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Economic Philosophy Quotes
Economic Philosophy
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Economic Philosophy Quotes
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“The misery of being exploited by capitalists is nothing compared to the misery of not being exploited all.”
― Economic Philosophy
― Economic Philosophy
“The moral problem is a conflict that can never be settled. Social life
will always present mankind with a choice of evils. No metaphysical
solution that can ever be formulated will seem satisfactory for long.
The solutions offered by economists were no less delusory than those of
the theologians that they displaced.
All the same we must not abandon the hope that economics can make an
advance towards science, or the faith that enlightenment is not useless.
It is necessary to clear the decaying remnants of obsolete metaphysics
out of the way before we can go forward. The first essential for
economists, arguing amongst themselves, is to “try very seriously,” as
Professor Popper says that natural scientists do, “to avoid talking at
cross purposes” and, addressing the world, reading their own doctrines
aright, to combat, not foster, the ideology which pretends that values
which can be measured in terms of money are the only ones that ought to
count. [pp. 134-5]”
― Economic Philosophy
will always present mankind with a choice of evils. No metaphysical
solution that can ever be formulated will seem satisfactory for long.
The solutions offered by economists were no less delusory than those of
the theologians that they displaced.
All the same we must not abandon the hope that economics can make an
advance towards science, or the faith that enlightenment is not useless.
It is necessary to clear the decaying remnants of obsolete metaphysics
out of the way before we can go forward. The first essential for
economists, arguing amongst themselves, is to “try very seriously,” as
Professor Popper says that natural scientists do, “to avoid talking at
cross purposes” and, addressing the world, reading their own doctrines
aright, to combat, not foster, the ideology which pretends that values
which can be measured in terms of money are the only ones that ought to
count. [pp. 134-5]”
― Economic Philosophy
“In some ways the most striking novelty in Keynesian doctrine was that
(abstracting from effects on foreign trade) an all-round reduction in
wages would not reduce unemployment and (introducing Kalecki’s
elaboration) would actually be likely to increase it. [p. 129]”
― Economic Philosophy
(abstracting from effects on foreign trade) an all-round reduction in
wages would not reduce unemployment and (introducing Kalecki’s
elaboration) would actually be likely to increase it. [p. 129]”
― Economic Philosophy
“The /utility /economists, according to Wicksell, were committed to a “thoroughly revolutionary programme” precisely on this question of distribution of income.^9 Marshall, and to some extent Pigou, got out of the fix that their theory had landed them in by emphasizing the danger to total physical national income that would be associated with an attempt to increase its /utility /by making its distribution more equal. This argument has been spoiled by the Keynesian revolution. If, as Keynes expected, saving is more than sufficient for a satisfactory rate of private investment, to use it for social purpose is not only harmless but actually beneficial to National Income, while if more total saving is needed than would be forthcoming under /laisser faire /it can easily be supplemented by budget surpluses.
Edgworth, as we saw above,^10 and many after him, took refuge in the argument that we do not really know that greater equality would promote greater happiness, because individuals differ in their capacity for happiness, so that, until we have a thoroughly scientific hedonimeter, “the principle ‘every man, and every woman, to count for one,’ should be very cautiously applied.”^11
Many years ago, this point of view was expressed by Professor Harberler: “How do I know that it hurts you more to have your leg cut off than it hurts me to be pricked by a pin?” It seemed at the time that it would have been more telling if he had put it the other way round.
Such arguments are getting rather dangerous nowadays, for though we shall presumably never have a hedonimeter whose findings would be unambiguous, the scientific measurement of pain is fairly well developed, and it would be very surprising if a national survey of the distribution of susceptibility to pain turned out to have just the same skew as the distribution of income.
If the question is once put: Would a greater contribution to human welfare be made by an investment in capacity to produce knick-knacks that have to be advertised in order to be sold or an investment in improving the health service, it seems to me that the answer would be only too obvious; the best reply that /laisser-faire /ideology can offer is not to ask the question. [pp. 127-8]”
― Economic Philosophy
Edgworth, as we saw above,^10 and many after him, took refuge in the argument that we do not really know that greater equality would promote greater happiness, because individuals differ in their capacity for happiness, so that, until we have a thoroughly scientific hedonimeter, “the principle ‘every man, and every woman, to count for one,’ should be very cautiously applied.”^11
Many years ago, this point of view was expressed by Professor Harberler: “How do I know that it hurts you more to have your leg cut off than it hurts me to be pricked by a pin?” It seemed at the time that it would have been more telling if he had put it the other way round.
Such arguments are getting rather dangerous nowadays, for though we shall presumably never have a hedonimeter whose findings would be unambiguous, the scientific measurement of pain is fairly well developed, and it would be very surprising if a national survey of the distribution of susceptibility to pain turned out to have just the same skew as the distribution of income.
