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Utilitarian Economics and the Corruption of Conservatism

The Oxford English Dictionary has two definitions of the word “conservatism.” The first defines it as a “commitment to traditional values and ideas with opposition to change or innovation”; the second defines it as “the holding of political views that favor free enterprise, private ownership, and socially conservative ideas.” The former definition strikes me as the classical definition; the latter, a more modern invention—as those who supported private ownership and free enterprise, such as John Locke and Adam Smith, were in their own times thought of as progressive liberals.

But is there a conflict between the two? Not inherently. With the absolute monarchies either abolished or subordinated to the will of parliaments, private ownership and free enterprise have evolved into the status quo. Given this, one can see how someone who defends this state of affairs might see him or herself as conservative. But in defending this status quo, many who think themselves conservative have instead slipped into supporting a truly radical social doctrine—namely, utilitarianism—a doctrine that has subsequently morphed into neoclassical or marginalist economics.

This is a social doctrine that has very little concern for traditional values. Indeed, it often appears to be entirely nihilistic in its consideration of value and truth. Because utilitarianism in its modern form—neoclassical or marginalist economics—is often the primary doctrine used to defend private property and free enterprise, the two definitions from the Oxford dictionary mentioned earlier begin to clash with one another.

From Normative Doctrine to Positive Imperative

What is the essence of the utilitarian doctrine? At its heart, it is the conversion of the human being in all of his or her richness into simplistic, self-contained atoms that are motivated only by their reaction to pleasure and pain. The individual is viewed as a creature isolated from any community: All considerations of intersubjective dynamics are subordinated to atomistic subjective dynamics. Anything resembling intersubjectivity is, in the utilitarian doctrine, merely a product of atomistic desires. There is, as Margaret Thatcher once said, no such thing as society. Simultaneously, although the individual is stripped of all faculties but the ability to feel pleasure and pain, he or she is invested with the ability to perfectly calculate how to best maximize pleasure and minimize pain. Man is divested of his all-too-human nature and endowed with the extremes of animal desires and godlike, calculating omniscience.

The roots of utilitarianism can arguably be found in the writings of the Greek philosopher Epicurus. Epicurus and his followers posited a normative doctrine that held that highly abstract, metaphysical values such as good and evil should be tossed aside in favor of maximizing contentment and minimizing pain. The Epicureans also viewed the world in a materialistic and atomistic fashion. That said, the Epicurean philosophy was not one of unbridled hedonism, as utilitarianism would become in the twentieth century, when marginalist economists began to view insatiable desire as a necessary condition in their models of man. Rather, the Epicureans counseled that people should try to reach a Zen-like state of contentment through the minimization of all pain.

Whereas Epicurean philosophy was a prescriptive doctrine advising people on how to lead their lives, utilitarianism proper emerged as a positive or quasi-scientific doctrine that claimed to uncover truths about the human being. The doctrine emerged in the modern era in the work of Jeremy Bentham. Bentham drew on empiricist thinkers like John Locke and David Hume and tried to formulate a wholly empirical theory of ethics. In Bentham’s doctrine, the line between “is” and “ought” is constantly blurred. Was utilitarianism for Bentham a positive description of the human being as a calculator of pleasure and pain, or was it a prescription for how society should be organized? Bentham was never quite clear.

For example, in his Introduction to the Principles of Morals and Legislation (1789), Bentham writes:

Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do. On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne. They govern us in all we do, in all we say, in all we think: every effort we can make to throw off our subjection, will only serve to demonstrate and confirm it. In words a man may pretend to abjure their empire: but in reality he will remain subject to it all the while.1

This is clearly a strong positive claim: these, Bentham tells us, are the laws by which man is governed. But it is not long before the positive claims give rise to normative considerations. Bentham’s utilitarianism is always pregnant with the potential to shape the world in its image, for the “is” to become the “ought,” and for Bentham to rally us as “partisans” to his social vision.

A man may be said to be a partisan of the principle of utility, when the approbation or disapprobation he annexes to any action, or to any measure, is determined by, and proportioned to the tendency which he conceives it to have to augment or to diminish the happiness of the community.

