The question is: who is to make the decisions--and whether the value judgments are open or hidden. What Robbins and Myrdal wanted was to make them explicit--and not have them hidden. Your nihilism point reminded me of Hick's review of Myrdal-- Hicks writes "Myrdal is more of an extremist than Robbins; he carries his agnosticism to greater lengths. Robbins wields his axe with gusto, but at the end of his operations it is only the undergrowth that has been cleared away; the tree still stands. When Myrdal has finished, it lies flat." I happen to agree with Myrdal, and I also think that Robbins and Myrdal were much closer than Hicks sees them. But that is a side issue. The entire development of welfare economics was an attempt to see if economics could sneak in some views about policy that just about everyone felt were right into economic science. We can't. Sen's work on social choice highlighted that, and his capabilities approach was a brilliant and sophisticated way to deal with it. The statement about the limits of value free economics is not a call for nihilism; it is a call to be open about one's values. So my answer to Mason is Sen.
Dave
David Colander
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-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of mason gaffney
Sent: Sunday, June 09, 2013 2:38 PM
To: [log in to unmask]
Subject: Re: [SHOE] moral sentiments
Roger et al.,
Robbins was an egregious offender, true, but hardly the "most" egregious.
Today some half our profession, perhaps a majority, write only apologetically about diminishing marginal utility. With them only "Pareto optimality" is permissible.
And of course Pareto preceded Robbins, as did Edgeworth. The mindset that they pioneered served to rationalize flattening the personal income tax, substituting sales taxes for property taxes, capping the base of the payroll tax and excluding property incomes, lowering estate taxes and corporate tax rates, et hoc genus omne ad infinitum, step by step inexorably from then to now.
There is obviously a diminishing marginal utility for potatoes, and they spoil. Adam Smith noted as to housing, however, the utility from "display of riches" does not diminish so fast, or at all. And you can spread durable capital over many years. So he favored taxing housing beyond some middling value. Veblen saw that "competitive emulation" may overpower diminishing marginal utility, at least for many people - witness W.R. Hearst once, and Larry Ellison and Ted Turner and the Sultan of Brunei today.
Once we have too many potatoes, there is the future to provide for; after our futures there is a future dynasty to immortalize. So there is hardly any limit to what Virgil called "auri sacra fames", the accursed hunger for gold, since it lasts forever. Equally durable, of course, and more displayable is land. Isaiah and Amos put that in the literature long ago.
Not only does land last forever, it is harder to lose and steal than gold.
Pareto preached, and others preach today that we cannot justify taking from the richest to help the poorest because we cannot make interpersonal comparisons. The obvious answer is that neither can we justify keeping things the same. We can't justify anything, we just have nihilism. Surely someone must have developed that thought and planted it in the history of thought literature. If any learned readers can direct me to it, please do so.
Thank you, Mason Gaffney
-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of Roger Sandilands
Sent: Saturday, June 08, 2013 4:30 PM
To: [log in to unmask]
Subject: [SHOE] moral sentiments
Mason: Lionel Robbins was one of the most egregious offenders in this regard. He opposed Pigou (I think it was) on progressive taxation on the grounds that it was impossible to make interpersonal comparisons of utility and so one could not argue that a dollar to a millionaire is not worth as much as it is to a pauper. Unscientific, you see. Currie, who knew him at the LSE, 1922-25, once suggested I write my PhD on "The errors of Lionel Robbins". Sadly, Robbins succeeded Young to a chair at the LSE after Young's untimely death in 1929.
CheeRS
By the way, when you see Larry Boland you might ask him what he made of Currie. They were colleagues and on his part Currie respected Larry. I think Zane and Larry were wary of each other. I met up with one of Larry's best students last year in Cambridge - Stan Wong, though Stan left academia and economics to be a hot-shot lawyer advising world-wide on regulation policy.
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From: Societies for the History of Economics [[log in to unmask]] On Behalf Of mason gaffney [[log in to unmask]]
Sent: Saturday, June 08, 2013 10:00 PM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series
Roger Sandilands' excerpts from A.O. Hirschman dust off some old memories that help me understand why I never took Hirschman seriously. Could we call him a pioneer of "Freakonomics"? Now I look forward to defenses from the Hirschman champions who came forth in large numbers to tell us he was one of the greats.
