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High Priests and Lowly Philosophers: the Battle for the Soul of Economics

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High Priests and Lowly Philosophers: the Battle for the Soul of Economics Case Western Reserve Law Review Volume 56 Issue 3 Article 4 2006 High Priests and Lowly Philosophers: The Battle for the Soul of Economics Peter J. Boettke Christopher J. Coyne Peter T. Leeson Follow this and additional works at: https://scholarlycommons.law.case.edu/caselrev Part of the Law Commons Recommended Citation Peter J. Boettke, Christopher J. Coyne, and Peter T. Leeson, High Priests and Lowly Philosophers: The Battle for the Soul of Economics, 56 Case W. Rsrv. L. Rev. 551 (2006) Available at: https://scholarlycommons.law.case.edu/caselrev/vol56/iss3/4 This Symposium is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law Scholarly Commons. It has been accepted for inclusion in Case Western Reserve Law Review by an authorized administrator of Case Western Reserve University School of Law Scholarly Commons. HIGH PRIESTS AND LOWLY PHILOSOPHERS: THE BATTLE FOR THE SOUL OF ECONOMICS PeterJ. Boettke ChristopherJ. Coyne Peter T Leesont "Do not pry into things too hardfor you Or investigate what is beyond your reach. Many have been led astray by their theorizing, And evil imaginings have impaired theirjudgments. Stubbornness will come to a bad end, And he who flirts with danger will lose his life. When calamity befalls the arrogant,there is no cure; Wickedness is too deeply rooted in them." - Ecclesiasticus 3: 21, 24-26, 28 "God, grant me the serenity To accept the things I cannot change, Courage to change the things I can, and wisdom to know the difference." - The Serenity Prayer by Reinhold Niebuhr penned in 1943 I. INTRODUCTION In his book, Reachingfor Heaven on Earth,1 Robert Nelson estab- lished that modem economics had indeed taken on a theological sig- nificance that was denied other social sciences and policy-relevant disciplines. This claim is worthy of serious attention, but Nelson's route to this conclusion is interesting in its own right. In writing about t Peter J. Boettke, Department of Economics, George Mason University, Fairfax, VA 22032. Christopher Coyne, Department of Economics, Hampden-Sydney College, Hampden- Sydney, VA 23943. Peter Leeson, Department of Economics, West Virginia University, Mor- gantown, WV 26506. We acknowledge the financial support of the Mercatus Center and the Program in Philosophy, Politics, and Economics at the James M. Buchanan Center for Political Economy. The usual caveat applies. I ROBERT H. NELSON, REACHING FOR HEAVEN ON EARTH (1991). CASE WESTERN RESERVE LAW REVIEW [Vol. 56:3 the role of economists in government, Nelson argued that economists do not limit their advice to technical expertise. Instead, they use their positions as economic advisors to strongly advocate particular pro- grams. In short, they do not just discuss the means-ends efficiency of a proposed policy independent of their own value assessment of that policy, but rather infuse their economic advice-giving with their own values. The economic way of thinking is a powerful tool for organiz- ing and interpreting events, and may well be value neutral; but economists as advisors are definitely not value neutral. This conclusion led Nelson to ponder why it is then that econo- mists are given a privileged position in the policy arena. Why are other disciplines that also provide a useful framework for thinking about important problems not afforded the same public hearing on issues of public policy? Nelson reasoned that since the economic way of thinking provides a way for us to understand and legitimate our modem world, perhaps economics has become the modem theology that has replaced traditional theology as the set of doctrines that give meaning to our social reality and hope to our endeavors for improving our lives. At least that is what Nelson sought to explore in his 1991 book, and to amazing effect. Since economic progress was seen as the solution to social ills, the discipline of economics is awarded a special status as the harbinger of progress and its practitioners are trans- formed from lowly philosophers, who only study the world, to high priests of social control, who are responsible for ushering in an age of unlimited progress and prosperity.2 In Economics as Religion,3 Robert Nelson develops this line of ar- gument even further and explores the theological underpinnings of such economic luminaries as Frank Knight and Paul Samuelson. The history of twentieth-century economics, in fact, could be read as how it came to be that Knight's Calvinistic economics was rejected in fa- vor of Samuelson's secular religion of scientific management.4 In 2 Nelson's work should not be read as an indictment of economics in the least. All that he is attempting to show is that economists do not practice a form of value-free analysis, and, in fact, cannot practice value-freedom when they offer policy guidance. Moreover, rather