The Balanced Budget Amendment: Clarifying the Arguments
James Buchanan (1919-2013) called on the
genius of the 18th century to correct the mediocrity of the 21st.
The 2006 Nobel Prize winner spent 60 years arguing that once the economic philosophy
of Adam Smith is applied to politics there will appear a political case for
that limited government which Smith had argued for on solely economic grounds. The
current global agony over government debt perfectly make’s Buchanan’s point.
Buchanan did not deny
there might be a purely economic case for government deficits. Do they
stimulate total demand? Perhaps. Can they dispense with temporary tax swings by
bridging temporary gaps between government spending and revenue? Certainly. But
whatever economic arguments favour them, Buchanan believed his ‘economic theory
of politics’ showed that government deficits are a bane, and should be made
unconstitutional.
His starting point is
his conception of the legislature. He did not see it as a debating chamber,: it was a market place, a political market place. In
this political market place different political
constituencies strike a bargain to fund each other’s most preferred programs. 'I will give you my support for that, in exchange for your support for this'. Such
bargains will never strictly mimic the exchange of genuine market, as the taxation
to fund any program will always be borne in part by sections of the
electorate not benefitting from the program. Someone else, in other words, is
always paying for part of your lunch. In consequence, there will be too much
government spending. But at least every program will
have some sort of ‘tax price’
The political market place goes from doubtful to disastrous once
programs can be funded by deficits. For the capacity to deficit fund means that
there is a zero ‘tax price’ at the margin for any piece of government spending.
The beneficiaries of programs can charge all its costs to future generations, who
are completely unrepresented in the political market place. Government spending
being free, elementary economics says political constituencies will ‘buy’ as much
of it as they can. And that is until bond buyers balk at ever being repaid. Thus Greece.
The price of avoiding that chaos is forgoing the benefits of ‘demand
management’ and ‘tax smoothing’ by disallowing deficits even when they seem
desirable.
The upshot is that Buchanan favoured a constitutional
amendment to enforce a balanced budget,
and thought it politically attainable. Inflation targeting has proved popular, and it is a
constraint no less than the balanced budget rule. In the US local and
state governments already commonly disallow deficits. In March 1995 the U.S. Senate failed by only a
single vote to approve such an amendment. And Buchanan believed held that until
the mid 1960s the balanced budget rule was ‘an integral part of the broader unwritten
constitution of the United States’. It was the advent of Keynesian demand
management that made possible a coalition between Democrats and Republicans to
revoke that unwritten clause. Democrats
saw stimulus in tax cuts, and to Buchanan’s mind ‘”Tax reduction was from the
outset more important to conservatives than budget balancing’. The new
coalition expressed itself in 1964 Kennedy tax cuts, and even more pungently in
the ‘Jobs and Growth’
tax cuts of George Bush.
Buchanan was alive to the
power of this coalition in favour of deficits, and proposed that any balanced
budget amendment only kick in seven years after it was passed. He also proposed
that the rule apply to budget plans, rather than outcomes, as outcomes will inevitably
been disturbed by unforeseen events. He also favoured exempting genuinely
income-producing capital assets. And he stressed that it was not a cap on
government spending as such. The American public would be able to choose to
spend as it likes: it would merely have to pay for it.
Buchanan's favour of the
balanced budget illustrates Buchanan’s deep faith in a constitutional remedies
for dysfunctional politics. His philosophy amounted to a “constitutional salvationism’,
reflecting both the political heritage of the United States and the benefits of
the rule of law. But regrettably, what one amendment can enacts, a later amendment
can repeal. And would there not be every political incentive to repeal a Balanced Budget
Amendment? Buchanan never saw the 'unwritten' balanced budget rule of the pre-Keynesian era as the product of the rational consensus that he believed was foundation of constitution-making. He saw the 'unwritten rule' as (in his words) a ‘fiscal religion’; to break it would have been (in his words) ‘sin’, a transgression beyond the
pale. It wasn’t a matter of constitutionality but morality. Perhaps today’s endemic
deficits require a moral cure rather than a constitutional one.
