Before Marx, After Marx; Veblen, DeLong

I’d like to start putting down on paper an idea I’ve been chewing on for a while. It’s a big claim, which may or may not be true. But to figure out if it’s true, it needs to be developed. So here we go...

Big claim:

Marx caused a century-long wrong turn in the in the social sciences, and this caused a corresponding wrong turn in how the entire Western World understands both human political behavior as well as the underlying substance of politics, i.e., making policy choices that encourage human flourishing.

• Marxian thought is fundamentally Newtonian, with billiard ball chains of causation.
• But in any field that involves living things, Newton must be rejected in favor of Darwin.
• The methods of biology are inconsistent with the methods of physics. (See, here.)
• Billiard ball causation must be replaced with webs of causation.
• The metaphor of the causal chain must be replaced with the metaphor of the ecosystem of causation. 
• Words like “force” and “power” applied to human behavior are metaphors from physics and are in-apt.
• Once you adopt wrong metaphors into the language it is impossible to express reality in those terms. The claim “Rape is about power” is neither true nor false. Rather, it is nonsense.

Timing:

My hypothesis is that the crucial injection of Marx into the course of intellectual history is caused by the success of the October Revolution in Russia. So Thorstein Veblen writing in 1896 can be pre-Marxian detour even though the Communist Manifesto was published in 1848. Note that the Revolutions Of 1848 in Europe were already under way in Europe as the Manifesto was published. Socialism and communism were ideas that would have existed with or without Marx and they are part of the milieu that formed Veblen’s world. I’m not arguing that Veblen’s paper “Why economics is not an evolutionary science” precedes socialism. 

Manner: 

The October Revolution is part of the definition of the English term “Karl Marx.” Bolshevism would not exist but for Marxism, and Marx would not have mattered at all for my purposes but for Bolshevism. You cannot seperate the influence of Marx from the historical violence committed in his name. Ironically, the belief of academics and activists that you can seperate Marx from violence is one of the most important things about Marx. Imagine how powerful the KKK would be if there were Harvard professors in 2018 AD who believed in a fundamentally peaceful, if racist, theory promoted by Nathan Bedford Forrest that was unfairly brought down by the historical accident of violence committed in Forrest’s name!

But that’s exactly what happened with Marx, starting in 1919.  

Results: 

1. The normalization of ideology politics. 
2. The political spectrum metaphor and the Newtonian understanding of political behavior, generally.
3. The idea that the New Deal had an intellectual foundation. 
4. The response by the National Review fashioning an intellectual foundation for “conservatism.” 
5. The success of the takeover of the GOP by robber barons in coalition with racists under the cover of “conservatism.” 
6. The background frame for Post War journalism of “balance equals truth.”
7. Persistence of rationality as the foundation of economics.
8. The endless confusion of “intersectionality” as a way to understand human behavior.
9. The prominence of literary approaches to matters of behavioral science such as human sexuality, identity, and in-group/out-group distinctions.
10. The idiotic idea that “cultural appropriation” is a useful category of bad behavior. 
11. Fascism in Italy, Germany, and Spain.
12. More to come... 

An example... 

Thorstein Veblen describes the non-science of classical economics, in “Why economics is not an evolutionary science.” This is an 1898 description of what not to do: 

This is the deductive method. The formula is then tested by comparison with observed permutations, by the polariscopic use of the “normal case”; and the results arrived at are thus authenticated by induction. Features of the process that do not lend themselves to interpretation in the terms of the formula are abnormal cases and are due to disturbing causes. In all this the agencies or forces causally at work in the economic life process are neatly avoided. The outcome of the method, at its best, is a body of logically consistent propositions con- cerning the normal relations of things — a system of economic taxonomy. At its worst, it is a body of maxims for the conduct of business and a polemical discussion of disputed points of policy.

What Veblen is saying is that an actual science of understanding “the forces causally at work” would not generate a list of exceptions. Here is Brad DeLong in 2014 merrily trotting out a list of exceptions, saying it’s just fine as long as we remember what’s on the list!!!

I think that modern neoclassical economics is in fine shape as long as it is understood as the ideological and substantive legitimating doctrine of the political theory of possessive individualism. As long as we have relatively-self-interested liberal individuals who have relatively-strong beliefs that things are theirs, the competitive market in equilibrium is an absolutely wonderful mechanism for achieving truly extraordinary degree of societal coordination and productivity. We need to understand that. We need to value that. And that is what neoclassical economics does, and does well.

Of course, there are all the caveats to Arrow-Debreu-Mackenzie:

1. The market must be in equilibrium.

2. The market must be competitive.

3. The goods traded must be excludable.

4. The goods traded must be rival.

5. The quality of goods traded and of effort delivered must be known, or at least bonded, for adverse selection and moral hazard are poison.

6. Externalities must be corrected by successful Pigovian taxes or successful Coaseian carving of property rights at the joints.

7. People must be able to accurately calculate their own interests.

8. People must not be sadistic–the market does not work well if participating agents are either the envious or the spiteful.

9. The distribution of wealth must correspond to the societal consensus of need and desert.

10. The structure of debt and credit must be sound, or if it is not sound we need a central bank or a social-credit agency to make it sound and so make Say’s Law true in practice even though we have no reason to believe Say’s Law is true in theory.

An adequate undergraduate economics major will spend due time not just on the excellences of the competitive market equilibrium but on these 10 modes of market failure, and in so doing become, effectively, a history and moral philosophy major as well.

A first-rate undergraduate economic major will also spend due time on government failure and bureaucratic failure, and thus reach the very economic conclusion that there are substantial trade-offs, and we must pick our poison among inadequate and imperfect alternatives, even in institution design.

This is insane. How on earth can somebody think it’s ok for the organizing idea behind an empirical science to be a “ideological and substantive legitimating doctrine”? ?? Karl Marx... that’s how.

Hat Tip to Lars Syll:  Neoclassical Economics Is Great—Except For All The Caveats.