Notes on Money, Markets, and Economics
What I've Been Reading


Aristotle's Social Science. Salkever. Read Here..

The Goal Of Evolutionary And Neoclassical Economics As A Consequence Of The Changes In Concepts Of Human Nature, Anna Horodecka. Read Here..

Islam and the Economic Challenge, Umer Chapra. Read Here..

An Essay on the Nature and Significance of Economic Science, Lionel Robbins. Read Here..

Retrospectives: On the Definition of Economics, Backhouse and Medema. Read Here..

Welfare and Welfare Economics: The Early Contribution of Alfred Marshall. Caldari and Nishizawa. Read Here..

Economics Controversies. Rothbard. Read Here..

Economics and its Ethical Assumptions. Long. Read Here..

The Economic Point of View. Kirzner. Read Here..

The Philosophy of Economics. Bowman. Read Here..



What would Plato say: Can I be a good scientist yet not be a good person?

Posted By Trevor Newton
August 1, 2017

Or, to put the question in terms which apply more specifically to myself, “Can I be a good economist yet not be a good person?

If Plato were to attempt to answer this question, speaking as he would through Socrates, he would first ask for clarification: What is Economics concerned with? What aspect of life does it know about? What is the goal (ergon) of Economics? (For example, in the Gorgias dialogue, where Socrates debates the merits of rhetoric, he spends considerable time (Gorgias 447a-457c) seeking to clarify the definition of rhetoric before he even attempts to launch his main argument against it).

Economists have debated the answers to these questions for more than two hundred years; yet still, there are no conclusive answers. The ‘definition debate’ continues to this day. Some background on the history of it can be found in Retrospectives On the Definition of Economics (Backhouse and Medema), The Economic Point of View by Israel Kirzner, and also Modern Economic Theory (Mukherjee, pp. 6-21).

Still, I suspect Socrates would not let us off the hook. I imagine he would persist in his questioning until we gave him a definition --- yet there are so many to choose from! Suppose we offered him Samuelson’s definition: “Economics is the study of how people and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption, now or in the future, among various persons and groups in society.” (Samuelson and Temin, 1976, p. 3). We could have just as easily chosen definitions from great economists such as Robbins, Marshall, or even Adam Smith, to name just three, yet Samuelson’s definition is the more modern one.

Socrates would, no doubt, still seek further clarification: But what is this area of study trying to accomplish? In reply, some economists might say: “it seeks to describe”; others would say “it seeks to explain”; others “it seeks to evaluate”, and still others, “it seeks to predict”.

Socrates would press further and ask: But what is the point of all your describing, explaining, evaluating or predicting? Robbins-and-company might answer: “the point is to identify the most efficient way to achieve the given ends in light of the scarcity of means”.

Socrates then responds: But why do economists think efficiency in achieving given ends is beneficial? Marshall-and-friends reply: “because the goal of economics is really the promotion of human welfare.

Socrates then asks: But what promotes human welfare? and at this point much clamor ensues, with various economists saying various things. It is precisely here, though, that I feel Socrates has a great deal to say.

This question was very important to Socrates (Plato), and he dealt with it in several of the dialogues, only he refers to welfare as eudaimonia which can also be translated as happiness. Happiness (eudaimonia) is not an external good, like money, rather it is an internal good, and it is the best good, and moral virtue is the essential means to attaining it. Moral virtue and happiness are thus linked, and this idea is eudaimonism. The knowledge of what is moral is wisdom, and wisdom always brings happiness. Without wisdom, material goods can be harmful because one who lacks wisdom may misuse them (Euthydemus 281d – 281e). Moral virtue is a good which is linked therefore to eudaimonia, and there is no material good which is at all equivalent in value to moral virtue. To be wise is to understand justice and practice it. To Socrates, the disvalue of acting unjustly is so great as to outweigh anything of positive value that a person might obtain through acting unjustly.

