Economics is always a philosophy of life, never one of death

What is economics? Is it a philosophy of death? No, it is a philosophy of life. Economics only includes the “allocation” of resources in support of life. There is no economics of death. Death is not an economic good that can be distributed fairly. Economics involves rational allocation. Just as there would be no point to irrational allocation, neither would there be any point to a theory of unfair allocation. So, all economic theories implicitly describe an allocation process that is fair.

     However, most professional scholars who have chosen to specialize in “economics,” pretending they know something, look for other ways to define or describe economics. They look for some other principle, but not fairness. So, the rule is to find some method for understanding economics allocation, and not fairness. What alternatives are available? It becomes the matter of what is left, to the “economics field.” The alternative, or the one alternative they decided to promote was that of self-interest. And in this way they achieved the goal: they found something outside of fairness.

A Curious Deception

The life that one lives under capitalism is not mere individualism; it is society, social, as much as any other kind of expression of human “socialness.” Those who claim the special character of an individualistic capitalism do so for a reason. They are afraid of the social, or of any way of life that involves more social responsibility than individual responsibility. These are merely two different ways of living. I am not saying one is objectively better than the other. A way of living that has more of the social quality is engaged in making its constituent members responsible for others. This is not the only way, however. The other way, espoused by many great Western intellectual figures, emphasizes primarily one’s individual responsibility. So there are these two trends. Both may provide viable ways of living, under specific circumstances. The trend towards capitalism is not a kind of individualism. Now, as to that kind of idea, the more individualistic kind of understanding of things, there are all kinds of justifications for this (which we can accept or not). But at the end of the day, one lives either in one system or the other. There is a system of shared responsibility and there is a potential, but probably not very current, system of potentially more individuatedness. Should the West have a system of social responsibility or one of individual responsibility? It is not ours to answer.

History has rendered its answer: social. Capitalism is in fact the answer that history has given. Capitalism, contrary to the received doctrine, a doctrine imposed on us by the very same capitalistic intellectual or cultural edifice, did not decide the case for individualism, capitalism only claimed to, and so over the years what we have been subject to is a curious deception.

Economics has various “schools” with ideas on "information." There are economic players, or participants. The schools of thought agree that the economic players obtain information. Do we obtain information? No doubt. Sure we do. It is not in doubt that economic theory covers information, as a theoretical component of its understanding. That is for sure. We all know that getting information is important. Information is in there someplace. I don't doubt it. Getting information is important. While getting the right information is important, there are times when we do not get it. There is more to it, somehow. There must be something else. This something else is, however, not usually explicitly spoken about. What is it then, that is not mentioned, when we focus on "information"? The other element is, perhaps, ignorance! The subject of ignorance should not be ignored. This subject may be divided up as follows. Here is how we do this. We can make a division of ignorance into intentional and unintentional, in the sense that one may be keeping the other people ignorant on purpose – or not. That makes two kinds of ignorance. The sense intended is that you either did it on purpose, or you did not – you knew what you were doing or you didn't. (Maybe it just happened that way.) You did not in the later case restrict information intentionally. That's the idea.
     It can be intentional, as in the case where a seller benefits from some of that good ol' ignorance – no doubt – then, the seller wants it, wants the customer to be in the dark. We may now consider that this is not really customary human behavior. We do not like to keep other persons ignorant in general. (This has some important implications we will omit here) On the other hand, we need to be aware of this. We have to allow it in. It is the “study” possibility.  

     If we do not study how ignorance works in economic relations, Well: Then, we are ignorant!

This discussion becomes relevant in the case of mercantilism. This is understood as a system where we have an entire country that tries to bring benefit to itself—it uses a certain strategy in getting profit out of its trade life. There is something peculiar about the study of this practice as other countries, not receiving this "mercantilist reward," could perhaps want to know about it. Back in what one historian assures us they used to call “this manor of England,” a phrase he says was widely used, if a man back then were to, say, publish a book on mercantilism? He might give the whole thing away! The trade partner is the other country (usually it supplies raw material?) – which merely has to read the book. This, I would think, brings us back to the point about intentional, or unintentional, ignorance, as an aspect, for both the study of, and the practice of, economics. ("Enquiring minds want to know" and all that...)

