The beating moral heart of economics is human freedom, according to Harvard Professor Edward Glaeser, writing for the New York Times Economix blog. For Glaeser, the word “freedom” has a definite meaning:
In the 19th century, John Stuart Mill asserted, “The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”
Economists idolize freedom, says Glaeser, and since he teaches at Harvard, his thinking will influence the next generation of political leaders. But, there are other ideas about freedom.
Glaeser explains the simplifications that go into this moral theory:
1. People can rank things they want in order.
2. Economists create an equation that describes these preferences, called a utility function.
3. People are better off when utility goes up.
4. “We typically prove that someone’s welfare has increased when the person has an increased set of choices.”
5. That leads to the proposition “… that the fundamental objective of public policy is to increase freedom of choice.”
He acknowledges that each of these assumptions are contested, and they are, some hotly. But he asserts that this amounts to a fundamental belief in freedom.
One of the principle challenges to this chain of propositions involves the assumption that welfare is improved when utility increases. It comes from A Theory of Justice, by John Rawls, who proposes a completely different method of gauging the value of change. Rawls’ ideas are complicated, but even economists question whether mere increase in options contributes to welfare. If you aren’t the principle purchaser of staples at your house, you may well find yourself flummoxed staring at the toilet paper selection at your grocery store and reach for the cell to call for help.
The notion of the utility function is attractive for a simple reason: you can do mathematics with equations. You can gather data, fit it to curves, integrate and differentiate and create models, and offer authoritative counsel based on those models. And that, indeed, is what happened. Economists created their models, gave their counsel, influenced politicians and conditioned the public to accept an entirely new regulatory regime. We know how that worked out.
There is a deeper issue here, though. What exactly is this freedom that revolves around choices of things to buy? What is it about the state that makes it the enemy of freedom?
Underlying Glaeser’s argument is an unspoken assumption about human beings. They are atomistic, fully existing without regard to the other members of the society in which they find themselves. They distrust the authority of others, including the state. They rebel. They want stuff, and they want to be left alone. This set of ideas has won the day. It’s hard to find a politician even among liberals, who questions them.
By valuing freedom above all else, Glaeser minimizes the value of the State. He does not consider the close relationship between individual freedom and organized authority. Without organized authority, how free can an individual be?
John Dewey offers another perspective in this highly readable paper presented to the Harvard Tercentenary. First, he explains how the dominant ideas arose. He agrees that the state was authoritarian, interested only in preserving its power and the power of the rich people who controlled it. Its authority was bolstered by an equally authoritarian Church. The people who controlled these institutions worked together to crush popular demands for change as societies evolved. The conception of the paramount individual became the opposition. That led to broad rejection of the role of the state and its authority in the affairs of regular people.
He describes the dangers of extreme individualism.
The individualistic movement has tended to identify the exercise of freedom with absence of any organized control, and in this way, it has in fact identified freedom with mere de facto possession of economic power.
Dewey calls out the assumption of the dominant ideology that all advances come from the actions of individuals:
To speak baldly, it is a plain falsehood that the advances which the defenders of the existing regime point to as justification for its continuance, are due to mere individualistic initiative and enterprise. The truth is that individualistic initiative and enterprise have sequestered and appropriated the fruits of collective cooperative intelligence.
Dewey’s “cooperative intelligence” is the method of organized science. Dewey says that the same principles that produced an understanding of the physical universe can be applied to creating forms of government that will advance individual freedom as well. Science teaches that some theories are better than others, that the test is outcomes, not ideology, and that careful observation and applied intelligence will lead to better understanding of the material world. In the same way, Dewey says, applying that cooperative intelligence will lead to more human freedom and a better society.
It sounds like a real democracy, doesn’t it? Not a democracy that idolizes wealth and grants it unbridled power, but one that values the input of all citizens in selecting goals and the means to achieve those goals.




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FREE MARKET, Baby! Now give me that subsidy or you won’t get campaign support. Oh yeah, make a law so that my corporation is the ONLY one!
In light of the uprising in Egypt, this paragraph from the paper I linked seems prophetic:
The Christ was pretty plugged into absolute freedom and self-enlightenment leading to the complete absence of “organized authority” two thousand years ago. That he was building on what the giants five thousand years before he came along had said doesn’t diminish the importance of his message.
Yep. See:
Purist, Sanctimonious, Retards, needing of drug testing, DFH, LiBrals, Socialist. I could go on.
Fear those nasty democrats. They want to take away your free market and make you pay.
He who rules the gold, makes the rules.
I read that Glaeser post the other day.
I am not an economist and may will be an idiot but it seemed to me that if I’m an idiot, Glaeser is an even bigger one with his reliance upon Milton Friedman to make his point.
