We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

Indulge me in a little sermon. The tradition among many anthropologists and archaeologists has been to treat the past as a very different place from the present, a place with its own mysterious rituals. To cram the Stone Age or the tribal South Seas into modern economic terminology is therefore an anachronistic error showing capitalist indoctrination. This view was promulgated especially by the anthropologist Marshall Sahlins, who distinguished pre-industrial economies based on ‘reciprocity’ from modern economies based on markets. Stephen Shennan satirises the attitude thus: ‘We engage in exchanges to make some sort of profit; they do so in order to cement social relationships; we trade commodities; they give gifts.’ Like Shennan, I think this is patronising bunk. I think people respond to incentives and always have done. People weigh costs and benefits and do what profits them. Sure, they take into account non-economic factors, such as the need to remain on good terms with trading partners and to placate malevolent deities. Sure, they give better deals to families, friends and patrons than they do to strangers. But they do that today as well. Even the most market-embedded modern financial trader is enmeshed in a web of ritual, etiquette, convention and obligation, not excluding social debt for a good lunch or an invitation to a football match. Just as modern economists often exaggerate the cold-hearted rationality of consumers, so anthropologists exaggerate the cuddly irrationality of pre-industrial people.

- This little “sermon” is on pp. 133-4 of The Rational Optimist by Matt Ridley (also quoted in this earlier posting here), in the chapter about the simultaneous rise of agriculture and early industrial specialisation, all within the context of a wider web of exchange relationships. What most clearly distinguishes humans from animals, and successful humans from all the failures, says Ridley, is trade.

Early agriculture and early industrial specialisation are both manifestations of the division of labour, which depends on trade. You can’t have early agriculture without specialists supplying crucial agricultural implements, such as axes to clear forests. You can’t have specialist suppliers of agricultural implements without specialist food-growers feeding them.

64 comments to Samizdata quote of the day

  • PaulH

    “You can’t have early agriculture without specialists supplying crucial agricultural implements, such as axes to clear forests. You can’t have specialist suppliers of agricultural implements without specialist food-growers feeding them.”

    Seems like that’s a slight overstatement – at some point you must have had one without the other. More generally you can have people who aren’t specialists, but do more of one thing than another, and still have a functional and prospering economy. Specialization is ‘good’, but not necessary.

  • Laird

    “Specialization is ‘good’, but not necessary.”

    Nonsense. It’s only “unnecesary” if you’re satisfied with living at a bare subsistence level (or lower). It is specialization, and the division of labor which it both requires and creates, which permits any sort of wealth creation and economic development.

    “you can have people who aren’t specialists, but do more of one thing than another.” That is precisely what “specialization” is. Not everyone has to be a world-class expert at something to “specialize” in it. Specialization simply means that I do more of one thing and you do more of another, and we exchange the results of our labors. Neither of us has to be the best at what we do. I don’t think you understand what “specialization” means.

  • This is probably a side point, but there is no such thing as non-economic factors.

  • Stuart

    Also dont hunter gather society generally specialize with the men hunting and the women gathering.

  • Regional

    A farmer now with modern machinery, fuel, seeds, fertiliser and transport can feed a lot people than the hunter gatherer and the people who provided the things to allow him to be more productive benefit from the cheaper mass produced food. Remember Medieval Princes with their goons in their castles taxed the peasants trading with each other like modern politicians with their bureaucrats in their ivory towers , nothing’s changed. Also remember the Industrial Revolution enabled the peasants to buy boots and tools at cheaper prices and the people who made them were able to buy cheaper food and allow parasites to have Clayton’s jobs in our big cities, Benjamin Franklin observed this about New York, ironic how the elite hate what sustains them.

  • Jacob

    “but there is no such thing as non-economic factors.”
    There are a lot of non economic factors.
    It was Marx’s “materialistic interpretation of history” that proclaimed, and made popular this idea. Like most of Marx’s ideas, it is utterly false.

    For example: religion is by far a stronger factor in determining man’s behaviour than economic factors. The number or range of non-economic, or non-matelialist factors if infinite.

  • Jacob

    The primitive people also had priests, or shamans, or witch doctors or some such. Weren’t they a ‘specialization of labor” ?

  • Julie near Chicago

    Humans are the only animals that trade? I thought some of the monkeys do it too–wrong?

  • veryretired

    Let’s not get lost in arguments about some aspect of economic life, and instead step back to consider the meaning, and purpose, behind the attempt to separate the modern, industrial society from the rest of human history.

    What I see is another facet of the argument that industrial, capitalist society is a force for destroying social bonds, and atomizing, or alienating, to use the marxist term, the individual from the rest of society.

    The dream world of a pastoral, pre-industrial world, in which competition and harsh factory work is missing, and everyone is bound together in some form of communal effort and belief, is a staple of the 19th century reaction to both the rise of Enlightenment ideas about reason and science, and the development of a free market in many places where the older, repressive social orders have broken down.

