Tuesday, April 28, 2009

Reform and Recovery - A Word of Caution from Keynes




From John Maynard Keynes's Open Letter to President Roosevelt

"You are engaged on a double task, Recovery and Reform;--recovery from the slump and the passage of those business and social reforms which are long overdue. For the first, speed and quick results are essential. The second may be urgent too; but haste will be injurious, and wisdom of long-range purpose is more necessary than immediate achievement. It will be through raising high the prestige of your administration by success in short-range Recovery, that you will have the driving force to accomplish long-range Reform. On the other hand, even wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to put other motives in their place. It may over-task your bureaucratic machine, which the traditional individualism of the United States and the old "spoils system" have left none too strong. And it will confuse the thought and aim of yourself and your administration by giving you too much to think about all at once."

Health Reform and the Reconciliation Process

Washington was buzzing Friday with news that health care reform would likely be pushed through the Senate this Fall during the reconciliation process, making it immune to the risk of filibuster. Normally, the famously "collegial" Senate has sensibilities that are far too delicate to countenance interrupting a given Senator when he or she is speaking. To close debate on a bill, 60 out of 100 Senators must vote for cloture. The end result of this procedural rule is that any given bill actually needs 60 votes to pass, not 51, so long as some Senator cares enough to filibuster it*. Filibustering is good insofar as it requires Senators to produce a more bipartisan bill. However, it opens the possibility that the minority will be able to dictate to the majority in a variety of occasions. The House does not have this rule.

However, budget bills can be submitted as "reconciliation bills", which cannot be filibustered. A reconciliation budget will specify certain legislative committees that need to bring certain pieces of legislation into alignment with the budget bill. So for example, this year's budget bill may say "we will spend X amount of money on health care", and specify that the committee that deals with health care bring the law in line with the spending requirements. These changes in health care law will then be passed without the risk of filibuster as well. This means that health care reform may be passed this year with 51 votes (which the Democrats easily have), rather than 60 (which they can't count on). It may come as a surprise to most Americans that this is even a major piece of news - isn't the majority always supposed to rule? Yes... except in the United States Senate.

Republicans are predictably suggesting that this is heavy handed and inappropriate. Why is this response predictable? Because it's exactly how the Democrats responded when the Republicans used the reconciliation process to push through the Bush tax cuts.... and most of Clinton's budgets... and most of Reagan's budgets. The false outrage over the reconciliation process is old hat in Washington. I personally have no problem with the Democrats using the reconciliation process - I wouldn't mind seeing filibusters eliminated from the Senate entirely. They have some moderating benefits, but they are inherently undemocratic. Republicans shouldn't be ashamed for using them to pass tax cuts under Bush, and they shouldn't be outraged that Democrats are using them now. But let's get past all this... why do I start by quoting a note of caution that Keynes offered to Roosevelt in the 1930s?

Reform and Recovery

The reconciliation process essentially guarantees that we will see some sort of health care reform this year. It may be a monumental overhaul, or it may be a first step towards a monumental overhaul. Right now we don't know. Health care reform is desperately needed in this country, no matter what side of the aisle you're on. We pay far more for the care we receive than any other country, and tens of millions of Americans don't have any health insurance. Higher costs and lower coverage are an explosive combination. These rising health care costs are also a burden on U.S. businesses who provide most of the coverage in the U.S.. Whatever the failings of the health care systems of our peer nations, they have been more successful at keeping costs down, which means that their businesses can operate that much more efficiently than ours can. Health care reform is unambiguously an imperative right now.

But another imperative is recovery from the current recession. Despite the upbeat talk of President Obama and Fed Chair Bernanke recently, most analysts think that we have not bottomed out yet, and when we do the recovery will be drawn out, rather than rapid. The ubiquitous Depression analogies aren't made to scare people, but they are made for a reason - this downturn will end up being substantial, and like the Depression there is no real prospect that the recovery will be swift. Those who write off double digit unemployment are fooling themselves. The "real economy" hasn't even bottomed out yet, and unemployment won't stop rising until well after the "real economy" has reached it's trough and started climbing again for at least a couple quarters.