     This shows that ignorance was important under mercantilism. I am concerned with ignorance in economics more for today. But, if ignorance was so important under mercantilism, and we note that it was so, at the country level, why could not ignorance be just as important in the next, upcoming phase of the human economic and social system, as it evolved in Europe? But, this time – in this system – on the individual level. Let's now say that in this system (the current one), trade should be for the benefit of everyone, the entire society—that does not seem unreasonable. In that case, we get the situation where ignorance is important to the workings of the system. We get to a situation that can only be described as a situation where ignorance is essential to the system. What we get, then, is a system that not only depends on information, or knowledge, and we can include the system's ideas about so-called “perfect information,” but also depends on ignorance, and thus, ignorance is also necessary, for its proper working. 

     And we hardly talk about this, of course. But are we being ignorant intentionally, or, unintentionally?

"Welfare" in Conventional Economics

If we say there are books on economics, that sure is the truth. There are such books, indeed there are some of  these, and if we look at them we would find out more about what is being discussed. (This a rarer idea than you, the reader, might think it is.) So, I picked out this one book, you see. It is old. One term of discussion that I noticed was “the principle of welfare,” or “social welfare.” OK, then. But what does “welfare” mean, both back in 1928, and today? I would think that in general it might mean something like the overall good or good of the society (implies "whole society"). That would be a kind of basic idea t hat a person might have, and rather a broad idea. But instead what I find is that these writers think that it is a narrow idea, a “principle,” of welfare, which in practice means, “concept.” The concept is going to be used in the area of economics discourse, so one is subsumed to the other, and hence “welfare” becomes just a concept, and so, not much different from any other. Now the "welfare economist" need to slot it in. It has to be slotted in somewhere, within economics, which is to say within that discourse.  

     But let us suggest a much different way to look, which is to surmise that that in fact is economics itself is all about. So, that is different. Now we are seeing the same concept more broadly. There are two possible views that I can see in this regard. We can narrow it down to two, at least. One is that economics is for individuals, with no social welfare involved at all. This is a common enough idea that one encounters (and, in my opinion, wrong). The other idea would be what I already mentioned, that it involves, fundamentally, the whole society. If we were to hold these as two separate, distinct views we might be able to come up with some useful observation or analyses. But this kind of practice of slotting in something called "the principle of welfare," or this practice of making something called "social welfare" a separate concept just seems to be a part of the overall project of social oppression. This is the project these persons are always carrying out! Aren't they? Anyhow, there isn’t much of much interest here and this, naturally, is why we do not read so many of these books. We read the clever, new attempts at it (guys like Tyler Cowen).

     But it was gathering dust on the bookshelf, here at Roosevelt University. Hey, I thought I’d give it a try. I am curious like that. If “welfare” becomes a concept, then where to fit it in economics? This seemed to be the author's concern. This is the kind of thing they go around and around with. I observe that, f you are trying to do something that cannot be done, this may just preoccupy you for a really unlimited amount of time.

     Better to say that the social welfare is the purpose of economics—it is very basic. A person wants to be alive, so s/ he eats, or builds a tent. A whole society wants the same, so the society generates some kind of economic system. So, I would offer  that social welfare is a lot more closely related to economics itself than just being merely another concept, which we may endlessly screw around with, trying to fit the precision phrase ("social welfare" and "the principle of welfare" were phrases I memorized) into one’s intellectual plate, at university! When we take something as basic as the common good or the social welfare, should we just turn it into another ordinary concept? I think we surely end up with just a basket of particulars. This may then pre-occupy us, and for way too long. 

     And it is certainly not worth it to go back to the shelf. Nah... On a quest for the exact title/reference? (I won't bother, but I can say it is a rather oldish book, and it is HB 34 –something; because, it was next to another book, by Coates. But that's another story, now isn't it?).

     I do not think that is the best way for me to spend my time.