If the question is once put: Would a greater contribution to human welfare be made by an investment in capacity to produce knick-knacks that have to be advertised in order to be sold or an investment in improving the health service, it seems to me that the answer would be only too obvious; the best reply that /laisser-faire /ideology can offer is not to ask the question. [pp. 127-8]”
― Economic Philosophy
“Not only is the system distorted by its bias towards investing in what
happens to be profitable, but even within that sphere there is no reason
to expect the profit motive to lead to a well-balanced pattern of
investment. This has always been a weak point in the neo-classical
system. The doctrine that, under conditions of free competition, given
resources are used to yield maximum satisfaction, applies essentially to
an equilibrium position. It can be demonstrated only by assuming that an
equilibrium exists and showing that a /departure /from it would be
harmful (it also has to assume, of course, that the distribution of
income is somehow what it ought to be). Walras had the ingenious idea of
making the inhabitants of his market “shout” their offers until the
equilibrium has been found, and then start actual trading at the
equilibrium prices. It is pure effrontery to extend this kind of
equilibrium conception to investment; an equilibrium pattern of
investment worked out on this system is possible only in a fully planned
economy (if there). [p. 125]”
― Economic Philosophy
happens to be profitable, but even within that sphere there is no reason
to expect the profit motive to lead to a well-balanced pattern of
investment. This has always been a weak point in the neo-classical
system. The doctrine that, under conditions of free competition, given
resources are used to yield maximum satisfaction, applies essentially to
an equilibrium position. It can be demonstrated only by assuming that an
equilibrium exists and showing that a /departure /from it would be
harmful (it also has to assume, of course, that the distribution of
income is somehow what it ought to be). Walras had the ingenious idea of
making the inhabitants of his market “shout” their offers until the
equilibrium has been found, and then start actual trading at the
equilibrium prices. It is pure effrontery to extend this kind of
equilibrium conception to investment; an equilibrium pattern of
investment worked out on this system is possible only in a fully planned
economy (if there). [p. 125]”
― Economic Philosophy
“Indeed, on a high plane of generality there is nothing very much for
economic theory to say to the planner, except: Do not listen to those
who say you want this rather than that — agriculture, not industry;
exports, not home production; light industry, not heavy. You always want
both. [p. 113]”
― Economic Philosophy
economic theory to say to the planner, except: Do not listen to those
who say you want this rather than that — agriculture, not industry;
exports, not home production; light industry, not heavy. You always want
both. [p. 113]”
― Economic Philosophy
“The analysis of the /General Theory /shows that inflation is a real, not
a monetary, phenomenon. It operates in two stages (once more giving a
crudely simple account of an intricate process). An increase in
effective demand meeting an inelastic supply of goods raises prices.
When food is supplied by a peasant agriculture a rise of the prices of
foodstuffs is a direct increase of money income to the sellers and
increases their expenditure. The higher cost of living sets up a
pressure to raise
wage rates. So money incomes rise all round, prices are bid up all the
higher and a vicious spiral sets in.
The first stage — a rise of effective demand — can very easily be
prevented by not having any development. But if there is to be
development there must be a stage when investment increases relatively
to consumption. There must be an increase in effective demand and a
tendency towards inflation. The problem is how to keep it within bounds.
Some schemes of investment that seem to be clearly indispensable to
improvements in the long run, such as electrical installations, take a
long time to yield any fruit and meanwhile the workers engaged on these
have to be supplied. The secret of non-inflationary development is to
allocate the right amount of quick-yielding, capital-saving investment
to the consumption-good sector (especially agriculture) to generate a
sufficient surplus to support the necessary large schemes.
It is in this kind of analysis, rather than in the mystifications of
“deficit finance,” that the clue to inflation is to be found. [pp. 110-11]”
― Economic Philosophy
a monetary, phenomenon. It operates in two stages (once more giving a
crudely simple account of an intricate process). An increase in
effective demand meeting an inelastic supply of goods raises prices.
When food is supplied by a peasant agriculture a rise of the prices of
foodstuffs is a direct increase of money income to the sellers and
increases their expenditure. The higher cost of living sets up a
pressure to raise
wage rates. So money incomes rise all round, prices are bid up all the
higher and a vicious spiral sets in.
The first stage — a rise of effective demand — can very easily be
prevented by not having any development. But if there is to be
development there must be a stage when investment increases relatively
to consumption. There must be an increase in effective demand and a
tendency towards inflation. The problem is how to keep it within bounds.
Some schemes of investment that seem to be clearly indispensable to
improvements in the long run, such as electrical installations, take a
long time to yield any fruit and meanwhile the workers engaged on these
have to be supplied. The secret of non-inflationary development is to
allocate the right amount of quick-yielding, capital-saving investment
to the consumption-good sector (especially agriculture) to generate a
sufficient surplus to support the necessary large schemes.
It is in this kind of analysis, rather than in the mystifications of
“deficit finance,” that the clue to inflation is to be found. [pp. 110-11]”
― Economic Philosophy
“Stalin formulated the economic aims of socialism as: “The securing of the maximum satisfaction of the constantly rising material and cultural requirements of the whole society.” [Economic Problems of Socialism in U.S.S.R., English edition, p. 45.]
