Friday, April 20, 2012

The Past is a Better Guide to the Present Than Hopes for the Future


Sandwichman’ writes EconoSpeak (19 April) (‘Anals of the Economically Incorrect) HERE http://econospeak.blogspot.fr/2012/04/whats-mythology-for-anyway.html

What's the Economy For, Anyway?: Why it's time to stop chasing growth and start pursuing happiness, by John de Graaf and David K. Batker, 2011. Bloomsbury Press.
“Here's something Sandwichman didn't know: "Hoover and Roosevelt (and their predecessors) had one thing in common. None entered office with a model or theory of how a national economy works.
Poor Adam Smith and the whole of political economy back unto the time of William Petty, when the enterprise was known as political arithmetick! Dr. Smith may have called his book Wealth of Nations but apparently it made no impression on the leaders of nations -- or at least on the presidents of one nation, the United States of America. They had no theory of how a national economy works. Not even an incorrect or misleading theory. None whatsoever.”

Comment
Authors of books who expect to impress ‘leaders of nations’ are likely to be disappointed, whatever the title of their books.  Adam Smith wrote his two books, 'Moral Sentiments', 1759, and ‘Wealth Of Nations’, 1776, for young students, some of whom might have aspired to become leaders of nations, and some of them certainly became politicians of some influence, but most did not reach such status.
 His books went through several editions up to his death in 1790, though both are still in print in various languages.  This looks impressive on one level, but far too few owners actually read what is in them, and most rely on quotations only, or not even that much.  Despite his non-readership, Adam Smith is a widely recognized name across the world.
I am surprised that Sandwichman expects “leaders of nations” to know something about “how a national economy works”.  I would be more than surprised that a leader of any nation knew how ‘a national economy works’.  I would be as surprised if any economist actually knew “how an economy worked”.  I would be beyond surprise if John de Graaf and David K. Batker knew how an economy works, especially given their focus on “happiness” as the appropriate objective for an economy, not GNP.
 I suppose these thoughts qualify me as “economically incorrect” though probably not in the sense meant by “Sandwichman”.  Economics is not a finished science; it’s an opinion, one of many opinions competing for attention.
Smith’s approach was more likely to produce better results than its alternatives.  It involved an historical method, called by his first biographer Dugald Stewart “conjectural history” (1793).  It studies the past, using the best information available, to form conjectures about how past events led to the present.  What happens is that each passing present provides knowledge about the approximate validity of earlier conjectures, thus sharpening better tools to arrive at better conjectures about successive presents.  

2 Comments:

Blogger airth10 said...

Sandwichman brings up and interesting question: "What is the Economy For, Anyway?"

One of the first things that came to mind is the campaign slogan "It's the economy, stupid". Without the economy we could not sustain societies or civilization. The economy is a treadmill activity of consumption and replacement; we consume and thus we have to replace. The economy is basically about replacing what we consume and use up. It is also about repairing and maintaining the mechanics that keeps the world working. The economy and it wheels basically combats and keeps at bay the universal constant of entropy.

Capitalism and the free market has emerged as the premier economic system because it was found to be the best at finding and replacing the resources we consume and use up, and in giving us the sustainable development for our survival and continuance.

The economy is metaphysical. It more than anything has united the world in a common activity. It has combined the two basic human instincts of creation and destruction, re-channeling the destructive and putting more emphases on the creative.

Sandwichman says that we should pursue 'happiness' instead of economic growth. Ironically, economic activity is where our happiness has most come from. It is the wedge behind which we have had the luxury to think about happiness.

2:46 p.m.  
Blogger Gavin Kennedy said...

airth

I agree.

Human kind have always been on a treadmill of "consume and replace" - or "first catch, or pick, consume, and catch or pick again". That led to average lifespans of under 40 years. Market "capitalism" is also a treadmill, with increasing lifespans.
Sandwichman's thesis about "happiness" is a hopeless quest. Even getting agreement could mean civil wars.
Gavin

7:03 p.m.  

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