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Economics of Life and Virtue

I typed up this brief (ok, relatively brief) summary for our class.
Unto This Last was published in 1862, following, as Ruskin himself says in the introduction, 18 months after the publication of the four essays which comprised it in The Cornhill Magazine. Although these essays were violently ridiculed by many of their readers, such was Ruskin’s confidence in his argument that he republished the four articles without any changes, without any additional defense of his claims or reply to his detractors. And indeed, while many of Ruskin’s suggestions seem quite fantastical, they also prove, on close examination, to be rigorously logical, and, it seems, quite thoroughly Christian.

Ruskin does not try to claim that his proposal for social economics is “natural,” that mankind, left to his own devices, will realize the just and beautiful social order to which Ruskin calls him, but this need be no refutation of his argument. Polanyi has showed us that the rise of the capitalistic economic and social order was not “natural” at all, but innovative and artificial, so capitalism cannot criticize Ruskin for being “unnatural.” The situation of modernity requires us to develop a social order which will necessarily be “artificial” to some degree, to the degree that any good social order must be brought into being willfully and will not simply emerge by itself. The question is whether this development can glorify the natural, instead of destroying it, whether it can encourage beauty and justice, rather than ugliness and vice. Ruskin seeks to articulate such a Christian glorification of natural social order in the pursuit of justice and beauty.

In the first essay, “The Roots of Honour,” Ruskin begins by denying the fundamental premise of capitalist political economy--that it is possible to determine how economies will and should function by taking into account only man’s economic interests, without regard to his social affections. A science such as this, while it may be true on its own premises, can never be true in the world. Ruskin mocks it, saying, “I neither impugn nor doubt the conclusion of the science if its terms are accepted. I am simply uninterested in them, as I should be in those of a science of gymnastics which assumed that men had no skeletons. It might be shown, on that supposition, that it would be advantageous to roll the students up into pellets, flatten them into cakes, or stretch them into cables; and that when these results were effected, the re-insertion of the skeleton would be attended with various inconveniences to their conclusion.” Social affections, both vicious and virtuous, must be taken into account, Ruskin says, and that being the case, our desire should be to encourage an economy based on the virtuous ones, not the vicious ones.

Manufacture, argues Ruskin, shall be most productive if workers work not merely out of economic interest, but out of affection for their masters. This will not happen, he says, as long as workers know that their wages may be reduced or removed at any moment, due to economic downturn. Ruskin therefore proposes that we find a way to keep wages 1) from varying based on the demand for labour, and 2) from disappearing when there is no work to be done. Both sound preposterous, but Ruskin endeavours to show otherwise. To save time, I will mention here only how he solves the first problem, since that is the most fascinating and compelling.

Many of the most honourable occupations, he points out, already function according to the principle of a fixed rate of pay, rather than on the basis of the supply and demand. We pay priests and statesmen (and in his time, doctors and lawyers) a fixed wage for their work, rather than hiring the lowest bidder. We do this because we expect those in such occupations to work not for money, but out of a sense of honour, and for the good of society. Those in honourable vocations are expected to occasionally sacrifice their own good, and their own profit, for the good of those they serve. Why should it be otherwise in the realm of commerce? Why can we not cultivate a mindset whereby merchants serve society by providing in the same way that ministers do by teaching, instead of seeking their own interest and avoiding loss at all costs?

In the second essay, “The Veins of Wealth,” Ruskin anticipates the objection, “Well, all of this may be fine and wonderful, but the science of political economy doesn’t propose to deal with that sort of thing. Its task is solely to determine the best method of acquiring wealth.” In response, Ruskin proposes to assess the nature of wealth, instead of simply assuming that it can be equated with monetary riches. Wealth, Ruskin points out, is ultimately power over labour--a fabulously wealthy man alone on a desert island, who could not use his wealth to employ anyone, would not be truly wealthy. Moreover, because of this, wealth is a relative phenomenon...to be able to use your wealth, you need others to be poor. Therefore, says Ruskin, the normal pursuit of wealth is the pursuit of a “maximum inequality in our favor,” and usually by unjust means.

Because of this agonistic nature of wealth, Ruskin sees that the pursuit of riches is often deleterious to the total wealth of a society. Therefore, we need a theory of wealth based on justice, which does not seek to take advantage of the weaker party to improve the relative position of the stronger. Otherwise, “that which seems to be wealth may only be the gilded index of a far-reaching ruin,” since the lives of many will necessarily be rendered miserable as the rich pursue more riches.

To solve this problem, Ruskin returns to his definition of wealth as power over men: “since the essence of wealth consists in power over men, will it not follow that the nobler and more in number the persons are over whom it has power, the greater the wealth?” The pursuit of real wealth is thus the pursuit of the enrichment and ennoblement of all societies members, and it will become clear in the end that the “persons themselves are the wealth.”

In the third essay, “Qui Judicatis Terram,” Ruskin turns to consider the notion of justice at more length. Rich and poor, he says, will always, as long as the world lasts, come into contact with competing interests. We cannot change this fact, but we may decide whether this contact will be destructive or beneficial, and to ensure the latter, we must use justice. Likewise, the laws of supply and demand are, to an extent, inevitable; the question is whether justice will guide them or whether they will destroy all in their path. Again, it is silly, he says, to say that economics is the “science of getting rich,” for there are many sciences of getting rich, such as poisoning rich people, for example; the question we have to answer is what is the science of getting rich justly?