Many moral philosophers strongly disagreed with the tendency to reduce man to his pleasures and pains. They pointed out that human beings are so much more complex; that societies often relied on individual sacrifices of various kinds; that temporary pleasures may lead to pain later, and that weighing this up was no simple task; and, of course, that happiness was not always synonymous with the maximization of pleasure.

Of Pseudoscience and Social Planning

But the world was entering an age of science, which privileged any doctrine that could claim the unquestioned authority of quantitative disciplines. Utilitarianism became just such a positivist pseudoscience in the late nineteenth century, when it was translated into neoclassical or marginalist economics. The key names in this development include William Stanley Jevons, Carl Menger, and Leon Walras.

Jevons and Menger both arrived at the idea that human behavior should be mathematized in order to turn the study of man into a science proper. They found that the most promising framework for doing this was utilitarianism. By stripping man down to the simplest motivational structures—the atom pushed to and fro by his pleasures and pains—and by combining this with a notion of an economy that operated through exchange and flexible price, they found that they could form a coherent theoretical system that seemed, on its face, as elegant as Newtonian physics. Yes, man also had to be fitted with a supercomputer and limitless access to information to make the thought experiments work—he had to become God—but so much the better; these were men of Enlightenment, after all.

The elegance emanating from an encounter with the godhead was pursued with great gusto by Walras. He devised a clever system of equations that could be solved to produce what economists call a “general equilibrium.” This general equilibrium proved that—within the confines of the reductive thought experiment—a system of markets could distribute resources in such a way as to produce a final equilibrium or settling point. Later, Vilfredo Pareto went on to show that such a setup would prove “Pareto optimal,” meaning that market exchange, given the strict (and grossly unrealistic) marginalist assumptions, would produce a situation in which resources were distributed in such a way as to maximize the community’s “pleasure” and minimize its “pain.” This was the Benthamite social vision cast in the iron language of mathematics; Walras and Pareto were the “partisans”—or, perhaps, the disciples.

All of these men sought to mathematize the behavior of human beings, which appeared to be their prime motivation: yes, they probably found the utilitarian doctrine attractive in many ways, but their main goal was to use it to reduce human behavior to a formula. It should also be noted that, like many marginalist economists after them, many of these men were not particularly enthusiastic about the capitalist system. Walras, for example, was a socialist. Their systems had an air of social planning about them, because that was precisely what they were constructed for. Marginalist economics was a doctrine of social planning from the first, and one that had to reduce man to a hobbled caricature of himself and treat him as such. No values, no culture, and no heroes—only pleasures, profits, and prices.

Utilitarianism provided the early marginalists with a simplistic vision of man and his world. There was man, other men, pleasure, pain, and the ability to calculate this pleasure and pain. With only these variables, a simplistic, robot-like model of man could easily be constructed. He would process the “data” given to him by the world and optimize his behavior to maximize pleasure and minimize pain. This made his behavior deterministic and rendered him predictable.

Take an example: You have fixed preferences in terms of, say, bananas and apples. There are various “baskets” of bananas and apples. You have a certain amount of money to spend on bananas and apples, which themselves have fixed prices. Given all this information, and assuming that you “maximize your utility”—in classic utilitarianese, you “maximize your pleasure”—a marginalist can figure out exactly which “basket” of apples and bananas you will buy.

In other words, the system is thoroughly deterministic. And this is where another difficulty arises in the claims made by its partisans: Many see the utilitarian doctrine as inherently liberationist and freedom-promoting. Some picked it up simply because they saw it as opposing communism and, ironically, intrusive social planning—in this basket fell pundits like William F. Buckley and Henry Hazlitt. Others, like Friedrich Hayek, realized early on that the doctrine tended toward scientistic technocracy but nevertheless continued to embrace it, dropping the mathematical pretenses in favor of theoretical mysticism and quasi-religious worship of the figure of the “entrepreneur.”2 Finally, there were the full-throated marginalist social planners like Milton Friedman, singing from the hymn sheet of personal freedom when the troops needed to be rallied but reverting to the cold, dead language of utility maximization when the masses had to be controlled.