The classical liberal has an apparently ambiguous response to 'reason'. In a phrase, they are attracted to 'rationality' and repelled by 'rationalism'. But what does this contrast come down to?
Liberals, I submit, differ from rationalists in that liberals see reason as a value, not as a power. Unlike rationalists, they do not see reason as a kind energy or motive force, to be unlocked and unleashed to perform marvels. In favouring a posture of cognitive humility, the liberal pins no great hopes on human reason. But, for all that, they believe reason exists, and is worth paying for when it is to be had. Why?
The liberal values reason because he believes that freedom cannot perform its economic feats without reason. The invisible hand's merit is not invincible to the merits of the choices that compose it. If you like, we need to know the quickest way to our workplace if the invisible hand is to secure what no planner could ever achieve: a maximising allocation of resources. But this valuation of reason is, it must be allowed, not a valuation of great reason. It is not a scintillating exercise of reason to know the shortest way to work, or home. A horse knows as much. Such mundane performances miss out on so much of the valuation of reason by liberals. Has not the cultivation of mind been a glory of liberal society? Are we to suppose this glory is merely an unbidden fruit of liberal values? Has not no small part of this glory been won by liberal thinkers, and their fellow travelers? Should we assume that their achievement was extraneous to their values?
In truth, it is not immediately clear whether liberal society should value the more refined productions of reason. The invisible hand - let it be stressed - does not require for its success that any one appreciate the invisible hand. It would work just as well if no one believed a word of Smith; or read of word of Smith; or if not a word of Smith had been written.The success of Smith’s Invisible Hand, then, doesn’t require the general public to be philosophers. Or anyone to be a philosopher. Granted: a belief in liberalism requires some 'philosophy': for liberalism is so paradoxical a doctrine that - like the heliocentric model - it is not clear that anyone would believe it without the harvest of sustained intellectual cultivation. But, for all that, liberalism to work doesn't require liberalism to be believed; no more than the circulation of blood requires belief in the circulation of blood.Granted: if the invisible hand was expressly disbelieved by the population then, doubtless, it would not be allowed to operate. Thus reasoning - superior reasoning - can obtain a value in correcting inferior reasoning, and the "Wealth of Nations" gains a value by discrediting "England's Treasure by Forraign Trade". Reason, then, can dispose of sophism.
For all that, in reading Smith we are still left with the thought that it would for the best if we didn't have any philosophers at all. Hayek seems to reinforce this thought by suggesting that social competition is sufficient to select in successful rules of behaviours. There is something odd in Hayek placing such confidence in such 'Darwinian' selection in the midst of the Age of Socialism, but the real defect in Hayek's position is that he istruncating the relation of freedom and reason. Yes, freedom facilitates reason - Hayek's position - but reason also facilitates freedom. Put simply: I can command you, or I can reason with you, (argue with you, discuss with you, etc). I can also seduce, convert you, you subvert you ; all these involve disregard for reason, and, I submit, a disregard for freedom. Reason, then, is the medium by which contrary wills may freely engage. It is the tournament that decides the conflict without resort to force.
This conception of reason's value lends itself to a certain understanding of political freedom that has proved popular with liberals; the 'Athenian' conception of democracy, or democracy-as-discussion. But it also obviously has an application to myriad bilateral relations between individuals.
Indeed, the conception of reason as the tiltyard of conflicting wills applies not just to a conflict of wills of different person, but to a clash of wills within the same individual. For one way the person who "does not know what to do" can solve that problem is by submitting to the will to others; to join a cult, or an army, or a totalitarian movement. Another way is to allow the victory of one part of their will over the other.To follow, for example, their "duty" in the face of a conflict of wills is to award dominion of one of their wills over the others. An alternative is for them to debate their motives for one action, or the other. This is surely makes for a freer action.
In championing reason as the medium by which contrary wills may freely engage, there is no assumption of the power of reason. There is no assumption that rational discussion will produce a political consensus, or even a decent majority. But it is through consensus we would like collective action to take place; and they would like such a consensus to be produced by rational deliberation.