    I began noticing this formula repeated over and over again as I went through school, not knowing the larger context of where the assertion came from, or its use as a weapon to discredit a modern, capitalist, technological economy, and, by derivation, the society that economic order supports.

    The ultimate expression of this narrative is the contention that past cultures incorporated art into every aspect of their lives, while modern culture is barren, keeping artistic life separate and stifled by the search for commerce.

    How anyone can say this with a straight face while living with carefully designed items all around them, from simple shoes to sculpted autos, and enormous structures that dwarf any medieval cathedral in both size and complexity, or elegance of design, to use an engineering term of art, is an example, not of the lack of art, but the deliberate attempt to ignore an overwhelming amount of evidence right before their eyes in pursuit of an ideological validation.

    Just as the naive assertion of the pastoral, noble savage has been rudely disproven by analysis of ancient remains which show that a substantial percentage died by violence, so this other fantasy of the “non-economic man” living in his kumbaya cooperative requires regular and forceful rebuttal with some pertinent facts, instead of misty-eyed nostalgia for a world that never was.

  • How do you define ‘economic’, Jacob?

  • Jacob

    How do you define “is” ?
    It seems to me that it goes without saying. “economic” refers to the motive, or action of accumulating material goods or values.

    many of those who decry the “economic motive” seem to imply that it is somehow base and contemptible, while other (for example: spiritual) motives are more noble. I, of course, don’t buy this.

    I just intended to point out that other motives exist, and are, most of the time, stronger than the economic ones. this is an observation, not a value judgement.

  • From the paragraph quoted in the post:

    Sure, they take into account non-economic factors, such as the need to remain on good terms with trading partners and to placate malevolent deities.

    Do you agree with the writer that things such as ‘remaining on good terms with trading partners’ and ‘placating malevolent deities’ are non-economic factors?

  • Lee Moore

    I suspect Alisa has in mind a meaning of economic that goes beyond commerce, finance and material well being. Looking at wikipedia, I selected this wider definition from Lord Robbins :

    “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

    “Robbins describes the definition as not classificatory in “pick[ing] out certain kinds of behaviour” but rather analytical in “focus[ing] attention on a particular aspect of behaviour, the form imposed by the influence of scarcity.” ”

    which seems pretty wide, but plausible (though I suspect that “human” is an unnecessary qualifications. Other creatures have scarce resources problems too.) But I suspect Robbins definition is wide enough to scoop up a lot of the factors that Alisa would like to call economic but which other people wouldn’t. Such as appeasing the gods etc. Nevertheless it seems to me that humans do respond to factors that are not related to scarce resources. Lots of people like to go for a walk. Some of the time you could analyse that in terms of scarce resources, eg time spent going for a walk can’t be spent on other things. But other times you go for a walk when you’re bored and haven’t got any other immediate use for that chunk of time.

    While I think I understand what Alisa is getting at – ie there are lots of factors that affect human behaviour that aren’t to do with commerce or money, but are to do with a trade off between costs and benefits (whether weighed consciously or not) – I dislike the formulation that everything in life is economic, for the reasons that veryretired touches on. Life is not a subset of commerce, commerce is a subset of life. The justification of freedom of action in commerce is merely a tributary of the justification of freedom of action in anything. It is always very irritating when socialists accuse free market folk of being “obsessed by money.” The reality is precisely the opposite. Free market folk are in favour of freedom, and their support for free markets is just one, and by no means the most important element of it. While socialists are the ones who are constantly determined to intervene in other people’s free choices with the goal of equalising…….money !

  • It is always very irritating when socialists accuse free market folk of being “obsessed by money.” The reality is precisely the opposite. Free market folk are in favour of freedom, and their support for free markets is just one, and by no means the most important element of it. While socialists are the ones who are constantly determined to intervene in other people’s free choices with the goal of equalising…….money !

    Indeed, Lee – and that is the reason why I said what I did. ‘Economics’ is not the same as ‘commerce’ – otherwise we would not have had separate terms for either. Plus, money is a distraction at the level of abstraction in the context of the original quote.

    But other times you go for a walk when you’re bored and haven’t got any other immediate use for that chunk of time.

    Not really – you simply are not willing to do anything “productive” in that same time. Like doing some of that bookkeeping that’s long overdue, or calling that friend that you can’t be bothered to listen to, or clearing out the garage.

  • Paul Marks

    A good post.

  • Jacob

    Alisa:
    “This is probably a side point, but there is no such thing as non-economic factors.”
    I’m not sure what you meant, if it is not the most simple explanation.

    “Do you agree with the writer that things such as ‘remaining on good terms with trading partners’ and ‘placating malevolent deities’ are non-economic factors?”

