Tuesday, July 12, 2011

the culture of the bourgeois

Any culture produces stories, myths, and other traditions with the intent of reproducing itself in society. Economics is no different. Economics attempts to reproduce values that serve the interests of certain wealthy individuals in the capitalist economy (capitalists). This is not a new idea: capitalists itself would admit to it. But, like the creation myths of religions, we can question the truth of these stories with cultures and stories which are not so easily heard, precisely because they are against the status quo, with powerful results.

We shouldn't be surprised by all of the stories we find when we open up an introduction to economics textbook. All cultures have their own sets of stories which are meant to reproduce within any one culture the main ideas, customs, values of the society that maintains that culture. For religion, we have the creation stories and other parables. Ancient Greece had oral history and myth.

Therefore, it is very important to realize that when we see the proliferation of stories in economics -- whether it's "Vinny the vegetarian and Mark the meateater" who trade goods so as to equate their marginal utilities with the prices of the goods, or "Sam the farmer and Ralph the rancher" who specialize in their work in order to exploit comparative advantage -- it is very important to realize that there is a culture behind all these stories, attempting to reproduce itself throughout society. Just as religions spread themselves through introducing their texts and practices to new potential members, and just as any culture has its own set of traditions which, once known and practiced by an individual, signifies the individuals membership into a group, understanding in and believing in the central stories told in economics will lead you on the path towards being an economist (or at least, being accepted within their culture).

The problem is, of course, that the stories of economics are incongruent with reality, even when its practioners never cease to argue in favor for them.

Remark: Whenever I read these "stories" I am really amazed at how unbelievably untrue they are -- even while its author is arguing for them until he is blue in the face. For example, in Abba Lerner's The Economics of Control, he explains the classical model of general equilibrium (i.e. the allocation of goods and services in a competitive economy in the case where N=2). He explains, on page 20, that "[the optimal allocation of goods in a competitive economy] seems so obviously what happens in the existing free market economy that all the rigamarole about marginal substitutability and barter exchange would appear quite unnecessary. There are two reasons," he goes on to say, "why all this argument is not unnecessary."

That is, he gives two justifications for why we need the competitive model.

They are far from satisfactory based on any standard of logic or rigor.

The latter argument he provides is that such a model is necessary because it is the foundation upon which later results are built. Fair enough -- surely insane conclusions may derive from any number of laughable premises.

The former argument is more intriguing. "The first reason," Lerner begins, "is the horror that many socialists have of anything that reminds them of the existing capitalist world. This makes it necessary to show that the usefulness of money as a means of bringing about a good distribution of goods is not merely a bourgeois belief carried over uncritically from experience under capitalism but can be shown to bring about desirable ends by a consideration of fundamental principles" (21). But the Marxian critique of money as a basis for exchange is based on the fetishization of commodities and the principle differences between exchange value and use value of those commodities (particularly, labor). But nowhere in Lerner's discussion of a market economy does he address the Marxist critique of capitalist exchange.

My point is that, according to Lerner's discussion, the theory of the optimal allocation of goods in a market economy is not a substantive critique of socialist policy; rather, it is viewed by Lerner as an ideological attack on (or defense against) Marxism.

That changes the game considerably -- and it highlights the important point made above that these are stories which are told over and over in order to reproduce the ideology of traditional, bourgeois economics.

End Remark

For over a hundred years, since at least the time of the response to Marx's Labor Theory of Value, proponents of mainstream economics have actively recognized that their project is a political one. Thus, the bourgeois culture behind economics tells stories which aim to reproduce the system's core beliefs, even though those beliefs are far from universally true. And, in a surprising twist, most economists will not even admit that they are not being rigorous even though it is obviously true that they are not being rigorous.

1 comment:

  1. Dan -- really interesting post. That Lerner would *explicitly* state that the General Equilibrium model exists for ideological purposes is something of a surprise to me. My beef with the neoclassical school has always been that, though shot through with normativity and ideology, it purports to be purely scientific, in the positivist sense. That is, it pretends that there is nothing political going on at all (nothing to see here folks, just science).
    Actually, I'm somewhat embarrassed to say that I did not realize that "...proponents of mainstream economics have actively recognized that their project is a political one." Again, my read of "vulgar economics" (as it were) is that practioners believe they were acting within the dictates of positivism -- and that's it. But did many of them *explicitly* acknowledge an ideological agenda? If so, do you have other examples you could point me to? Thanks.