Re: Question for the Lefties -- II

["Jeffrey L. Beatty" <Beatty.4@xxxxxxx>]

Let me first make it clear that I do not identify with the Marxist left.  Nor am I a democratic socialist or even a very good social democrat--although I might make it in the milktoasty Tony Blair version of the British Labour Party.  I'm basically a plain old Bill Clinton Democrat, influenced in my academic work on international political economy primarily by liberal institutionalism in international relations theory and old and new institutionalism in economics.  Thus, I am not really defending my own position when I respond to some of the questions posed by David Shemano.  Nevertheless, I have some comments to offer.  


At 06:01 PM 12/14/00 -0800, David Shemano wrote:

>2.	To the extent that your criticisms of capitalism are primarily
>political-social (e.g. capitalism generates inequality, competition is
>dehumanizing, etc.), to what extent is your argument dependent on a specific
>understanding of human nature?  I am aware that lefties do not like
>sociobiology, because that field assumes/evidences a constant human nature
>that if true would call into question the possibility of the
>political/economic system that lefties seem to prefer.  Therefore, is it
>critical to your arguments that "bad" human behavior (competiveness, greed,
>etc.) is a product of capitalist social/economic relations and such behavior
>would not exist once social/economic relations were reconstituted?
>


It is probably safe to say that a great many people in the Marxist left might be attracted by the argument David suggests.  Personally, I have always found their doing so suspect.  It smacks of an attempt to render their theory impervious to empirical criticism.  The argument seems to be, "Let me assume the existence of a world in which all the rules are different, one that hasn't existed anytime except perhaps in the mists of prehistory, and one that might not even be possible, and I can prove to you that it's the best of all possible worlds."  (Extreme free-marketeers have their own strategy for protecting themselves from empirical criticism, BTW,--it's called "unrealistic assumptions").

Nevertheless, I caution you against setting up the argument as a debate between believers in an infinitely mutable "human nature" and believers in an immutably egoistic human nature.  Belief in the perfectibility of people (in my terms, their infinite malleability) underlies much of the Enlightenment tradition upon which Marx and other socialists drew.  Notions of a static, egoistic human nature, of course, underlies the self-interest-based theories of neoclassical economics and realism in political science (not to mention a good chunk of Judeo-Christian theology!).  But there is no need to accept "socialist man" and _homo economicus_ as the only two possibilities.  Even within the neoclassical tradition, the notion of humans as "rational egoistic utility-maximizers" aiming only at maximizing their consumption material goods and services has its critics (see Elinor Ostrom's presidential address to the American Political Science Association from 1997, published in Ostrom 1998).  Institutional economists like Douglass North have attempted to take social norms seriously by arguing that people undertake a sort of cost-benefit analysis in deciding whether or not to obey them (cf. North 1990, inter alia)--i.e., they obey social norms when the benefits of doing so outweighs the cost.  For examples of other attempts that I, at any rate, find more intellectually satisfactory than North's, see Crawford and Ostrom 1995, March and Olson 1989, Mansbridge 1990, and Ben-Ner and Putterman 1998.

The work I find especially interesting, however, is that of one of our Ohio State University psychologists, Philip E. Tetlock.  He has developed a typology of "alternative functionalist metaphors" representing different sets of assumptions about the goals people are attempting to achieve.  Investigators' assessments of social actors' judgemental biases and errors depend upon our assumptions about the goals people are trying to achieve:  are they intuitive scientists, trying to understand the world?  Or are they intuitive economists, attempting to maximize utility in competitive markets?  Or are they intuitive politicians (attempting to maintain good relations with key constituencies), intuitive theologians (trying to protect sacred values against secular encroachments), or intuitive prosecutors (trying to deter violations of the normative order) (cf. Prof. Tetlock's Web site at http://www.psy.ohio-state.edu/social/tetlock/tetlock.htm). 

The important point is that social scientists investigating the "real world" have discovered that observations of peoples' actual behavior by no means clearly conform to the model of _homo economicus_.  When we adopt behavioral assumptions about human beings, it is important to specify the goal they are attempting to achieve.  There are many possible sets of behavioral assumptions other than the gloomy self-interest based model often taken for granted in Western society and the "perfectibility" assumption of Enlightenment optimists.


