How the ‘A-Team’ Redeems Modern Economics

8/8/2019 How the A-Team Redeems Modern Economics

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Dr. Jennifer Roback Morse 663 S. Rancho Santa Fe Road Suite 222 San Marcos CA 92078

www.jennifer-roback-morse.com email: [email protected] 760/295-92782007 No part of this document may be reproduced or disseminated in any way without the expressed written consent of theRuth Institute.

How the A-Team

Redeems Modern

Economics

by Jennifer Roback Morse, Ph.D.

a review of the book, RedeemingEconomics: Rediscovering the Missing

Element by John D. Mueller. This reviewwas originally published atFamily in

America.

John MuellersRedeeming Economics is an

impressive achievement, really three booksin one. Mueller rewrites the history of

economics in the first book. In the second

book, Mueller expands the concerns ofeconomics in the light of his historical

reinterpretation. The third book proposes

and critiques public policies through the lensof the theory developed in book two.

Readers of The Family in America will

probably be most interested in book three.

But Muellers most lasting contribution tothe well-being of the American family may

well be book two. His expansion of the

concerns of economics has the potential togive economists as well as social

conservatives the analytical tools needed to

defend the family on its own terms, ratherthan as a special case of a contract.

The scope of Muellers intellectual ambitionin this book is truly astonishing, as is the

scope of the research involved in all three of

his projects. The combination of these three

books creates an edifice Mueller calls

neoscholastic economics. As the realchallenge for this book will

be to get people to read all three books, I

trust this review will convey a sense of whypeople should invest the time needed to

read, absorb, and promote this important

book.

Book 1: Rewriting the History of

Economics

Modern scholars tend to believe that

discipline of economics began with AdamSmith. However, this a-historical reading of

the subject is corrected by Mueller, who

insists that we have to bring on the entireA-Team to really grasp the history of

economics: not just Adam Smith, but also

Aristotle, Augustine, and Aquinas. In thisrespect, Mueller stands with no less an

authority than Joseph Schumpeter, author of

the twentieth centurys most comprehensive

history of economics. Schumpeter arguesthat the real founders of modern economics

were the scholastic doctors of the Middle

Ages. These natural law philosophers hadworked out all the elements of economic

analysis; Smith simply coordinated them.

Schumpeter further claims that The Wealthof Nations does not contain a single analytic

idea, principle or method that was entirely

new in 1776, and Mueller fully agrees.

Most modern economists, who instinctivelyvenerate both Smith and Schumpeter, are

innocent of Schumpeters somewhatheretical views on Smith.
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Mueller believes that the questions the

scholastics raised reveal their sophistication.Aquinass theory had four elements:

production, exchange, distribution, and

consumption. Smith dropped consumptionand distribution, leaving only production

and exchange as the proper domain of

economics. According to Mueller, Smith

appealed to his contemporaries because heover-simplified Aquinass synthesis of

Aristotle and Augustine. Aristotle argued

that every community follows someprinciple in distributing its common goods,

some principle that defines what the Greek

philosopher considers distributive justice.Augustine expanded this theory by adding to

it a theory of personal distribution. Each

person decides to whom or for whom he

is distributing his goods. Humans always actwith some person in mind, even if it is only

the actor himself. We give to people we

love; we sell to or exchange with people wedont.

Smiths famous declaration about the

butcher and the baker acting solely out of

self-interest eliminates Augustines theory

of distribution. Smiths contention thateverything is done out of some redefined

self-interest collapses a real and valuable

distinction between gifts and exchanges.Mueller claims that Augustines theory of

distribution could have shown why thebutcher and the baker give their wares totheir own children, and sell them to

everyone else.

Book 2: Expanding the Concerns of

Economic Theory

This historical analysis sets the stage for

Muellers own contribution. He redefineseconomics as the science of human

providencepersonal, domestic and

politicalfor oneself and other persons,using scarce means that have alternative

uses. He offers an outline of a theory of

how people divide their goods between gifts

and personal consumption. The theory ofdistribution is a theory of gifts to people one

cares for, crimes against people one has no

regard for, and exchanges with everyoneelse. Mueller calls this neoscholastic

economics.

He introduces a simple problem, adapted

from neoclassical economist Philip

Wicksteed. Neoclassical analysis oftenbegins with Robinson Crusoe, alone on his

island, allocating scarce resources with no

companions or relationships. By contrast,Wicksteed invites us to consider the problem

of a mother, a person loaded with social

relationships and complications. Themothers problem is to explain the

behavior of the typical mother (circa 1910)

in her home as she tries to maximize the

value of her familys resources. How mightshe allocate a single scarce commodity

milkamong alternative uses? In the usual

routine, milk may be wanted for the baby,for the other children, for a pudding, for tea

or coffee, and for the cat. According toMueller, neoclassical economic theory couldprovide the solution in the special case in

which all the milk was for her own use. She

should begin with the most urgent usethat

is, the use with the highest marginalutilityand as the urgency of this need is


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diminished by the application of milk,

continue to the next most urgent, and so on.But, Mueller continues:

The mothers actual problem is quitedifferent, and unanswerable by neoclassical

economics, since she is dealing not only

with her own preference but also with thepreferences of several other users of milk.

Her problem is twofold: not only to estimate

the preferences of each user, but also todecide how much weight to give to those

preferences. Should she give the same

weight, other things being equal, to her own

preferences, those of her husband, each ofher own children, a neighbors child and the

family cat?

