The Classical Economists Revisited

"It’s about the doctrine of laissez-faire, the doctrine that the government exists in order to protect property rights and established contracts and make sure that contracts are enforced and that that’s the sole role of the government. That’s not something that any sane economists actually taught. But it is what economists were thought to have taught. It is what (usually) right-wing propagandists, people who like the current distribution of property rights and who fear the consequences of a bigger and more intrusive government, especially one that is interested in progressive taxation, said that economists taught. It’s what journalists, usually journalists with various right-wing connections or employers, said that economists taught or ought to have taught. D.P. O’Brien talks about how economists don’t just worry about how the economy works and don’t just analyze technical questions and draws the links between these concerns and their more general moral and philosophical aims. If you think about it, first of all, the market economy is going to fail to recognize all kinds of externalities that actually exist in the economy. It is going to fail to recognize pollution and congestion and all sorts of other things. It is going to fail to recognize the benefits of having communities of knowledge and inquiry in which people learn massively from each other without having to pay, because they can observe each other. Thus, we ought to have heavy taxes on pollution and heavy bounties for the acceleration of technological progress. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . But, also, a market economy counts every dollar as equal. While, actually, if you’re a good Benthamite utilitarian you count every person as equal. And, if you believe, as Bentham did and as virtually everyone does, that there’s a declining marginal utility of wealth, that each rough doubling of your wealth does about as much to advance your ability to achieve your interests and your potential happiness as the last doubling—that going from £10,000 pounds to £20,000 is worth the same to you in your subjective terms as going from £20,000 to £40,000 and that that provides the same benefit as going from £40,000 to £80,000, that has strong implications. That tends to make you think that the economy gives ten times as much attention or weight to someone ten times as rich as someone else. We see this at its sharpest in Amartya Sen’s studies of the Bengal famine where, because in 1942 and 1943 World War II was raging in the Pacific, all of a sudden there were an awful lot of people in Bengal who had no incomes at all. And because they had no incomes, the market economy rated their well-being as worth zero. And so, in a perfectly efficient, competitive market economy in Bengal, even though there was ample food available to feed the whole population, the value of the lives of those without any income was weighted at zero, and so three million people starved to death. This is the market economy doing what the market economy always does in a Pareto, optimally efficient manner. It weights those who have wealth, their desires and interests a lot more than the desires and interests of those who have less wealth. And at the limit at which your wealth and income are zero, you have no desire or weight at all. O’Brien is excellent at how economists wrestle with these distributional questions and, indeed, with Marx’s nightmare that an extraordinarily unequal distribution of wealth was something the system would drive itself to. He’s diving deep, talking not just about Ricardo and Malthus and Smith, but also about the second and third layer people who had all kinds of interesting insights and who greatly expanded knowledge about how the economy worked, but who don’t get the headlines."