INTEGRAL WORLD: EXPLORING THEORIES OF EVERYTHING
An independent forum for a critical discussion of the integral philosophy of Ken Wilber
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ARE YOU SURE YOU KNOW
WHAT ECONOMICS IS?
According to the Integral Naked web site, “Integral" simply means comprehensive or inclusive.' There is, sadly, absolutely nothing comprehensive about the Integral movement's understanding of economics. Again and again Integral theorists stand up and make confused and muddled pronouncements which betray a staggering ignorance of economic science. In so doing they present themselves as babblers who simply parrot what they have picked up from others as uninformed as themselves. This note aims to be the first step to address this issue. It explains what Economics is, what it isn't and why we need it.
WHAT IS ECONOMICS?
Human action and social cooperation is governed by a set of laws. These laws bind us as tightly and as irrefutably as do the laws of nature. Sciences such as physics, chemistry and biology disclose these laws to us. Just as there are sciences that disclose the laws of nature, so there is a science that discloses the laws of human action and social cooperation. This science is called economics.
WHAT DOESN'T ECONOMICS DO?
As a science, economics abstains from any judgements of value. It shows us the consequences of our choices but it does not tell us what we should choose. In 'Thoughts Towards an Integral Political Economy' Ray Harris writes:
Politics is economics an economics is politics. The two cannot be separated. Any economic theory is also a political theory. What an economist chooses to measure is a political decision. Economics is not neutral it is not a science. It is burdened with the weight of human values.
He could not be more mistaken. All scientists choose what to measure, what is relevant to their investigations and what is not. The choice is dictated by the boundaries of the science in question. Does the fact that physicists choose not to measure heart-rate disqualify him as a scientist?
Aside. It should be noted that the importance of measurement is not the same for all sciences. In the experimental branches of empirical sciences like physics and chemistry, knowing what to measure and how is a key component of the practioner's repertoire. For a priori sciences like logic, mathematics, economics, computing science, the act of measurement is not a major part of the development of the science. End of Aside.
Some claim that the decision to abstain from value judgements is itself a value judgement. In 'The Economics Problem' Peter Collins writes:
Indeed the very supposition that economic issues can be studied free from "value interference", in itself represents a very important value i.e. the deliberate attempt to screen out the value implications of economic thinking.
He uses this to erroneously conclude that economics does not in fact abstain from value judgements. Whether or not the decision to abstain from value judgements is a value judgement may be true, but is beside the point. The fact is there is no theorem in economics that states `it is better to abstain from value judgements'. The decision as to whether or not we should make value judgements is outside the scope of economics, or indeed any science. Economics does not tell us whether or not we should make value judgments. It simply tells the laws which govern human action and social cooperation.
It is at this point instructive to examine the origin of the 'economics is not a science' fallacy.
In `Thoughts towards an Integral Political Economy' Ray Harris wrote:
The idea that economics could become a science and be values free has well and truly been refuted.
The various economic theories are merely the expression of particular values masquerading as objectivity. There is no consensus in the field of economics
To demonstrate the validity of his argument, Harris should have gone through each and every one of the laws of economics, demonstrating why they are not value-free. But he does no such thing. Why does he want us to believe that economics is not a science? The clue lies in the sentence immediately preceding the above quote:
Marx observed that all ideology was the expression of class interest.
The mention of Marx here is revealing. Harris is saying that economics is an ideology. For Marx and those influenced by him, the word 'ideology' has a special meaning. For them it is a something which, although unsound from the point of view of their logic, is beneficial to the selfish interests of the class which advances it. For this to be true, however, we must accept that different logics apply to different classes. This belief is called polylogism.
Polylogism is the denial of the uniformity and immutability of the logical structure of the human mind. It comes in two flavours, logical, due to Marx, and racial. Racists claim that each race has a logic of their own, Marxists each class.
An obvious question to ask to the Marxist goes as follows: A man is born into a working class family. He starts his own company,becomes wonderfully wealthy, and begins to live the bougeois lifestyle. When exactly does his proletarian mind become bougeois? How exactly does this mental transformation take place? The racists we ask – what logic rules people of mixed race?
But we need only observe that no polylogist has ever detailed exactly how logic differs between the various classes or races. What are the laws of proletarian logic? How are they different from those of bougeois logic? Once they have produced an answer to this, the polylogists need to show how an argument, though sound according to the rules of bougeois logic, becomes unsound according to the rules of proletarian logic. Needless to say, centuries after Marx, nothing of the sort has ever been produced.
Aside. And speaking of Marx, we can behold even more of his hypocrisy by noting the class to which he belonged. The son of a well-to-do lawyer, he married the daughter of a Prussian noble. His collaborator, Frederick Engels, was a wealthy textile manufacturer ('exploiter'). Therefore, if Marxists are to be consistent, they must admit that socialism, or at least Marxism, is in fact a product of bougeois thinking, and thus deserving of the same treatment as, say, bougeois economics. But consistency has never been their strong suit. End of Aside.