Many people see the problem as steering deftly between the Scylla of a broken health care system and the Charybdis of a once (more likely twice) in a lifetime economic downturn. I think this understanding of the situation is incorrect. Health care is obviously a problem in this country - but is it a problem that throws millions out of work in a matter of months? Is it a problem that destroys a third of a family's savings? Is it a problem that will grow exponentially worse if it is allowed to fester for another year or two or three? No. If we are still at the bottom of this hole in 2011 or 2012, history will remember this as the Second Great Depression, and the future prospects of capitalism will truly be in jeopardy. If we maintain the current health care system through 2011 or 2012, how will history remember us? Perhaps as lazy. Perhaps that we missed an opportunity. Perhaps even that we are uncaring and primitive. It will probably look at us the same way that we look back to the sluggish adoption of Social Security and unemployment insurance in this country; unnecessarily slow, but since the change was inevitable, the delay is ultimately just remembered as an artifact of history. We have had somewhere around 40 to 50 million uninsured for years. It is a burden and it is a crisis, but that crisis clearly lacks the immediacy or urgency of the economic crisis.

We did elect Obama for a double task: reform and recovery. But his mandate for reform and recovery doesn't mean that both need to be done within ten months of taking office.

What is to be done?

I, like the vast majority of Americans, am suspicious of what's called a "single payer", public health insurance system. Thankfully, Barack Obama and the United States Congress also seem to be wary of such a course. We know that the market is too efficient to completely abandon. But there are problems that public policy can help to address. While Americans shouldn't be required to purchase government health care, we can think about making some sort of subsidized public insurance available to the 50 million people who are uninsured. The externalities of public health may justify mandating health insurance coverage, either from a public or private source - much like many states already do with car insurance. We can think about eliminating the tax privileges currently afforded to employer provided health benefits, which encourage sub-optimal over-consumption of health care and hide the true costs of care. We can imagine the benefits of a system of electronic health records, and we can conceive a potential role for government in jump-starting this process. There is a lot we can potentially do, but there are no silver bullets. I think this suggests that we act, but also that we discuss and deliberate. The "experts" have discussed our options for years - at least since the aborted attempt at health care reform spearheaded by the current Secretary of State in 1993. But our elected representatives have not had a real debate on the finer points of health reform, probably since that debate on the Clinton plan fifteen years ago.

If we don't act immediately to address the economic crisis, we could easily slip into a cycle of deflation, rising debt burdens, rising unemployment, and further deflation. A moment of hesitation could make this recession much worse. Can we say the same for health reform? Of course not? A moment's hesitation - even a year's hesitation, or two year's hesitation will probably find us about where we are today: with a health care system that could be vastly improved on a number of measures, but that generally keeps Americans healthy. What would a rush to reform health care risk? It risks leaving us with an equally poorly conceived system that we're likely to be stuck with for years or even decades to come.

I will note, this is not meant to suggest that there is no risk associated with rushing a program of economic recovery. Hindsight will certainly show us that there were major problems with TARP, TALF, ARRA, and every other "rescue" that's been rolled out since the summer of 2008. We will pay a price for these problems. But I would argue that these problems are far outweighed by the problems that would have emerged if we had waited longer to do something. I think the risks are flipped when it comes to reforms in general, and health care reforms in particular. Prudence and careful consideration will pay off. Obama should not rush into this (nor should he rush into education reform, finance regulatory reform, etc. etc.).

*The Washington buzz of Tuesday, the 28th (which absolutely swamps the events of last Friday in overal buzziness) largely negates the buzz on reconciliation of Friday, the 24th. Republican Senator Arlen Specter announced that he is changing his affiliation to Democratic, virtually assuring that by the Fall (when Al Franken will in all likelihood be seated), the Democrats will have a filibuster-proof majority anyway.

Reform & Recovery: killing two birds with one stone

Daniel's post deals with the limitation of political resources and a pragmatic balance of policy decisions... how should the Obama administration tackle economic and healthcare crises that press for a response? At the same time, reform of healthcare insurance in particular receives some consideration by Daniel in a way that the economic crisis doesn't. My sense is that for Daniel the case is closed for any significant objections to economic recovery work (and that's fine by me... fun as the blood curdling battle-cries of the past few months have been), and that it's various social welfare reforms that now deserve some closer scrutiny.