>3.	It appears to be a theme among many of you is that capitalism is
>problematic because the system produces goods and services based upon
>"demand" instead of "need."  As I understand it, the fundamental
>methodological assumption of neoclassical economics is radical subjectivism,
>meaning that neoclassical economics is entirely neutral on what consumers
>demand and that "need" is an unintelligible concept -- if consumers demand
>an end to poverty and global warming, the market will eventually deliver it.
>Is it your position that there is something inherently wrong with capitalism
>that produces "incorrect" demand?  If so, doesn't that assume a prexisting
>ethical system that distinguishes "good demand" from "bad demand?"  If so,
>what is that ethical system?
>


The argument David states sounds to me like an extreme libertarian variant of neoclassical economics, perhaps one associated with the Austrian school (the rustle you just heard was me breaking out my cross and garlic).  It is true that neoclassical economists are subjectivists in the sense that they claim not to make value judgements about the different demands of consumers.  From a strictly economic perspective, money spent on a hooker is no more worthy of moral condemnation than money spent on a diamond ring for the fiance, according to the neoclassical economists (hmmm.  Some masculinist examples sneakin' in there).  To claim otherwise is to engage in an "interpersonal utility comparison", usually treated by neoclassical economists as tantamount to the Unforgivable Sin (actually, the _real_ Unforgivable Sin for neoclassical economists is to be a political scientist! : ) ).  

It is not true, however, that all neoclassical economists claim that the market will invariably provide whatever consumers demand.  Many neoclassical economists recognize situations of market failure, i.e., situations in which markets fail to provide incentives for optimal production of goods and services.  The most familiar example of these, as you probably already know, occurs in the case of "public goods", goods with significant positive externalities that cannot be completely captured by any one producer of the goods.  These externalities exist when the goods are characterized by non-rivalry of consumption (one person's consumption of the good doesn't preclude another person's consuming the same good) and non-excludability of supply (once a good is provided to anyone, no one can be excluded from consuming it).  Sidewalks are the classic example of public goods.  Returning to David's argument, poverty elimination and environmental protection can also be considered public goods.  Theoretically, such goods are undersupplied by markets since no single producer can capture the positive externalities associated with them.  Thus, the benefit any one producer can capture is outweighed by the cost of producing the public goods.  Some neoclassical economists would argue for interventionist public policy in cases such as these; more libertarian economists would argue that the public goods dilemma emerges because of misspecified property rights.  

Returning to David's argument, my argument against the position he outlines is that the alleged value neutrality of the subjectivist position is a phony value neutrality.  I've already noted the argument for the existence of market failures.  Thus, if political institutions allow markets to function and do not rectify the concomitant market failures, we may say that their doing so constitutes a de facto political choice in favor of the sorts of goods and services markets are good at providing, and not the ones they are not good at providing.  
It constitutes a de facto choice that, e.g., it is more desirable to produce private goods and services for consumption rather than the public goods of research on AIDs or Lou Gehrig's disease.  Even if we accept the more radical libertarian position that market failures can be overcome by proper specifications of property rights, we must conclude that rights claims are embedded in a legal order which is in turn embedded in a normative order chosen by society. These choices can in no way be considered value neutral!  Indeed, the implicit materialist value judgement these choices contain, and the relative weight they assign public and private goods, is the basis for much of the moral criticism of capitalism by the left.  

I apologize for the length of this post, my first lengthy one to this list.  I realize much of this material is probably agonizingly familiar to most of the people on this list; nevertheless, it appeared to me that it might be of some use to David.

REFERENCES

Ben-Ner, Avner, and Louis Putterman.  Economics, values, and organization.  Cambridge; New York, NY: Cambridge University Press, 1998.

Crawford, Sue E.S.; Ostrom, Elinor.  "A grammar of institutions." The American Political Science Review 89, no. 3 (Sept 1995):  582-600.

Mansbridge, Jane J.  Beyond self-interest.  Chicago : University of Chicago Press, 1990.

March, James G., and Johan P. Olsen.  Rediscovering institutions : the organizational basis of politics.  New York: Free Press, 1989.

North, Douglass C.  Institutions, institutional change, and economic performance.  Cambridge; New York : Cambridge University Press, 1990.

Ostrom, Elinor.  "A behavioral approach to the rational choice theory of collective action: presidential address. American Political Science Association, 1997."  The American Political Science Review 92 no. 1 (March 1998): 1-22.

Tetlock, Philip E.  Personal Web Page.  Viewed Dec. 17, 2000.  Available online at http://www.psy.ohio-state.edu/social/tetlock/tetlock.htm
--
Jeffrey L. Beatty
Doctoral Student
Department of Political Science
The Ohio State University
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Email:  Beatty.4@xxxxxxx
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