than a flippant critique of economics, Nelson actually engaged in historical research to demonstrate that many of the founding fathers of political economy and economics had deep theological commitments. They used the intellectual constructs from their theology to construct their eco- nomics, and they spoke of the discipline of economics itself and its policy advice in messianic terms. For a discussion of the relationship between value-neutral economics and value-relevant political economy, see Peter Boettke, Is Economics a Moral Science?, I J. MARKETS & MORAL- ITY 212-19 (1998) (arguing that economists can provide value-relevant knowledge grounded in value-neutral analysis); Peter Boettke, Why Are There No Austrian Socialists? Ideology, Science and the Austrian School, 17 J. HIST. OF ECON. THOUGHT 35-56 (1995). 3 ROBERT H. NELSON, ECONOMICS AS RELIGION: FROM SAMUELSON TO CHICAGO AND BEYOND (2001). 4 Despite his severe criticism of religion, Knight could not escape his background in 2006] HIGH PRIESTS AND LOWLY PHILOSOPHERS fact, Nelson 5 demonstrates how Samuelson's claims to scientific value-freedom are merely rhetorical flourish. Instead, Samuelson's ideas are the logical outgrowth of the intellectual movement of American Progressivism in which government, in seeking to create the Kingdom of God on earth, must act as a corrective to social ills, such as unemployment, and plan the social order. Guided by the teachings of scientific management, the practice of public administra- tion promised not just efficiency in public affairs but to be morally uplifting as well. Thus, the liberal state would be transformed by sci- ence to become the administrative state with the goal of eradicating social ills. Samuelson, according to Nelson, must be seen as providing the "scientific blessing for the American welfare and regulatory state."6 Building on Nelson's analysis, we contend that the transformation of economics from a discipline that studies the economy to one that is entrusted with its control has threatened the very "soul" of economics. The false pretense of scientific management led economists to prom- ise to accomplish tasks that they cannot legitimately achieve. False theory combined with bad philosophy generated scientific claims that must now be rejected. But this does not mean that economics as a way of thinking about the world and organizing its facts must be re- jected. Quite to the contrary, the teachings of economics are neces- sary for understanding the complexities of social reality. Perhaps its two most important public roles are (1) to explain how within a spe- cific set of institutional arrangements the power of self-interest can spontaneously generate patterns of social order that simultaneously achieve individual autonomy, generalized prosperity, and social peace and (2) through means-ends analysis, to provide parameters on peo- 7 ple's utopian notions of economic policy. The first captures the di- dactic role of the economist in teaching the nuances of Adam Smith's Christian thought. For Knight, as in earlier Christian theology, private property and the market economy exist because of original sin. Prior to the fall of man neither would be necessary and thus in an ideal world they would not exist either. But in the imperfect world we live in, prop- erty and markets serve to counter the natural proclivity of fallen man to strive for power and advantage over other men. Property and markets may be an imperfect solution, but they are better than the alternatives. See id at 136-37. 5 Jd. at37-48. 6 Id. at 263. 1 See James M. Buchanan, Economics as a Public Science, in FOUNDATIONS OF RE- SEARCH IN ECONOMICS 30-36 (Steven G. Medema & Warren J. Samuels eds., 1996). Buchanan argues that the task of economics as a public science is to provide an understanding of the work- ings of an organized economy to citizens and the consequences of alternative interventions into that working economy so that these citizens can be informed participants in the democratic process. In Buchanan's way of thinking, economists must differentiate between the analysis of what is, what could be, and what ought to be in performing their task of providing citizens with the information required to make intelligent democratic decisions. CASE WESTERN RESERVE LAW REVIEW [Vol. 56:3 "invisible hand" and the second captures the contribution that eco- nomics as a technical discipline can offer to public policy discourse. When economists move beyond these roles and instead try to employ economics as the primary tool for social control, they run afoul and distort the teachings of the discipline. We provide three cases in which the scientistic pretensions of economists got the better of them in the twentieth century: Keynesian demand management, the practice of cost-benefit analysis by regula- tors and lawyers, and the debate over market socialism. If our argu- ment is right, the role of the economist should move from high priest back to lowly philosopher.
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