The above brings also out that to liberals reason is 'a' value: it is not 'the' value. Liberals will not sacrifice freedom to reason. They will not support a dictatorship of scientists. Reason is valued as a complement to freedom. But at the same time freedom is a complement to reason, as Hayek rightly maintained. These twin stars orbit each other.
It has been said that Keynes came not to bury capitalism, but to save it. But what was his purpose with respect to liberalism?
His plain purpose, surely, was to discredit historical liberalism. To historical liberalism the competitive market was the ultimate expression of the congruence of the liberal values of freedom, wealth and rationality. Keynes's reasoning annihilated the merit of the free play of markets: such play would be unproductive of wealth and punishing of rationality.
But if his negative purpose was to discredit historical liberalism, what was his positive intention? Was it to reinforce the coalition of labourism and Technocracy, that, under the standard of 'socialism', then constituted an existential threat to liberalism? No: Keynes deprecated both labourism and technocracy. Keynes was in today's language 'an elitist'; he would not have the fish conflated with the mud (to use his own phrase); he would never truly sympathise with the egalitarianism of Labourism, and there was nothing in his theories to suggest he should. His objection to the inequality of wealth of his day was purely instrumental and contingent: it produced more saving than the economy could absorb.On the same logic, Keynes would favour an increase in inequality if the economy was not generating enough saving.
And Keynes also repudiated technocracy. Technocratic versions of his own doctrines (eg Lerner's "Economics of Control') repulsed him. To Keynes, Lerner's ideas were a supurious rationalistic antidote to the economic disease that, in Keynes mind, was bottomed in the inadequacy of rationalism.
It was no great wonder that in the last year his life that Keynes was in 'deeply moved' agreement with Hayek on socialism.
So where was Keynes positioned on the ideological matrix?
Broadly speaking, Keynes was, of course, a New Liberal, a category that progressively displaced traditional liberals in the Liberal Party over the course of Keynes' life. (His life-long party political allegiance was to the Liberal
Party). New Liberalism might be ruthlessly analysed as merely a dilution of historical liberalism by some stronger currents of the times: by egalitarianism, by rationalism (in the form of Utilitarianism), and by a little of (what we would call) communitarianism, in the guise of 'organic' conceptions of the nation. If you like, New Liberalism was a conglomerate rather than a crystal.
But Keynes could be interpreted more ambitiously as providing a new doctrinal structure of liberalism; one that would manage to do service to the preeminent of value of freedom in the face of the inadequacies of human reason.
The foundation of Keynes' rejection of the invisible hand , I venture, was epistemological. Humankind was not capable of the performances the invisible hand required of it. This incapability would appear to clear a path for planning; but human reason, unequal to making the invisible hand work, would be even more overwhelmed by planning. Keynes, I suggest, found hope in a different possibility: not more control of human will, but less control. Not in less control by the state, but less control by the internal government of the pysche. Less self-control, in other words.
Since at least J.S. Mill there has been a tradition of finding the kernel of
freedom in 'sponteneity': the opposite of self-control. Mill's principle adversary here was the informal sanction of 'convention' by society at large. But 'spontaneity' could clearly also be invoked against that self-regulation, which Mill, as a rationalist, saw rooted in reason. Keynes as an anti-rationalist would find no such exoneration of self-regulation. And in consequence the puritanical or bourgeois virtues would now be impeachable.
It was, of course, the 'bourgeois' virtues; of thrift, discipline and prudence that historical liberalism held were necessary for a society wealthy. But to Keynes, thrift would not add to capital, and prudence would not preserve it, but only waste it in paralysis. Thrift and prudence were abnegations of the will, a kind of stillness, a substitute death, that not only did serve freedom, but which made for poverty. And he had a long treatise on economic theory to argue that contention. By motivating a wish to hold money, all that prudence fostered was a reward for a form of inactivity -saving-that made us all poorer.