First, on the order of action to be taken. Keynes’ advice sounds sensible to me as applied to today’s situation, although some of Daniel's comments on healthcare don't leave me very comforted (not that this was Daniel’s point in making them)…

We have had somewhere around 40 to 50 million uninsured for years. It is a burden and it is a crisis, but that crisis clearly lacks the immediacy or urgency of the economic crisis.
...well, sure. But what it lacks in immediacy or urgency it makes up for in depth and longevity, doesn't it? We have become accustomed in the wake of 9/11 to dropping everything in response to situations of urgency… this was the heart of last week’s critique of torture, used for various clandestine ends and then brushed under the jurisprudential rug even by those who disapproved of the practices. It's the same here. The presence of a crisis should not cause us to drop all other considerations in deference. I don’t think the fact that the health insurance situation isn’t a crisis necessarily leads to the questions of comparison that Daniel asks, namely…

Health care is obviously a problem in this country - but is it a problem that throws millions out of work in a matter of months? Is it a problem that destroys a third of a family's savings? Is it a problem that will grow exponentially worse if it is allowed to fester for another year or two or three? No.
The answer to the last of these three questions may be “no”, and the answer to the first may be “not unless a swine flu epidemic hits those who lack adequate insurance”, but the answer to the second depends very much on whether any particular family faces significant injury or illness, and this is not an insignificant concern.

None of this means that economic recovery shouldn’t be focused on first, but nor do I think that the difficulties of the insurance question are conveyed by a strict either/or. In addition, those families that are likely to experience trouble finding or retaining employment are also the ones that are most likely to be uninsured. Somehow we need to account for how this can compound both crises, perhaps not on a large-scale demographic level, but certainly in a significant number of communities.

I do, then, see the problem as more one of steering through a Scylla and Charybdis, although I don’t like the language of “steering through”… Daniel says rightly that we elected Obama for a double task, and the image of dodging double threats doesn’t quite get at what we’re dealing with. More accurately, Obama needs to kill two birds with one stone here. The question becomes whether he can pull it off. Daniel raises concerns about an ill-conceived response, but as he himself points out, 1) we’ve already been discussing this for some time, and 2) the recovery plan isn’t immune to the same sorts of charges. Given that, the sensible counsel seems to be caution rather than further delay. None of Daniel’s arguments for waiting are problematic for a decision to cautiously move forward, and I don’t see how this is an either/or to the extent that he portrays it. It’s certainly worth pointing out where Obama falls short, but I’m inclined at this point to put more on his plate rather than less. I’m not convinced that we’ve reached the limit point of meaningful and well-structured consecutive responses to crises.

Tuesday, April 21, 2009

The Rule of Law & Political Power

This past week the Obama administration released Bush administration memos on torture of individuals under U.S. custody. The memos themselves don’t especially change the terms of the conversation, as outcry against the Bush Administration’s activities before and after the release of the memos remains much the same. One significant development is that President Obama has offered assurance that CIA operatives and others acting in good faith based on orders concerning torture would not be tried for war crimes or human rights violations (although this isn't necessarily the final word). The idea is that we should move on, leave past errors behind us, and turn a new page. This idea, however well intentioned, is wrong and unjust. Some good discussions of why can be found here and here.

That’s not to say, however, that those who tortured are evil sadistic monsters. These actions weren’t taken lightly, and they were done with the intention of contributing to the American effort in an ongoing “war on terror”. Joe Klein, even if I don’t agree with him, offers some good points about the importance of clandestine service and the political threats that this memo release and public outcry might pose for future CIA initiatives.

As I see it (and I don’t claim any originality in making this point), the situation is one of the rule of law versus political power. International and national law prohibits torture, making the case pretty straightforward on a legal level. At the same time, there is an argument to be made for political necessity in times of crisis, and it’s reasonable to assert that political authority has a role to play outside of the bounds of law in order to act in a swift or innovative manner given a situation not well-suited to “the rules”. I tend to be rather uncomfortable with these forays into the territory of established legal constraints, but I won’t deny that human creativity and initiative is meant to use the law; the letter doesn’t rule by itself.

My sense, however, is that in America we’re in real danger of tilting overboard away from the rule of law and towards assertion (or capitulation to) the political power du jour. My wife and I have started to watch the first season of 24 (I know, we’re way behind)… for those who aren’t familiar with the show, it’s a real-time counter terrorism suspense story where the hero is constantly bending or breaking the rules in the name of getting the bad guys. There’s a constant sense that those who are attempting to enforce the law are getting in the way of pursuit, and while the typical Hollywood collateral damage is present, it has been amplified by the fact that it is central to the story. The show could have been written by a Bush administration staffer seeking to sway public opinion about the necessity of extraordinary methods against terror. Daniel and I have discussed this previously with regard to just war, and it isn’t an insignificant consideration. Public consciousness about level of threat and the need for extraordinary response remains of prime importance in evaluating what might be considered allowable action by the government.