Condition of the Working Class in England (by Engels)

There does not seem to be any doubt but that we are social beings. The doubt arises when you ask whether there is any sense talking about it. Some don't want to, but whether you want to talk about it or not, it remains there. The fact of human sociality remains, and we are always going to be social beings, and that entails helping, cooperating, and so forth, for we can only live where others accommodate us. You can think of this as giving way, interaction. There always has to be some giving way, some interaction.

     Let's say, then, that I am out in Arizona, and I also have a neighbor. He may be a few miles away but eventually I am going to have to decide whether or not to be social towards him: “social” means anything short of a state of war. Or, sometimes it can be a state of war!

     If some persons do not want to talk about it, fine, but I say that they are social: Everybody is. I am social; so are you, however some do not want to have that discussion.

     The matter is settled. Now, if we are social beings and we like to get along with each other it appears that nevertheless at one time capitalism (as described by Engels and also Marx, in the 1840s or 50s) was not very socially accommodating. It wasn’t very social—at least not to workers whom Engels studied. He gives copious references to the condition of “The Working Class in England,” which is a workman-like title for Engels' 1844 book, originally in German. The book is truly without mercy. However, we know now that Engels' analysis of capitalism as strictly anti-social was wrong; capitalism survived. And thus it is my contention, that it must have done so due to the fact that this social aspect of human life was injected into capitalism. Somehow, it eventually entered in, or else it was already there, dormant.

     Still, discussions since the time of marx and Engels (marx shall be henceforth lowercase, as it is the only way to avoid deifying him) are always about how dehumanizing capitalism is. This is something we need to get over.

     Engels says: “the bourgeois certainly needs workers...but as we need an article of trade or a beast of burden...” In the engaging passage that follows (page 114, Penguin Classics), the bourgeoise always gets the better end of it. He “takes very good care” not to treat workers well. In the long run this analysis is not well-supported and incorrect.

     Even in 1844, Engels admits, “it has become very complicated” (p114). Over time something happens that was outside of his model. Engels did not suspect that persons could get nicer. Or probably I should say that human decency gets injected into capitalism. But this is not accounted for in the 1844 report. When Engels speaks of “the centralizing tendency of competition”, on page 117, and of a process that “transfers the goods that cannot be disposed of in one market to other markets”, let us note that it has the potential of social interactions. Possible interactions of this kind are so various, and multiply so much, that over time, another eventuality comes due, the utility of better social behavior. This may come into play as much as any other thing. But perhaps the puritanical German, of Rhineish orientation and under Prussian domination, did not see this one coming.

     At the beginning of what K. Polyani calls “market society,” which is to say the latter half of the eighteenth century, the whole situation naturally seemed chaotic. Thus there was little opportunity to put any social benevolence into the situation. It appeared that workers would be thrown to the dogs, as perhaps they were for one hundred years. This is rather dismal news about capitalism, indeed. Nevertheless, a humanizing trend eventually took hold—even in dismal England where the human cesspools of Manchester were located that were described with such detail and proficiency in the opening chapter of the able Engels volume. That situation could not go on much longer—now, this is correctly perceived by the author (and his friend Marx), but the trend, instead of revolution, was more of an evolutionary process. It was, eventually, humanizing. Humans have an inherent need to be social, and also sociable, as were the good bourgeois Engels and family, Marx and family.

R. H. Tawney

Is it a natural characteristic of acquiring money that, having acquired it, one should be able to do whatever one likes with it? The attractive component of capitalism, for those with no morality, has always been that they can do whatever they want with it—I should rather say, with the money that comes out of it. The requirement of the system is that you need to pay for what you get. Deirdre McCloskey gave me a long lecture on this. We may work for six months, then go to the market, to spend our wages. Are seller and buyer the same? The seller earned a profit in a few minutes, based on perhaps six months of hard labor on the part of the other person. It was just these kinds of opportunities that became the surplus value component of capitalism.

     This was quite an opportunity for someone. Is it all bad, to explore this opportunity for profit? NO, I don’t think so. I do not think we need to label it as bad but I do not think it is good, either, although this seems to be the position that McCloskey ends up in, which seems to be rather untenable, considering its extreme unlikelihood. And this she calls “virtue.”