Dismal Science Redeemed: Where to Go from Here

 
 

How and why considering distribution will yield a complete economic science. The second in a two-part series.

Having considered the historical genesis of the elimination of personal distribution as a factor in the science of economics in the first part of this article, one might wonder why it matters, or what harm it causes. Consider Harvard-educated Yale Professor David R. Mayhew’s highly influential and widely acclaimed book Congress: The Electoral Connection (1974), published by Yale University Press. The book’s underlying thesis—and assumption—is that congressmen are “single-minded seekers of reelection.” With this starting point in place, Mayhew can then engage in empirical research and interpret his findings accordingly. Not surprisingly, all of the activities that congressmen engage in—advertising, credit-taking, and position-taking—can be accounted for, in his model, as means to the end of reelection.

Or consider the work of Lee Epstein and Jack Knight in what is viewed as the most important book on judicial behavior in the past generation, The Choices Justices Make (1998). In explaining the causes of justices’ behavior, Epstein and Knight write, “Among the most important of these is the primacy of policy preferences; that is, judicial specialists generally agree that justices, first and foremost, wish to see their policy preferences etched into law. They are, in the opinions of many, ‘single-minded seekers of legal policy.’” While policy preferences are the most important determinant, according to Epstein and Knight, they go on to show how Justices act strategically, given the institutional constraints of the Court and other branches of government, to get their preferred outcome.

Both of these examples, from Congress and from the Court, show the insufficiency of the reigning models of political science. They are either simply false, or they’re tautological. Anyone familiar with elected officials, or who pays any attention to electoral politics, knows that there are differences among politicians. Some really are single-minded reelection seekers. But some aren’t. Some take positions on controversial issues that cost them votes, and they do so knowing that it will cost them votes. Are the actions of a Rick Santorum or Sam Brownback or, for that matter, a Joe Lieberman, best understood as rationally selected means to the end of reelection? Or might some politicians take positions on policy that they truly think best, consequences be damned? This is an empirical question. And an empirical science can answer it only if it does not start by assuming an answer.

So, too, with the Court. Without a doubt, there are some justices whose behavior has quite explicitly revealed that their loyalty is not to the Constitution, but to the policy outcomes they prefer. But is this the best explanation of Scalia’s vote to uphold the constitutionality of flag burning? Might Justice Scalia and Citizen Scalia vote differently if it came to a question of the current constitutionality of flag burning, and the question of whether to amend the Constitution to prohibit it? Again, the only political science that can tease out when a justice is deciding cases to advance a policy preference and when a justice is deciding cases based on his best reading of the Constitution will be one that doesn’t assume that all justices act to advance policy preferences. Insofar as good constitutional law is simply treated as a “legal policy” preference, then the theory simply becomes a tautology; the input and the output of the theory contain the same exact variable: justices decide cases according to how they think cases should be decided. This is, of course, no explanation at all.

I mention these two examples from political science to show how similar faulty assumptions lie at the heart of economic science (which views man as a “single-minded utility seeker”), and thus John Mueller’s Redeeming Economics: Rediscovering the Missing Element can profitably be read by many social scientists seeking a cure for what ails their disciplines. Mueller, following Gary Becker, notes that most modern economic theory assumes that “consumers derive satisfaction or ‘utility’ directly from products that they purchase in the market from business firms and that in demanding such goods, consumers seek to maximize their satisfaction.” Mueller then discusses Becker’s helpful modifications to this theory. But with or without modifications, Mueller argues that the theory is incomplete, for the choice of goods as means does not tell us whom the goods will be chosen for as ends. Insofar as economic theory addresses the issue of ends at all, it pushes it off as if it were a normative question.

But this question cannot be removed from any descriptive theory, for an adequate theory needs to provide an analysis of the ends chosen. As Mueller writes, “Neoclassical economics does not provide a coherent, empirically verifiable description of how people actually choose—rightly or wrongly—to distribute the use of their resources, whether as individual persons, as members of a family household, or as a whole society under the same government.” Insofar as contemporary economists have tried to answer the question, they “have tried to deduce final distribution from utility—in effect, to argue that the economic means determine the economic ends.” But as we have seen from the above examples in political science, this “approach relies on circular logic, and its hypotheses about final distribution are either empirically false or not falsifiable [i.e., are tautologies].”