What Keynes was doing, then, was to dethrone the virtues of self-control of historical liberalism, and replacing it with the virtues of impulse; of 'animal spirits' , of enjoying your sin. If we could only be more like artists, and less like clergyman, all would be better. In Keynes, in summary, passion steps in to replace reason, as Hume had proposed so long before. Freedom as licence supplants freedom as truth.
What might be made of Keynes attempt to honour freedom (or, a kind of freedom) in the face of the inadequacy of human reason?
It is arguable whether "freedom as licence" is a better response to the inadequacies of human reason than self-control. Hayek shared Keynes' doubts about reason, but proposed the solution would be found in competition; competition between institutions.And 'institutions' in Hayek means rules, typically enforced by an internal sanction. A population averse to assimilating such internal sanction would leave competition unable to select in succesful behaviours.
But it is even more arguable whether freedom is licence, and if self-control is an infraction of freedom . To choose a constraint is not slavery. To be unable to choose a constraint - to be unable to 'control one self' - surely constitutes a form of dominion almost as bad as literal slavery.
Critics of classical economics often contend that the freedom classical liberals prize is not 'real freedom'. To illustrate,
someone who is 'free', but is (say) immobilised by a terror of breaking the taboos that saturate their daily life, is not really free (Gurley)
someone clinging to a log in a torrent may nominally be free in negotiating with a passer-by to throw a rope, but they are not really free. (Hobson deploys this sort of example).
Such critics commonly favour a conception of freedom different from the classical 'absence of human constraint' formulation; an alternative conception that goes under the head of 'positive freedom', and amounts to an index a person's capability.
Votaries of freedom may be tempted to follow this path of isolating 'real' freedom . After all, a freedom that allows one to drown is not a very attractive freedom.
But I contend that those who prize freedom should be disaffected by such a search for 'real', 'positive' freedom. I contend that this theorising of real freedom will not conclude in distinguishing true freedom from its shams - an achievement that any votary of freedom would esteem- but will instead reduce to identifying the conditions in which freedom is desirable; indeed, irresistible. Such a program of investigation is, undeniably, of interest . But my objection is that it will blunt the appreciation of the devotee of freedom of their object of admiration. Instead of exploring her loveliness, we list her faults.
True love is blind. The most passionate votary of freedom does not see the value of freedom in any way 'conditional'. They will not hold freedom to account on any criterion. The votary of freedom does not, for example, require that freedom brings happiness. He does not care if freedom offends 'equality of opportunity'; he is unconcerned if it accompanies exploitation. The votary of freedom believes one should be free to be unhappy; free to infringe equality of opportunity; and free to exploit (if 'exploit' means paying less for something than it is worth), .
Does the votary of freedom, then, also believe in the freedom to cheat? Not logically. If I am being paid in counterfeit notes we may be confident that I have not chosen to be paid in counterfeit notes.The fraud is subverting my freedom. The 'freedom to enslave' is a similarly incoherent notion. But what of the freedom to harm others? It is on this question that classical liberalism struggled. The Millian dictum that that freedom should be restricted so that its exercise does not harm others is massively illiberal in implication, at least in the absence of a massive limitation of the harm which 'counts'. (If you criticise this post you might be deemed to harm me). Mill left classical liberalism without an adequate account of freedom, and leaving the door open to doctrines positive freedom of New Liberalism.
Hayek's attempt to get a more adequate account of freedom, without resorting to capability, surely indicates the impulse of the votary of freedom. His formulation of freedom as 'the absence of coercion' is an improvement on Mill's inadequate effort, but would rule still out the 'manipulation' that freedom surely permits. Friedman's emphasis on 'choice' as the nub of freedom is better, and Buchanan's stress on choosing our constraints better still. Perhaps freedom is 'choice over the human wills we are subject to'.
But where would a formulation of freedom as 'choice over human wills' leave that person clinging to a log? Free or unfree?Very possibly it leaves them 'free'; for it is possible there are several passers by, all with a rope. The person is dependent on no single human will; and so he is free. And yet, if he is destitute he will drown. His freedom, then, does necessarily save him from drowning. But the moral of the scenario is not that his freedom is not real; but that it isn't useful. And this is just to say that freedom is not a panacea.