Justice in employing labour, says Ruskin, means giving the labourer the same amount of labour in return (or the means to buy the same amount of labour) for the labour he has given. A just wage then will be sufficient to procure for the labourer as much or more labour as he has given, not less. By just wages, Ruskin endeavours to show, just as many will be employed in society as otherwise would be, but the power over labour is spread throughout the economy, and down through the social ladder, rather than remaining all in the hands of a few wealthy employers. Just wages will tend to raise men to the employer’s level, rather than keeping them at a low level.

In the final essay, easily the longest, Ruskin seeks to redefine the crucial terms of political economy, namely Value, Wealth, Price, and Produce.

Value, he argues, cannot be determined by supply and demand, or by how much labour goes into something. No, value is objective, it is a matter of whether or not something “avails toward life.” True political economy, then, depends on transcendent values, teaching us what to value and what not to value. Wealth, he points out, is not merely the possession of useful things, but the possession of them in such a way, and by such persons, that they are rightly and constructively used; it is ‘the possession of the valuable by the valiant.’ Price, he determines after some complex discussion, is ‘the quantity of labour given by the person desiring it, in order to obtain possession of it,’ and labour, in turn, is defined as ‘the contest of the life of man with an opposite.’

What about production? Here his argument dismantles the modern notion that the production of an economy can be best gauged by a statistic like GDP. Just because labour produces something doesn’t mean that anything beneficial has been done. Labour can produce many things, some destructive of life, others availing towards life. Production of capital, for example, is not in itself valuable, but only insofar as it enables the production of goods for consumption. Moreover, depending on how or why something is consumed, it may be valuable or not. A bomb, when it is “consumed” is destructive, and so the labour of bomb-making is not true production. “Production,” he concludes, “does not consist in things labouriously made, but in things serviceably consumable; and the question for the nation is not how much labour it employs, but how much life it produces.”

He ties together the argument of this essay, and of the whole book, that economic value cannot be separated from social value, and thus moral value, by declaring, “THERE IS NO WEALTH BUT LIFE. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others.” Moreover, “the maximum of life can only be reached by the maximum of virtue.”

A just and true economy, then, will function by the rich treating justly and the virtuous working to instill virtue in all those below them.

5 comments:

It seems to me there's something very wrong with this criticism of economics. The thrust seems to be something like: 1) economics takes as its premise that man is motivated solely by economic interests, 2) (1) is, in fact, factually false, therefore 3) economics doesn't apply to reality. (This seems to me to be the point of the skeleton-less gymnastics example.)

It isn't that this is wrong--it's just that it doesn't work as a general critique of economics. It can be applied only on a case-by-case basis. Let me give an example to illustrate what I mean.

Suppose I'm giving a physics lecture, and I say, suppose you drop a feather and a cannonball from the top of a building, which one would hit the ground first? A student might say: the cannonball, obviously, since the feather would float and flutter slowly down. To which I would say: ah, right--well, assuming no wind resistance, which one would hit the ground first? Now the student gets angry. "Assuming no wind resistance"?! Why would you do that? Can you name one place on earth in which there isn't wind resistance? Any "science" that stipulates such unrealistic premises is one that I am uninterested in--why it's as uninteresting as the science of skeleton-less gymnastics! Good day sir! I am off to create a new version of physics, one in which the phenomenon of wind resistance is placed at the very fore!

You see the problem. Science is all about coming up with quantitative models for stuff--small, simplified "toy" versions of the real world that allow us to isolate and manipulate basic phenomena that lie underneath the complex, noisy, messy real-world data that we observe. Assuming out wind resistance was perfectly appropriate in the example above because the whole point was trying to isolate and examine how gravity alone affects objects in Newtonian physics. In other contexts--such as describing why a curveball curves (in baseball)--such an assumption would be completely inappropriate. The point is, the appropriateness of the assumptions made in a particular model is entirely determined not by the fidelity of those assumptions to real life conditions, but rather, whether the assumption correctly isolates the phenomenon that the model purports to describe.

October 13, 2009 at 6:19 AM  

So when an economist stipulates that man is motivated by economic interest alone (whatever that means, exactly), if he's a good economist he's doing it for a good reason, and the assumption is appropriate for the particular model he is considering and is, ultimately, validated by real-life data. It could very well be that economic man is completely off-base as any kind of description of actual human beings and their behavior on an individual level, and yet still be completely sound as far as constructing a model that adequately describes everybody's behavior in the aggregate (or contributes significantly to a grand theory that describes everybody's behavior in the aggregate). I, David, do not walk around solely trying to "maximize my wealth". There are a bunch of considerations of all sorts that go into my decisions--moral ones, aesthetic ones, social ones, petty ones, arbitrary ones. But for certain questions, like say how much of my income I'm likely to save given my income and the cost of borrowing, all these considerations from everyone in the aggregate ends up being so much noise that all cancels itself out, and when this dust clears what you see are trendlines that more or less correspond to what would be the case if it were true that everyone's sole motivation was to maximize their wealth. This is the great simplifying maxim, ceterus paribus, in action.