These intellectual revolutionaries, as morally radical as any Bolshevik, saw the marginalist doctrine as smashing through encrusted notions of good and bad and allowing people to make their own choices. “This doctrine promotes the idea that no one should tell me how to live,” they say, “and this means it allows me to do what I want.” But is this really the case? If I am correct, the main motivation for the marginalist transformation of utilitarianism was to render men, in their view, as determined and predictable as a billiard ball hitting another billiard ball. Where, then, is the space for freedom? Where is the space for choice? One would be forgiven for thinking that the freedom of utilitarian theory is not the freedom of the mind but the tyranny of the stomach. It is not hard to see how it promotes a vision of a society in which men are not encouraged to participate using their minds but rather to subordinate themselves to the system by way of their stomachs.

Robotic Is My Freedom

Can a theory that seeks to be deterministic really promote freedom? This is a serious question, and one not often enough asked. Marxists, for example, were apt to call for an increase in freedom, yet their doctrines portrayed human beings as being “overdetermined,” in the words of French Marxist philosopher Louis Althusser. That is, these doctrines promoted a vision of human beings as objects pushed this way and that by the ebbs and flows of history. Yes, from time to time, Marx will wax romantic about events or individuals, but this flies in the face of his overarching doctrine—one which seeks to impose laws upon history and thus eliminates choice in the movement of history. With no choice, there is no freedom.

Conservatives used to complain that Marxism was gratuitous and objectifying, but these were often the same conservatives who championed the theory of marginal utility. A clear-sighted understanding of marginal utility theory reveals that it is just as gratuitous and objectifying as Marxist theory. Given prevailing prices, our budgets, and our fixed preferences—that is, our stomachs—our actions are thought to be predetermined. This is not freedom. Freedom is typically seen as overcoming an obstacle, whether internal or external, in one’s path. Contrary to the marginalist conception, true freedom would be to say “no” to one’s stomach for some higher moral or ethical reason.

What we are dealing with here, as should now be clear, are ethical or moral questions. We are not strolling down the path of “is” but wandering into the open field of “ought.” Some of the more reflective marginalists recognized this, too. Take, for example, this quote from the marginalist economist and Nobel Prize winner Paul Samuelson:

I think that as far as the sociology of actual behavior is concerned simple axioms are unlikely to be realized to an appreciable degree of approximation. But aesthetically I think that there is much to be said for the Ramsey-Savage canons of consistent behavior. And that given time for reflection the would-be rational man would reproach themselves if it were called to their attention that they were showing inconsistencies as defined by the axioms of the theory. Speaking for myself, I know I would.3

Clearly this is a normative theory. Samuelson is sure that rational men would “reproach themselves” for behavior inconsistent with marginalist theory—at least, he knows he would. This is, it cannot be denied, how Samuelson believes that men should behave, and he does not even think it is how they are likely to behave. So much for positive science.

This approach is built into the foundations of modern marginalist economic theory. It is not often discussed because, as any student in a modern economics classroom will attest, value judgements are almost never discussed. They would occupy time that should be taken up with the dogmatic, rote learning of various mathematical puzzles. And, moreover, typical modern economists are not intellectually equipped to consider such things; discussions about moral philosophy render them uneasy and confused. The fact that Samuelson was able to articulate what he was doing is a testimony to the fact that he was a cut or two above his peers. But underlying everything that pours forth from the economics textbook is the same set of assumptions that undergirded Samuelson’s project. After all, Samuelson invented the modern economic textbook with the publication of his Economics in 1948. Here is what he had to say in that particular book (which, take note, went through nineteen editions):

What is assumed is that consumers are fairly consistent in their tastes and actions—that they do not flail around in unpredictable ways, making themselves miserable by persistent errors in judgement or arithmetic. If enough people act consistently, avoiding erratic changes in buying behavior, and generally choosing their most preferred commodities, our scientific theory will provide a reasonably good approximation of the facts.4

And woe to those who act with insufficient consistency so as to render Samuelson’s theory unscientific! Waiting for them is a veritable Samuelsonian hell of “persistent errors in judgement [and] arithmetic.” Dante would blush.

Properly understood, marginalist economics is the streamlining of the utilitarian doctrine into a pseudo-positive set of axioms. Thus, these axioms inevitably contain utilitarian normative judgements. The act of “unfreedom” in this theory is the same as the act of unfreedom in the Marxist theory: It tells you how to be free. In Marxism, if you do not submit to the tide of History and join the Movement, then you are not free. In marginalist utilitarianism, if you do not submit to the utility calculus and maximize material satiation, then you are not free.

