Whence the Social Sciences ? – 3 : Economics.

Finally got a decent amount of time off from work and studies and all that to write some more.
Last time was some comments on method of the early social scientists, and now something more about economists in particular.

Economics, in the early stages as is now, was a means to understand the patterns in the varied economic transactions conducted by people, how some things came to be valuable, and some worthless. The times of the early economists was during when the feudal systems were slowly going out of fashion, and a new phenomenon called the market was being observed. Here, the market is not some place you go and buy your vegetables, which is but a manifestation of it, but rather in a more general sense where the three important goods, Land, Capital and Labour were to be freely sold and bought. Neither Land nor Labour were previously freely exchangeable under the feudal system.

The transition from a conservative feudal society to an upstart, sanguine capitalist society was not a smooth one, and the varied angles are described well here. The first few attempts to explain economic behaviour came from the Physiocrats and the Mercantilists. Mercantilism was taken apart later, and Physiocracy was never fully accepted. The watershed that occured was, as everyone knows, the publication of the Wealth of Nations by Adam Smith. The book is massive, at times boring, at others highly insightful, at others hugely frustrating, but awe inspiring if you consider the amount of work that would have had to go into making a work like this. Though most of his theoritical contributions to economics are no longer accepted as they were presented by him, there is no questioning his influence on present day thinkers, a famous example being Amartya Sen. His normative doctrine about allowing people free to do things as they choose to, and removal of barriers are definitely still applicable in modern society. It is a shameful thing that many industrialists in the years following Smith used laissez-faire as an excuse to exploit people rather than working for the upbringing of society as a whole which Smith hoped for.

The notable economists who followed him were witnesses of the devastation of the poor that the factory system brought about, and were definitely of a more gloomy and less optimistic outlook.
Malthus, Marx are definitely good examples. There were also some not slightly mad personalities who dreamed of a perfect society which could be brought about, people like Saint-Simon and Fourier (not the scientist!).

Though all of these were prone to seeing grand visions of a perfect world, (except Malthus, of course, who thought people would breed faster than the earth could supply food for them, and therefore mankind would implode upon itself), there was one thing common about all of them : They were deeply concerned about the lot of the common man, and tried to find methods which would help ameliorate the plight of the masses.

Then came another watershed : Edgeworth. The man tried to mathematically study economic processes and his method became quite popular, since it dealt with numbers which don’t complain, talk back or revolt. The previous problem of studying man’s monetary associations with another was linked to solving linear algebraic systems or differential equations. The philosophy which made this possible is known as utilitarianism, and was popularised by Jeremy Bentham, a social reformer from England. It is said of Bentham, the amount good that he did in practice, was counterbalanced by his cloudy philosophising about the innate nature and urges of man. His normative doctrine goes something like this : Man has two masters, pain and pleasure. He always tries to reduce pain as much as possible, and increase pleasure as much as possible. If a man goes after anything but pleasure, he is obviously irrational, and therefore does not count. Even people dying in war, sado-masochists are after pleasure. We choose things purely because they give us pleasure. If we get x units of pleasure by acquiring one thing, and y units acquiring another, we get something like the sum of pleasures if we acquire both. Thus, what is morally right is that which gives us pleasure, and whatever causes pain is morally wrong. However, since people can have opposing desires, moral correctness for the society is that which gives maximum amount of pleasure for the maximum amount of people. He went on to give a felicific calculus that helped one calculate the sum of the pleasures of individuals to calculate the total pleasure for the society.

This philosophy, in a highly refined and sophisticated package is what is presented to us as economics. Once the trivial parts about how to add pleasures and pains and knowing the nature of man are settled, one can go about building a superstructure which will help us understand economic behavior. Now, since one accepts that pleasure is subjective, we go about converting it to an objective measure which can be measured. Veblen goes about showing how economic behavior is related to the current culture and institutions, and cannot be seen as a static process in his Limitations of Marginal Utility. Though it has had its detractors, Utilitarianism has been spectacularly successful and tenacious and survives to this day, not least because of the fact that modern economics was built on it.

Thus, we see how economics evolved from an attempt to understand economic behavior by empirical studies to modelling empirical data to form a mathematical expression which claims to explain away human uniqueness. May be there is a model for that too, who knows.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s