The most passionate devotee will object. And they will be wrong in their objection. The discreet and sincere admirer of freedom will acknowledge its limitations. To admire is not to worship. And to acknowledge the limitations will serve the appreciation of freedom, as appreciation rests on truth. The only other way to respect truth without admitting blemishes of the beloved, is to participate in the program of 'real freedom'- seek to identify the settings of freedom's perfection. And that is massively reducing of her domain.
And that is why the adversaries of freedom favour 'real freedom'
Ian Castles (1935-2010) is best known as the first Secretary of a new-born Department of Finance (1979-1986) and the eleventh Australian Statistician (1986-1994).
I wish to shine a light here on a
scholarly production of Ian Castles: his paper of 1984 entitled ‘Economics and
anti-Economics’. This paper is equally remarkable and neglected. It is
neglected: it is almost impossible to obtain. And it is remarkable that a
public servant senior engrossed in administration could, amid the cares of such
an office, produce what is essentially a Masters thesis born of the scrutiny of
miscellaneous recondite texts.
The subject of Castles’ paper is the
so-called ‘the moral critics of political economy’ of the 19th c.
His thesis is that that they were, in truth, immoral critics of political economy. Even ‘immoral’ is
understatement; in reading Castles paper I am left with the thought that
‘appalling, atrocious, indecent to the point of villainy’ would be closer to
the mark.
Castle’s case is a careful 30,000
word long examination of the actual; what was actually said by the
economists (as distinct from what they were said to have said); and what was
actually believed by anti-economists. In detailing the gulf between these two
actuals, Castles’ paper amounts to a crushing piece of table-turning upon these
supposed ‘moral critics’.
Castles paper is a tour de force. But in the source of that
force we may also locate its lacking; its ad
hominem aspect. When I say ad hominem
I hardly need say that Castles does not proceed by denigrating the personal
attributes of his targets; he did not describe any of them as an ‘ill-bred,
half witted Scotchman with a damned soul’; that is John Ruskin’s own well-bred
caption for Adam Smith. When I say ad
hominem I mean that Castles’ strategy is to show is that the positive assertions
of anti-economists were ignorant and ludicrous, and their normative positions
were obnoxious. There is a
power in this, procedure and a frailty: for it is clear that to show that someone has
misrepresented (besmirched, calumnied) a corps of doctrine is not to show the
doctrine is true, or even an advance towards truth. And to demonstrate that the
persons who have censured some tendency are far more censurable themselves, is
not to demonstrate the tendency itself is beyond any censure. Thus while Castles
paper establishes that the ‘moral critics’ offended justice, it leaves unidentified,
unexamined and unresolved the questions at issue that were the background of
that act of injustice. And his method of ‘personal critique’ leaves open a
method of ‘personal defence’; where the anti-economist shrugs ‘we all know that
Ruskin was barking mad; but still… ’. I
wonder if these deficiencies in its dialectic strategy may explain the aspect
of proximity-without-contact that I have in contemplating Castles’ paper: for
I am conscious that Ian’s apparently vanquishing riposte to anti-economics
appeared on the eve of an eruption of
anti-economics in Australia of which in
its ignorance, frenzy and indecency would almost match that of the 19th
c originals. We must infer the paper did not prevent that eruption; we may
suspect it did little to temper its frenzy. During that ghastly episode Castles
paper would have given heart to a few economists who knew of the paper; but by
its nature it could not supply the logical tools that might provide of logical
antidote to the distemper.
One can’t do everything in a single
paper!
Let me try to distill what it does
do.
At the outset Castles groups of his
protagonists.
On one side Castles places the
‘Economists’; by which he means the Classical Economists.
On the other side are
‘anti-economists’, sometimes known to historians of ideas as the ‘sages’ of
19thc Britain; though perhaps better described as the rhapsodists, the Savonarolas, the berserks of that society: S.T Coleridge, Thomas
Carlyle and John Ruskin, who, over two generations, personified a blazing seam
of social and political reaction in British intellectual life; and exhaled
cyanide gas against the ‘dismal science’, as Carlyle so enduringly branded it.