Both theories are perfect material for authoritarian technocrats—and there is nothing quite like an authoritarian who knows what you want better than you do. After all, an authoritarian who simply wants to subordinate your will to his in order to benefit himself in some cynical way does not seek to actually break your inner will. But the authoritarian who knows what you want better than you do will not stop until the will is broken—or, in his mind, cleansed.

The marginalist theory is of this type. Are you a silly, sad sack who is not maximizing your utility sufficiently because you have higher moral principles? Well, then you are not “rational.” Do you suspect that the amount of information required to make the calculations that the marginalist doctrine requires is absolutely and ontologically impossible to attain?5 Certainly not “rational.” Do you think that even if this information were available, the likelihood that you and everyone else would be willing and able to undertake the complex calculations required would be extremely low? Not “rational,” sorry.

From Partial Equilibrium Nonsense to General Equilibrium Madness

The manner in which marginalist theory is introduced to people today is seemingly innocuous. Take N. Gregory Mankiw’s popular textbook Principles of Economics, first published in 1997. The first part of the book introduces the student to some axioms of utilitarian-marginalist economics. Often this is presented in a manner that commands assent. Take the example in which the idea of “opportunity cost” is introduced. Opportunity cost is, of course, the idea that the cost of one object is the amount of some other thing foregone in order to get the desired object. Mankiw provides a colorful example when he writes:

Basketball star Kobe Bryant understands opportunity cost and incentives. Despite good high school grades and SAT scores, he decided to skip college and go straight to the NBA, where he earned about $10 million over four years.6

This is perfectly reasonable, of course. What is not reasonable, however, is the notion that people make all decisions in this way—or, to go further, that people can possibly make all decisions in this way. Yet this is precisely what students are told to believe very soon after the seemingly innocuous basketball example. It is a big step from saying that my opportunity cost for having soup for lunch today was not having a sandwich—a clear decision that I probably did actually make in the manner presented—to saying that my entire budget is allocated in such a way that I carefully calculate all my opportunity costs for everything simultaneously, and that I do so using a marginal utility calculus. But this is precisely what Mankiw is telling us when he writes:

Rational people think at the margin. . . . When it’s time for dinner, the decision you face is not between fasting or eating like a pig, but whether to take that extra spoonful of mashed potatoes. . . . Individuals and firms can make better decisions thinking at the margin. A rational decisionmaker takes an action if and only if the marginal benefit of the action exceeds the marginal cost.7

Again, the dinner example seems obvious and likely has us nodding in bovine assent. But it is not long before these seemingly straightforward nuggets of life wisdom are scaled up into economic models that make strong claims about societies at large. The hokey, anecdotal examples that Mankiw gives of individual decision-making are soon converted into microeconomic supply-and-demand curves of the type so many are familiar with today. And from here it is only one step to Mankiw’s assuring the reader that:

Markets are usually a good way to organize economic activity. . . . In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of supply and demand to serve that end. Supply and demand together determine the prices of the economy’s many different goods and services; prices in turn are the signals that guide the allocation of resources.8

What the reader is never told—not once—are the assumptions that are implied when we scale up a simple supply-and-demand model for apples, bananas, or scoops of mashed potatoes into a model of the economy at large and how it distributes resources to various ends. It is in these assumptions—the assumptions that ensure equilibrium in a single market is transmitted into equilibrium in the economy at large—where the authoritarian tendencies truly rear their ugly head. G. L. S. Shackle outlines these assumptions admirably:

Equilibrium is a means by which all persons in choosing their acts can be supposed to have equal and perfect relevant knowledge and equal freedom. Given a list of persons, besides himself, composing the society, and given for each of these persons a list of all the acts possible to that person, each person can be supposed to draw up a list of all the distinct combinations of acts, one or other of which combinations will constitute the circumstances surrounding his own act. For each of these combinations he can be supposed to specify the act that he himself would choose, in case he were assured that the combination in question would prevail. The conditional promises, one for each person, thus derived, can now be supposed to be treated as a system to be simultaneously solved.9

Did that passage make your head spin? This is what is required of our pleasure-robots if their actions are to result in general economic equilibrium of the sort that leads Mankiw to say that “markets are usually a good way to organize economic activity.” Is this remotely realistic? Of course not. But nothing less than this is required. Now, is it any surprise that those who want to realize this fanciful utopia will try to make society in the image of their perfect pleasure-robots to achieve it? Recall Samuelson again: he does not think that people act in line with his theories; rather, he thinks that they should. Those who push these theories may or may not be aware that people do not undertake the intellectual rocket launches that Shackle lays out when they make decisions—but you can be sure that they think everyone should.

