Collective Conscious

Still read­ing Robin­son. In the present sec­tion she addresses the role of the econ­o­mist as a moral philoso­pher mainly through the ques­tion of the virtue of lux­ury; that is, whether a man can spend exor­bi­tantly in good con­science. Many econ­o­mists have fought for the gen­eral accep­tance of the moral­ity of expen­di­ture, cit­ing the expen­di­ture of wealth as the engine of pros­per­ity, the cap­i­tal­ist as the viva­cious heart of econ­omy, and so in and so forth. She writes:

It was the task of the econ­o­mist to over­come these sen­ti­ments and jus­tify the ways of Mam­mon to man.… It is the busi­ness of the econ­o­mists, not to tell us what to do, but to show why what we are doing any­way is in accord with proper principles.

The method of thought sat­i­rized by Robin­son here is echoed in many intro­duc­tory eco­nom­ics books even today. The core idea is that every peo­ple do, they do for a rea­son — specif­i­cally, ‘men are ratio­nal’ — and the task of the ana­lytic econ­o­mist is to dis­cover the nat­ural prin­ci­ples behind the inevitable behav­iors of man.

This is rub­bish. As econ­o­mists — as sci­en­tists — we are obliged to do much more. We must take what we learn and apply it to berthed the human con­di­tion. What if the Wright broth­ers had stud­ied the dynam­ics of wings and lift and con­cluded, “That is all very well for the birds”? We should not fol­low that path either. We know in large part how mar­kets work. We under­stand in small part how indi­vid­u­als inter­act. And we have the power to expand those ideas to make life bet­ter for all.

On the idea of lux­ury expen­di­tures as exem­plary behav­ior, it is true — spend­ing makes the econ­omy go round. Bu there is no rea­son why spend­ing should result in the mate­r­ial enrich­ment of the wealth­i­est. We have the tools to design a sys­tem that allows every­one to reap the rewards of eco­nomic suc­cess, rather than sim­ply ensur­ing that the wheels con­tinue to revolve. Lux­ury spend­ing as an eco­nomic engine means that money flows in and out of the work­ing class with­out allow­ing them to acquire the least mate­r­ial inter­est — no prop­erty, no wealth, no secu­rity for those whose liveli­hoods depend on the atti­tudes of the rich.

Instead we can sup­port the inter­est of all through a mul­ti­tude of pos­si­ble schema. One pos­si­bil­ity is the clas­sic wel­fare state (Scan­di­navia), which admin­is­ters direct taxes and pro­vides pub­lic ben­e­fits to all, such that every­one shares in wealth through con­tin­u­ous pub­lic ben­e­fits. Another pos­si­bil­ity is the manda­tory sav­ings state (Sin­ga­pore) in which all work­ers are requires to save a sig­nif­i­cant por­tion of their income for privately-​​purchased ben­e­fits such as home­own­er­ship, retire­ment, and health care — accu­mu­lat­ing real wealth in the mean­time. Yet another is the collective-​​ownership state (China) in which profit-​​making enter­prises are owned or admin­is­tered by the state, and the income is used to pro­vide pub­lic ben­e­fits with­out a cor­re­spond­ing tax burden.

Any one of these sys­tems can sup­port an afflu­ent soci­ety with­out grind­ing against the laws of eco­nom­ics that we have worked so hard to dis­cover. In fact, each of them uses our knowl­edge of human deci­sions to it’s advan­tage. In these instances we may term the new method of national orga­ni­za­tion a sort of ‘market-​​state’, fol­low­ing in some way Philip Bobbit’s def­i­n­i­tion in The Shield of Achilles. But I reject his sim­ple def­i­n­i­tion:

[Y]ou are see­ing the begin­nings of a change in which the state says, “Give us power and we will max­imise your oppor­tu­nity. What you do with it – that’s up to you. We will not assure you equal­ity, and we will not assure you steadily improv­ing secu­rity, but the total wealth of the soci­ety will be maximised.”’

This promise is not enough. Max­i­miz­ing total wealth means noth­ing to the indi­vid­ual. The proper market-​​state will pro­vide a bal­ance of wealth and equity by har­ness­ing mar­ket forces, not by unleash­ing them. It estab­lishes moral­ity through com­mon duty to state and neigh­bor, mean­ing that what is right is also ratio­nal under the rules of such a state. Such an orga­ni­za­tion, I think, can neatly resolve Robinson’s moral trou­bles as well as pro­vid­ing greater wel­fare for human­ity as a whole.