Economics of Good and Evil

Economics as Moral Philosophy

Economic orthodoxy says we must seek constant growth in our GDP. For that to happen, people must buy stuff, and because most people are not lacking in what they really need, the economy must stimulate desire for things they DON'T need. Marketing and advertising stimulate desire for stuff we don't currently have which makes us work harder and produce more, and and so the economy grows. Economists trot out numbers and charts to illustrate the growth effects of wanting more, working more and buying more. But Tomas Sedlacek dares to challenge this scenario in which Homo Economicus sees his existence as the endless pursuit of profit and possessions.

WHAT ARE THE ROOTS OF ECONOMIC THEORY?

He does not challenge it by presenting us with his own charts and projections, but by asking us to look back - way back - in the past and think about where the whole concept of economics comes from. He asks us to consider how this whole cycle of work and buy got started and he takes us back to the Garden of Eden where Adam and Eve had life pretty good until they wanted the one thing they couldn't have - the forbidden fruit. Once they tasted that, they discovered that the once pleasurable "work" of taking care of the garden was now less pleasant and, for Eve, giving birth to the human race was painful.

We move forward in time to Gilgamesh, the Babylonian demi-god who was busy putting up a big wall around his city until he met Enkidu, a "wild" man who lived in the unsafe area outside the walls of the city. But Gilgamesh cannot resist seeing what's out there and he and Enkidu go on adventures that introduces Enkidu to the hard work in pursuit of pleasure that characterizes civilized man while Gilgamesh discovers the freedom of his wild side and abandons wall-building. The point of these stories is that humans always want what is just out of reach, and the field of economics has seized on that desire as the key to economic growth. Our very myths and stories reaching back into the mists of time tell us how we got this way.

We go on further journeys in time through ancient Hebrew views of society, the teachings of Jesus, the Greeks with their Stoics and Epicureans (Hedonists) and of course, Plato, with his illusionary world in the cave of shadows. These ancient thinkers originated the key concept of "utility." This is the idea that people behave in a way that maximizes the usefulness of their acts to themselves. As the author later shows, this is a bit of a tautology (we do what is useful because it is useful), but it is a basic idea in Economics. The Stoic - Hedonist dichotomy is all about whether man should act according to sensible rules and not according to the expected outcome of his behavior or should act in his own best interests by doing whatever produces a good result for himself. This is an argument that goes on today. Do the ends justify the means? What does this have to do with Economics? Quite a lot - how we think about this affects how we live and work and that affects society and its economic life.

CHRISTIAN THEOLOGY AND ECONOMICS

I found in this book an answer to something in Christian theology that has long puzzled me. What is the meaning of the concept that "Jesus died for our sins?" There is an answer in the ancient Hebrew concept of debt as being something that had to have limits. People who became so mired in debt they could not get out became "debt slaves." But the Hebrews had a built-in release valve for this condition: The Jubilee Year which occurred every 49 years; it was a "year of forgiveness" when debt slaves were freed and all land reverted to its original owners, which allowed all the tribes who had come to Canaan to retain a portion of the land forever. This "forgiveness" was seen as necessary to building a just and fair society, even though it meant some debts were not actually repaid and some received benefit they did not "earn." It seems this is the same concept (or metaphor) applied to Jesus' death on the cross. Like a Jubilee Year, Jesus erases the debt for the evil acts of mankind.

The author shows how many ancient thinkers (Thomas Aquinas and others) thought evil was part of our world and could not be eradicated. They went so far as to say that good can come out of evil acts or at least be so tightly bound up with good that eliminating evil would also eliminate a lot of good. Jesus said not to throw out the weeds right away for fear of pulling out the good plants, but to wait until you harvest the crops, and he said you should not return evil for evil so as not to propagate it further, but return good for evil. In this way of viewing morality, it was not always about placing blame for bad happenings like debt or loss. Evil just IS and we must exist with it.

FINANCIAL REDEMPTION AND THE INVISIBLE HAND

Today, we still practice forgiveness of debts with bankruptcy laws and when the government bails out institutions, as the US government did in the Great Recession beginning in 2008. The banks and financial institutions that were the furthest in the hole got the largest forgiveness, just like the worst sinners receive forgiveness the same as those whose offenses are small. Is this fair? The question becomes irrelevant when we consider that this forgiveness is necessary to rebuild society and avoid financial Armageddon.

Hebrews obeyed the laws of their God whether it maximized their own "utility" or not, believing these rules for the good of all. Mass forgiveness like the Jubilee Year maximizes utility for the whole society rather than just for one person. Later, Aristotle taught something similar, believing all good should be for the society as a whole. Aristotle gave us the concept of maximizing Good (MaxG) instead of maximizing Utility (MaxU).

Our present economic thought is all about MaxU and this is considered to derive from Adam Smith and the "invisible hand" which is supposed to guide our economic actions to always bring about a good result if just left alone.

But the author tells us that Adam Smith only mentioned the invisible hand three times in his extensive writings and Adam Smith was not a believer in MaxU. These ideas can be more accurately ascribed to Bernard Mandeville whose ideas were at the far end of the spectrum of good vs. evil; he thought evil was good for the economy and that there was lots of profit in vice. Like the movie character, Gordon Gecko, he thought greed was good. Keeping people discontented was a great idea so they would keep seeking ways to profit so they could buy more stuff. What we needed, 20th century economists told us, was to encourage consumption and more consumption. That, according to this point of view, is the way of progress.

GRATITUDE VS. CONSUMPTION

There are so many ideas in this book, I cannot even summarize them all here, but what I read resonated with me over and over. Some years ago, I discovered that I really did not need any more possessions and I found that exchanging GRATITUDE for seeking more stuff made for happiness. In the last part of this book, the author makes that very point. He suggests we try being GRATEFUL for what we have. He suggests that economics needs to rediscover its roots in moral philosophy, that economics is not, and cannot be, value-neutral. Mathematical models have become the content of economics instead of a tool to use along with assessing how life really works. The author has a nice discussion about the elusiveness of reality and how little it relates to models.

Economic theories cannot predict the future, which depends on factors outside how much we are all busy maximizing utility. I actually found this a rather funny idea - I had never considered anything I did in terms of how much I was "maximizing utility." The author cites many renowned thinkers, but he left out my previous favorite author on this subject. Some years ago, I read a little book by John Kenneth Galbraith called "The Good Society." This laid out how we can have a "good" (MaxG) society in which everyone participates and benefits. It definitely had a point of view that was not based on mathematics. I don't know if author Sedlacek has read Galbraith, but I think they might have something in common.

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