In defense of science
by Ari David Kopolovic

Mr. Canivet, I think that you have done the discipline of economics an injustice by condemning it without really understanding it.

Your first point is to condemn rational self-interest-the desire to receive the highest degree of satisfaction for the least effort-by using the example of how awful someone would have to be to withhold medicine from those who cannot pay. This outcome is not what economics stipulates. The possessor of the medicine is merely seeking the highest amount of satisfaction; and while this may come in the form withholding the medicine from those who cannot pay, it may also come on the form of giving it to them because he/she feels it is the right thing to do. Whether to withhold the medicine or administer is not a question of economics, but rather a question of the character of the person who possesses the medicine.

So can you really say that you don’t subscribe to the economic principle of rational self-interest? What of those who have an altruistic self-interest? They still do things which to them yield the highest amount of satisfaction. That it comes from doing things for non-financial remuneration is just a statement of their preferences.

You then make the claim that the economic principle of scarcity-that people always want more than they have-is fallacious, but then mix it with the Malthusian (AKA classical) theory of arithmetic versus exponential growth. The two are wholly separate theories, with different foundations and outcomes. You combined the two theories into an incongruous mess and then denounced the scarcity argument using examples relevant to the Malthusian theory.

The scarcity argument can be summed up by saying unless everyone had everything that they have ever wanted, scarcity can be said to exist. Scarcity just means that there are some thing which some people want but do not have. What kind of things you ask? ANYTHING! A chocolate bar, a walkman, an apartment, a Bentley, or a skyscraper with a penthouse swimming pool filled with cheese fondue and dancing rhesus monkeys-to anyone who wants any of those things but does not have them, scarcity exists. Even if right now, everyone on earth had everything they wanted, inevitably someone, somewhere, would eventually say “hmm… wouldn’t it be nice if I had a …” and just as fast as the desire was formed scarcity would again exist.

Economics is no more a religion than physics, chemistry, or biology. They are all logical ways of explaining observed phenomena. The people who you accuse of worshipping economics are actually just those who derive a great deal of satisfaction from material rewards.

Ceteris paribus (AKA “all other things being equal”), economics is an exact science. It tells us that given ‘A,’ the market will find equilibrium at ‘B.’ It cannot tell us what is right or wrong, and it cannot tell us what our values should be. Economics cannot say that 100 dollars is worth that feeling you get from knowing that you have done the right thing. You may value one and not the other. The end result is that your values are something that you must establish, and only then can economics be of assistance.

Ari David Kopolovic is a student of Economics, Sociology and English.

Religion or not, it ain’t science
by Andy Canivet

Mr. Kopolovic may be right. Perhaps it is possible to distinguish between the academic study of economics, and the implementation of economic theory in the real world-so it’s easy to defend the theory and blame any bad application on the agents involved.

As a science, economics fails miserably, because it directly influences the very thing it is supposed to study. When people apply economic theory to making money, that theory ceases to be an objective description of the world and becomes a self-justifying way of life.

Rational self-interest, for example, simply fails as a model of human rationality. Obtaining “the highest degree of satisfaction for the least effort” requires being able to accurately predict your future satisfaction and measure your effort. Psychologist Daniel Kahneman won the 2002 Nobel Prize in economics for demonstrating this.

How can we calculate emotional satisfaction when human experience is subjective and qualitative, not quantitative? We usually just have to act and hope the results are beneficial. Moreover, the question of payoff is usually irrelevant, or even a hindrance. You don’t stop to calculate satisfaction when you run from a tiger in the jungle or kiss your lover–the activity is motivation enough. You laugh because it IS fun, not to GET fun, see?

Rational self-interest only works when you are making a deal. Applied to the rest of human behavior, it is more prescriptive than descriptive-it tells us how we should act, not how we do.

Even if it did apply to all of our decision-making, we’d still have a problem. Things like character and emotional satisfaction are irrelevant to artificial economic agents like corporations. Corporations can behave well, but they have no direct emotional incentive to. Even the nicest corporation exists to make money. The immeasurable, qualitative social concerns of the public, or the employees, simply can’t be factored into the accounting, so they take a back seat to profit.

As for scarcity-population must be a factor (more people, more want); but it’s simply not true that people always want more than they have. Once what you have meets what you need, wanting more is a choice you make. We just happen to live in a competitive culture that says we should always want more, regardless of how much we already have and regardless of the consequences to our health, the environment, or other people.

Economics may not have created this problem, but it perpetuates it. If you believe rational self-interest really is how people think, then you will always want to compete for greater gain; particularly when things like advertising artificially inflate scarcity by telling us we shouldn’t be satisfied with what we already have.

We stay afraid we’ll fall behind, working harder than ever to afford ever more, and too busy to stop and ask if our endless desires actually make sense.

This is a compulsion, not a whim-it’s not a matter of “wouldn’t it be nice if I had a…,” it’s more like “I’m so afraid of not having this thing that I’m willing to work a 60 hours a week and neglect my family so I can afford it.”

We live in a culture of constant fear and dissatisfaction, perpetuated and reinforced by the practical application of economic theory.

Economics is an entirely different thing than physics, chemistry, or biology. Politicians don’t consult physicists when making policy, you don’t get biology reports on the nightly news, and society does not arrange its institutions around chemical principles.

If it is a science, economics is a highly confounded social experiment. As society puts economic theory into practice, our values do change to meet economic ideals. When economists look at society, they see their theories at work and conclude they are correct.

That’s a religion if ever there was one. It certainly isn’t science-and you can take that to the temple…er…bank.