But, critically,
Castles adds to ‘the anti-economists’ a second trio of persons; very different
in character and station from the first; but who under mantle of progressivism
broadcast in the 20th c the same travesty of economics promulgated
by reactionaries of the 19th. These are three ‘teledons’ or celebrity intellectuals of the
1960s and 1970s; CP Snow, JK Galbraith, and Kenneth Clarke; the authors of,
The Two Cultures and the Scientific Revolution
The Age of Uncertainty
Civilisation: A Personal View
respectively.
The case against classical economics
which these three disseminate was essentially the same, and amounted to
insinuating a responsibility of classical economics for the banes of 19th
c ‘industrialism’: those Dark Satanic Mills; that ‘the condition of the working
class’, poverty amidst plenty, the Poor House vs Ascott House. The classical economists, at the very least,
bestowed a self-satisfied benediction on this awfulness. They were therefore culpable
of moral delinquency; or ‘inhuman[ity]’ in the words of Kenneth Clark, who Castles rightly identifies as the leading 20th c disciple of Ruskin’s ‘devastating’ (in Clarke;s word[1]) anti-economics.
Ian Castles contends that the truth about
the economists and the anti-economists is much closer the very opposite; that
classical economists possessed a feeling of humanity, and a sympathy for
humanity; and it was the anti-economists gripped by a loathing of much of their
fellow species .
Castles sustains that claim by
contrasting the positions of the two groups on various heads of social and
economic policy of the day. Let me go through them.
Education;
Castles points our that ‘probably the
first serious proposal ever’ for universal [publicly funded] education’ Adam
Smith, in the Wealth of Nations.[2] In his lead on education
Smith was followed by virtually every political economist. Coleridge was roughly
contemptuous of such programs of universal education. Ruskin maintained it was
best if not all children were required to learn to read.
Ireland
Castles bears evidence of a leniency
of the classical economists to perpetually troubled Ireland. Ricardo
recommended that to Ireland be applied a ‘system, of kindness, indulgence and
conciliation’. And Nassau Senior, no soft touch in these matters, contended
that ‘the erection, regulation and support of fever hospitals, infirmaries and
dispensaries [in Ireland] should be fully and immediately attended to’(Senior
1831).[3] It was the anti-economists who, as Castles documents, felt an irritated,
resentful impatience at such solicitation for Ireland’s wants, and repeatedly
insisted that the Lord would provide whatever necessaries Ireland might require.[4]
The New Poor Law
The New Poor Law would seem to be a prize case for anti-economists. But however severe the New Poor Law, it
needs to be registered that it was the express position of those Political Economists
who favoured the Law (such as Mill) was that the Law was warranted by the obligation
of society to relieve the destitution of the destitute. However qualified that
obligation was in the minds of Mill and the like, they held the destitute had a
rightful and lawful claim on society, and the New Poor Law was to meet that
claim.
Political Economists could also be
friends of private charity, and the greatest of them was the greatest friend;
Ricardo. On his estate Ricardo established a dispensary, an alms house, and a
school; he was a prolific subscriber to various charities: the Poor of the
Parish of Hanovers Square, Extreme Distress at Spitalsfield and Persons
Confined for Small Debts …. (the list is extensive).
It was Carlyle who considered all
this provision for the poor (be it public or private) an absurdity.
Why not regiment these unfortunate wretches, put colonels and corporals
over them and thrash them, if it proved needful, into habits of industry …Try
them for a couple of years and if they could not feed themselves … they ought
to be put out into the world’ …. Sell them in Brazil as niggers.
Slavery
Smith, Ricardo, Mill, Senior, were
strenuous anti-slavers; the anti—economists were almost always slavers.