This authoritarian tendency is manifest today in the policy sphere. It bubbles up any time an avid “free marketeer” chastises some working stiff for not appreciating the free movement of capital and labor—and the accompanying destruction of jobs and outsourcing that it brings. These boobs? They are simply not rational. They do not understand what is in their own self-interest. It manifests itself in even more virulent form in what can only be described as marginalist cults—such as the so-called libertarian philosophies like Ayn Rand’s objectivism (a moniker as self-assertive and imposing as the doctrine itself) or Ludwig von Mises’s praxeology (a mess of epistemological confusion that arbitrarily assigns a priori status to the a posteriori material of the empirical human being). These abstract intellectual constructions—usually half-understood—imbue their adherents with a mandate for social change. It gives them a bizarre anti-moral morality which they can take with them into the world and impose on the populace. Anyone who disagrees? They’re not rational.

The Morality of the Atom, the Ethics of the Void

And so we return to where we began: Ethics. Morals. Values. There is really no way of getting away from them. Let us be candid: When examining the behavior of men, there are only three possible paths. The first is for us to simply observe and record their behavior, in the hope that this gives us access to some truth about man generally. The second is to form a grand theory of how man will behave at all moments, in all societies, at all points in time. The third is to recognize that man is free to do as he chooses and to either recognize this freedom as a good in itself or to recognize that some sort of moral or ethical force must constrain this freedom to ensure that it is channeled in a satisfactory way.

The first path has some merit to it. We should be interested in how man behaves under certain conditions. This is what many behavioral psychologists and economists do today. It is also what, in an entirely different framework and a more hermeneutic mood, psychoanalysts and anthropologists do. But this path runs out quickly. We now know that there are serious epistemological problems. Reflexivity kicks in, for one. Does the fact that the observed is being observed lead them to behave differently than they would if they were not being observed? And then there are the empirical problems. How many times need we be shown that many psychological experiments are non-replicable before we admit that human behavior may be a lot more heterogeneous than the more naive empiricists allow for? Given these problems, the likelihood that anything positive can be drawn from experimental psychology seems rather small. But we must give credit where credit is due: experimental psychology works wonders to dispel certain illusions we may hold about the consistency and so-called rationality of human behavior.

The second path is the one we have been discussing with respect to utilitarianism. Unlike the first path, it is a manifestly bad idea. Man is simply too complex. Such an approach stumbles drunkenly across the line between the descriptive and the prescriptive, never quite sure which side it is on. When pushed by either the experimentalists or the ethicists to clarify what exactly they are saying, the proponents of this approach tend to simply fall over in the middle of the street. We will not hide our disapproval: an arrest for public disorder is most certainly advised.

The third path is obviously the strongest. This is the conclusion that most serious philosophers have arrived at since ancient times. “Everything that needs to be said has already been said,” counseled André Gide, “but since no one was listening, everything must be said again.” The problem today is not a lack of dusty books that reflect on the “ought”; rather, it is that we are scared of the “ought” and cling to the pseudo-certainty provided by the “is.” That is why we are seduced by glittery theories of human motivation: we derive from them the moral authority we crave without ever having to question the source. But what we lose in this devil’s bargain is the truth. When we allow our doubts to creep in, we soon find that the authority we sought is not a king but only a jester wearing a paper crown.

Again, let us be candid. If we want to pontificate on human behavior, then we must be prepared to address it from a moral and ethical standpoint. If we are not, then we would probably be best off remaining silent. Utilitarians of every stripe want moral authority—sometimes extraordinary moral authority—while eschewing the responsibility to cast their arguments in the mold of moral argument. This is irresponsible and disingenuous, and it must stop.

