The Dismal Science

6 October 2006 at 10:52 am David Gordon Leave a comment

| David Gordon |

Everyone knows that Thomas Carlyle called economics the “dismal science”, but the context in which he did so is surprising. Sandra Peart and David Levy point out in The “Vanity of the Philosopher”: From Equality to Hierarchy in Postclassical Economics (University of Michigan Press, 2005), that Carlyle thought economics was “dismal” because the classical economists opposed slavery. Adam Smith and his successors supported a broadly utilitarian philosophy in which everyone was taken to be equally capable of happiness. Carlyle and other defenders of hierarchy condemned the economists for what they regarded as dangerous nonsense.

The supporters of hierarchy appealed to the new science of evolutionary biology to support their position. Darwin himself favored the perfection of the race rather than happiness as the standard of ethics; and although he did not reject sympathy for the unfortunate, he feared its malign effects. (Peart and Levy do not mention, though, that Darwin was on the opposite side from Carlyle in the controversy over Governor Eyre’s brutal suppression of a black revolt in Jamaica.) Francis Galton and other supporters of eugenics criticized the classical economists for ignoring the differences in quality among people: the state, in their view, should make efforts to obtain a “better” population.

In response to the challenge from eugenics, Edgeworth and other successors of the egalitarian John Stuart Mill abandoned the assumption that each person’s happiness should be counted equally in assessing policy. Perhaps, Edgeworth suggested, superior people had a greater capacity for happiness. If so, their preferences ought to be more heavily weighted. Peart and Levy argue that the use of the Pareto criterion was in part intended to sidestep this problem

Peart and Levy also find an affinity between the eugenics movement, with its effort to plan for a superior population, and collectivist economic planning. They note that Karl Popper’s The Open Society and Its Enemies, a famous attack on total planning, had Plato’s eugenics proposals as one of its principal targets. They applaud the Chicago and Austrian Schools for resisting eugenics and returning to the classical view. Mises strongly condemns eugenics in Planned Chaos.

I think that the authors are right that Smith and Mill adopted an egalitarian standpoint, but why is this position, or its denial, part of economics? The law of comparative costs, broadened by Mises into a general law of association, shows that even people of differing abilities benefit from exchange. No assumptions about human abilities and their genesis seem essential to economic theory.