    Yes, they are non-economic factors.

    Do you wish to imply that you define them as economic factors? It does not seem possible.

    Lee Moore above expressed better than I can what I wanted to say.

    But, unlike him, I cannot understand under what definition of “economic” you can justify the phrase “there is no such thing as non-economic factors”.

    Take the definition quoted above: “a particular aspect of behaviour, the form imposed by the influence of scarcity” – ‘scarcity’ here cannot mean anything else but material scarcity.

  • ‘scarcity’ here cannot mean anything else but material scarcity.

    Why not? What about things like love, companionship, confidence, or any other emotion we obtain through interaction with others? Are these emotions not scarce? Is interaction with others – and those others themselves, and their willingness to interact with us – are not scarce? Do we not buy gifts for people to gain their recognition and affection? Do we not spend valuable time (that could be otherwise spent to make money or takes solitary walks) with our friends, listening to their problems, so that on other occasions they will reciprocate? Etc, etc.

  • Mr Ed

    @ Julie

    Humans are the only animals that trade? I thought some of the monkeys do it too–wrong?

    Socialists don’t aspire to trade, as they ascribe to an anti-human Death cult, evident in the reacrtions to Mrs Thatcher’s passing.

  • Laird

    “What about things like love, companionship, confidence, or any other emotion we obtain through interaction with others? Are these emotions not scarce?”

    No, they are not, at least not in an economic sense. There is potentially an infinite supply of love. “Scarcity” is meaningless in anything other than a materialistic sense. Listening to our friends’ problems (whether in the hope that they will sometime reciprocate or not) isn’t an economic decision, either, because even if they listen to your problems later that’s not an economic good.

    “Remaining on good terms with trading partners” is an economic decision because it directly affects your future economic transactions with him and hence your economic well-being. “Placating malevolent deities”? I’m not so sure. It depends upon what you desire (or fear) from such deities. Love, companionship, etc., generally are not, except at their most crass levels (i.e., patronizing a prostitute is certainly an economic transaction, while getting married generally is not; hiring an escort is, but going on a date is not). None of which is to deny that, at some level, there is a form of cost-benefit analysis going on in any of those scenarios, but it is generally not an economic analysis. To assert that every human relationship is an economic one is to define “economic” so broadly as to strip it of any utility.

  • Laird, that’s why I asked Jacob how he defines economic. And I’ll ask you what is the difference between ‘economic’ and ‘commercial’?

    None of which is to deny that, at some level, there is a form of cost-benefit analysis going on in any of those scenarios, but it is generally not an economic analysis.

    In what way is it not an economic analysis? I really am trying to understand, but so far all I see is a circular argument.

  • Lee Moore

    Whether or not one wants to confine the word “economics” to materialistic/commercial choices, costs and benefits, it’s clear that economic-type analysis can be applied to choices outside the materialistic sphere. Mate selection / pair bonding / marriage for example has got a whole string of interesting economic or economic like questions associated with it – from the division of labour in child rearing to the workings of evolution, and all points in between. That doesn’t mean that the participants analyse the costs and benefits economically, but other people can if they want to. However this distinction does draw out one point of difference that I have with Alisa :

    “Do we not buy gifts for people to gain their recognition and affection? Do we not spend valuable time (that could be otherwise spent to make money or takes solitary walks) with our friends, listening to their problems, so that on other occasions they will reciprocate?”

    Well sometimes. But a lot of the time we buy gifts for people because we feel like it. We listen to our friends because we feel we ought to, or we want to, or we’re just in the habit of doing so. Although social theorists and evolutionists may calculate that people with the tendency to want to listen to their friends or buy gifts for them may have left more descendants in the past, because such behaviour tended to be usefully reciprocated, and that therefore even our feelings may have at least a historical cost/benefit explanation, that doesn’t mean that we do these things for consciously economic reasons. So things like love, companionship, confidence, etc don’t normally involve economic calculation by the human. It’s just how we feel. So although I appreciate Alisa’s point of view – which I take to be that economic type analysis can extend well beyond the sphere of conscious calculation of material costs and benefits – I think Laird is right to say that making economics cover too wide a sweep tends to make it lose some of its usefulness as a term for describing the materialistic/commercial portion of the world.

    I suppose it’s a bit like chemistry and physics. One could say that there’s really no such thing as chemistry as it’s really just a small corner of physics. But in terms of what chemists do and what physicists do there seems to be a clear enough practical distinction. But at a more philosophical level, not so much. Nobody, apparently, was more surprised than Ernest Rutherford when he won the Nobel Prize for Chemistry – he thought he’d been studying physics.

  • Laird:

    Listening to our friends’ problems (whether in the hope that they will sometime reciprocate or not) isn’t an economic decision, either, because even if they listen to your problems later that’s not an economic good.

