Blum Center Friday Political Economy Colloquium

The following is a transcript of the talk I delivered to the Friday Political Economy Colloquium sponsored by the Blum Center, University of California, Berkeley, on Friday, February 18, 2011.

The Prodigal Son and the Good Son: An Economic Parable
Presented at the Berkeley Friday Political Economy Colloquium
18 February 2011

Joseph W.H. Lough, Ph.D.
Lecturer, Political Economy
University of California, Berkeley

First, I would like to thank the Blum Center for sponsoring and Professor DeLong for planning this event. Professor DeLong called our attention in his opening remarks to John Maynard Keynes’ complaint against those who would counsel austerity and puritanism during a recession. I too can think of no better place to begin a discussion such as this than with Mr. Keynes’ complaint. The only problem is that, from our lips, or in any case from mine, this complaint cannot help but sound a bit hollow. What, practically or theoretically, do I know about austerity? What do I know about puritanism? Really. We might therefore do well to ask: does Mr. Keynes’ complaint amount to anything more than ad homonym. Austerity is foolish; puritanism is silly.

Ironically, Mr. Keynes’ ad homonym, if that in fact is what it was, may have carried more weight in Keynes’ day, in the 1930s, than it does today, because even among Keynes’ intellectual opponents—fiscal conservatives all—puritanism would have appeared even more foolish then than it does today. The retreat of secularism and humanism—we must admit—has blunted Keynes’ criticism: Austerity, foolish? Puritanism, silly? Not any more.

Let me see if I can therefore put the discussion on a different footing. Not Lord Keynes’ ad homonym, but, rather, the solid ground of science. Because, unless I am mistaken, there is something indubitably self-evident about economic austerity—something economists on the coasts—Harvard and Berkeley—sometimes referred to as salt water economists, are liable to overlook.

Don’t get me wrong. Although a product of Chicago, I am not myself Chicago. I am as “salty” as the next guy. But I do feel that, when we ask our audience to embrace one or another variety of profligacy, however packaged, we are, my friends, beating our heads against the storied brick wall. Here we would do well to draw a page from our colleague, the neuro-linguist George Lakoff. For when we say “stimulus” or “government spending,” what they hear is “irresponsible profligacy” and “government control.” Because, in their view, economic responsibility demands not a handout; indeed, not even a hand. Economic responsibility demands that the government give us the liberty to act and to fail and to suffer the consequences for our actions. That’s responsibility. That’s morality.

Immanuel Kant won this debate over two centuries ago. It went something like this: so you made a bad (or good) choice. If you are to be held morally accountable for that choice then you cannot blame it on (or count it up to) the material, bodily, conditions of your life; for if you do, then you must kiss ethics, religion, and, with it, all law and justice down the road. For there can be no condition placed on true moral freedom.

This, my friends, is the turnkey to the austerity and puritanism recommended by fresh water (which is to say, Chicago) economics. Without it, Chicago economics melts into a pool of mush. And, with it, all talk of austerity and belt-tightening. This was Amartya Sen’s message to us—a message for which he was duly awarded a Nobel Prize.

Do we embrace a negative, purely abstract, notion of freedom—freedom as the absence of constraint—i.e., the Chicago school? Or do we embrace a positive, substantive, notion of freedom—freedom as the conditions of the good life a la Amartya Sen? Aristotle or Plato? Hegel or Kant?

But this really doesn’t solve our problem, does it? For, as Professor DeLong has pointed out, there is a long list of economists quite willing, ready, and able to point out precisely where, empirically, austerity is simply wrong-headed.

But, wrong-headed for what? Surely, wrong-headed for long-term economic growth and full employment. Wrong-headed as well for general social welfare.

Aha. But, what about for freedom? But, you say, we weren’t talking about freedom. Oh, yes, we were. Or, rather, should I say, yes THEY were and are. For, really, it has always been about freedom. Even when Chicago’s Gary Becker and Milton Friedman herded their students into Graduate Course 301, the centerpiece of Chicago’s mathematically oriented economics program, with its peculiar preoccupation with price; it was always about freedom.

At which point, we could have—we should have—pulled out our big guns; not Karl Marx or John Maynard Keynes; not Locke and Hobbes. What I mean is Aristotle. Aristotle’s Politics, Book I, Chapter 1, the very first page. The heart and soul of Western thought and culture. The very core of the Core Curriculum itself; the tradition behind the Great Books Tradition: Aristotle.

Here, on page one, Aristotle asks, is the ruler of a republic simply the ruler of a somewhat larger private oikos, private economy, private enterprise? No? Why not? Because, says Aristotle, the ruler over a private enterprise, an oikos, is a despotes, a despot, the ruler over subordinates, dependents, workers, women, children and slaves. Therefore, writes Aristotle, you should never ever, ever allow a businessman to rule over a republic. No. The ruler over a republic is not the ruler over a somewhat larger private enterprise. The ruler over a republic is a ruler over others who like himself (or herself) is a substantive beneficiary of substantive freedoms.

But freedom here—as Amartya Sen points out—is not the absence of constraint. Freedom here is the substantive condition of its own possibility. You know it. You are its beneficiaries. A good education. Freedom from fear. Good health. Leisure—the time to read, to go to the opera, the theater, the ballet, MOMA, the symphony, to help your children with their homework, to go on bike rides, to work in the garden, to conduct research, the freedom to fail and to learn without the fear of losing one’s living.

These freedoms—so different, so nearly opposite the freedoms that govern the private oikos, the private enterprise—are the freedoms that compose the public sphere in a republic.

But, at the very instant that we began to understand these freedoms—for many of us it was upon reading Karl Polanyi’s Great Transformation—at that very moment we began to cede the field of economics to forms of thought and modes of research ill-suited to anything but Kant’s ethics of duty and deprivation.

At that moment—and this is pure Kant—substantive freedom lost its footing in economics. Not that we didn’t continue to talk about it and recommend it. But absent a coherent and compelling theory of substantive freedom, our talk and research lost out to their theory. We can cry “injustice” till we are blue in the face. We can yell—and we are right to yell—that families should not have to choose between health, safety, and education. But until we realize that morality for most of us intuitively entails the absence of constraint, we will almost certainly be preaching to the choir.

So. What is the answer? I don’t know. How do we begin to shift the weight of experience, at least where freedom is concerned, from the absence of constraint, to the conditions of freedom?

How do we shift our own research perspectives to supplement our quantitative documentation and modeling, with qualitative, critical, interrogation?

Which brings us back, I feel, to the story of the prodigal (or should we say profligate) son. All of you, I am sure, have heard the story; this is the story about the son who, having received his share of his father’s inheritance, leaves home and squanders it on the pleasures of this world. His father—who, in the story, represents God—is bereft and bereaved at his loss (not his economic loss, but his personal loss). But then his son returns, sick and broke. And what does the father do? The older son, the good son, counsels austerity and puritanical punishment. But what does the father—who, in the story, represents God—what does the father do? He slaughters the fattened calf. He throws a party. He welcomes his son with open arms. How utterly irresponsible!

Will $1.2T (or is it now $2T) lead us to full employment? I don’t know. But, is that the right question, even for an economist? Maybe the right question is instead: do you miss your son?

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