Wicksteed concludes that the solution to the

mothers problem lies outside economictheory. No one would regard the principles

upon which I balance the claims of devotion

to God against those of friendship, or of

either against the indulgence of my aestheticappetites, as within the range of economic

science. But Mueller believes this leaves an

unacceptably large hole in economicanalysis. As Wicksteed observes, Her

doings in the market-place and her doings at

home are . . . part of one continuous processof administration of resources, guided by the

same fundamental principle; and it is the

home problem that dominates the market

problem and gives it its ultimate meaning(emphasis added). Mueller believes that

Wicksteeds neoclassical followers likeGary Becker do not have a satisfactoryunified theory any more than Wicksteed did.

Economists, claims Mueller,

declare the answer a matter of

normative or moral judgments thateconomists qua economists cannot

make. But this is an unacceptable

dodge. It leaves economists with afundamentally analytical or

positive failure: Neoclassical

economics does not provide a

coherent, empirically verifiabledescription of how people actually

choose rightly or wronglyto

distribute the use of their resources,whether as individual persons, as

members of a family household, or

as a society under the samegovernment.

Mueller solves this problem by resurrectingAugustines theory of gifts to supplement

the theory of exchange. Muellers revision

of economics should be of interest to thosewho are dissatisfied with the current

treatment of the family by economists.

Economists tend to view the family as aspecial case of the market, marriage as a

special case of a contract, and children as a

special kind of consumer durable. Muellers

revision allows economists to view thehuman family as a social institution in its

own right, not simply a special case of

something else.

This revision of economics should also

interest those who care about human liberty.Economists currently divide society into the

private sector and the public sector.Decisions that do not have significantspillover effects on other people are the

proper domain of the private sector, and


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everything left over becomes the concern of

the public sector, by default. Thisdichotomy has made it difficult to resist the

lure of the state takeover of the wide scope

of human activity that can be plausiblyargued as affecting other people. Muellers

synthesis brings a third sector more clearly

into view: the social sector. In the social

sector, people interact with each otherwithout contracts or explicit exchanges.

Instead, people give gifts, transfers of

resources with no implicit or explicitexpectation of reciprocity. The family quite

obviously operates in this realm of the gift.

This social realm has been squeezed by acombination of the market and the state

partially because the people who should be

its natural defenders have no vocabulary

with which to defend it.

The enemies of the state who ought to resiststate encroachment of the familys domain

have been reduced to treating the family as a

special case of the market. This rhetoricalstrategy has made it difficult to do justice to

the deep human need for personal

connections, a need that cannot be satisfied

by commercial relationships. At the sametime, the enemies of the market who ought

to defend the family against

commercialization have typically offered thegovernment as the only alternative. These

critics have been blind to the statesencroachment on the proper domain of thefamily and the accompanying replacement

of family bonds with impersonal

government transfers and bureaucratic

control. Muellers synthesis allows us to seethe genuinely social arena of human life,

where people are more than autonomous

individuals, and where actions neverthelessremain none of the governments business.

Book 3: Proposing and Critiquing Public

Policies

The third book consists of policy analysis

based on the expanded economic theory.

Muellers targets include the usual fiscaltopics like taxation, unemployment,

inflation, and social security, as well as

topics usually considered social issues like

abortion, fertility, and marriage. Hecontrasts the neoclassical approach with his

own neoscholastic approach. In the

neoclassical approach to public policy,politicians preside over society in the same

way that a parent presides over the

household. Mueller thinks this isunsatisfactory. Unlike a mother, who makes

personal distinctions amongst the family

members in accordance with her love for

them and her perception of their needs, thepolicy maker must treat them (hungry

babies) all exactly the same.

By contrast, the neoscholastic framework

uses the Thomistic distinction between

benevolence, or good will, which can beextended to everyone in the world, and

beneficence, or doing good, which cannot.

We can always avoid harming others, whichis why there are no exceptions to the moral

prohibitions against theft and murder. But

scarce goods cannot be shared witheveryone, simply due to the fact of scarcity.

And, as Thomas Aquinas taught, what is

inherently impossible is not morally binding.


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This leads to the policy insight that

enforcement of negative rights is inherentlypracticable, because to refrain from harming

another person incurs no cost. . . . Positive

rights, in contrast, can never extend furtherthan the ability to pay for them. Hence, the

neoscholastic framework recognizes that

scarcity in the public sector plays out quite

differently from scarcity in the privatesector.

Some of Muellers policy conclusions will

seem familiar and unexceptional. Others will

be quite surprising, such as his argument

that the real solution to the Social Securitycrisis is to lower, not raise, the payroll tax.

He also insists that the government should

stop raiding Social Security funds to pay forother, non-Social Security programs. But do

not judge the book by one policy proposal or

another. A book of this scope is not going toconvince everyone on every analytical or

policy point. For instance, I am not

convinced that his analytical distributionfunction and the accompanying graph is

doing the work he thinks it is doing. But it

would be a mistake to look in the index for

your favorite public policy and then dismissthe whole book if you dont like what

Mueller has to say about that particular

issue. Instead, look at the entire book and beastonished that one person has something to

say about such a broad range of topics, andthat so much of what he says does makessense.

My hope is that Redeeming Economics willinspire a generation of doctoral theses and

monographs, systematically working out the

analysis of preferences for persons and

rigorously testing the new hypotheses suchanalysis would generate. Muellers

analytical structure has the potential to

humanize wide swaths of public policy-making. This is contribution enough for one

book, even a book that is really three in one.

Jennifer Roback Morse, Ph.D. is an

economist and the Founder and President oftheRuth Institute, a nonprofit educational

organization devoted to bringing hope and

encouragement for lifelong married love.She is also the author ofLove and

Economics: It Takes a Family to Raise a

Village andSmart Sex: Finding Life-LongLove in a Hook-Up World.
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