Re "morality", I've never heard or seen anyone dismiss Adam Smith on the grounds that he wrote about moral sentiments. Pareto and his fans have, it is true, dismissed progressively graduated income taxes, and estate and property taxes, on the grounds that moral sentiments are just subjective. A few on this list might even agree, but if so, let them please come out with it explicitly - it's worth an open dialogue.
Mason Gaffney
-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of Roger Sandilands
Sent: Saturday, June 08, 2013 6:41 AM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series
Fidel objects to my "ideological motives" in criticising Raul Prebisch's protectionism; and Ana Maria objects to my writing 'immoral' in connection to Albert Hirschman's "principle of the hiding hand" in favour of industrial protectionism. She says such words are inappropriate for a historian of thought.
I actually wrote, "to my mind immoral". Note that we all have value judgements; the only difference is in whether we make them explicit. I made mine explicit, but I'd like to know on what good grounds - moral or otherwise - an economist can justify the "hiding hand" principle.
Hirschman urges planners to conceal the true risks of their own pet projects that would not otherwise be approved, or to urge private investors (risking their money, not Hirschman's nor that of the planners he is advising). He then explicitly supports this by invoking Christian morality to support "an economic argument" for a "preference for the repentant sinner over the righteous man who never strays from the path". Cute, but to my mind dubious economics and, yes, even more dubious morality.
And what about Hirschman's policy advice based on his "theory of unbalanced growth" (about which M June Flanders has written much): deliberately approve projects for which there is no demand (but lots of nice backward and forward supply-side linkages) so that while those projects go bust the resultant bottlenecks and shortages elsewhere will then induce others to invest profitably there?
Or his complacency over rapid population growth because it too leads to "development-enhancing" bottlenecks?
Or his urging that the development agencies bring caravans full of the "cornucopia of modern civilisation" to the edge of villages so that their tradition-bound inhabitants can be wrenched out of their deplorable lack of rational economic aspirations? But maybe he didn't explicitly use the word deplorable.
- Roger Sandilands
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From: Societies for the History of Economics [[log in to unmask]] On Behalf Of Ana Maria Bianchi [[log in to unmask]]
Sent: Saturday, June 08, 2013 12:29 AM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series
Roger Sandilands also employs the word "immoral" to refer to Hirschman's hiding hand principle, which I think he should not do, as historian of thought.
----- FIDEL AROCHE <[log in to unmask]> escreveu:
>
Dear all,
Roger Sandilands disaproves Raul Prebisch's contributions to economics on the grounds that Mr Prebisch was a "protectionist". It's sad to see that ideological motives are used as arguments against a man whose heterodox ideas proved to be so useful, even if so many blame him for phenomena beyond the scope of his work.
> I wonder also what's Mr Sandilands opinion about earlier contributors
> to
development economics who advocate protectionism as well, on different grounds, such as Hamilton and continue to be heared by advocates of third party liberalism (never to be practised at home), such as the USA.
>
Regards
Fidel Aroche
2013/6/6 Roger Sandilands
<[log in to unmask]<mailto:[log in to unmask]>>
I have to say that I am very lukewarm toward Oscar Ugarteche's suggestion of Raul Prebisch - and the main reason he gives (his influential support to ECLA for the kind of import substituting industrialisation protectionism that theAsian NIEs early rejected in favour of more outward-oriented policies that propelled them to much more rapid growth than in Latin America).
Likewise, one of my last choices would be Albert Hirschman (another protectionist and type of "structuralist" whose work in Colombia in the early 1950s was rightly opposed by the more thoughtful economists there, and whose ideas on backward and forward linkages, to be promoted through the (to my mind immoral) "principle of the hiding hand" -- the duping of investors into putting their money {not Hirschman's} into projects whose benefiits are deliberately exaggerated and whose true costs are concealed by civil servants).
Nevertheless, I respect Michele Alacevich's canvassing of Hirschman's name.
His recent book, The Political Economy of the World Bank: The Early Years (Stanford UP, 2009) contains a very full description of Hirschman's bitter conflicts with Lauchlin Currie in Colombia, though perhaps with not enough insight into the relative depths of their economic visions, perseverance, and actual achievements.=
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