Philosophy, Values, and Economics

Ed Glaeser at the New York Times says that freedom is the moral center of gravity for economics. He writes:

"Economists often present a cold public persona, emphasizing dollars and sense over the rousing rhetoric of moral argument. But by appearing as technocrats who seem concerned only with the bottom line, we allow ourselves to be portrayed as people without a sense of right and wrong.

Two weeks ago, I wrote about ethics and economics, calling for appropriate steps that economists could take to disclose conflicts of interest. Today, I focus on a larger issue: the complaint that economics is a discipline without a moral core.

Modern economics began with Adam Smith and the Scottish Enlightenment, a movement full of ethical debate by thinkers like David Hume, Francis Hutcheson and Lord Kames. Smith himself, who followed his teacher Hutcheson in the chair of moral philosophy at the University of Glasgow, wrote “The Theory of Moral Sentiments,” which included such ideas as “to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature.”

As Smith moved from moral sentiments to political economy, his focus changed from the perfection of private nature to the improvement of public systems. Most economic writing since then has typically shied away from offering moral advice to individuals and instead focused on improving public institutions and policies.

But that shift doesn’t mean that there isn’t a deep moral tenet – a belief in the value of human freedom – at the core of our discipline."

He mentions The Theory of Moral Sentiments, which reminds me - Robert Shiller was recently interviewed about his five favorite books and "human traits essential to capitalism". The interview is here. The first book on his list was Moral Sentiments.

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Peter Boettke also has a great post up on philosophy and economics that comes to much the same conclusion that Glaeser does. He writes:

"In his very readable On Ethics and Economics, Amartya Sen argues that modern economics has existed in the corner solution of economics as engineering as opposed to economics as philosophy. At the time he wrote that book, Sen was agitating for a movement away from economics as engineering and toward economics as philosophy.

I agree with Sen. I have made the distinction in my writings between the "mainline of economic teachings" that can be traced back to David Hume and Adam Smith and runs forward to F. A. Hayek, James Buchanan, etc., and "mainstream economics" which is more or less a sociological concept related to what is currently scientifically fashionable among elite academic economists. It is contributing to the "mainline" of economic thought that is more important in the long run, whereas fashion is fleeting. A phrase I often invoke in conversation with my PhD students is "shelf-life", which simply means how long will that idea stay in the heads of economists. I first heard this distinction between "mainline" and "mainstream" from Kenneth Boulding, and I got my attitude about "shelf-life" from James Buchanan.

Anyway, I am optimistic that the last decade has seen considerable movement along the lines Sen argued for in On Ethics and Economics, and with that a renewed appreciation for the "mainline" of economics as opposed to an exclusive pre-occupation with what is considered "mainstream" in the contemporary literature. Economics continues to be a more fascinating discipline year after year, and it is more interesting precisely because that leading thinkers are compelled to rethink the sort of questions in moral philosophy that David Hume, Adam Smith, F. A. Hayek and James Buchanan wrestled with throughout their careers.

I was very interested to see this article in today's NYT by Edward Glaeser on "The Moral Heart of Economics." Glaeser reaches back in time to Hume and Smith and forward to Milton Friedman in his essay, and concludes that:

Economists are often wary of moral exhortation, as many see the harm so often wrought by arguments that are long on passion and short on sense. But don’t think that our discipline doesn’t have a moral spine beneath all the algebra. That spine is a fundamental belief in freedom."

I have a comment on it - third one down.