That capitalism breeds a culture in which everyone is a self-interested utility maximizer is not a conclusion that good social science has taught us, for it’s an assumption built right into the foundation of the economic theory. So it should be no surprise that the popular presentations of the theories conclude that businessmen are greedy, self-interested, and concerned only with the bottom line: How could the science, given its starting assumptions, conclude otherwise? But whether all businessmen are greedy or not, in fact, is an empirical question. And to answer it, one will need to employ a methodology that actually considers and investigates distribution. That is, a sound philosophic anthropology reveals that “a complete description of economic behavior has always required both a ranking of persons as ends of economic activity—the distribution function—and a ranking of scarce goods as means—the utility function."

Mueller’s discussions of Augustine’s theory of distribution are perhaps the most important contributions of Redeeming Economics. He praises the scholastic theory of economics because it can be formulated as “a set of economic equations” that is “logically complete,” “empirically verifiable,” “purely descriptive,” “valid at every level of analysis,” and, therefore, such that “the outline itself never changes in the least.” But this is possible only with the reintroduction of distribution. Augustine’s key insight was that, no matter what, “every human does, as a matter of fact, always act with some person(s) as the ultimate end or purpose of action.” While Augustine’s normative teaching about the proper ordering of loves sought to guide people to make the right choices in selecting God and other people as ultimate ends, one shouldn’t overlook the reality that all of our choices, right or wrong, place someone as the end of our actions.

Economic science goes wrong in assuming that “every human acts solely for him- or herself. That is precisely what each person is free to decide.” As Mueller argues, “each of us has not only a scale of preferences for instrumental goods as means but also a scale of preferences for persons as ends of our actions.” With this understanding in place, Mueller can develop his modified Augustinian theory of gifts, exchange, and crimes. Whereas contemporary economics reduces all human activity to exchanges, Mueller argues that we make gifts towards those we particularly love, commit crimes against those we fail to love, and make exchanges with those in between.

The crucial distinction is one between benevolence and beneficence. While we are called to love our neighbor as ourselves, we are not (because it would prove impossible) called to love our neighbor equally with ourselves. Mueller argues that, for Augustine and Aquinas, there are “two ways in which we can love our fellow man: benevolence, or goodwill, which can be extended to everyone in the world, and beneficence, or doing good, which cannot.” Because our goods are scarce resources, we cannot be beneficent with everyone; we have to prioritize certain people (ourselves, our families, our immediate neighbors) to be the objects of our economic actions. As Augustine taught, “Since you cannot do good to all, you are to pay special regard to those who, by accidents of time, or place, or circumstance, are brought into closer connection with you.” At the same time, we can be benevolent to all by respecting their wellbeing in refraining from causing harm (in economic-speak, in refraining from giving them a negative value on the distribution scale).

There is too much in the many pages of Redeeming Economics to be discussed here. In addition to his discussion of the history of economics, Mueller insightfully applies his neoscholastic economic theory to topics of personal economy (the “mother’s problem,” homicide, and the Good Samaritan), domestic economy (discussions of marriage, childbearing and rearing, lifetime family earnings and spending), and political economy (discussions of infant industry, unemployment, and inflation). The book closes with a short but insightful consideration of “divine economy” and the three different worldviews that underlie classical, neoclassical, and neoscholastic economic theories. Two of Mueller’s applied discussions merit particular attention: abortion and crime, and parenthood and population.

In 2001, John Donohue and Steven Levitt claimed that “legalized abortion appears to account for as much as 50 percent of the recent drop in crime.” Mueller writes that Donohue and Levitt’s theory followed the “economic approach to human behavior,” based on “a highly restrictive set of assumptions to reduce human behavior to the choice of means—a maximization of ‘utility’—but also gratuitously redefines utility as a synonym for pleasure.” Investigating the same crime data, Mueller proposes to use his “human approach to economic behavior” to better explain the phenomenon by considering distribution based on “preferences for persons” and utility as our “order of preference for economic goods as means for those persons.”

