Sunday, 16 October 2011

The Science of Choice and The Society of Capital: Reflections on the Apories of Bourgeois Economics Between "Hypothesis and Convention" and "System and Freedom"

In his The Methodology of Positive Economics, Milton Friedman sets off on a quest to define bourgeois economics as a "positive science":

In his admirable book on The Scope and Method of Political Economy, John Neville Keynes distinguishes among "a positive science . . .a body of systematized knowledge concerning what is; a normative or regulative science ... a body of systematized knowledge discussing criteria of what ought to be . . . ; an art ...a system of rules for the attainment of a given end"; comments that "confusion between them is common and has been the source of many mischievous errors"; and urges the importance of "recognizing a distinct positive science of political economy."
This paper is concerned primarily with certain methodological problems that arise in constructing the "distinct positive science" Keynes called for - in particular, the problem how to decide whether a suggested hypothesis or theory should be tentatively accepted as part of the "body of systematized knowledge concerning what is."

You will recall that in our discussion on Hobbes's political theory we saw that every time the word "hypothesis" is applied to human beings and institutions that Hobbes postulated to be "conventional" (established by a "social contract"), this use reflects the degree of "manipulability" of the living reality of human beings and institutions either on the part of those who carry out the "hypothesis" or else on the part of some existing distribution of "power" between those human beings and their institutions so that they acquire a degree of "predictability and regularity". Rather than reflect on the reasons why certain "positively measurable" behaviours take place in a given society, Friedman prefers  to concentrate and therefore arbitralrily "narrow" the focus of his "Positive Economics" to "a body of systematised knowledge concerning what is".

It may be well to recall at this point the time when the Nazi dictatorship filmed the behaviour of unfortunate Jewish people whom they had forced into the Warsaw Ghetto - living in the most appalling circumstances that at the mere thought renew the nightmare of the experience and its unspeakable sorrow -; the Nazi dictatorship filmed these unfortunate human beings and the horrendous conditions and behaviour to which they had been horrifically and violently forced by the Nazi SS and Army so as to be able to "prove" to the German people back home "why Jews are rats". The idea was obviously that if people behave like rats, they must be rats - without any questions asked about "how and why" they came to behave in that manner!

So this is exactly what Friedman is asking us to do with his "positive economics". But if this is the aim, it follows then that any "hypothesis" that Friedman and his "economic science" may advance will be vitiated ab initio - from the very start - by the historical and political circumstances that have led to "what is". In that case, his "systematised body of knowledge" would tell us absolutely nothing (!) about the true content and substance of "what is" and it would tell us much more instead about the "system" - about the "stable, regular and predictable" social relations that have been imposed on a society so that they are not subject to great and significant change. "The system" here may well be inconsistent with "freedom" or "choice", the more this "system" is subject to "mathesis", to its mathematical modelling. And this is exactly what we have deprecated and exposed on this site with the various economic and econo-metric "models" espoused by bourgeois economists from Mishkin to Bernanke to Krugman.

Perhaps the greatest attempt at devising and defining a "science of economics" was that of Lionel Robbins at the London School of Economics (where he was joined by Friedrich Hayek in the 1930s) in terms of "the Science of Choice". According to Robbins economics is the science of allocating "scarce resources" to "alternative uses". In other words, Robbins says that economics is "the dismal science" because it deals with "resources that are scarce" (whose supply is limited) to determine the "choices" available for their allocation to a (limited) number of alternative uses.

The apory (the practical contra-diction) in this definition between the rigorous inevitability of the "science" with the apparent "freedom" of the "choice" is immediately evident. If, indeed, economics can tell us "scientifically" what our "choices" are in terms of the allocation of existing resources, then we simply do not have any "choice" in the matter! Simply put, the bourgeois dream of a "scientific economics of capital" and of a "free society" is simply impossible! One of two things: either economics (the "dismal" science) is so rigorous that it effectively allows no real "choice" or else it does, in which case it is neither "rigorous" nor "scientific"!

The apory or contradiction - in fact, it is a "vicious circle" - that Robbins did not see in his bourgeois apologetic haste, lies hidden in our surreptitious substitution above of "existing resources" for Robbins's "scarce resources". In fact, Robbins - in his complete imbecillity - never once asked himself "how" he knows that certain "resources" are "scarce" to begin with!

And the answer is that existing social resources become "scarce" because a given society has already made a "choice" (dependent on its existing system and distribution of political power) as to what will be the "resources" that it seeks to utilize!!!

So, in other words, it is impossible to determine what are "scarce" resources and the degree of their "scarcity" without reference to the social relations (harmonious or antagonistic, conflictual or co-operative) of a given society - unless we assume that there is " no conflict" already in our society about "how and to what extent" existing (!!) resources are to be utilised! Robbins simply "assumes" that there is no "conflict" between social individuals and classes in a capitalist society! He is assuming that what is a "scarce" resource in a capitalist society will also be a "scarce resource" in any and all societies!! But if that were so, "economics" would no longer be "economic science": it would be a mere branch of engineering or mathematics!!

Indeed. as you can see, in their absurd attempt to remove all "conflict" from "economic science", bourgeois economists end up with only "mathematical equations" - that is to say, "empty formal relationships between mere numbers"!!! This happens to Robbins, it happens to Friedman (in the article quoted above), and it happens to Krugman in the article we just reviewed! In fact, it happens to all "bourgeois economists" because, on one hand, they wish to preserve the (consumeristic, individualistic) "freedom of choice" in "society" - yet at the same time they must present "the society of capital" as one that operates according to "scientific" principles - as a (free) society that is rid of the "conflict and antagonism" of "capital"!

That is why in our title we have worked with the "geometric opposites" of "science" and "choice", of "capital" and "society", of "convention" and "hypothesis", of "system" and "freedom". We will look more closely at these in the near future.

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