Monday, May 16, 2005

Ross B. Emmett, a professor of economics at Michigan State University, posted a comment directing our attention to his interesting critique of Gordon Bigelow's Harper's article on evangelicals and free-market ideology. Professor Emmett is apparently one of the leading scholars in the US, if not the world, on the ideas of the influential first-wave U of Chicago economist Frank H. Knight. I can recall reading a bit about Knight in the context of one of his contemporary U of Chicago scholars, but I can't remember any particulars there. A quick browse around the web paints Knight in terms that would be considered left-libertarian today, meaning that while I would probaby agree with Knight (and presumably Emmett) about some of the problems of economics, we would almost certainly disagree about the solution.

And that's pretty much my take on Professor Emmett's critique of Bigelow's article. I agree with the good professor's underlying emphasis on the importance of democratic will, but I don't agree that markets are essentially democratic institutions without government intervention. Ironic! I would almost certainly state the opposite in terms of, say, collective action or broad social movements: democratic space is created when equals can meet and exchange ideas freely. Why are markets different? Well, individuals approach markets differently than they do exchanges of ideas. The goal isn't to learn, convince, or achieve consensus; it's to make a profit. Each side in a ideal market exchange is attempting to make an advantageous deal for himself or herself. In a free exchange of ideas, there is no cost to winning or losing an argument. In fact, I've found that the best possible outcome is the situation where each side comes to an understanding that is different and greater than the original positions. Maybe that's idealized, but I think it's also the origin of democratic thought.

I also cannot agree with this statement by Professor Emmett:

Finally, and perhaps most importantly, Bigelow ignores the fact that neoclassical economics has been on the wane for some time now. The most ardent defenders of free markets today, in America and elsewhere, are those who understand that markets are institutions, and that democratic political will is required to undertake the particular political actions (especially protection against the possibility of the state absconding with your property) that make them work well. The difference is that the new institutionalists know how important markets are not only on efficiency grounds, but also on social and moral grounds.

All of the economic theory I've been taught has been neoclassical, exclusively. In fact, according to this article by Duke economist E. Roy Weintraub:

The status of non-neoclassical economists in the economics departments in English-speaking universities is similar to that of flat-earthers in geography departments: it is safer to voice such opinions after one has tenure, if at all.

I've also understood such free-market true-believers as Friedman and Hayek to be supreme neo-classicists, and their ideas are as integral to the neo-cons running the country as the thoughts of Leo Strauss. How can neo-classicists be in decline if they are running the economics departments, not to mention the monetary policy of the whole freakin' country?

Of course, as in any of my conversations about economics with real, live economists, I'm probably a) missing the point and b) misunderstanding the tidbits I think I understand. If Professor Emmett returns, I have no doubt that he'll set me straight.


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