Coleridge snarled that the Empire
was being subverted by abolitionism. In Unto
This Last – the anti-economics frenzy so by praised
Clarke - Ruskin announced that slavery is ‘an inherent, natural and eternal
inheritance of much of the human race. It
was Carlyle’s fury at abolitionism was the very occasion of his coinage the
‘Dismal Science’; in his paper the ‘Nigger
Question’ of 1849, in which, amidst fantasies of firing squads for political
economists, he champions slavery as ‘the answer’ to that ‘question’.
There is an historical epilogue
here: ‘the Eyre Controversy’. In October 1865 a rioting mob in Jamaica killed
18 people. At the behest of the Governor, Edward James Eyre, British troops
executed, or lawlessly killed, 586 blacks, and flogged another 600.
Scandalised, JS Mill formed a Jamaica Committee. But Carlyle ‘heartily sorry
for Eyre’, and with Ruskin formed a Eyre Defence Committee to rebut the ‘nigger
philanthropists’ of Mill and Henry Fawcett.
Let me pause to insert a
speculation. I put to you that all three of these ‘moral critics’ of political
economy adopted - presumably as a model for British public - the persona of tyrant. In the conduct of Eyre we have
sinister possibility of Life imitating Art. Thus there is a more than personal
significance in the character – the bad character – of the anti-economists; and
there is a broader significance in the good
character of Ricardo and Malthus. The evidence on that score, that Ian
Castles’ careful plots, is that this most vilified of men they were equable,
amicable, affectionate.
There is also an added significance in
the intellectual honesty of the classical economists, about which Ian also
assembles a fund of personal testimony. For the insinuation of JK Galbraith in
the Age of Uncertainty is that the
classical economists were not so; his implicit message is the only significance
in their thought lies in whatever propaganda purpose it might be put. It may
seem strange for a supposed historian of economic doctrine to impute such logical insignificance to the theories
of classical economics ; but the imputation is doubtless rooted in the position
(so congenial to the adversaries of classical economics) that reality is
plastic; that it can be pushed into any desired shape; that we have play-doh
economy is free of constraints, trade-offs, costs, … The upshot is that there is no hidden
mechanism to trouble over, there is no economic law to be uncovered; only
political power to be obtained
Very different was the outlook of
the political economists, who believed that a powerful but complex mechanism underlay economic
events; a mechanism that was hidden to
careless observer but yet could be found. It was on account this outlook that,
as Maria Edgeworth records, ‘[Ricardo and Malthus] hunted in search of truth
and huzzaed wherever they found her ... .’
I
suspect it was partly that jubilant sense of discovery; that naïve joy;
that impelled Ricardo to unabashedly advance his doctrines in the form of
motions to the House of Commons, that were lost by vast majorities; provoking
even one of his parliamentary allies to rise
from the bench and declare that the Member for Portarlington must have
‘descended from Jupiter’.
How unworldly the ‘worldly
philosophers’ seem in contrast to Clark, Galbraith and Snow, those three sleek greyhounds of various mid-20th
‘corridors of power’. The ambassador’s residence, the division lobby of the
House of Lords, the weekend party at Windsor castle; such were their natural
habitats.
And it is on account of their
unworldliness that the classical economists were very differently motivated to
write than Galbraith etc. On this difference Castles tellingly quotes Galbraith
from his Affluent Society;
Audiences of all kinds applaud what they like best … the great
television and radio commentators make a profession of … saying with elegance and unction what their
audience find most acceptable.
Indeed.
The conflict between the wish to be
something in the world and the wish for other things brings me Castles
treatment CP Snow.
