Friday, November 20, 2015

Frederic Bastiat the Ethicist by William Cunningham 1906

Frederic Bastiat the Ethicist by William Cunningham 1906

See also The History & Mystery of Money & Economics-250 Books on DVDrom

Bastiat, a French Economist, was a pioneer...eager to present the truths of Economics in a form in which they would give an easily apprehended reply to socialism. He held that there is an economic harmony in the world, so arranged that each man, in the effort to satisfy his own wants, makes the most effective contribution of which he is capable to the good of the world as a whole1. This view rested on a belief in Divine Wisdom as controlling the Universe. Economics was still an abstract science, for a hard and fast line was drawn between man as an economic unit, and man as a member of Civil Society. Bastiat held that, in the former capacity, the free action of individuals tended to what is best on the whole; and hence with him, Economics was no longer a Science following out the course of certain tendencies, but almost a branch of Ethics describing what ought to be done for the general well-being. Whatever advantages there may have been in this mode of presentation, it did not tend to clearness of thought. Bastiat's writings gave rise to the impression, which still seems to hold good, that laissez-faire and Free Trade are in some sense a virtuous course of action, closely related to the teaching of the Sermon on the Mount. Through his friendship with Cobden, Bastiat's writings came to be well known in English circles. Men who could not accept his sociological views, were yet inclined to break away from the strict scientific tradition, in the hope of thereby laying popular misconceptions at rest. The public do not appreciate the importance of abstract reasoning on economic affairs, and they never could remember that it was abstract. They assumed that Political Economists held up the "economic man" as an example of what all men ought to be, and insisted that the teaching of the science was sordid and its ideals low. Hence, Professor Marshall has been tempted to discard the economic man; Bastiat asserted that the Ethical and the Economic were blended in the scheme of the world as a whole, and Professor Marshall insists that they are mingled, in varying proportions in different groups of mankind. He is prepared to examine the regular play of motives of many kinds in an ordinary human being. Whatever advantages there may be in this modification, there is at least a great loss of clearness; for it is impossible to say definitely what assumptions are made, and thus to make evident how far the reasoning is abstract, and what bearing it has upon actual life. If we get rid of the apparent harshness of the classical form of the science, we also get rid of all its precision. Instead of taking the individual we know in business communities, we are forced to take "mankind in the mass," and to try to analyse the main motives which sway people in general.

There may be some doubt as to the method by which we arrive at our conception of the ordinary man, whether it is by introspection, or by induction from a world-wide survey. In any case the science thus presented is imperfectly abstract, since we have no means of stating clearly what is assumed, either in regard to man individually or as to society. The economic man, with all his faults, was a convenient reminder to us of the nature and limitations of the reasoning in which he appeared. What we may require of the man of science is "that he should remember his method is abstract"; but Economics in its more genial form, as commonly taught in England, has become very imperfectly abstract, because what it leaves out of account cannot be clearly stated. It is, if we may apply Mr Haldane's happy phrase, merely "a hybrid science."

As one result of the confusion that has thus been introduced into the abstract science of the Classical Economist, we are left in doubt as to the kind of validity which attaches to Economic reasoning. Mr Haldane himself does not make clear what place he would assign to Economics in the circle of the sciences. On one hand he ranges it with mathematics and physics, as if it were an abstract science in the strictest sense, and its reasoning were demonstrative in character; on the other hand, he speaks of it as if it were an empirical science, and its results were dependent on observation and induction. "It can only deal," he says, "with tendencies and probabilities—probabilities which become certainties, only when a wide-enough area is surveyed." When Mr Haldane fails to keep the distinction clear, there is no reason for surprise that less skilful thinkers should fall into positive confusion, and occasionally write as if their reasoning had a demonstrative character which does not really attach to it. It is a pity to allow oneself habitually to speak more positively than the information available warrants.

Another defect of the hybrid science lies in the difficulty of applying its conceptions to some of the most important phenomena of modern economic life; since it deals with the subjective play of motives, it is an individualistic rather than a social science. Social action and collective bargaining are among the most interesting features of our day, and it is inconvenient to approach them from the individualistic point of view. The play of motives only explains individual action, and there is a certain awkwardness in applying it to corporate and collective action. Tendencies which are more or less the tendencies of every individual are, as Mr Haldane assures us, "everywhere operative," but this statement takes us a very little way in seeing how they operate, or in understanding the action of the various societies and corporations in a highly organised community. Personal utility or disutility may explain why a man joins a Trade Union, but does not directly account for the action of the Union as a body.

There is a further difficulty in attempting to verify any of the conclusions of this hybrid science; we cannot tell whether the reasoning is merely in the air, or within what limits of place and time it is supposed to apply. Those who rely, in their investigations of economic phenomena, on principles which do not rest on observation and induction, but are derived from subjective analysis, discard all known safeguards against hasty generalisation. From every point of view we may see that this hybrid science fails in the very point in which the Classical Economists were conspicuously successful, since it encourages slovenly thinking. The hybrid science, which has been developed on English soil on the impulse given by Bastiat, is cumbrous and confused, and its exponents have lost themselves in a fog from which they are unable to escape. At all events, they are not able to help the public towards a mental attitude in which it is possible to discuss economic problems thoroughly and effectively.

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