Berkeley Political Economy Colloquium: February 18, 2011: "Austerity"

Feb 24, 2011 09:31

via Brad Delong Audio available from the link

I was kinda half-listening as Lough began speaking, but his priestly speaking style caught my attention. And that was BEFORE the bible reference.

Joseph Lough:

I too can think of no better place to begin a discussion such as this than Mr Keynes’ complaint against austere and puritanical souls. The only problem is that from our lips, or in any case from mine, this complaint cannot help but sound a bit hollow.

What, practically or theoretically, do I know about "austerity"?

What do I know about "puritanism"?

Really.

We might therefore do well to ask: does Mr Keynes’ complaint amount to anything more than ad homonym. Austerity is foolish; puritanism is silly-less so now perhaps than in Lord Keynes’ day-when none was a Keynesian, but when all, thank God, not excluding Chicago’s own Frank Knight and Jacob Vine, were-how should I put it-godless. The retreat of secularism and humanism-we must admit-has blunted Keynes’ criticism: austerity? foolish? puritanism? silly? Not any more.

Let me see if I can therefore put the discussion on a different footing. Not Lord Keynes’ ad hominem, but, rather, the solid ground of science. Because, unless I am mistaken, there is something indubitably self-evident about economic austerity-something us salt-water types are liable to overlook.

Don’t get me wrong. Although a product of Chicago, I am not myself Chicago. I am as salty as the next guy. But I do feel that, when we ask our audience to embrace one or another variety of profligacy, however packaged, we are, my friends, beating our heads against the storied brick wall. And since a substance metaphysics does not match the experience of any save the most metaphysical among us, we will beat and beat and beat until we bleed and then some more.

Immanuel Kant won this debate over two centuries ago. It went something like this: if you attribute the state of your soul to the material, bodily, conditions of your life, then you must kiss ethics, religion, and, with it, all law and justice down the road. For there can be no condition placed on true freedom.

This, my friends, is the turnkey to fresh water (Chicago) economics. Without it, Chicago economics melts into a pool of mush. And, with it, all talk of austerity and belt-tightening. This was Amartya Sen’s message to us-a message for which he was duly awarded a Nobel Prize. Do we embrace a negative, purely abstract, notion of freedom-freedom as the absence of constraint? Or do we embrace a positive, substantive, notion of freedom-freedom as the conditions of the good life? Aristotle or Plato? Hegel or Kant?

But this really doesn’t solve our problem, does it? For, as Professor DeLong has pointed out, there is a long list of economists quite willing, ready, and able-Deontological Ethics or None-to point out precisely where, empirically, austerity is simply wrong-headed. But, wrong-headed for what? Surely, wrong-headed for long-term economic growth and full employment. Wrong-headed as well for general social welfare.

Ahhh. But, what about freedom? But, you say, we weren’t talking about freedom. Oh, yes, we were. Or, rather, should I say, yes THEY were and are. For, really, it has always been about freedom. Even when Uncle Gary [Becker] and Uncle Milty [Friedman] secreted us away into Graduate Course 301, it was always about freedom-meaning, of course, the absence of constraint.

At which point, we could have-we should have-pulled out our big guns; not Karl Marx or John Maynard Keynes; not Locke and Hobbes. What I mean is Aristotle. Aristotle’s Politics, Book I, Chapter 1, the very first page. The heart and soul of western thought and culture. The very core of the Core Curriculum itself. Surely, even Hutchens could not object to our sources. This is the Great Books Tradition.

So, is the ruler of a republic simply the ruler of a somewhat larger private oikos, private economy, private enterprise? No? Why not? Because, says Aristotle, the ruler over a private enterprise, an oikos, is a despotes, a despot, the ruler over subordinates, dependents, workers, women, children and slaves. Therefore, writes Aristotle, you should never ever, ever allow a businessman to rule over a republic. No. The ruler over a republic is not the ruler over a somewhat larger private enterprise. The ruler over a republic is a ruler over others who like himself (or herself) is a substantive beneficiary of substantive freedoms.

But freedom here-as Amartya Sen points out-is not the absence of constraint. Freedom here is the substantive condition of its own possibility. You know it. You are its beneficiaries. A good education. Freedom from fear. Good health. Leisure-the time to read, to go to the opera, the theater, the ballet, MOMA, the symphony, to help your children with their homework, to go on bike rides, to work in the garden, to conduct research, the freedom to fail and to learn without the fear of losing one’s living.

These freedoms-so different, so nearly opposite the freedoms that govern the private oikos, the private enterprise-are the freedoms that compose the public sphere in a republic.

But, at the very instant that we began to understand these freedoms-was it in 1944 or 45, was it with Karl Polanyi or Franz Neuman, Herbert Marcuse or Hannah Arendt?-at that very moment we began to cede the field of economics to forms of thought and modes of research ill-suited to anything but Kant’s deontological absence of constraint.

At that moment-and this is pure Kant-substantive freedom lost its footing in economics. Not that we didn’t continue to talk about it and recommend it. But absent a coherent and compelling theory of substantive freedom, our talk and research lost out to their theory. We can cry in justice till we are blue in the face. We can yell-and we are right to yell-that families should not have to choose between health, safety, and education. But until we realize that morality for most of us intuitively entails the absence of constraint, we will almost certainly be preaching to the choir.

So. What is the answer? I don’t know. How do we begin to shift the weight of experience, at least where freedom is concerned, from the absence of constraint, to the conditions of freedom? How do we shift our own research perspectives from quantitative documentation and modeling, to qualitative, critical, interrogation?

Which brings us back, I feel, to the question of profligacy. All of you, I am sure, have heard the story about the Prodigal Son who receives and squanders his share of his father’s inheritance. His father-who, in the story, represents God-is bereft and bereaved at his loss. But then his son returns, sick and broke. And what does the father do? The older son, the good son, counsels austerity and puritanical punishment. But what does the father-who, in the story, represents God the father-what does the father do? He slaughters the fattened calf. He throws a party. He welcomes his son with open arms. How utterly irresponsible. Or not.

Will $1.2T (or is it now $2T) of fiscal stimulus via expanded government purchases lead us to full employment? I don’t know. But, is that the right question?

Maybe the right question is instead: do you miss your son?
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