    Not so sure about that. If the alternative to having a friend providing an ear and support is to pay a professional for a similar service, there is, what seems to me, a fairly clear economic trade-off.

  • Julie near Chicago

    Alisa is essentially correct (except, possibly, in the characterization of resource or other thing as “scarce”–see below.)

    In the large, economics is about the managing of resources.

    See the various definitions and usages of the term in the OED–not the online version, the real thing. Mine is the 1971 edition, 10th printing, U.S., 1975.

    As a reminder, the word derives from the Greek for “household,” so that originally it referred to the managing (or budgeting) of a household’s resources.

    The (political) economists have taken over singularly unsuitable words as technical terms. “Scarce,” for instance, doesn’t mean “scarce,” that is, rare or extremely hard to find, at all; it seems to mean merely “limited,” that is, not instantly available to all in virtually infinite (i.e., unlimited) supply.

    (Then those who philosophize about property take their cue from the economists’ unfortunate usage, and use the word “scarce” to lend a false plausibility to the Scarcity Theory of Property. This leads to various destructive ideas.)

    As an example of a different category of economy, we speak of “budgeting our time”–so your choosing to have a baby instead of focussing your time and energies on furthering your career is a matter of your personal economy.

    Mostly when people use the word “art” with no qualifier, they mean visual art, and at that only paintings or drawings. In just this way, people (especially people interested in politics or economics or business) think of the system of exchanges between producers and consumers (in which the producer is not the consumer) as “THE economy.”

    But those of us who were required to take Home Ec (Home Economics) somewhere along the way in grade school or high school or the equivalent–know that that’s only one form of economy.

    And Economics, does not refer to some economy, but rather to the STUDY of an economy.

    Not all economies are goods-oriented nor trade-oriented nor even gift-oriented. Not all economies involve interpersonal transactions at all–perhaps most do not. Yet Laird’s point is interesting–the “gift” of friendship that includes a willing ear and perhaps a helpful observation could indeed be valued in terms of money saved (and possibly extra, or a different kind of, satisfaction gotten) because of the “trade” of friendship for friendship.

  • Julie near Chicago

    Oops! Misattributed the comment just before mine to Laird. Actually, it was Paul’s observation. Apologies.

  • Julie near Chicago

    Mr. Ed,

    If you mean to imply that as monkeys are subhuman, so socialists are sub-monkey — I can accept that. *g*

    However, I was seriously asking, because of this in the original posting:

    What most clearly distinguishes humans from animals, and successful humans from all the failures, says Ridley, is trade.

  • Mr Ed

    @ Julie. Socialists are human, but they reject that which distinguishes us from the beasts, trade and a capacity to engage in high reasoning (e.g. crows appear to reason to an extent).

    A short clip with a narration of L v Mises about reason. The socialists lost the arguments in the 19th Century, undeterred, they rejected reason itself. Hence some blow whistles or bash drums on marches, to distract their minds and others lest they hear reason. They probably don’t know why they hate reason, but hate they do.

    http://m.youtube.com/watch?v=MWnZDvcNaf4

  • Jacob

    Alisa,
    Like a good Jew you answer with new questions. I can do that too.

    What do you mean by “economic” ? Try to define it for us, so we won’t have to guess what you meant.

    Or, take an example. People give to charity (they give money). Is that an economic transaction? Let’s say they do it because it makes them feel good, or because they hope for a reward in the next world. Do you define this as an economic transaction ?

  • Being a good Jew yourself Jacob, and with Passover just behind us, I remind you of the Four Sons:-)

    To your question: of course. I said as much in my original comment.

  • Lee, thank you for the thoughtful reply. FWIW, I don’t see much disagreement between us, but I’ll still try to narrow down some points. For example, the ‘because we feel’ like doing something, which in this case you seem to apply to giving. My question is, why not apply the same argument to receiving, too? When we buy a box of chocolates for ourselves rather than for a friend, don’t we do it because we feel like it? We obviously part with our money in both cases, but there’s a “side benefit” in both cases as well: we either enjoy the taste of chocolate, or we enjoy our friend’s enjoyment and their gratitude.

    Regarding the semantics, I clearly understand the distinction between chemistry and physics, but I still do not understand the distinction between economy and commerce, if ‘economy’ is not to be understood the way I present it here.

  • Julie: very good points on semantics – thank you. I am obsessed with semantics.

  • Jacob, I now see that I neglected to answer your question: ‘What do you mean by “economic” ? Try to define it for us, so we won’t have to guess what you meant.’

    I – at least for the time being and until proven wrong – define it as the web of human exchanges within a given society, whether formal or informal, material (however that may be defined) or not, direct or indirect (indirect ones being conducted with the help of some kind of intermediary, such as money). I am also saying that all deliberate human interactions (‘deliberate’ as opposed to unintentionally bumping into someone in the street) involve some kind of exchange as described in the previous sentence, and are thus economic in their nature.

