that so many well educated people could easily & perpetually deceive themselves into such a comfortable, effortless unconsiousness.