Donahue and Levitt make a straightforward argument: Women abort babies when the utility in aborting is higher than the utility in bringing the pregnancy to term; babies aborted now are less likely to commit crime 20 to 24 years later; and because crime is disproportionately committed by African Americans, and because African-American babies are disproportionately aborted, the first effect is magnified. Their theory, Mueller argues, does not consider why people commit crime, but relies on an “environmental” explanation that people in lower socioeconomic classes simply commit more crime. Having fewer of “them” will result in fewer crimes committed.

Mueller’s response entails both a broadening of the data examined (he goes back further in history to examine all of the 20th century’s crime fluctuations, and not just post-Roe behavior), and a deepening of the reasons examined. He notes that the data do not quite fit the story Donahue and Levitt tell about abortion and 20-year-delayed crime rates, but that the data do fit current rates of fatherhood and current crime rates. What Donahue and Levitt failed to realize is that the same young adults who pressure their girlfriends to have abortions—or who otherwise act as absentee fathers—are the same young adults who currently commit crime. The distribution function of their actions, demonstrating a strong preference for themselves over love of their children, begins to show the psychology involved not in ranking means and utility, but in ranking persons and distribution. In other words, “those behaviors which involve raising the significance of the self relative to other persons (crime and other antisocial behavior) also should be positively correlated with one another.” Applying his thesis to what really explains the abortion data, Mueller argues that “since the vast majority of homicides are committed by men, and because not all biological fathers take responsibility for their children, we should see the largest opposite shifts in the rates of economic fatherhood and homicide,” for “the time devoted to committing crimes against others is a subset of time not devoted to helping them.” When Mueller empirically tests his theory, he finds that “over the sixty-five years for which we have data, there is a 90 percent inverse trade-off between the current homicide rate and the current rate of economic fatherhood.” He concludes: “both Augustine’s and Becker’s theories can explain the behavior of people who are selfish, but only Augustine’s can explain the behavior of people who aren’t.”

In a similar way, Mueller uses his neoscholastic economic theory to explain why people have children. Current economic thinking tries to explain fertility rates in relation to social spending by the state and to national savings, the idea being that people have kids for reasons of economic utility, and when there is great social spending and savings, children are less useful. But Mueller insists, and has the facts to show, that neoclassical economics cannot “explain anything so fundamental as fertility—the reproduction of human persons—without the element of economic theory that describes one’s preferences for persons."

As Mueller sees it, “people have children either because they love the children for their own sakes, or else because they love themselves and expect some personal benefit from the children (or some combination of these motives).” While government social spending and national savings might relate to the second reason, they do nothing to address the first reason. As an empirical measure of this, Mueller looks to weekly worship rates—a proxy to measure one’s preference for someone other than the self—for “whether the other person is God or another human being,” the decision to worship each week “entail[s] sacrificing scarce goods that could otherwise have been used for oneself.” The data show that “the rates of weekly worship and fertility are always positively related across countries, with relatively minor variation by religious denomination.” Once “purely selfish factors are accounted for, acting on belief in God . . . makes the crucial difference as to whether people reproduce themselves. It suggests that the personal gift of time and resources involved in worship is closely systematically associated with the personal gift of having children for their own sake rather than for the pleasure and utility of the parents."

Mueller knows that his explanation of fertility rates “is not the last word” on the matter. Rather he offers it “as a first effort in what promises to be a fruitful new program of research.” The same could be said for the entirety of Redeeming Economics. It repays reading and re-reading, and its discussions of historical, analytical, and applied topics will be invaluable for anyone working in economics, political science, and philosophy, especially those working at the intersection of the three: political economy. For those concerned with normative questions of how we ought to structure of common economic life, an adequate description of that economic life will be required. But that description can be given only by recovering a more adequate anthropology. Utility must be seen at the service of persons. Utilitarianism fails both as a prescriptive and descriptive theory. And John Mueller has helped us all to “rediscover the missing element.”

Ryan T. Anderson is Editor of Public Discourse.

 

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