Jim Cox is one of my favorite living economists. His slim but pregnant book — The Concise Guide To Economics — is a miniature masterpiece. The following comes from Chapter 37:
The Spanish Scholastics of 14th through 17th century Spain had produced a body of thought largely similar to our modern understanding of economics. The work of these scholars was largely lost to the English speaking world we’ve inherited. The French physiocrats carried the discipline forward in the 18th century with prominent economists of the time including A. R. J. Turgot and Richard Cantillon. A strategic error was made by these French advocates of laissez-faire as they attempted to change policy by influencing the King to embrace free markets, only to have the institution of monarchy itself delegitimized. Thus a guilt by association undermined the credibility of the laissez-faire theorists.
In 1776 Scotsman Adam Smith published The Wealth of Nations only to set the discipline back with his cost of production theory of value. (Smith did properly emphasize specialization and the division of labor in his analysis.) The correct subjective theory of value had been understood by both the Spanish Scholastics and the French laissez-faire school. Why Adam Smith chose the faulty cost of production theory over subjectivism is a mighty mystery as it is clear from Smith’s lecture notes that he had endorsed marginal utility analysis prior to the publication of his book. The marginal revolution of the 1870’s–with Carl Menger in Austria, William Stanley Jevons in England, and Leon Walras in Switzerland each writing independently and in differing languages–reestablished the correct marginal approach. As stated by Joseph Schumpeter in The History of Economic Thought:
It is not too much to say that analytic economics took a century to get where it could have got in twenty years after the publication of Turgot’s treatise had its content been properly understood and absorbed by an alert profession. p. 249
Unfortunately, the theory was perverted into a mathematized method with the rush to positivism in the 20th century.
The Austrian tradition of Menger was completed in the theories of Ludwig von Mises with the application of marginal utility analysis applied for the first time to money, which in turn led to the correct business cycle approach during the 1920’s. This approach was gaining headway in the English speaking world with F. A. Hayek’s appearance in England in the early 1930’s. But in the late 30’s the well-named Keynesian Revolution displaced the Austrian theories–not by refutation, but by neglect–taking economic theory to the bizarre point of splitting macro-theory from an underlying micro-emphasis; a point where it still is today.
Jim Cox is an Associate Professor of Economics and Political Science at the Gwinnett Campus of Georgia Perimeter College in Lawrenceville, Georgia and has taught the principles of Economics courses since 1979. Great Ideas for Teaching Economics includes nine of his submissions. As a Fellow of the Institute for Humane Studies his commentaries were published in The Cleveland Plain Dealer, The Wichita Journal, The Orange County Register, The San Diego Business Journal, and The Justice Times as well as other newspapers. His articles have also been published in The Atlanta Journal and Constitution, The Margin Magazine, Creative Loafing, The LP News, The Georgia Libertarian, The Gwinnett Daily News, The Atlanta Business Chronicle, The Gwinnett Post, The Gwinnett Citizen, The Gwinnett Business Journal and APC News. Cox has been a member of the Academic Board of Advisors for the Georgia Public Policy Foundation, and is currently on the Board of Scholars of the Virginia Institute for Public Policy.
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So what do we do at this point?
We keep on keeping on.
And remember: the revolution won’t be televised, but it will be broadcast live here.
The primary purpose of our founding documents is to establish a limited government that recognizes, protects, and defends the rights and freedoms of American citizens; emphasis on protect and defend the individuals’ rights, which are spelled out in concise language.
Utopians* have declared it the “moral responsibility” of our government to provide “human rights”, including basics like health care, food, housing, etc. A full litany can be found in U.N. materials, references available, and I’m certain we can find videos of the “moral responsibility” assertion during the “health care reform debate”.
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Ray, a key aspect of my personal philosophy is what Russell called the “Philosophy of Logical Analysis”. Essentially, all Russell is saying is that he’s ok with any cogent philosophy. Russell, a renowned mathematician and contributor to Boolean algebra and symbolic logic, would boil a philosopher’s statements down to cohesive phrases, build those into a symbolic argument, find the mathematical disconnects, then re-phrase those to demonstrate the flaws in the reasoning of the author. On a side note, the classic philosophical flaw is usually rooted in the ontological argument.
I think the two statements at the top regarding primary purpose and utopians offer a narrow-scope example of what appears to be flawed thinking.
Where does the Constitution grant power to elected officials to define what is a “moral responsibility” upon which the government is now obligated to act? In particular, act in a way that can easily be proven as harmful to many individuals?
The utopians use government power to discriminate in order to satisfy our “moral responsibilities”. This year, I will not get a raise and my health insurance cost is increasing. The specific Bill of Rights protections of my property (money) have been abrogated, rationalized by giving supremacy to the commerce clause.
It would be interesting if we could get to the root of the argument. What we’ve been doing is debating in the context of flawed premises, which is a wasteful diversion to the benefit of those who use government powers to discriminate against individual people, groups, businesses, and in favor of others. That’s why our economy is fucked up: politicians meddle with it in the first place. Isn’t destructive political meddling rooted in the same “moral responsibility” argument?
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*liberals? progressives? collectivists? democrats? marxists? socialists? communists? theocrats? Not intended as a slight, I use “utopian” to indicate everyone BUT conservatives and believers in the U.S. Constitution as the guardian of our individual rights and freedoms. Got a better word, let’s hear it.
Great post marshep – the earliest socialized were utopians – and to some effect still are.
Government bureaucracy has co-opted their movements, and simply siphons off more money to expand their class and power in the name of using our society to engineer the greatest good.
Graft and corruption…
Marshep wrote: “Where does the Constitution grant power to elected officials to define what is a ‘moral responsibility’ upon which the government is now obligated to act?”
That reminds me of this recent article, which I think you’ll find interesting:
(Link)
Echo: “And as for the specifics, Perriello paused for a moment and confessed that no, nothing came to mind. He couldn’t think of a single thing—not one piece of legislation—that the Democrats had proposed in the past four years that might go beyond constitutional limits.” … “And those are just the highlights of a genuinely gargantuan, sweeping agenda. But nothing strikes Perriello as having gone over the line. And if that’s the case, then there is no line.”
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Excellent, thank you Ray. Great link, I’ll review when time allows. Oh, I was thinking “Borg” may be better fit than “Utopian”, as we will be assimilated whether we like it or not. Seems to fit, and does have an “ism”.
My goal is to get past the politics and partisanship and establish a politic that is verifiably rational, both “sides of the aisle”. Tracinski’s article hits the easy target, a member of the ruling elite, but members of the Republicans have statements and rationale that are equally irrational. Would it be fun to work the issue as a math problem?