Though the polylogism has implications for all branches of human knowledge, its real target is and always has been the science of economics. To see this, one need only observe how the behaviour of polylogists themselves does not endorse their doctrine as far as other sciences are concerned. It is all too common for anticapitalists to dismiss economic theorems as 'bourgeois'. Without a trace of irony, they do so with the aid of bourgeois technologies such as computers, in homes and offices built with the aid of bougeois physics and bougeois chemistry. When they fall ill, they do not think twice about seeking aid from bougeois doctors practicing bougeois medicine in bougeois hospitals.
Of course, it all too easy to explode the fallacies of polylogism with respect to the sciences. So they must amend their argument. Yes, science provides universal knowledge, they concede, but economics is not a science. This, they believe, allows them to safely invoke polylogism.
But even if economics isn't a science, it does not immediately follow that its teachings are wrong. Shouldn't we carefully study economics and determine what, if anything, may be useful? But this is the last thing that the polylogists want. The main motive for their doctrine has always been to justify ignoring the teachings of economics. Most who adopt this viewpoint simply have no true knowledge of the science and base their assumptions on the badly distorted picture they have in their minds. What they have in common with Marx is that they can neither refute the theorems of economics nor can they demonstrate the correctness of their own doctrines. The only option left to them is to try to avoid engaging the argument by resorting to polylogism. They declare, without any evidence, that economics is not a science but an ideology. They then claim that the economists are wrong, not because they can present a sound argument that they are wrong, but because they are expressing their 'class interest'.
Aside. In order to improve the quality of our lives humanity developed the medical sciences. Precisely because men are eager to stay in good health and physical condition the science has to be correct. An incorrect or 'ideological' medicine would not serve their interests. Economics may very well serve the interests of those who advance it, but this in itself does not make its theorems wrong. End of Aside.
Economics is not Marxism, however, so simply unmasking the political motives of its detractors is not considered in and of itself sufficient to dispose of any objections put forward against the validity of its teachings. In science not rhetoric but reason reigns supreme. To disprove the notion that all of economics is value-laden we need only produce a single example of an economic theorem that is value free. Here I will present two.
(0) Humans act.
Note that this is not a judgement of value. Economics does not say whether or not is good for humans to act, or whether it is better to act than not to act. It states simply: 'humans act'.
Action is the conscious adjustment of our behaviour to achieve some purpose. The purpose we wish to achieve is called an end. The method we choose to achieve it is called a means. Humans consciously choose ends and the means to attain them. The options before us are often mutually exclusive. Indeed it is the mutual exclusivity of ends/means which forces us to choose. To act is to choose one thing and forsake another.
This is a law we cannot but obey. Any attempt to refute the law e.g. by doing nothing simply confirms its validity (you wish to refute the law, so you consciously do nothing. You have consciously adjusted your behavior to achieve a specific purpose, the very definition of action).
To act is to choose. Man chooses between various opportunites, preferring one alternative to others.
The idea that man has a hierarchy of needs in his mind when he arranges his actions is not unknown. On the basis of such a hierarchy and given insufficient resources to cater to all his needs, he satisfies what he considers his more urgent needs, and leaves unsatisfied that which he considers his less urgent needs. What is all too often forgotten is that the hierarchy of needs manifests itself only through action. The only way to know a man's need hierarchy is by observing his actions. When we say that a man considers need X over need Y, we are interpreting his actions.
Certain doctrines seek to establish what a man's hierarchy of needs should be. They declare men more or less ethical, evolved etc. based upon what they consider to be important. Such is not the approach of the sciences of human action. Economics determines only whether the means men select are suitable to meet their needs.
On the way to satisfy an ultimate need, man may determine intermediate needs. The importance of these needs is derived according to the extent to which their satisfaction results in the satisfaction of the ultimate need. They are important only to the degree to which they pave the way for the satisfaction of the final need. The importance attached to the satisfaction of the ultimate need is called its value. From the above it follows that the value of intermediate needs are derived from the value of the ultimate need.
Value comes from within, not without. It is not found in things, it is found in our actions with respect to things.
Economics deals with men as they are. The only hierarchies of needs that matters for this science are the ones actually disclosed by the actions of men.
(1) The Law of Marginal Utility.
Acting man satisfies needs, satisfying those he considers to be more urgent before those he considers to be less. He uses means to attain ends. Means which satisfy more urgent needs are considered more important than means that satisfy needs less urgent. The importance attached to a means is called its utility. Means that satisfy more urgent needs are said to have higher utility than means that satisfy less urgent needs.
