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Art, Science and Political Economy*

Summary:
John Neville Keynes (1852-1949), the father of John Maynard Keynes, famously divided economics into positive economics (study of what is), normative economics (study of what should be) and the "art of economics" (applied economics where the lessons of positive economics are utilized to address normative economics).  It is in the "art" that J. N. Keynes (and Marshall and Pigou) thought that the science of economics will bear fruit. James M. Buchanan (1959) similarly argued that "positive economics" and "political economy" could be reconciled in a way that the zeal of the idealistic reformer could be satisfied while the discipline of the science was maintained.  Suggestions for change (what should be), Buchanan argued, would be limited to changes in the structural rules, and the

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John Neville Keynes (1852-1949), the father of John Maynard Keynes, famously divided economics into positive economics (study of what is), normative economics (study of what should be) and the "art of economics" (applied economics where the lessons of positive economics are utilized to address normative economics).  It is in the "art" that J. N. Keynes (and Marshall and Pigou) thought that the science of economics will bear fruit.

James M. Buchanan (1959) similarly argued that "positive economics" and "political economy" could be reconciled in a way that the zeal of the idealistic reformer could be satisfied while the discipline of the science was maintained.  Suggestions for change (what should be), Buchanan argued, would be limited to changes in the structural rules, and the suggested changes should be treated as hypotheses to be tested in the democratic process of collective decision making.  Buchanan's process is guided throughout by a true (not hypothetical) compensation principle and the ultimate test is agreement.  In making his argument, Buchanan was also affirming an important democratic principle -- we economists have no privileged position in the conversation with our fellow citizens.

Of course, this insistence on the democratic principle as a constraint separates Buchanan from others in this discussion of the science and art of economics and political economy.  Keynes, and more famously his son, held fast to the commitment that economics must bear fruit and provide "expert" advice on how to address social ills -- be that poverty, ignorance, and squalor, or instability, idleness and inequality.  Those trained in economics can design appropriate solutions to society's problems and fix the world in the service of democratic polities.  The "experts" can effectively govern over, not govern with, their fellow citizens.  This was, and remains, the "Harvey Road" presumption, or in the US the "K Street" presumption, that dominates progress thought.

Buchanan's negative reaction against this is evident from his first paper, where he challenges the idea of the "fisc" (1949) and it is obviously there in his Nobel lecture where he invokes Wicksell -- as he did throughout his career -- to argue that economists must cease proffering advice as if they were employed by a benevolent despot. (1987)  His argument has roots not only in Wicksell, but in Knight and Hayek.  Knight once states that when he hears an economist say "I want power to achieve X, Y, Z", he stops listening after the first 3 words because those are the only words you can believe.  Knight also repeatedly argued that appeals for expert rule where fundamentally non-democratic in nature.  Now imagine what a hard pill that was for Knight to swallow because he also believed economics was little more than applied common sense and that fellow citizens would see the points being made by  if only they would open their eyes.  But even given this reality of a citizenship often composed of individuals suffering from ignorant prejudices, the economist has no privileged place in democratic deliberation.  He cannot impose his will on fellow citizens, he can only attempt to persuade them through thoughtful deliberation to see his point.  To Knight and Buchanan the idea of government by discourse is critical to understanding their system of thought.

From Hayek, on the other hand, Buchanan drew inspiration not only about the spontaneous ordering of affairs within a specified institutional framework, but the necessity of, and importance of, the institutional framework as a subject of serious study.  Buchanan called for a "genuine institutional economics".  "The standard procedure," Buchanan argued, "of assuming competitive order is not acceptable.  Appropriately thorough analysis would include an examination of the institutional structure itself in a predictive explanatory sense.  The economist should not be content with postulating models and then working within such models.  His task includes the derivation of the institutional order itself from the set of elementary behavioral hypotheses with which he commences." (1965, 5) In short, institutions matter.  And, for economic analysis to be meaningful, institutions must be endogenous to the analysis.

Buchanan differed in a serious way from Hayek in how he went about endogenizing institutions, and his various analytical moves effectively meant that constitutional craftsmanship for him would take on a sort of top-down character.  But a genuine institutional economics need not proceed in that fashion.  Elinor Ostrom's various studies of collective decision making and constitutional craftsmanship, for example, are more or less all bottom-up explanations.

The point I want to stress is a methodological and analytical one. If the "art" of economics and political economy is to be found in the rule-level of analysis -- as I believe it is -- then how best do we study the emergence of institutions and analyze the maintenance, and perhaps deterioration, of institutions using the tools of basic economic reasoning (positive economics)?  We cannot be content with what Barry Weingast has recently called the "neoclassical fallacy" where institutions are acknowledged but not analyzed.  Our goal must be, as Buchanan once put it, to use "the technical economic principles that one must understand in order to assess alternative arrangements for promoting peaceful cooperation and productive specialization among free men.  Yet political economists go further and frankly try to bring out into the open the philosophical issues that necessarily underlie all discussions of the appropriate functions of government and all proposed policy measures."

Thinking in our discipline cannot be done in splendid isolation.  This was a core motivating idea behind the Public Choice Society, and its predecessor The Committee on Non-Market Decision Making.  Vincent Ostrom used to suggest we needed a new science of politics, a new science of sociology, and a new science of economics so we can realize the "art and science of association" appropriate for a democratic society.  This necessitates a return in our teaching and our research to the modes of thinking and habits of thought one finds in moral philosophy and moral sciences from Adam Smith to John Stuart Mill.  During that period Philosophy, Politics, and Economics were blended seamlessly together, not just a smorgasbord of classes patched together to meet degree requirements. And, the empirical testing ground was to be found in history and anthropology and archeology, and not in data analysis per se.

We must be prepared today to wrestle with the same problems that Mises/Knight/Hayek faced and which Buchanan/Tullock/Ostrom faced -- the fate of moral philosophers in the age of economics scientism.  And, we must recognize that if we fail in this task, as Hayek warned in his Nobel lecture, we don't just condemn economics to intellectual bankruptcy, we actually commit ourselves to standing idly by as those self-anointed economic "experts" become potential tyrants over their fellow citizens and destroyers of civilization.

The stakes we might say are quite high.

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*Remarks read at the 2018 Public Choice Society meetings in Charleston, SC.  

Peter Boettke
Peter Joseph Boettke (January 3, 1960) is an American economist of the Austrian School. He is currently a University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU.

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