Lall Ramrattan - The Purpose of Life in Economics: Weighing Human Values Against Pure Science

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The book calls for a broader purpose for economics than a mere means to ends analysis. In current practice, economics is focused too minutely. Although Adam Smith, the father of economics, was working with a vision of the economic process which allows the practitioners to think economic problems through, not in separate bits, but together, as explained by Hicks (Hicks, 1983, p. 6), his approach is considered self-centered. While humans are endowed with multiple faculties, Smith honed in on only the one that will produce plentiful revenue for themselves, and to supply the nation with sufficient revenues for public services. Such a goal assumes inequality, situates morality on greed, and does not impute a true social cost of production, particularly of the environment. In times of crises, Smiths vision is not consistent with expenditures on public works and institutions, which are in the interest of the individual (Robbins, 1976, p. 7).

David Ricardo had at heart the distribution of output. He believed that the laboring classes should have a taste for comforts and enjoyments, and that they should be stimulated by all legal means in their exertions to procure them (Ricardo, 2004, p. 100). He was particularly concerned that this goal should not be achieved by a policy of reducing the population, but not for the reason that Scrooge gave for reducing the surplus population. Rather, he was concerned that such a policy will reduce production and therefore defeat the purpose.

The philosopher and economist, John Stuart Mill, sought a goal that would humanize economics. He stood on the shoulders of Jeremy Bentham and David Ricardo, on utility theory and distribution theory, to achieve that purpose. With regard to utility, he held that the sole evidence it is possible to produce that anything is desirable is that people actually do desire it. If the end which the utilitarian doctrine proposes to itself were not, in theory and in practice, acknowledged to be an end, nothing could ever convince any person that it was so (Mill, 2001 [1863], p. 25). Mill improved utilitarianism by distinguishing higher from lower pleasure. The test for this is that one who experiences both would prefer the higher pleasure thing. The higher pleasure may require a higher education or wisdom for it is better to be Socrates dissatisfied than a fool satisfied (p. 13).

With regard to distribution, Mill advocated a special brand of equality, which on the one side has the theory of dependence and protection, and other that of self-dependence (Mill, 1909, p. 753). As is expected of every human, Mill sanctioned the latter. The poor should not depend on the rich in their thinking, morality, or religion. In the economic sense, he regarded relation between protector and protected as belonging to a rude and imperfect state of the social union (p. 755). The modern poor can be self-dependent because they have the laws to protect them, and where laws do not reach, manners and opinion protect them (Ibid.).

The classical economists, Alfred Marshall, wrote that economics has to use every method known to science. And as to scopeeconomics is a study of mans action in the ordinary business of life. It inquires how he gets his income and how he uses it (Marshall, Volume One, 1996, pp. 299300). We are told that the Mecca of the economist lies in economic biology rather than in economic dynamics economics (Marshall, 1982 [1890], p. xiv). In a letter to John N. Keynes (September 20, 1890), he gave a more general view of his method, when he wrote that I think that the right order is first to emphasize the mutual dependence of induction & deduction, and afterwardscollecting, arranging, and narrating facts (Marshall, 1996, Volume One, p. 339). It reads much as Aristotles definition that studies those qualities which are held in common by all the members of the class. And afterwards to study special qualities of each individual in it (Aquinas, 1967, p. 55).

Marshall is also known for favoring analysis over theory, as when one analyzes all the forces pushing balls in a bowl. But in his analysis, he invokes the ceteris paribus method that changes one variable while holding all others constant, as opposed to the mutatis mutandis method where all variables adjust to the said change. The latter application finds a home in linear programming in economics. A major problem with Marshallian economics is in pretending that perfect competition does a good enough job in fitting the real world and he was delaying the understanding of general equilibrium (Samuelson, 1972, Vol. 3, p. 26).