Economists can write all the (untestable) equations they like, and they are all just mere speculation, until tested.
Tested and published with repeatable results. They they can be called tested theories. Until the testing is complete (also call experiments), they are unworthy of serious consideration, and completely invalid if used.
Any equations proposed for economics that do not employ non-linear feedback and chaos theory are invalid, and one has a better chance of predicting outcome, of effects of “utility” in Vegas.
Bullshit on the whole subject of “Economics”. Show me the repeatable experiments.
Ecomonic theories should met met with the Question: “Nice Theory You’ve Got There. How will you test it?” Not, he’s a brilliant economist, while kissing his credentials on all four cheeks.
Except when it comes to pot, or LSD, or assisted suicide, or abortion. Then it becomes pretty easy to find all sorts of politicians who question this “individual autonomy” stuff.
And if you were correct about the idea of “distrust of authority” as having “won the day,” there would be no TSA (at least not in its current form).
My own take: I honestly don’t believe that any of it is really about “individual autonomy.” The “freedom” stuff is just a nice cover for the truth. I think our politicians are basically authoritarians. And their highest authority is represented by the Captains of Industry.
The overuse of the Theory of Marginal Utility has been criticized for a long time. Thorstein Veblen made this issue one of his main themes starting in 1909 with his “Limitations of Marginal Utility” first published in the Journal of Political Economy. You can find a copy here:
In point of fact, you can always tell an economist is a right-winger whenever he or she starts talking about how “utility” makes it mathematically possible to prove his or her point.
Show me the experiments.
Wonder how this fits into the original Neo-con theory of democracy dominoes falling from Iraq. Oh no, they are falling West instead of East.
More significantly is the failure of the US government’s and international banks’ “money as debt” financial Ponzi system. By creating debt slaves in the US and the world over an inevitable financial collapse occurs. As the US monetizes it’s deficits global prices are affected. Debt based consumption in the US offshores real price increases for necessities. Those economically struggling to survive feel the pain first. As the Ponzi collapses those denied entrance to the pay out portion of the scheme react the strongest.
When an underemployed college graduate in Tunisia torches himself, what does that mean for all the US unemployed college graduates? The US minimum wage folk have little change in expectations. It is those who expected to participate in the Ponzi who hit the reality shockwave the hardest.
When all are equal before the law everyone is as free as the law allows.
In the United States, people who can afford a lawyer are much more free than people who cannot.
And the president (and whomever he/she designates) is completely free to do anything they wish.
You have a picture of my mentor John Dewey up on this post. Dewey and his mentor William James would have told you that we are physical beings who are born into a physical world of objects, forces and other people.
We start in the world and among other people from when we draw the first breath. There is no original independence or “freedom”. We begin with habits, impulses and reactions responding to what we find in our world. We become free and “independent” only after we develop or brains and nervous systems and begin to awaken sufficient consciousness to interrupt the habits and impulsive reactions and make choices.
We are born and raised immersed in the physical world and society and interdependent with all other people and all other things. Their choices effect us and our choices effect them. We don’t get to start as individual agents, and this thing they are calling the “State” is just another feature of society.
Mr Glaeser’s approach is wrong from the start. There is no point arguing it at all.
I’ve read some of those economic-theoretical ideas over the shoulders of fellow commuters. Any theory claiming to explain how people make decisions should not first assume perfect knowledge and unbiased decision-making. yet that’s what they teach, and Glaeser is another one of those theoretical economists who buys into the perfectly-knowledgeable unbiased consumers.
There is no better example of the fruits of collective cooperative intelligence being appropriated by the initiative of individualistic enterprise than those enterprises we have come to call the “Media”.
The collective achievements of the early experimenters in radio
Broadcasting were summarily absconded with by corporations who collected, and patented as their own, the work those experimenters published freely for each other’s and the by extension, the public’s benefit.
Stolen/appropriated broadcasting technology, when paired with what has turned out to be government-granted monopolies has resulted in the giant media conglomerates which stifle the free flow of news and information in favor of dissemination of propaganda.
In like manner, the internet developed with government money, that is, taxpayer subsidies, is rapidly being transformed from what is, and should be our nation’s commons, into the private property of the same kleptocracy that seems hell bent on returning us all to a feudalistic existence.
Our government is us down while those rugged individuals who worship Ayn Rand pick our pockets and take the food from our children’s mouths.
Of course the last sentence should read;
Our government is holding us down while those rugged individuals who worship Ayn Rand pick our pockets and take the food from our children’s mouths.