Yet how would the economist answer Socrates’ question? It is their unique understanding of human action which allows economists to evaluate policy in relation to given ends. But as to the ends themselves, economics often claims to be agnostic. “The economist is not concerned with ends as such… The ends may be noble or they may be base” and “Economics is entirely neutral between ends” (An Essay On The Nature & Significance Of Economic Science. Robbins, pp. 23, 24). Even if we accept these claims, can we accept that someone can be a good economist without also being knowledgeable in morality?

According to Socrates, if an area of expertise (techne) is ignorant regarding moral precepts, then is not a true area of expertise (techne) at all, and therefore it must, in order to be truly beneficial, be made a subcategory-of and subservient-to an area of expertise (techne) which really does have expertise regarding morality. He makes this point in the Gorgias dialogue (Gorgias 517e, and also see a similar argument in Republic 601c-601d), using the example of the baker (who knows nothing about what is healthy for the body) whose trade should be brought into submission of those who do understand what is healthy for the body. When economics doesn’t make itself subservient to those who possess moral expertise then it (like the baker) is only suited for “slavish, ancillary, and degrading work” (Gorgias 518a). If an economist is not thoroughly trained in morality then he would not be a true expert and would be rather like a slave catering to whatever whims are demanded of him.

Rothbard, in describing the economist who thinks he can prescribe means to attaining given ends yet still remain ethically neutral, says “since the economist takes someone else’s hierarchy of ends as given and only points out the means to attain them, he is alleged to remain ethically neutral and strictly scientific. This viewpoint, however, is a misleading and fallacious one" (Economic Controversies. p.318). Regardless of whether an economist is asked a general question like “What promotes human welfare?” or a more specific one like “What promotes full employment?” his answer necessarily involves taking an ethical position.

In the Gorgias dialogue, the concept of techne (an area of expertise such as an art or a craft) is differentiated from empeiria (a knack). The dialogue links techne with values. Socrates argues that rhetoric is not a techne but is rather an empeiria, because it is not oriented toward good but rather is neutral. It takes no thought at all of what is actually best (Gorgias 464d) and therefore because it lacks knowledge of good and evil it is not a techne. Techne not only possesses knowledge of good/evil but it also seeks the welfare of that which is its object (Gorgias 464c and Republic 342e).

To provide further insight on techne vs empeiria, philosopher Andrew Feenberg has noted: “Weber distinguished between "substantive" and "formal" rationality in a way that corresponds in one significant respect to Plato's distinction between techne and knack. Substantive rationality begins by positing a good and then selects means to achieve it… Formal rationality is concerned uniquely with the efficiency of means and contains no intrinsic reference to a good. It is thus value neutral, like the Platonic empeiria.” (Heidegger and Marcuse: The Catastrophe and Redemption of History. p.13)

Socrates would argue that, unless economics is concerned with what is actually good, then it is not techne (462b) but rather empeiria. Further, since Socrates defines power as the means to effect a good outcome; therefore, since rhetoric (and, it follows, all emperiria) lacks wisdom as to what is actually good, it is not powerful, and whatever power it does possess ends up being used for harm (Gorgias 466e - 468e). Thus it is with economics: unless it is combined with wisdom (knowledge of moral virtue) it is not beneficial but rather, potentially, harmful.

Value-free economics then, when used in subservience to policy-makers who themselves are morally ignorant or deviant, becomes a tool for harm, not good. In Gorgias 521a, Socrates makes it clear that the policy maker can either be focused on facilitating others’ pleasure or on confronting others to ensure their perfection, even though to do the latter would likely lead to persecution. And since, as Socrates makes clear, political leaders are typically bad, then we as economists must be on our guard against conforming ourselves to the culture of wrongdoing (Gorgias 513a).

Lest an economist hopes to benefit himself by offering his “ethically neutral and strictly scientific” (Rothbard, p.318) services to the morally-ignorant policy-maker, he may find that he will have assisted in harming others, which in turn can only come back to haunt him. The economist becomes “caught in the system he thinks he masters” (to borrow from Feenberg, p.14). And so it would be very stupid, according to Socrates’ argument (Apology 25c - 25e), for the economist to act this way because it would end up ricocheting back on himself as well as everyone else in society.

