Monday, November 3, 2014

Is economics common property or valuable property?

Taking the right or left? It's a matter of choice.
Basher Eyre, Wikimedia Commons
What is economics? Is it about making so much money and living in luxury; about human welfare and distribution of material well-being; giving citizens the power to afford whatever they like, whether genuine or contrived? Economics could be any of this to you, but the central idea behind economics is scarcity - how you and I, faced with unlimited wants, use our limited resources to satisfy these wants. Choice and private property became the central tenets of modern economics. Economists have decided to deny themselves the knowledge of mental states for observable choice. To an economist, the more choices a society makes through acquiring more resources, the higher will be human welfare. But could it be otherwise? Could scarcity be relegated to the background?

  • Scenario 1:

  • Is there an alternative to private property? Common property! History has shown us that for common property to be a viable proposition, then we’d be faced with the question of how to distribute fairly and equitably the proceeds from common land. Nations that have gone through that avenue were poorer for it. But wealth accumulation was not the framework of economics.

  • Scenario 2:

  • Would economics allow itself as a science to study the mental influences behind our preferences, the unlimited needs and wants that we all possess? Then, the inefficiencies of overproduction and increased production would be the central framework of economics.

  • Scenario 3:

  • Human welfare, happiness or satisfaction, are not directly observable or measurable, yet human welfare is equated with solving the scarcity problem. Could it be done otherwise? Through equating human welfare with longevity and not preferences? Could it be possible to equate human welfare with the level of support network in disaster situations?

If any of the three scenarios were possible, then scarcity would cease to be the framework on which modern economics as a science is built.

According to Asad Zaman in his article: Normative foundations of scarcity, if economists were trained to deal with the question of values or ethics, then scarcity might not be central to economics. Economics cannot be value free! Exploitation is unobservable but exists! Making a lifestyle choice is an imperative issue which cannot be asserted for truth or falsity, yet it is the object of economics. Poverty can be discussed rationally and arguments for or against poverty proffered by opposing sides to a debate. These three issues are value laden and part of the purview of economists.

So, why are values meaningless and senseless to the modern day scientists? Why are economists not being given courses in ethics in the Universities? If this was possible, scientific theory would consider social norms as assumptions and then, common property, overproduction to eliminate scarcity and measures to equate human welfare, like longevity, would be substitutes for preference satisfaction.

Scarcity would cease to be the central framework of modern economics!

But all other alternatives to capitalism has failed. Yet, there are no substitutes to scarcity. I think Asad should have proposed something novel, something more innovative. Is he nolstalgic about logical positivism? After all, economic theories like scarcity still rest on normative tenets which equate welfare to preference satisfaction. Advantages of free trade, optimal taxation, consensus on basic needs, health, market failures and productive capacities are normative. Why should logical positivism be the roadmap to a value system?

You can read the full article online.

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