On a broader note than entertainment culture, one rarely hears a popular level discussion of the legal structure in America without encountering criticisms of 1) activist judges or 2) the unfortunate nature of our litigious society. Whatever the merits of these critiques may be, our society is one where the rule of law has a strictly prescribed role and where public sentiment is not well disposed to its expanded use.

Political power, of course, is also very restrained in America. Libertarian sensibility and a reaction against the abuses of imperial government during the colonial period have made the U.S. into a country that enforces a balance of power within government and an equally important democratic balance of the political power of constituents against their elected officials. It’s worth noting, though, that the democratic impulse is itself a power struggle. Vigilantes and even more ordinary voters hold a sway that is more politically impressive than legally binding. The same goes for the media of left- or right-leaning persuasions, who can have an impressive impact upon the course of society without exercising any concrete jurisdiction in doing so.

American civil action is determined largely by the rule of men rather than the rule of law. That’s not good or bad in itself- people can be just, and laws can be unjust- but it will have implications when a society such as our own encounters torture memos and a past administration guilty of numerous wartime injustices. And this orientation towards political aims rather than legal order will not suddenly disappear with the Obama administration… quite the contrary; Obama is the one that has announced that he will not seek prosecution of past injustices. This sets us up, I’m afraid, for a continued bloating of self-confidence amongst those in clandestine service and a continued privileging of what is perceived as a political necessity despite nominal references on the part of Obama toward his commitment to the rule of law. They ring rather hollow when such commitment is demonstrated by the mere release of the very torture memos that should goad his administration on to prosecution.

Four Reasons Why the Torturers Must Be Prosecuted

I agree completely with Evan that the torturing of prisoners that went on during the Bush administration was unambiguously criminal, and that the Justice Department needs to charge somebody with these acts, even if the burden of proof may represent a steep uphill battle. The torture of a few al Qaeda operatives is important because it violates U.S. and international law, but it's not important for that reason alone. I'm confident that the law is violated all the time - sometimes flagrantly, sometimes accidentally - and not all of these infractions merit public indignation over whether the Justice Department decides to prosecute. So why this time?

- First, because this crime is uniquely heinous. As Christopher Hitchens has said, "It used to be in the press you remember people would say that it simulates the feeling of drowning. You've read that I'm sure. In fact it doesn't simulate it at all in fact you are being drowned." There is a reason that both the Republican and the Democratic candidate for president this Fall came out strongly against torture, and it had less to do with McCain's war experience than it did with the fundamental incongruity of torture with modern society.

- Second, because this is not just a legal violation - it as a constitutional violation as well. While some of the Bill of Rights protections of criminals arguably do not apply to prisoners of war, and those who are tried by military tribunals, the injunction against cruel and unusual punishments has no such distinction. The numerous protections guaranteed by the fifth amendment are qualified by a very vital loophole that the Bush administration has ably exploited: "No person shall be held to answer for any capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." The eighth amendment, for what should be obvious reasons, includes no such qualification: "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted."

- Third, and quite simply, the Bush administration has to be held accountable for something with respect to the prosecution of the war on terror and the Iraq War. History will judge the American people to be as complicit with the Bush as the American people were found to be with Jackson's Trail of Tears or FDR's internment camps if they do nothing to right this wrong. The specific points of the Patriot Act, the War on Terror, the Iraq War, the Plame Affair, extraditions, Guantanamo Bay, Abu Gharib, etc. can certainly be debated by reasonable people, and several of these cases have already been tried. Not all critiques may end up being legitimate critiques (I've agreed with the administration on a few of these concerns. For example, I'm a strong supporter of a vigorous War on Terror, and I don't think there's anything wrong with having a prison at Guantanamo, so long as the proceedings there are legal). This third point is therefore not meant to be a thoughtless, blanket indictment of the Bush administration. Instead, it is a recognition that life in America and abroad was radically different between September 11th, 2001, and January 20th, 2009. Some of it was handled quite well, and some of it was handled not as well. But we cannot abandon an evaluation of these years in an effort to "move forward". We can't move forward with confidence without knowing where we may have misstepped in the path. Obama's justification for failing to prosecute for these crimes is completely wrong-headed. If we don't grapple with what was done we have no road map with which we can move forward.

