I have been sitting on this very interesting (and long) article by Christopher Hayes about his experience in a beginner economics class. His teacher was Allen Sanderson of the University of Chicago, an ardent subscriber to the Milton Friedman school of "Free Market – Free Trade" economic theory. "Is a little economics a dangerous thing?" asks Hayes. "Is too much economics and too little philosophy, psychology and ethics the real danger?" is my question. Without the benefit (and harm) of my half baked analysis, find out here for yourself. An excerpt:
Efficiency is the Chicago School’s defining value. The free market economists who came before—most notably Austrian Friedrich Hayek—offered a philosophical critique of the political consequences of state regulation and control of the economy. But Milton Friedman, his colleague George Stigler and the entire Chicago School focused on the actual economic problems of state control, namely, inefficiency. They rejected Keynes’ contention that markets function best with routine government intervention and instead harkened back to Adam Smith’s classical conceptions of equilibrium. Chicago School theories gained popularity when global capitalism hit a major funk in the ’70s—a period of slow growth and high inflation. Friedman argued, plausibly, that it was too much government that had caused the problems.
What may seem a subtle rhetorical shift had major consequences. It transformed what had been conservatism’s moral argument about capitalism bestowing the most benefits on those who worked the hardest—and the inherent injustice of a coercive state forcibly redistributing capital—into a technical argument about the inefficiencies associated with non-free-market solutions and the perverse incentives that made any social programs destined to fail. Thus, arguments about the way the world should be were converted into assertions about how the world actually was. Or, to put in terms that economists favor, normative arguments became positive ones.
"In the textbook Sanderson uses, author Michael Parkin defines the difference this way: positive statements are about “what is” and they “might be right or wrong.” Normative statements are about “what ought to be” and because they depend on values, they can’t be tested. “Be on the lookout,” Parkin warns, “for normative propositions dressed up as positive propositions.”
Parkin’s warning, however, turns out to be surprisingly difficult to heed. Neoclassical economics smuggles a great many normative wares underneath its positive trenchcoat, both in its assumptions about how humans operate—as individuals rationally maximizing their utility—and its implied preference for “markets in everything.” Because neoclassical economics always presents itself as a value-neutral description of the world, its ideological commitments can be adopted by those who learn it without any recognition that they are ideological. This is the source of some very spirited debate within the field itself. A growing global movement of “heterodox” economists has criticized the ideological confines and blindspots of the neoclassical approach. As Nobel Laureate Joseph Stiglitz put it, the dominance of the neoclassical model is a “triumph of ideology over science.”
In the popular press, however, such dissent is almost entirely absent. When protesters disrupted the 1999 World Trade Organization meeting in Seattle, WTO officials, mainstream economists and the New York Times’ Thomas Friedman ignored the fact that in much of the world neoclassical reforms had failed to produce the promised growth. Friedman went so far as to dismiss the protesters as “flat-earthers.” For Thomas Friedman (and, indeed, Allen Sanderson), people can’t “disagree” with neo-classical economics. They can only fail to understand it."
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