  • ‘I define it’, by it I meant ‘economy’ – sorry.

  • Rob

    “It’s only “unnecesary” if you’re satisfied with living at a bare subsistence level (or lower)”

    Or more accurately, “It’s only “unnecesary” if you’re satisfied with other people at a bare subsistence level (or lower)”

  • Lee Moore

    That sounds a bit like “social” to me, Alisa, rather than “economic.” Though it’s easy to see on that definition why you’re sceptical about non-economic factors in human interactions. But are human interactions a necessary feature anyway ?

    What about Robinson Crusoe sitting on his desert island ? When he decides whether to build a long lasting shelter with a lot of labour, or a short term shelter that he can knock up in an afternoon; or to send the morning fishing rather than collecting coconuts; or whether to eat the last bingo-bingo fruit, or plant it – are these not economic decisions ?

  • Jacob

    If you define a-priori “economic” to mean all human actions – then your claim: “there is no such thing as non-economic factors” is a tautology (correct by definition).

    Is there anything that is “non-economic” action in your opinion ? (you already said “no”).

    I don’t think this is the usual, or simple, or generally accepted definition of the term “economic”. Or a useful definition.

    As to “commerce” – it is only part of the materialist definition of ‘economy’. For instance: ‘production’ is not ‘commerce’ yet it is something within ‘economy’.

  • Midwesterner

    The most consequential activity in the field of self defense rights, specifically gun violence and rights, was done by applying economics tools to firearm violence data. Most notably by John Lott. What is more primordial to human nature and interaction than weaponized violence? Even other great apes engage in weaponized violence. And yet it was the tools of economic study wielded by economists than eventually has lead to a general return of the right of armed self defense in the US.

    Julie said, “In the large, economics is about the managing of resources.” and Alisa has been saying economics is about pretty much everything.

    They are both right. Economics is the study of how various forces and energies affecting the utilization of resources in social systems bear on each other.

    Economics is a level of study – a method of study, not a field of study.

  • Jacob

    “economics is about pretty much everything.”

    Here is another example: take the 9/11 terrorist attack.
    Can this be explained by “economic factors” ?
    Or another example: the election of Pope Francis – was this determined by “economic factors”?

    Here is a dictionary definition: “Of or relating to the production, development, and management of material wealth” or “Of or relating to the practical necessities of life; material”

  • Lee, ‘economic’ and ‘social’ are not mutually exclusive, however one defines economic.

    No, human interactions are not a necessary feature, but then an “economy” which does not include them (Robinson Crusoe) is of no interest to society anyway. I have no principle objection to the inclusion of solitary activities of a solitary person in the definition of economy, but I see no use for it either.

    Also, I have to apologize to all for using ‘economy’ and ‘economics’ interchangeably – they are two different things, of course.

  • Rob Fisher (Surrey)

    I’m struggling to see why Alisa is having so much trouble here.

    “we buy gifts for people because we feel like it” — yes, and with resources we could otherwise have spent on something else, but made an economic decision to choose those particular good feelings instead. Ditto charity, “the need to remain on good terms with trading partners” and even, though it may be mistaken, the need to “placate malevolent deities”.

    I suspect this discussion is just about semantics.

  • Rob Fisher (Surrey)

    “the election of Pope Francis – was this determined by “economic factors”?”

    Yes. Those guys in the conclave were thinking about: the emotional well-being that comes from the knowledge of having done right; the advantages that come from the respect of one’s peers; the practical effects of the future likely decisions of a given pope on their day to day lives; the political advantages of loyalty to one person over another; reaching any decision at all so they can get out of there and go home.

    All of which are economic cost/benefit tradeoffs, such as choosing between the happiness that comes from the feeling of having acted honestly and the happiness that comes from buying a new yacht.

    “If you define a-priori “economic” to mean all human actions – then your claim: “there is no such thing as non-economic factors” is a tautology”

    Not quite. Economic factors are factors that affect human decision making. So it is absurd to claim there are non-economic factors to decision making. Pointing that out is not a tautology.

    Having said all that I just re-read the original post and it is clear the author means “non-money”. :-/

  • Lee Moore

    As you say Rob I think it’s mostly semantics. But my opinion is that the definition of economic that you and Alisa prefer is slightly eccentric.

    In arguing that any factor that affects human decision making is economic, you are relying on a psychological util calculation, without having to trouble to do any such calculation (because you have no means to do so.) ie by assumption humans only decide things by making psychological util calculations, therefore when a human makes a decision it must have been determined by the psychological util calculation – a wee bit circular.