Now. Obviously it is possible for the artless--or simply wrong--economist to deploy "economic man" when it is not appropriate to do so. Assuming can openers seems to be an occupational hazard of the economics profession. But when this happens, what is required is not a wholesale demolition of the foundations of economics, but rather, a critique within economics that shows why that particular set of assumptions is unwarranted in that particular case. This is boring, journeyman work, I know, and not nearly as exciting as revolutionizing our the very concept of wealth itself, but it's all that is needed. And indeed, in the economics profession you see just such a conflict taking place, with the so-called "saltwater economists" challenging the neoclassical ("freshwater") economists' assumptions of rational self-interest and so forth, as well as a renewed interest in how findings from behavioral psychology are relevant to things like the big financial crisis that happened.

So I guess you can color me skeptical about wholesale critiques of economics that take as their launching point the fact that there is more to man than the desire to maximize his wealth.

October 13, 2009 at 6:22 AM  

Also, on a completely separate note: I think Ruskin's definition of wealth misses a pretty important insight, which that increasing one's wealth can be, and often is, a positive sum activity. Under Ruskin's definition, however, wealth is relative and thus, by definition, zero-sum: if you're getting wealthier, by definition someone else is getting poorer.

But do you really want to say this? Under Ruskin's definition, the total wealth in the world is a constant over history, and the only thing that changes is the distribution of it over the world's population. But if this is true, how do you explain or describe the fact that a man in the bottom 20th percentile of wealth in 2000 has vastly better living conditions (better food, flush toilets, electricity, phone and TV, lives with fewer cohabitants, lower infant mortality, etc.) than a man in the bottom 20th percentile in 1900? You should be able to say that the total wealth of the world has increased (expononetially) over the decades.

Or, put another way: would Ruskin say that a man alone on a desert island with no material possessions is as wealthy as a man alone on a desert island with lots of food, shelter, and entertainment?

October 13, 2009 at 6:45 AM  

Hey David,
This would be an excellent line of criticism, except Ruskin anticipates it. This is the problem with having to put up such a brief summary of such a fine argument...it looks like he makes these unfounded assertions, but he doesn't. Here's how he answers your physics analogy:

"This would be a perfectly logical and successful method of analysis, if the accidentals afterwards to be introduced were of the same nature as the powers first examined. Supposing a body in motion to be influenced by constant and inconstant forces, it is usually the simplest way of examining its course to trace it first under the persistent conditions, and afterwards introduce the causes of variation. But the disturbing elements in the social problem are not of the same nature as the constant ones: they alter the essence of the creature under examination the moment they are added; they operate, not mathematically, but chemically, introducing conditions which render all our previous knowledge unavailable."

In other words, when you're dealing with Soul and with moral phenomena, these are of such a different nature that they cannot simply be plugged into economic equations, however complex and "saltwater" these may be, and they will totally alter the nature of the discussion.

But, there's another point worth making here too, and it's something I've been thinking about a lot lately. I think Kuhn's analysis of paradigm shift in scientific revolutions has a lot to say about the capitalist paradigm too. See, Kuhn points out that geocentrism wasn't "proved" wrong--it wasn't that the empirical data flat-out contradicted any version of the theory, because the theory could keep being refined and tinkered with to accomodate any problematic data. As far as I know, it is still to espouse a theory of geocentricism which could account for all the data. Heliocentrism triumphed, however, because people eventually just got skeptical of the ever-increasing complexity that the geocentrist system had to elaborate to defend itself...there has to be a simpler account that makes sense of the evidence, they said. And so eventually geocentrism just lost adherents. I see the same thing going on...yes, capitalist economics can continue to try to empirically justify itself (though I would still say now that it cannot morally and theologically), but that to do so, it has to get so complicated that there must be a better explanation, which is to say, something more like Polanyi's or Ruskin's.

And of course, once the paradigm shift happens, it becomes very hard for the two sides to communicate meaningfully--you either see it or you don't. For me, it's plain as day now (and this happened rather suddenly) that capitalism doesn't make sense...for others, it still seems that capitalism must be true, as long as it's properly tweaked.

October 14, 2009 at 10:49 PM  

As for your last point, Ruskin does not say that wealth-creation is a zero-sum activity. Of course wealth gradually increases. But it does so because of productive labour, not because of exchange. Apparent increases in wealth due to increases in exchange value, he argues, are zero-sum. If I have a car that I value at $10,000, and you have a horse that you value at $10,000, and we exchange, but I know that I can get $15,000 for the horse elsewhere, and you know you can get $15,000 for the car elsewhere, and we each sell and make $5,000, the total wealth of the society has not increased.

That's his only point.

Of course, he would also insist that purely economic wealth is not true wealth, so that if society is much better off materially than it was 100 years ago (obviously true) but is much more culturally and morally degraded (true) then it may not be "wealthier" after all.

October 14, 2009 at 10:52 PM  

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