A man has identified three needs which are, in order of decreasing importance, N0, N1 and N2. He has identified two goods that will help him satisfy these needs, namely A and B. He has two units of A, A0 and A1, and one unit of B, B0. A0 will satisfy N0, A1 will satisfy N2 and B0 will satisfy N1. Thus the goods, in order of decreasing utility, are
Given the above, which would he prefer, to lose one of A or one unit of B? If he loses his least important unit of B, B0, he will be unable to satisfy a need more urgent that if he lost his least important unit of A, A1. As acting man satisfies needs he believes are more urgent before needs that are less urgent, he will prefer to lose A1. Reasoning in the same way we can see that if he has to choose between losing one unit of B and two units of A, he will choose to lose one unit of B. In general for a set of good units A and B, A is preferred to B if there exists an element a in A such that for all elements b in B, a is preferred to b.
The least important use the man can make of his supply of A is to satisfy need N2. The least important use of a supply of a good is called the marginal utility. We are now ready to formulate the Law of Marginal Utility:
When faced with the problem of the value to be attached to one unit of a homogenous supply, man decides on the basis of marginal utility.
Thus in our example, the value of one unit of A is equal to the need N2. The value of one unit of B is equal to the need N1. And now we see what it means to say that one unit of B has greater value than one unit of A – the marginal utility of B is greater than the marginal utility of A i.e. the least urgent need satisfied by one unit of B is more urgent than the least urgent need satisfied by one unit of A.
Notice that if the man had to choose between his entire supply of A and his entire supply of B, he would choose A, but if he has to choose between one unit of A and one unit of B, he chooses to keep one unit of B.
Suppose now that, for whatever reason, the man no longer has two units of A, but only one. The least urgent need of one unit of A is now greater than the least urgent need satisfied by one unit of B. The marginal utility of A has become greater than the marginal utility of B, hence one unit of A now has greater value than one unit of B.
Here we have another law that cannot be refuted. It follows directly and inexorably from the theorem that humans act i.e. that they engage in purposeful behaviour to exchange what they see as less desireable states of affairs for more desirable ones/they choose to satisfy what they consider to be more urgent needs over less urgent ones.
Such are but two laws of economics. They are as far from being 'particular values masquerading as objectivity' as it is possible to be.
WHY IS ECONOMICS IMPORTANT?
Provide a plant with water, fertile soil and sunlight and it will grow. Deprive a man of oxygen and he will die. Whether we like it or not we are constrained by the laws of nature with regards to what actions we may choose if we wish attain the ends we seek. Strapping feathers to our arms and flapping them
vigourously is not an effective way of flying, no matter how much we may wish to believe otherwise. Studying the laws of nature as disclosed by the natural sciences would ensure that we do not waste our time (and lives) trying. In exactly the same way we cannot but obey the laws of human action. It thus behooves us to know what they are, or else we will not succeed in our endeavours.
It was the application of the teachings of economics that led to the tremendous technological progress and increase in wealth a welfare. Moreover, whenever man has ignored the teachings of economics, his actions have invariably resulted in disaster. Yet Integralist writings on the subject are so filled with fallacies that it is all too clear that integralism suffers from a profound ignorance of economic science. If Integralists wish their ambitious project to synthesize all knowledge to be taken seriously, then this is a deficiency that should be addressed with all haste.
A DISMAL SCIENCE?
There are those who love to toss out the phrase 'the dismal science' in reference to economics, a phrase due by Thomas Carlyle. But how many of them know why he coined it? Let us investigate the context of his remark. In his essay 'An Occasional Discourse on the Negro Question' he writes
Truly, my philanthropic friends, Exeter Hall Philanthropy is wonderful; and the Social Science—not a "gay science," but a rueful—which finds the secret of this universe in "supply-and-demand," and reduces the duty of human governors to that of letting men alone, is also wonderful. Not a "gay science," I should say, like some we have heard of; no, a dreary, desolate, and indeed quite abject and distressing one; what we might call, by way of eminence, the dismal science. These two, Exeter Hall Philanthropy and the Dismal Science, led by any sacred cause of Black Emancipation, or the like, to fall in love and make a wedding of it,—will give birth to progenies and prodigies; dark extensive moon-calves, unnameable abortions, wide-coiled monstrosities, such as the world has not seen hitherto!
Carlyle condemned economics because it was used to advance arguments favour of the freeing of black slaves. Under the sway of racial polylogism, Carlyle concluded that black people were little more than 'two-legged cattle' and undeserving of the same rights as whites (in this he was joined by,among others, Charles Dickens). In contrast the classical economists argued that all humans shared the same basic nature and pushed for the end of slavery. Centuries before the civil rights movement, economists from Adam Smith to John Stuart Mill, argued that all men, regardless of color, should be equal before the law. Knowledge of economic science was the key to this wonderful insight. The dismal science indeed! What other treasures would a study of economics bestow upon us?
Ludwig von Mises – Human Action
David M. Levy & Sandra J. Peart – The Secret History of the Dismal Science (http://www.econlib.org/LIBRARY/Columns/LevyPeartdismal.html)