    Taking Pope Francis, this “economic” angle seems to lead you to a very cynical conclusion – ie all the factors you quote are selfish. A cardinal choosing him because he thinks he’s the holiest, or the best suited to do God’s work or whatever, doesn’t get a mention. Of course you can argue that such motivations must generate maximum psychological utils because otherwise the decision would have been different. But because this is circular, it makes the pschological util story useless as an explanation – it’s just an assumption.

    It all suffers from the same problem as utilitaranism. Faced with “thou shalt not kill” as an unbreakable principle that can’t be traded off against anything else, the utilitarian argues – well that just means you’re awarding a squillion points to not killing people, you’re still doing a computation. But you’re not, you’re deciding otherwise than by a computation.

    So I’ll stick with the possibility of humans using economic and non economic decision factors. If the non economic ones are in fact supported by secret unconscious psychological util calculations, I’ll wait for the psychologists to show me the evidence.

  • Rob: yes, it is about semantics as well, as can be seen from this Hayek quote (with thanks to Laird) with which I absolutely concur:

    Unfortunately, purely economic ends cannot be separated from the other ends of life. What is misleadingly called the ‘economic motive’ means merely the desire for general opportunity. If we strive for money, it is because money offers us the widest choice in enjoying the fruits of our efforts – once earned, we are free to spend the money as we wish.

    While I said that everything is economic, Hayek said that nothing is – but I did mean the same thing he did. To that extent this is purely semantic. But what this is really about is the artificial distinction between “money” and “non-money” human activities and decisions.

  • Lee: so the distinction you make between the economic and the non-economic decisions is based on the level of consciousness at which the decision has been made?

  • Lee Moore

    Not quite – an economic decision factor is a factor that relies on considerations of cost, benefit, scarcity and so on. An actor may use such a factor to make a decision when he is conscious of it, in which case he has made his decision based on an economic factor. But if he makes his decision using a different type of factor, eg I will do this because I have a duty to, or because I love my child, or because God commands me, then he hasn’t made his decision based on an economic factor.

    It is possible that a third party (or the actor later on) may reanalyse the decision and identify possible unconscious considerations of cost/benefit etc underlying the non economic factor – eg acting in accordance with a duty may make other people like me better, leading to future benefits. In which case they would perhaps have discovered an interesting link between the non economic decision factor and economic considerations, which might apply generally to similar cases, or at least to some. But that would be an interesting economic analysis of a non economic decision factor.

    Likewise economic analysis might be applied to outcomes of events, never mind mere decisons – eg genetics and evolution can involve economic analysis, in the currency of reproductive success rather than psychological utils or material well-being.

    So an economical analysis is a type of analysis. If a decison is taken explicitly using this type of analysis then it’s a decision made on economic factors. But plenty of decisions are made using non economic factors, or a mixture of economic and non economic factors. So let’s take the chap who has taken a girl out on a date. He would like to get her into bed. He may make weigh up how much to spend on a meal or drinks against his prospects of getting her into the sack. Those would be economic decision factors. And if he considers whether to invest in a date rape drug, he may weigh up the odds of getting caught and jailed, alongside the money cost. That would be economic too. But if he decides against buying the drug on the basis that rape is morally wrong, and cannot be justified however pretty the girl and however small the chances of being discovered, then that’s a decision based on a non economic factor. If someone comes along later and shows that, on average, chaps who have a strong moral objection to rape tend to enjoy sex more than other kinds of chaps, by a factor of 1.27, then that’s an interesting economic analysis. But it doesn’t make our original guy’s decision not to buy a date rape drug a decision made on economic factors.

  • Lee, my point – which I have not made explicitly – was that you look at subjective motives for decisions and actions. But when we talk about economies and economics, we are by definition dealing with the objective interactions. In other words, we are not dealing so much with motives, as we are dealing with results. So while I would be willing to concede (not really, but for the purposes of this discussion) that the guy didn’t rape because he just couldn’t do it (because he “felt” that rape is wrong*), that is irrelevant to the outside observer. To that observer, the guy did not rape, and several things happened: he felt morally intact, he did not have sex that night, he did not break the law and so did not end up in jail, his date saw what a standup guy he was and decided to sleep with him on the next date, he didn’t spend money on the drug and bought an extra beer instead, etc. etc.

  • Lee Moore

    I understand. I think the difference between us is that I do not assume a priori that that is what the objective observer will discover; ie I regard the objective observation as an opportunity to discover things that I didn’t previously know. To assume that there must be an economic explanation seems to be a bit, and I hate to be rude , er, Marxist for my taste.

  • That was very rude indeed:-O

    It is not the explanation (i.e. motive) that is economic, it is the consequences (the results) that are. The former is subjective, the latter is not. That is also why many here oppose the idea of “hate crimes”. I do not presume to read people’s motives (I do, really, but only for my own personal purposes).