Consider the economists who advises policy which lavishes transfer payments on the citizens, who love them for it and call them good economists even though the policy is making the citizens “bloated and rotten” (Gorgias 518d - 519a). So in the world’s eyes the economist is good if he helps them get what they think they want --- even though they don’t actually want it, it’s just that their minds are sick due to extreme self-indulgence (Gorgias 505b). So the ‘good’ economist isn’t really good, rather he has become just like the rhetorician whose trade Socrates despises because it is aimed at pleasure and so is a sort of flattery, being used for bad.

The “only responsibility a good member of a community has” is “altering the community’s needs rather than going along with them” in order to make them better people (Gorgias 517b - 517c). So the economist who simply goes along with peoples’ wishes without regard for what is actually good/bad is not a good member of his community according to this reasoning.

In common vernacular often it is said that someone is good at doing something without regard to whether they themselves are actually a good person or whether they are doing something which is actually good. It is obvious that a ‘good’ burglar isn’t a good person, rather he is bad. Neither is the action of burgling in itself good. A ‘good’ burglar is simply a bad person doing a bad thing but with skill. To say someone is a ‘good’ burglar would be a misuse of the word good as Plato would define it, because neither is the burglar himself good (he doesn’t possess good qualities) nor is the action of burgling good (it doesn’t produce good effects).

And while there is good, there is also pleasure, and the two are not identical. Each can be pursued, but the activities (means) which lead to each may be quite different (Gorgias 500d - 500e). Pleasant is not necessarily the same as good, nor is unpleasant necessarily the same as bad (Gorgias 497d). Socrates points out that to discern good pleasure from bad pleasure requires discernment between good effects and bad effects, which in turn requires the knowledge and wisdom of an expert in the field (Gorgias 500a). This ought to be where economists excel, but sadly it is not.

A good person is just, religious, and brave (Gorgias 506d – 507c). These qualities require education and self-discipline (Gorgias 506e and Republic 505a). “Anyone who wants to be happy must seek out and practice self-discipline” (Gorgias 507d). It follows that a person must do this, even if justice and restraint have to be imposed upon them, “or else forfeit happiness” (Gorgias 507d). Socrates maintains that all of our own, and our society’s, efforts should be towards “ensuring the presence of justice and self-discipline” – thus guaranteeing happiness (Gorgias 507e).

Justice and legislation are to the soul what medicine and exercise are to the body (Gorgias 464c).Markets should serve as an extension of justice and legislation. Markets therefore should reward actions which are actually (i.e. morally) good, and penalize actions which are morally bad, and thus provide incentives for moral behavior. The more that people want to buy good things, the more they are aiding producers to become better people, thus the good is amplified. The more who want to buy bad, the more they are aiding in producers becoming more bad and the bad is amplified.

Thus to reiterate, to be consistent with Gorgias 507e, Socrates would have markets be a means of promoting justice and self-discipline. The economist who understands this would be able, in Socrates’ view, to employ economics in the service of good.

An economist (or anyone for that matter) is a good person if he possesses good qualities. Good qualities include most of all virtue, justice, being religious, and having courage (Gorgias 507b). Yet it is both the inward state and the outward actions which together are necessary (Gorgias. Robin Waterfield. p.xxiii). One without the other is not sufficient to be a good person. But what makes an action good? If it has good effects. Good effects means the action makes me (or you) ‘more good’, where good is defined as possessing the good qualities listed above (Gorgias 507b).

To summarize then, according to Socrates I cannot be a good economist unless I use economics to do good. And in order to use economics to do good, I must know what good is, and this knowledge is obtained through training in moral virtue. As I come to know what good is, I train myself to do it through self-discipline. And thus, if I know what good is, and I do good, then I am a good person.