Taken positively, this has no more content than any metaphysical slogan; like the slogan “All men are equal,” it expresses its point of view through negations. “Constantly rising” requirements means that there is no foreseeable limit to the possible rise in productivity (for, of course, it is not so much the needs as the means to satisfy them that will continually increase). “Cultural” requirements means that growing wealth is not to be confined to physical goods (though these alone enter into the Marxist definition of output). “The whole society” implies a condemnation of the arbitrary distribution of wealth.
There is nothing in this that the orthodox economists can object to. Indeed, it takes the very words out of their mouth. But they were wont to excuse the inequality generated by private property in the means of production because it was necessary to make total income greater. If income grows faster without it, they are in an awkward situation. Perhaps this is why they have crept off to hide in thickets of algebra and left the torch of ideology to be carried by the political argument that capitalist institutions are the bulwark of liberty. [pp. 109-110]”
― Economic Philosophy
Taken positively, this has no more content than any metaphysical slogan; like the slogan “All men are equal,” it expresses its point of view through negations. “Constantly rising” requirements means that there is no foreseeable limit to the possible rise in productivity (for, of course, it is not so much the needs as the means to satisfy them that will continually increase). “Cultural” requirements means that growing wealth is not to be confined to physical goods (though these alone enter into the Marxist definition of output). “The whole society” implies a condemnation of the arbitrary distribution of wealth.
There is nothing in this that the orthodox economists can object to. Indeed, it takes the very words out of their mouth. But they were wont to excuse the inequality generated by private property in the means of production because it was necessary to make total income greater. If income grows faster without it, they are in an awkward situation. Perhaps this is why they have crept off to hide in thickets of algebra and left the torch of ideology to be carried by the political argument that capitalist institutions are the bulwark of liberty. [pp. 109-110]”
― Economic Philosophy
“After the war, when the problem of deficient effective demand seemed to
have faded into the background, a fresh question came to the fore —
long-run development.
The change arose partly from the internal evolution of economics as an
academic subject. The solution of one problem opens up the next; once
Keynes’ short-period theory had been established, in which investment
plays the key role, it was evidently necessary to discuss the
consequences of the accumulation of capital that investment brings about. [p. 92]”
― Economic Philosophy
have faded into the background, a fresh question came to the fore —
long-run development.
The change arose partly from the internal evolution of economics as an
academic subject. The solution of one problem opens up the next; once
Keynes’ short-period theory had been established, in which investment
plays the key role, it was evidently necessary to discuss the
consequences of the accumulation of capital that investment brings about. [p. 92]”
― Economic Philosophy
“In the last chapter of the /General Theory, /quoted above,^35 he [Keynes] falls into the fallacy of supposing that there is some kind of /neutral /policy that a Government can pursue, to maintain effective demand in general, without having any influence upon any particular demand for anything. The Government has to undertake “the task of adjusting to one another the propensity to consume and the inducement to invest” but everything else is best left to “the free play of economic forces.”^36
This is a metaphysical conception as unseizable as /abstract labour /or /total utility. /What is a policy which /merely /adjusts the demand for investable resources to the supply?
To increase effective demand when it threatens to flag, various means can be used: to reduce taxation or to shift the burden from those most likely to increase their consumption to those most likely to reduce their savings; to foster competition so as to reduce profit margins; to increase subsidies or outlays on social services — all means which tend to reduce inequalities in consumption. Or Government expenditure on investment can be increased, directly or through nationalized industries, or reductions in taxation and credit policy can be used to encourage private investment. Contrariwise, when effective demand seems excessive, taxes to discourage consumption, credit restriction and reduced Government expenditure can be brought into play. And all this has to be worked out so as to preserve the balance of trade at some level or other, as well as to preserve employment. What is a /neutral /policy? What mixture of these means is it that leaves private enterprise unaffected in content and acts only on the quantity?
[pp. 89-90]”
― Economic Philosophy
This is a metaphysical conception as unseizable as /abstract labour /or /total utility. /What is a policy which /merely /adjusts the demand for investable resources to the supply?
To increase effective demand when it threatens to flag, various means can be used: to reduce taxation or to shift the burden from those most likely to increase their consumption to those most likely to reduce their savings; to foster competition so as to reduce profit margins; to increase subsidies or outlays on social services — all means which tend to reduce inequalities in consumption. Or Government expenditure on investment can be increased, directly or through nationalized industries, or reductions in taxation and credit policy can be used to encourage private investment. Contrariwise, when effective demand seems excessive, taxes to discourage consumption, credit restriction and reduced Government expenditure can be brought into play. And all this has to be worked out so as to preserve the balance of trade at some level or other, as well as to preserve employment. What is a /neutral /policy? What mixture of these means is it that leaves private enterprise unaffected in content and acts only on the quantity?
[pp. 89-90]”
― Economic Philosophy