Whither Utilitarianism, Whither Economics?

The question that naturally arises here is whether in slaying the marginalist dragon we have destroyed the discipline of economics. Has the sweet-smelling baby of economic insight been tossed out with the bathwater of marginalist pseudoscience? It is an important question, but it presupposes that all economics must be based on the marginalist utility calculus—that all economics must be based on the notion of a playground filled with atomic pleasure-machines with unlimited information and computing power. In the parlance of modern economics, this is tied up with the idea that economics should be “microfounded”; that is, that the behavior of the economy should be explained with reference to the mathematized behavior of the individual economic agents. But is this all there is? If we remove this wonky leg, does the stool fall unceremoniously to the floor?

The answer is no. There is absolutely no need to undergird economic theory with haphazard visions of how man behaves. In fact, we need not think much about motivation at all. The reason for this is that interacting systems of individuals, no matter how they behave or why they behave the way that they do, generate what some call “emergent properties.” That is, these systems generate higher-order behavior that goes above and beyond the human individual and constrains them.

Let us take the illustrative example that I used in my recent book The Reformation in Economics (2016).10 Imagine a football pitch with one hundred seats lined up ten by ten. Now consider the dynamics of this setup: any one person can stand up in order to get a better view of the pitch, but in doing, so they can often block the view of others behind them. This provides a good analogy for how economic behavior can be seen to be constrained at a higher level of abstraction. In our example, we can also see that different people in different seats wield different degrees of power relative to their neighbors. Assuming that, if a person in front of another stands up, then the person behind him will also stand up to maintain his view, then the people in the front row have the ability to cause nine other people to stand up simply by standing themselves. The people in the back row, on the other hand, have no capacity to make anyone else stand up.

This may seem like a simple example, but it has powerful implications for the study of economics. It leads us away from the pseudo-psychology of human behavior that is microeconomics and into the epistemologically firm territory of macroeconomics proper. This “higher order” thinking allows us to capture interesting truths about the workings of the economic system.

Take the famous paradox of thrift, for example. A single person can decide to increase his savings, should he feel like doing so, but if everyone tries to increase his savings at the same time, then no one will succeed in increasing his savings. This is because in order to save, we all need income. And because my income is the expenditure of someone else, that means if that person cuts their expenditure by increasing their savings, then my income will fall and my attempt to save will prove impossible. When we study the economy from this “higher order” or macro perspective, we come across many such constraints on individual behavior. In so doing, we can learn an awful lot about the functioning of the economic system while shying away from positing necessarily silly “laws” of universal human behavior.

As we have seen throughout this essay, the interminable sin that the marginalists fell into was to try to render human behavior determinate—to subject it to laws that resemble the laws of physics. But a proper macroeconomic approach does not require this. Proper macroeconomics makes no a priori assumptions about people’s behavior. Indeed, it is not really interested in behavior as such. Rather, it is interested in potential coordination problems that may arise when people behave in a certain way. In a sense, macroeconomics is not so much a science as it is an exercise in social logistics. Macroeconomics studies the paradoxes that various individual decisions—such as the decision by individuals to save en masse—can generate for the economic system as a whole—in this case, the implications that such savings have for economy-wide income.

What’s more, this perspective opens up a great deal of space for freedom. Because we have dispensed with the irritating pleasure-robots and utility-maximizers, we can escape the prescriptive prison that they lock us into. The utilitarian-marginalist arguments in economics are usually set up so as to force upon us policy choices that are then deemed to be inevitable. It is only one or two steps from the assumption of the utility-maximizer to the argument that, say, free trade is inevitably the best arrangement, or that all markets should be thoroughly deregulated. But once the utility-maximizing assumption is dropped, these become far more open questions. And this is precisely where the question of morality comes back in.

This more open vision of economics that I have outlined allows for many different “optimal” worlds. “Optimality” itself becomes largely, but not totally, a normative question. A properly macroeconomic vision certainly says that there are constraints. You cannot have your cake and eat it. But it does not deny that there are many different paths to achieve nirvana. And because there are many different paths, these can be evaluated from a properly moral or ethical normative framework. This opens economics up to a plurality of moral views. Perhaps you are a Christian or a Muslim or a Jew, and you would like to organize your society along those lines. Perhaps you have given up on the extremist utilitarian framework but still like the freedom that a relatively laissez-faire market system provides. Or perhaps you have an aversion to too much market freedom, because you think it gives rise to social chaos and moral confusion. “Sure,” the macroeconomist would say, “but we will have to evaluate your plans to make sure that they are consistent.”