What provokes Castle’s ire in Snow’s
Two Cultures is Snow’s light minded
pairing – in a single phrase - of Napoleon wiith Adam Smith. To give some
quarter to Snow for his apparent fatuity, I wonder if, as a self-identified
‘democratic socialism’ Snow was seeking some epitomisation of ‘autocratic
capitalism’ and failing to find one, settled for epitomisation of autocracy
(Napoleon) and epitomisation capitalism (Smith). But, however that may be,
Castles does not hesitate to pounce, and stresses the perfect antipathy between
the world views of the Emperor and the professor; the one a philosophy of
conquest, and the other a philosophy of exchange; an antithesis exemplified in
their stance to empire: the one the
supreme imperialist; the other an emphatic
anti-imperialist, who saw empire as corrupt and costly methods of
Mercantilism; and who would have found every corroboration for this thesis the ‘Continental
System’ introduced by Napoleon. This last policy provoked some forward
opposition by some economists in France, which Napoleon dismissed as ‘the
twaddle of economists’. As T. B McCauley said, Napoleon ‘hated political
economy’
In its revolutionary despotism we can doubtless
detect in the Napoleonic empire a prefiguring of the totalitarian state. But we
can also see a prefiguring of the totalitarian state in Napoleon’s sensitivity
to (and anxiety about) social ideas, including economic ideas. Napoleon once
complained if there were a monarchy made of granite, the abstractions of the
economists would be enough to grind it into dust. Napoleon was resolved to subvert any such
subversion by abstract thought: thus J-B Say, having refused the importunate
overtures of the Emperor, was dismissed from the Legislature, and publication
of his Treatise of Political Economy
forbidden; thus Napoleon abolished the Institut concerned with social sciences,
amidst much fuming about ‘ideologists’ (while preserving the Institut of natural
sciences and humanities).
Warp it, break it; make it teach that black is
white. This is how totalitarian societies deal with social thought. War is Peace, Freedom is
Slavery, Ignorance is Strength.
In ‘Economics and Anti-economics’, written in 1984,
Castles makes effective rhetorical reference of Orwelllian oxymorons to
underline the perverse rewriting of history of economics by Clark and Galbraith.
‘Inhumanity is Humanity’ is the double-speak slogan under which they stand. And
yet Castles’ references to Orwell’s 1984 in
some respects miss the mark. For we don’t live in a totalitarian state; and the
perversely false mythologies of Clark and Galbraith flourish without the
terroristic negative incentives of such a state. A free society evidently
contains positive incentives that
powerfully nourish such mythologies. Pondering what those positive incentives
are brings me back to the unwitting (or shameless) admission of Galbraith that
Castles highlighted:
Commentators make a profession of saying with elegance and unction what
their audience find most acceptable
The looming reference is the corruption to thought
that lies in the temptations to popularity and celebrity. To put the thought
another way, unpopularity and obscurity can be a price of integrity. An
indifference to those prices can be a source of integrity
We are fortunate that considerations of popularity
and celebrity did not figure in Ian Castles motivations to write ‘Economics and
Anti-economics’. It is a powerful piece of history of economic ideas. Yet it
was never his lot to have it published by Andre Deutsch (it was never published
at all). It was not his lot to deliver his economics by Reith Lecture; he did
not have a BBC microphone or camera. Instead he delivered his paper to a
session in Canberra of the (soon to expire) ANZAAS Conference; no place at all
for any ‘great radio and television commentator’.
Ian Castles had the worldly unworldliness of
Ricardo, and regardless of the presence or absence of the television camera, he
‘hunted in search of
truth and huzzaed wherever he found her’.
References
Castles, Ian (1984) ‘Economics and Anti-Economics’,
54th ANZAAS Congress, 18 May 1984
Clark, Kenneth (1950) The Gothic Revival : an Essay in the History of Taste , London, Constable
Coleman, William (2004) Economics and Its Enemies: Two Centuries of Anti-Economics ,
Palgrave Macmillan
Senior, Nassau (1831) Letter to Lord Howick on a Legal Provision for the Irish Poor.
[2] Barthelemi-Gabriel Rolland is recorded by
historians of education to be the author, in 1768, of the very first such
proposal (see Coleman 2004, p257).
[3]James
McCulloch believed that in Ireland ‘the poor should have a claim, a right to
support’. Senior opposed such a claim (Senior 1831, 30).
[4]
‘What are the great causes of
Irish misery?’ asked John Wilson (anti-economist and friend of ST Coleridge) …
Without hesitation we reply … he is the author of his own misery … in the
qualities of disposition for national prosperity, he stands at the lowest of
civilised men’ (see Castles 1984, p34).
