Lazy ReasonSadists don’t smile a lot because serious pleasures are not laughing matters. It follows that economists are not necessarily unhappy people even though they practice the gloomy science and certainly sound pretty gloomy. There’s so much satisfaction to be had in identifying with the aggressor, not to mention the daily fun of humiliating students by demonstrating that everything they know is wrong. It’s no secret by now that a certain malice motivates the dialectic—Socrates himself was, after all, the first and greatest of trolls—but pedagogic cruelty is especially close to the surface in the Econ 101 version of the Method. Not even Socrates got to demonstrate so literally that the good intentions of the earnest youths were mere stupidities. Economics is a thoroughly evil profession. Unfortunately, that’s not exactly a fatal objection to the discipline or a refutation of its fundamental insights. Still, the economists might miss something important in their humorless infatuation with the dark side of the Force.
Henry Hazlitt’s Economics in One Lesson, an influential defense of free markets, argued back in '46 against government interference in the economy by claiming (in John Quiggin’s paraphrase): "Assuming that market prices are equal to opportunity costs, government interventions that change the market allocation must have opportunity costs that exceed their benefits." I don’t know if this lesson really is the basic principle of economics or if it really is, as advertised, ineluctable in some sense—Quiggins is currently writing a book that proposes that economics requires at least one more lesson—but if the Hazlitt’s lesson isn’t precisely the fundamental theorem of economics, it does point towards the fundamental shtick of economics, the endlessly fascinating idea that good intentions are always self defeating while individual greed leads to broad sunlight uplands or if not exactly broad sunlight uplands, the broadest and sunniest uplands we’re going to get. The historical version of this bit of this theodicy is always trotted out whenever some Pope or other busybody criticizes capitalism. “So what do you think is lifting the world’s poor from their poverty? Encyclicals?”
Elaborate deductions from dubious premises in papers decorated with the backwards 6’s may impress the masses…of business majors, but it is the historical evidence rather than the mathiness that raises the more serious questions for me. Even after you scrub the chamber-of-commerce makeup off the Whiggish version of economic history, the narrative has considerable plausibility. It really is hard to see how a virtuous and communitarian system of production and distribution (let alone scientific socialism) could have ever produced the respite from Malthusian misery enjoyed by at least a substantial portion of mankind over the last couple of centuries. After all, the nearest example of a Jeffersonian paradise of yeomen farmers on hand is Haiti.
One should point out at the outset, however, that the important issue in all this is not whether the free market was worth it. The free market capitalism found in Chapter One is not the capitalism of history. That economic system only functions in the Cloud Cuckoo land of theorists where the spherical cows graze contentedly on the artificial turf. The capitalism of history, the system that actually transformed the world, certainly involved markets, but the adjective free seldom applied to them. Markets were not the secret ingredients in the recipe of the modern world—everybody trades. Sven Berkert’s concept of war capitalism is closer to the mark since it took a great many guns to produce the take off and the great divergence. Even before the Age of Exploration, capitalism was, in Braudel’s useful formulation, something layered on top of the technologies of production and the structures of exchange. The whole point of being a capitalist is to beat the market, to game it, to pay your workers as little as possible and preferably nothing at all, to shoot fish in a barrel because competition and fair dealing is not likely to get you rich. The modern world was created through force and fraud; and the question is whether that force and fraud was necessary and, even more, whether a system that continues to function through force and fraud should be defended and reproduced. I take it that’s a very real question.
My ambitions in addressing this question are limited. Unlike Niall Ferguson, who is considered an economist by historians and a historian by economists and therefore enjoys immunity from criticism by either side. I’m neither an historian nor an economist and can’t get away with anything. It simply occurs to me that the neoliberal celebration of capitalism suffers from an obvious shortcoming. While I quite agree that things have worked out better than you would have expected, the history of the last two centuries is hardly a story of the triumphant advance of unbridled capitalism. The one-time experiment was not a trial of pure capitalism because capitalism was opposed, edited, and modified at every step by political forces. Indeed, a counterforce has emerged precisely at those passes where putatively free market but actually oligarchic political economics has resulted in intolerable results. If the English working class didn’t fall into terminal wretchedness, it certainly wasn’t because of some happy intrinsic feature of Manchester political economics. The workers got organized. It was Ulysses Simpson Grant and William Tecumseh Sherman and not economic rationality that ended slavery In the U.S.—slavery was a huge moneymaker right up to the Civil War. For that matter, the eight-hour workday, overtime, tolerable working conditions, and Saturday didn’t happen because of anonymous market mechanisms. Unions and political action imposed these reforms on the owners against the advice of most of the economists and pundits of the time.
Anno domini 2015 it very much matters that the great expansion of the world’s economy unfolded in an era where capitalism was always contested because we are apparently entering an era when the forces opposed to capitalism are extraordinarily weak. Across the West, democracy has been largely discredited; and what’s called liberalism in a country like ours is more a call for a more decent form of oligarchy than a serious contestation of the power of money. We’re apparently preparing to perform a new and unprecedented experiment in which we do find out what happens when the soi disant free market gets to do its stuff without effective opposition. What the Republicans denounced as socialism saved capitalism from itself before. It will be interesting to see if capitalism survives its own triumph. Wellington once said that the only thing more terrible than a battle won was a battle lost, but maybe Wellington wasn’t quite right about that.
Speaking of battles lost. It would be an instance of the fallacy of the lazy reason to give up the struggle just because the inexorable laws of economics or the iron law of oligarchy or some other scientificated version of fate predetermines the outcome and you figure that it won’t be too bad even if you do nothing. It may well be true that the historical processes that produced the modern world didn’t result in the disaster the prophets foretold (at least yet), but the efforts of those that didn’t come out on top were part of the process. Just as the old theologians used to insist that reality only persisted because of an ongoing act of divine creation—continuous fulgurations— it seems to me that what humanity there is in the human world survives because human will recreates it in every generation. I don’t always go along with the theologians entirely, however. For me, a war is just if losing it is better than not fighting.