An obvious example today would be the question of unemployment. A simple solution to such unemployment would be for the government to simply hire the unemployed. But what are the constraints here? Can the government afford to hire them? If they are hired as service workers, might they put pressure on the trade balance—and could this prove problematic in the future? Will hiring the unemployed cause inflation? These are the questions that a proper macroeconomics, unconstrained from the stifling marginalist precepts, can serve to answer.11

The first step on the road to theoretical recovery is to admit that the utilitarian-marginalist framework is bankrupt. But, despite what many economists today will tell you, this does not result in an uncontrolled descent into the void. Rather, it opens up many possible different worlds. It opens up a debate that can be accessed by everyone. No longer must people adhere to the axioms that currently play gatekeeper in the economics classroom. If you find these axioms absurd, then dump them. Replace them with your own vision of right and wrong. Then learn some proper macroeconomics and see if you can make your plans add up. If nothing else, it is far more compelling and interesting than “solving optimization problems in utility space.”

And conservatism? Any serious evaluation cannot but conclude that the principles of conservative philosophy were corrupted and debased by the utilitarian onslaught. Conservative publications like the National Review are literally drowning in pro-market scribblings. With recent missives like, “Conservatives have too often supported policies that don’t promote competition and free markets in the energy sector,” and, “A free market think tank sues Washington State over union bullying,” these publications have seemingly nailed their flag to the mast of the market. Conservatism today is increasingly seen as synonymous with some sort of mid-nineteenth-century radical liberalism. When the pages of a conservative publication like the National Review are barely indistinguishable from the pages of a radical utilitarian journal like the Economist, surely the world has been turned upside down.

Those who are interested in preserving any sort of tradition should not be worshiping at the temple of the market, which, as Marx rightly pointed out, bulldozes tradition and lays waste to any non-market social structure. The only question for thoughtful conservatives is this: How on earth could anyone have ever thought otherwise?

This article originally appeared in American Affairs Volume I, Number 3 (Fall 2017): 58–74.
The opinions expressed in this essay are those of the author and do not necessarily reflect those of Grantham, Mayo, Van Otterloo & Co., LLC.

1 Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (Oxford: Clarendon, 1876).

2 This is a strange footnote in the history of the marginalist takeover. Hayek and the Austrians saw the dangers of scientistic technocracy and so tried to recast the utilitarian/marginalist vision of the universe into something resembling a cultic tradition. See, for example, my essay “Libertarianism and the Leap of Faith: The Origins of a Political Cult,” Naked Capitalism, December 7, 2011,

3 Paul Samuelson to Maurice Allais, 20 October 1958,

4 William Nordhaus and Paul Samuelson, Economics, 15th ed. (New York: McGraw Hill, 1995), 78.

5 Indeed, it requires either telepathy or some sort of connection to a hive mind.

6 Gregory Mankiw, Principles of Economics (Boston: South-Western, 2011), 7.

7 Ibid., 6–7.

8 Ibid., 88.

9 G. L. S. Shackle, A Scheme of Economic Theory (Cambridge: Cambridge University Press, 1965), 12–13.

10 If the reader is interested in exploring these arguments in more detail, this is done in my book, The Reformation of Economics: A Deconstruction and Reconstruction of Economic Theory (London: Palgrave Macmillan, 2016).

11 To give a concrete sense of the difference here, consider how a marginalist macroeconomics and non-marginalist macroeconomics would provisionally answer these questions at the time of writing. The marginalist would most likely say that the government may not be able to afford hiring them; that so long as trade is free and the currency is floating, it should not prove problematic; and that hiring them will generate substantial inflation. The non-marginalist would likely say that the government can afford to do any hiring it pleases; that if the workers are hired in such a way that increases imports and does not increase exports, that this may prove problematic in the long run; and that hiring the workers is unlikely to generate inflationary pressure.

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