Manichism In Economics Essays - Economic Theories,

Manichism In Economics The Manichaean character of economics. Charles Kindleberger. Abstract: Economics is said to have adopted a certain degree of dualism. None of its tenets have been absolute in terms of social effectiveness. To survive in an economic system, rules must be enforced to ensure the peace. There are times when pluralism is good for a society as a way recognizing social differences. However, there are times, such as war, when the rule of a central authority is preferred. Laws in economics are hardly permanent since such regulations are enacted and enforced only when the need arises. Full Text: COPYRIGHT 1999 M.E. Sharpe, Inc. Are there any absolute answers in economics? This international trade economist and economic historian has his doubts. The answer to most questions is "It depends." Manichaeus, as we all know from the Oxford dictionary; was a Persian philosopher of the third century A.D., whose system held some sway throughout the Roman empire and Asia until the fifth century (with some elements lasting to the thirteenth). He believed in dualism, the coexistence of good and evil, with Satan coequal with God. I suggest that economics has a heavy dose of dualism, though I hesitate to characterize views that differ from mine as evil or satanic. In the first edition of Economics: An Introductory Analysis the only one I read when I was teaching the introductory course - Paul Samuelson wrote that when one is offered a choice, it is not legitimate to say "both." I hesitate to differ from my esteemed colleague, but "both" is often a correct answer, as occasionally is "neither." Is one supposed to believe in Say's law that supply creates its own demand, or Keynes's law that demand creates the needed supply? In the course of a long academic life, I have developed Kindleberger's law of alternatives, based on historical examples. Often after extended policy debate, the powers that be end up doing both. In 1931 Keynes recommended tariffs, others devaluation or depreciation. Outcome: both. During World War II there was a vigorous Allied debate as to how best to push back German railheads from the Normandy beaches, whether by bombing marshaling yards, as the British called them, or bridges. Answer again: both. Nor did questioning a German prisoner of war, General des Transportwesen West, under Marshall von Runstedt, make clear which was better. American interrogators got the answer from Oberst (colonel) Hoffner they wanted - bridges - and the British theirs - marshaling yards. Robert Heilbroner has been a Classicist (Say's law?) and a Keynesian (Keynes's law?) and has been mildly infected with Marxism, but has never to my knowledge adopted the absolutist position of denying all truth to the polar opposite. In economic debates we have capitalism versus socialism; perfect markets with rational and informed suppliers and demanders versus market failure; monetarism versus Keynesianism; fundamentals (such as geography demography, technology, and perhaps history) versus institutions, path dependency; externalities, and occasional breakouts of herd behavior ending in financial crisis; free banking versus regulation and central banks; public choice versus markets (governments make mistakes but markets seldom do, and such mistakes as they rarely make are quickly corrected); centralization versus pluralism; rules versus decisions by authorities . . . One could go on. In international trade, which I taught before I learned the delight of historical economics, I was wont to say that the answer to every question in economics is, "It depends," and that it usually depended on the magnitude of the elasticities. President Truman sought one-armed economic advisers because of his unhappiness with the answer to his question "On the one hand, . . .; on the other hand, . . ." I have admiration approaching reverence for the thirty-third president of the United States, but I cannot endorse his pleas for an answer of "Yes," or perhaps "No," followed by a number. Let me illustrate this deeply philosophical or perhaps cowardly position with a few examples drawn from history. I skip capitalism versus socialism because most of us believe in the mixed economy, perhaps leaning slightly to one or the other, but in any case nowhere near the limits. Such, as I interpret it, is the Heilbroner take on Marxism since his infection at (by?) the New School. Centralization versus pluralism can be disposed of in two sentences, though I have a book of 100 pages on the issue: In quiet times, pluralism is better because it is more democratic. In crisis or on deep moral issues such as slavery or racism, some central authority is preferable. It is, however, difficult to