Chaos By Design: Economics Without A Heart

Recently I was faced with the challenge that a lot of political economists face. When we discuss with economists, conventional economists dismiss our inclusion of morality and values into economics as being 'unscientific' and sullying their discipline.

That is, I'm talking about economists of the neo-classical ideology, or at least who solely use methods of inquiry established by that system that infamously has invented such conventions as general equilibrium theory and other fun concepts that legitimise right-wing politics and economics.

I've been engaged in a lot of fiery discussion over at The Visible Hand in Economics, a group blog that is relatively conventional in it's economic approaches but provides a lot of interesting and sometimes quite humorous economic analysis of very unconventional subjects.

In a recent post of theirs, they intentionally or inadvertently let slip what is the current problem of economics

the idea of equity is normative - ergo why economists ignore it and focus only on the aspects of ‘efficiency’'.
...
The economists of yesteryear had a good point when they split up objective measures of efficiency from subjective measures of equity, and it is a point we economist can forget only at our peril.

To the blog's credit, they do make an argument to include equity calculations alongside efficiency and argue that it would be a positive thing to integrate into their economic models.

Nevertheless, it is an incredibly disturbing admission by people who are experienced and well-educated economists to those of us who hold suspicions. How can we counter this relatively recent trend of mathematical economics that somehow posits efficiency to be able to be defined objectively and equity somehow being a 'subjective' measure?

It's a trend that Adam Smith, a pioneer of 18th century political economy, actually scorned in his works, strongly believing in the incorporation of morality and Government intervention with the operation of the 'invisible hand' in relatively free markets.

Political economy looks at problems it faces in societies two ways: an economic understanding and a political/social/moral one. Both are, in a practical sense, unscientific (shouts start coming from the economists at this point), as they rely on subjective and objective measures to analyse and derive results and conclusions.

After all, any 'rational' observer would see that economics and politics/society/morality are fundamentally intertwined. They're really more or less the same thing, just different aspects of a total whole that is humans living together in communities, in countries and as being citizens of Earth.

It's a bit like using both your heart and your brain to solve a problem. Unlike mainstream economics that The Visible Hand in Economics defines, political economy has historically been much more mature and expansive in it's understanding of economics for obvious reasons.

And indeed, political economy is a discipline that has existed for more than three centuries. Economics in it's present form really has only existed as an academic specialisation since the early 20th century. Of course, this isn't a measuring contest and the age of a discipline does not necessarily give it credence, but it is particularly ironic considering the self-righteous way economists believe their set of analytical methods are utterly infallible within their academic context.

It's for these reasons that I know, and economists themselves do too, that deep inside their callous rejection of factors related to equity as being 'subjective' and factors related to efficiency as being 'objective' is ideology.

It is a neo-classical ideological assumption dedicated to the idea of the free market, a technocratic and anti-social solution to the tough problem of seeing the awful tragedies and pain that the operation of unfettered capitalism causes.

It's a façade of statistics, mathematics and 'empiricism' covering what really is nothing more than a normative belief that equality/equity is irrelevant and a hindrance and embarrassment to the operation of a perfectly beautifully sculpted human creation that is widely known as 'The Market'.

Luckily those of us of the heterodox school of economics, for all our faults and the plethora of sorts of political economy that fit within our boundaries, do not reject equity as being 'normative'. I personally think it's incredibly important within my own understanding of economics, and when I look at an economic problem, I think that efficiency is just as important in equity in drawing up a solution.

In fact, intrinsically speaking, what is the point of talking about 'efficiency' when you're dealing with human subjects? For neo-liberals and many economists, it's a way of converting human lives, communities and entire societies into statistics that can be altered and dismissed by bureaucrats and such like under a veil of mathetmical legitimacy.