  • Laird

    Alisa defines “economic” as “the web of human exchanges within a given society, whether formal or informal, material (however that may be defined) or not, direct or indirect.” I stand by my earlier statement: that is too broad a definition to be of any utility. If everything (or nothing, per Hayek) is “economic” the term has no value. I can define “green” as anything having a wavelength of between 4000 and 7000 angstroms, but that doesn’t help with discussing red or blue. There is value in having more narrow definitions.

  • The term has a huge political value, Laird.

  • Other than that, I agree – no value whatsoever. In a world with no government intervention in people’s interactions, what need would there be for this term?

  • Julie near Chicago

    Tax Day hereabouts…of all days to be discussing economics! :(

    However: Economics is restricted to the social sphere? Nonsense, I say. “Economy” refers to the management of resources, and there are various different areas in which there is an economy. For instance, Robinson alone on his island had to think carefully about how to budget his main resources — time and effort, trading off spending them first in acquiring good X (coconuts) instead of good Y (fresh drinking water) for instance. Then, how much of each should he put by for later use? Lots, some, none?

    If somebody wants to state at the outset, or even well into the discussion, that from now on he’s only talking about political economy, that is, the kind of economy that involves trade and exchange as the way the individual members of society get the raw or finished material goods they need or want, and to some extent the aesthetic goods also (since we buy books and tickets to the opera); then that’s fine.

    That is the answer to Laird’s objection that the word becomes meaningless if it applies to all human endeavor (“Human Action”). The word means what it means, but there are various KINDS of economy. (And it isn’t only humans who have or participate in “an economy.”)

    It’s perfectly reasonable to talk about home economics, business economics (the economics of manufacturing, provision of services, and trade — i.e., political economy), physical economy — the various processes of the body whereby it takes care of itself, such as in sloughing off old cells and generating new ones, even emotional or psychological economy, in which we avoid worrying about X so that we’ll have the emotional energy to deal with Y, for instance.

    There may be more to life than the various kinds of economy, but everything we do is an example of participation in SOME kind of economy — even as we merely lie sleeping, our physical economy is busily taking out the garbage — the chemical sludge that Tax Day has built up within us, leaving behind (we hope) a cleaner, fresher self.

  • Nick (nice-guy) Gray

    I don’t think that animals trade with each other- they sometimes give gifts to friends (that dead mouse left by your cat was meant as a present so swallow it gratefully!) or females they are courting, but none of them have been seen to exchange gifts at the same time, or to bargain over such transactions.
    Yes, even religions are trading centers- bargaining with God or the Gods for better treatment now or forever. If they didn’t think such trade was possible, nobody would build temples!

  • Jacob

    I’ll stay with the dictionary definition of ‘economic’. It is simple, concise, clear, and therefore also useful:
    “Of or relating to the production, development, and management of material wealth” or “Of or relating to the practical necessities of life; material”

    In the case, for example, of charity – when one (Alisa) says it is an economic transaction – you give money and get a “good feeling” (something non-material, therefore non-measurable) – the use of ‘economic’ here is borrowed, is a metaphor, it is not the straightforward use of the simple term.

    If everything is ‘economic’ – then why do we need the term at all? A term or concept is useful in order to distinguish between some group of things and other groups. A term that has too broad a meaning, or a too nebulous definition is not useful.

  • Lee Moore

    Jacob – I think there are two main practical difficulties with your formulation.

    1. If you confine economics to the material, how do you deal with transactions that are in every way like economic dealings in material things, but which concern immaterial things ? eg when you pay your cable subscription.

    2. The subjective theory of value is difficult to square with a determination to ignore the non material and non measurable.

  • I think that Julie has it more or less.

  • Mr Ed

    @ Lee/Jacob. Perhaps if you consider action as directed at relieving a state of unease, then whether an act is ‘economic’ is set in the wider context of the impact on the state of mind of the actor. If I give money to Mountain Rescue, even though I may not climb mountains, I may feel less unease at the prospect of helping by handing over money than any other use I had for that money at that time. That is the end of it. I relieve my unease by funding a service.

  • Jacob

    “eg when you pay your cable subscription.”
    Whta’s the problem with this? Cable service is a material thing.

    I don’t ignore the non-material transactions, ot non-material motives, or deny that they occur. I only object to calling them “economic”. There are, of course, and endless number of actions and transactions, and motivations, that are not “economic” (non material).

    If you give money to Mountain Rescue, or any other charity – it is a not economically motivated action. That is: money, a material thing, is transferred, but your motive, the reason for this transfer is non-economic. It is caused, or driven, by a non-economic factor.

  • Jacob

    Julia said:
    “even emotional or psychological economy…”

    maybe that refers to a second possible meaning of the concept “economy”: efficiency.

