On the Limits of Economic Thinking

by Stephen Moriarty


Note: This was posted as a comment to D.J. Webb’s latest, but deserves promoting to a post in its own right. SIG

Everything has been “sold in terms of economics” for a very long time now. Of course this has got something to do with politicians finding that elections are easier to win when times are prosperous, but some ideology had to fill the gap when the nation-state was abandoned. Both free-market and nation-state ideologies are half-truths, and there is the rub. When Roy Jenkins shook his head and said, “All that is finished with,” during the referendum on the EEC, he had a point: on both sides of the class divide appeals to loyalty looked like humbug. The Unions saw nationalism as merely an appeal to work for less, and the “capitalists” understood on some level that “socialism” was only possible in a nation state. Both sides, as it were, decide to shoot the horse they were both sitting on. And both sides felt able to adopt an ideology of “realism” based upon the idea that self-interest is the only reality: “To thine own self be true and thence thou can be false to no man.” Economics, or its vulgar version at least, is based upon this idea, in part because theorising about complex systems is only possible on the basis of simplifications. The great Victorian economists like Marshall probably never intended their ideas to be taken to the lengths that they have been, which has included trying to simplify the world to fit the model!

Margaret Thatcher managed to “doublethink” – she treated “The road to serfdom” as a bible (“There is no such thing as society”) and simultaneously felt profound patriotic emotions. It is her failure to see the contradiction in her position – manifested in the signing of the Single European Act – that we are dealing with now.

Hamlet of course replies: “There are more things in heaven and earth than are dreamt of in your philosophy.” Well, I don’t know about that, but if there is no such thing as society, there is certainly such a thing as family. Classical economists have trouble explaining why people object to inheritance tax, the neo-Darwinists don’t, but nationalists have a similar difficulty about explaining the collapse of the post-war consensus: blood is thicker than water but not much thicker.

There is an eccentric-looking figure called David Hicks who posts the same thing more or less in The Telegraph over and over again. Unfortunately he frequently uses the unattractive phrase “perverted Darwinian instincts”, but I think he has it about right: nationalism “works” on the back of what is, to a significant extent, what I think is called a “dissociated instinct” – the instinct to favour relatives at play in an environment where we frequently interact with non-relatives. All of nationalism’s good and bad qualities flow from this, the instinctive sharing and its manipulation by power, the aggression towards outsiders and the willingless to “lay down one’s life for one’s friend”.

Dr Gabb recently spoke of an “existential crisis” in Britain/England. This is right and is of course to do with the fact that no one can possibly pretend that he interacts with relatives all the time anymore. As a consequence “the tribe” is unhappy and prone to panics. We are living through an astonishing experiment in which we will find out whether or how a society can function without the semi-illusion of relatedness. I make a plea to the “left” to have compassion for people who are frightened by living in an environment which they cannot even pretend to be natural and in which certain instincts have no outlet, and I make a plea to the “right” to remember that these instincts are “dissociated”. Nevertheless I am not sure that “society” can function without them.

2 responses to “On the Limits of Economic Thinking

  1. Society is not an entity, it is not a thing (like the state) – civil society is the web of civil (voluntary) interactions between human beings. That is what Mrs Thatcher was trying to say – and messed it up a bit (by the first line). The Road to Serfdom is not an economics book (although there is a small bit of economics in it) – and it is a very good book.

    As for economics – Marshall did not add anything of great importance to economics, indeed he may have helped some problems develop. However, he was certainly better than most later economists in Britain.

    By the way – “Stephen Moriarty” should use his real name.

  2. Stephen Moriarty

    First, I am flattered to find that my post has been promoted in this way.
    Second, the name of the Telegraph poster is Roger, not David, Hicks.
    Third, who would choose a pseudonym like mine?
    Kind regards to all those of “the Oxford temper”,
    Stephen Moriarty