Economists Don’t Understand Philosophers

Harvard Philosopher Michael Sandel understandably peeved a few economists with his latest book, The Moral Limits of Markets (See here and here for my review of the book). Unfortunately, their replies indicate an almost complete failure to understand his criticism.

I’ll look at Jodi Begg’s critique as being fairly representative of the economists response. (Her’s is just much more accessible and enjoyable to read; what else would you expect from a blog called “Economists do it with models. Warning: ‘graphic’ content ahead”?)

Beggs stages a conversation between Sandel and economists.

Sandel: The second limitation to market reasoning is about how to value the good things in life. A deal is economically efficient if both parties consider themselves better off as a result. But this overlooks the possibility that one (or both) of the parties may value the things they exchange in the wrong way….

Every Economist Ever: The “wrong way?????” Who in the hell are you to tell people what they “should” be valuing?…

Behavioral Economists: Okay, we get it, people are sometimes irrational and don’t always act in their long-term best interests. We’re working on understanding the nature of short-sightedness and how people could be helped by various forms of commitment devices or nudges to better align their incentives with their long-term happiness. But that is very different from saying “I arbitrarily think that this is immoral, therefore you shouldn’t do it.

I’ve edited for length, but I think this is the crux of the disagreement between Sandel and his economic critics. Perhaps the most telling part is in the last line “I arbitrarily think this is immoral.” It’s not like Sandel flipped a coin in order to come to his view that it’s wrong to spend 6,000 dollars to kill a walrus at point blank range instead of donating money to a local charity….or really doing almost anything other than killing a walrus. (Yes, this is a real example from Sandel’s book).

Economists would really, really like to believe that they’ve solved the problems of moral philosophy by inventing a value neutral system with no need for judgment. (“Who in the the hell are you to tell people what they ‘should’ be valuing?”….well, I’m  a moral philosopher at a prestigious university, so it’s kind of my job.)

Economics tends to assume two supreme values, freedom and efficiency. Now these are fine values to assume and a very solid case can be made for them. Sandel is simply pushing back and arguing that we should discuss our values rather than assume them. The plain fact is that economic systems are not morally neutral. That’s unfortunate for economists who would rather not grapple with moral philosophy, but it doesn’t make it any less true. By pretending that they have found a way out of making moral judgments economists are entirely missing the critique that Sandel is making….there is no way out of making moral judgments.

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