- Fourth, and by far the most important, we must prosecute as a defense against fascist tendencies. I have been enormously critical of news outlets that apply labels like "fascist" or "socialist" to President Obama. That kind of hyperbole is incredibly destructive. So why do I use this word now? It is because I'm concerned about letting the mindset of fascism take root in this country. Allow me to explain my distinction: it is my opinion that the Iraq War was aggressive and unprovoked - that we should have focused our energies on the War on Terror, which we actually had cause to prosecute. Despite my strong disagreement with Bush on the Iraq war, I don't think the war had any tendency towards fascism at all. Bush made a case to the people. He made a case to the international community. He had allies. He got the approval of Congress. A reasonable person could say that he didn't intentionally and recklessly abandon international law. In other words, the Iraq War may have been ill-advised, inappropriate, and perhaps even illegal: but it was done in broad daylight, it was not executed by personal fiat, and it was prosecuted in line with the Constitution. It was therefore not fascist. The same is true of the stimulus package and the TARP program. I'm infuriated when these things are called "fascist", not just because I agree with their necessity, but also because the critics ignore the clear consistency of the method of passing the stimulus package and the TARP with the liberal political tradition and democratic principles. No such consistency exists for these acts of torture, and while they may not be fascist themselves, they represent "fascist tendencies". Fascism is about method, not policy. A "benevolent dictator" could implement the same programs that any presidential administration in history has enacted, but they would still be fascist if they did so by will of the president, rather than by the will of the people, through the Constitutional apparatuses designed and assented to by the people. Likewise, democracies are capable of a great deal of misery, but poor or even ruthless decisions on the part of democracies are not "fascist" so long as they are implemented by a government limited by well defined constraints on it's power and the will of the people. I think this distinction is important to make, because we have flirted with fascism on more than a few occasions in our country's history. The bedrock fascist position is best stated by Nixon, probably the closest we have come to a president with a truly fascist mindset: "When the president does it, that means that it is not illegal." Nixon probably hurt his policital adversaries more than anyone else - his crime ultimately didn't result in much more of substance than a broad-based loss of innocence - but this man's very mindset was a fascist mindset. He was, and I think he will be remembered as, a fascist who held an official position in a democratic Republic for a number of years in the late twentieth century. Was Bush a fascist in this mold? Was Cheney? Prosecuting torturers won't answer that question, and we may never know. We probably won't have the benefit of a Frost interview for those men, like we had with Nixon. But the tortures reek of something terrible, in the same way that Watergate did. And even if the torture could be explained away in various ways (just like Watergate could have itself been explained away as quite insignificant), the entire endeavor is indicative of "fascist tendencies" in the Bush White House - a tendency to place the president above the law, rather than under it. We need that tendency to be scrutinized in the light of day. And perhaps I have it all wrong and the torturers will be found not guilty, and this whole post was all a big mistake - but I think the preponderance of evidence for enough people suggests that we need to shore up the value and strength of the law in America. We're likely to have very trying times ahead - we don't want a charismatic president like Obama to enter trying times without a firm message from the American people that fascist tendencies are not acceptable, regardless of the objective desirability of the program that the fascist is offering.

Tuesday, April 14, 2009

Smith's Theory of Moral Sentiments

This year is the 250th anniversary of the publication of Adam Smith's "Theory of Moral Sentiments" - the work of moral philosophy that in many ways served as a precursor to his "Wealth of Nations". Econtalk.org is marking the occasion with an audio series on the book, the first installment of which was recently released.

I, like many, am far less familiar with Moral Sentiments than I am with Wealth of Nations. And also, like many, my understanding of Wealth of Nations is largely restricted to the popular cookie-cutter interpretation of that work. To summarize: the pursuit of self-interest is actually beneficial to society, and restrictions on the pursuit of self-interest often have unintended negative consequences. The foundational "human motivation" in Wealth of Nations and most subsequent works of economics is this self-interested pursuit of "utility" or "profit". The few exceptions, including institutionalists like Thorstein Veblen, or heterodox thinkers like John Kenneth Galbraith (I'm thinking of the Galbraith of The Affluent Society primarily, rather than the Galbraith of The New Industrial State) seem to prove the rule.

There are many reasons to believe that any model of society based exclusively or even primarily on the motive of utility maximization is likely to imperfectly represent (and perhaps more substantially, imperfectly predict) reality. It should be self-evident (and I don't appreciate the casual use of that hallowed phrase) that we are motivated in our own lives by other things than self-interest. In many cases, when economists confront this reality, they explain it away by suggesting that alternative motivations aren't directly relevant to the marketplace. Yes, altruism, jealousy, etc. may motivate much of human activity - but greed and self-interest exercise such primacy in market decisions and any model determining production and allocation can safely disregard other motivations.