    “but everything we do is an example of participation in SOME kind of economy”

    That seems to me like an a-priori definition. You define ‘economy’ to mean “any human action”.
    I think we do many things in an un-economic, and even inefficient way, and sometimes deliberately so.

    But you can always say, if you insist, that there is SOME kind of economy that refers to our action. Some kind of hidden economy, even if we act deliberately in a non-economic (non utilitarian) manner.

  • Lee Moore

    “Cable is a material thing”

    I’m talking about the service not the physical cable. Material usually connotes “made of matter” – so either you’re using material in a different sense, or you’re counting excited electrons. And if you’re counting excited electrons, then would you exclude them when they’re excited in your brain rather than on the screen ?

  • Jacob

    Cable TV is a service. It’s not the pixels they sell you, it’s the content, the shows. You pay them for bringing the content to you, it is phisical work.
    Why you are interested in the shows you watch is another question, unrelated to the material service of the cable provider.

    Let’s say you go to the theater (and buy a ticket). Are you motivated by economic motives? I don’t think so.
    The theater, on the other hand, is an economic enterprise. Their motives are to generate income for all people involved in the production. But that does not make your action of going to the theater an economic activity.

    Take another example: a guy goes to study mathematics or philosophy at the university. Is that an economic activity? Is that the best thing he can do with his time, to “make a living” or generate income? I’m afraid, not. In most cases, he will make a living, later, working in some unrelated field. He probably likes math, but this liking is a non-economic phenomenon or factor.

    Seeing economic factors in everything we do is probably like seeing a Divine hand. You beleive, a-priori, that it is there. “there must be SOME kind of economic factor, hidden somewhere… “

  • Lee Moore

    I’m still struggling with what you mean by “material.” I understand that you want to watch some shows and I understand that the cable company has to do some work to enable you to do so. Are you saying that the cable company’s work is “material” but you watching the shows isn’t material ? Or both are material ? If the cable company’s activity is material is it material by virtue of the activity, or by virtue of the motive ? ie if the cable company was just a human, and he provided the service for his own amusement rather than for money, is it material because he’s still doing something, or not material because he’s doing it for fun ?

    Moving on to your theatre, you distinguish between the theatre company – motivated by hopes of profit – and you – motivated by the desire to see the show. And I think you’re saying that therefore it’s economic for them but not for you. Presumably if they were an amateur company doing it just for fun and only hoping to recoup costs from the ticket price, it would then cease to be economic for them ? This implies that you think economic activity has to do with the desire to make a profit ? ie it’s all about motive. But I see one or two difficulties with that. People have mixed motives. Maybe I go to work to get paid, so as to put bread on the table, but my choice of job may be influenced significantly by what amuses me, or whether I like working indoors or outdoors. Except where one is dealing with mere legal persons like companies, who can’t have any motives of their own, pretty much any apparently economic transaction will also have non economic (in your terms) aspects.

    I suspect that we actually agree on the substance – eg consumption decisions are usually about feelings and likings and belong largely to the realm of psychology (though even subjective value assessments are to some extent deducible in relative terms, ie if he wanted to go ski-ing rather than staying home to watch the football, he’d have gone ski-ing.) But I don’t really understand your use of material and economic. I don’t agree with Alisa’s use of economic, but I do at least understand it (I think.)

  • Lee, my point was not to gain agreement with my view, but rather understanding thereof. So my work here is done – unless I can be of further help:-)

  • Mr Ed

    @ Jacob. That the cause of making a chaity donation being an uneconomic factor is not really relevant. The motive is to relieve an unease, justbas he motive for acting economically ismtomreleive an unease, two sub-sets of the same urge, to relieve unease.

    It is necessary, in the long run, to act economically in order to indulge in donations, but that does not detract from the motive.

  • Jacob

    Lee,
    “eg consumption decisions are usually about feelings and likings and belong largely to the realm of psychology”
    Of course we agree. The above is exactely how I see things. I’m not sure I would call it “the realm of psycology”, but it is close enough. One thing that seems obvious to me is that it is not the “realm of economy”. And that exactly was my point: there are other realms, or factors, that are not economic, and are powerful, at least as powerful as the economic factor, probably much more powerful as drivers of human behaviour.

    We sometimes act by economic motives – for example – try to get the biggest compensation (money) for our work or efforts, and bargain to buy the things we need at the best price. Other times we give away our efforts for free (eq. work for a charity or write long blog posts), and spend big amounts of money on silly things like, say, a painting or a rare bottle of wine.

    As to the distinction between ‘material’ and ‘non-material’ – I think it is real, tangible, meaningful. We know that some things are material, others not. There may be doubts or difficulties in defining border cases, but that does not mean that there is no such thing as ‘material’. Or that there is not such (distinct) category as ‘non-material’.

    This is the clasical and famous philosophical (unresolved) question of body and soul…