Adam Smith used his "Theory of Moral Sentiments" to outline the major facets of human motivation beyond self-interest, and for that reason it should serve as a motivator for economists who cling to utility or profit maximization models. This is not to say that self-interest should be marginalized. It will always be central to economics. But I would like to see (I would like to design myself) models that explicitly model the optimization of some combination of relative wealth and absolute wealth. We know people "keep up with the Jones's" - why do we pretend that relative wealth is irrelevant in our models?

Often we look back to Adam Smith, accept the foundational insights into the market that he introduced, and then proceed to qualify the Smithian worldview with various externalities and market failures that economists have come up with since the 18th century. The Wealth of Nations earns it's place of honor on our bookshelves (I have three copies myself, my favorite of which is about 125 years old and looks quite handsome, safely nestled on it's shelf, four feet above the floor), but it is rarely cracked open for actual guidance. I've never read Moral Sentiments, but I think it holds the possibility of exploding the profit-maximizing myth of modern economics. If economics is really going to be a science of human decision making, it should more explicitly encompass the full range of human motivations.

Moral Sentiment in Macrocosm

If Daniel has a cookie-cutter understanding of Smith’s thesis, then I am even less knowledgeable of the terms of this history (a fact of which readers are probably already well aware). Daniel’s suggestions for expanding economic understandings of human behavior to account for non-profit maximizing approaches seems right-headed to me. Economists run the risk of fitting reality to theory rather than vice versa if they insist on such a flat account of human action, and at this point scientific claims begin to go out the window (which is ironic but still the case… I take it that there’s some squeamishness about moral sentiment in economics as too humanist and not concrete enough… ironically, the alternative is a rather ideological clinging to a materialist justification of consumption that can be just as unrealistically theoretical as sentiment of any other sort).

Daniel lays out a broad understanding of moral sentiment that opposes a caricatured basic selfishness. Recognition of sentiment beyond self-interest would indeed broaden the perspective of social scientists, and it might also have implications for such fields as evolutionary biology; as much as the “selfish gene” has been a watershed moment in our understanding of biological development, it turns on the same basic assumption of atomized self-interest, here on the genetic level and shaking off some of the personifications of the homo economicus, though the principle remains the same. And again, a wider view of human sentiment wouldn’t marginalize the selfish gene any more than the profit maximizing impulse in human behavior. It would, however, be a valuable check against overstating the case for such a mechanical functioning that seems suspiciously easily fitted to formulae and models.

What I’d like to focus on briefly is another aspect of social thought about human behavior suggested in Smith. The contrast between self-interest and broader moral sentiment is there, and it is perhaps the most obvious thing we could take away from Smith’s work. But embedded in modern economic theory is perhaps an even more important and revolutionary shift in our understanding of person and society. What I’m thinking of here is the basic opposition between individual and collective upon which something like economic self-interest depends.

In much classical thought and carried through the Abrahamic faiths as a central theory of Western culture is the idea of the person as “microcosm” of society’s “macrocosm”. Society was often depicted as a body, whose various organs worked in cooperative fashion and depended upon one another. Or, elsewhere, the virtue or vice of an individual- often the king- was seen as having a direct causative influence on the moral status of the people and society as a whole.

This is a radically different understanding of society than is presented in modernity, and the modern understanding isn’t limited to economics. Daniel may be working with a Smithian “immoral man and moral society”, but as a theologian I’m working with a Niebuhrian “moral man and immoral society”. And usually, if a one doesn’t line up with Smith, they simply reverse the equation and stand with Niebuhr. The point in either case is that the individual and the collective offer a competitive (albeit ultimately constructive) relationship through which we must understand both.

I don’t think that this modern way of looking at things is bad. The classical microcosm/macrocosm relationship between person and society has just as many shortcomings as the modern “man v. society” theme, and probably both should be employed insofar as they make sense of the world around us. They may even share some common ground, actually. The idea that the human is humanity in miniature or in its particularity may sound a little mythical, but so is Smith’s “invisible hand”, which simply serves as a posited bond between the prosperous individual and the prosperous society meant to make sense of what at first appears to be a contradiction. Both are explanatory fictions that make something coherent of the facts, and both have something to say in an account of human behavior.

Daniel closes by saying, “If economics is really going to be a science of human decision making, it should more explicitly encompass the full range of human motivations”. Seconded. And in addition, our social scientific understanding should more explicitly encompass the theoretical models that we use to understand personal and societal action in relation to one another. Where Daniel presents the horizontal complexities of human behavior, I’ve tried to outline an approach to the vertical complexities of the same.