Here’s a little piece I found almost at random in Dewey’s “Human Nature and Conduct”:
You studied with Dewey? Did you think he was a good teacher? I’m afraid people don’t know much about him and his ideas. I never heard of him in College in the 60s, and would never have learned about him except for my wife, who studied his work in grad school.
I write about Glaeser because he and other economists who agree with him dominate public discourse, with their slots in the New York Times, and their academic credentials, and the cooperation of news reporters and others in the media who never heard anything different from the economics supported by the business class.
These people led us into a horrifying disaster, and simply refuse to accept their responsibility for their role in the Great Crash.
We need a new start in understanding economics, one grounded in American experience and sensible practice, guided by inquiry and reflection instead of a long-dead ideology.
5. That leads to the proposition “… that the fundamental objective of public policy is to increase freedom of choice.”
Opposed to creating monopolies in commerce and trade that restrict choice, innovation and advancement, protecting status quo interests, like an East India Tea Corp, BP or the institution of slavery? Expect plenty of obstruction in the Senate to any change which affords Egyptians or Americans increased opportunity and choice, as a matter of public policy!
One of the things Glaeser doesn`t mention (and probably doesn`t even know –as a professional economist I`ve never been exactly overwhelmed by his work), is that the analytical core of the points he sets out were made by Walras`s student Wilfredo Pareto, who was looking for a minimalist solution to the problem of human betterment. Pareto (who later drifted into Mussolini`s fascist party) thought that just about everyone would agree that improvements in the scope of choice were good in the degree that they didn`t result in someone being harmed by it. This is another version of is welfare theorem: to wit, society is made better off if any one person is made better off and nobody else is made worse off. The point is, it is hard to disagree with this, unless you are positively sadist (you feel better when other people are worse off).
This ideology–for that is what it is–took wings in the 1920s and 1930s, when the ideological gap in intellectual circles between left and right had become extremely wide, and in some cases lethal. So it was left to define what persons of good will on either side of that divide could agree on.
This is all pretty weak tea, needless to say. But it was picked up by formalizations in the 1940s and 1950s, and now constitutes the core of what economists call `welfare econoics.` Since most young economists mainly come out of mathematics or mathematical sciences as undergraduates, their understanding of welfare is needless to say, stunted. Pareto`s minimalism is mathematically tractable. It gives persons of actually average ability a chance to look like they know something if they can manage the math.
It`s all shadow-boxing. As I said, Glaeser is conventional. I guess that`s why he`s at Harvard. It`s their forte.
Good point. The right wing argument is that when the government limits choice it’s tyranny, when a multinational corporation does it’s liberating. The most prominent example is the way health care is obtained in America. I bet there are millions of people working at jobs they’d rather leave, but then they and their families would face destruction if one of them got sick. That’s not freedom.
Thanks Masaccio,
it all reminds me of Milton Friedman’s “Free to Choose” which James Galbraith tore apart in his book “The Predator State”(review). Galbraith coined Friedman’s idea of freedom as “Freedom to Shop”.
Galbraith focuses on the need for planning, a point I certainly support. And it sounds like Dewey’s comments on collective cooperative intelligence are along the same lines.
War is the givaway that planning produces better results. War presses a societies resources to the limits and the best way to push the boundaries of those limits is… planning. We did economic planning on a massive scale during WWII and our planners were very good at it. Even in the Civil War, one of the Norths big advantages over the South was in terms of organization and planning. The South was far more individualistic.
Many individualistic choices have suboptimal limits or tend to produce chaos. For example:
Given the individual choice between owning a car and not owning a car, I’m better off owning a car. But if I could choose that everyone(or atleast the vast majority) use public transport, I’d choose that collective course of action.
Or look at our corporate CEO’s. If they push the red button, they collect 100 million and their company ends up filing for bankruptcy within a few years. It’s chaos from the get go but there’s also the follow on factor that the value of that 100 million approaches zero as more and more CEO’s “press the button”. If the CEO’s all press the button, everyone loses, including the CEO’s.
Freedom of choice is fine, but is an individual’s life really improving if the increasing array of choices are all poor ones?
Glaeser is conventional, but he has that slot at Harvard that gives him sway over minds pre-programmed to accept his weak tea. That’s why I like Dewey. As Tetercreek says, freedom only comes to those who can interrupt the flow of their impulses and habits. If not challenged, the next generation of US leadership will be another version of Geithner, Summers and Glaeser.
Oh, no, Dewey died before I was born. I just meant that he was an intellectual mentor. I just got into studying him in the last couple of years trying to prepare for some ethics classes I am teaching. I started on William James “The Moral Philosopher and the Moral Life” and kind of moved on from there. Jane Addams is also an important connection.
“Democracy”. Democracy is the key idea. The fundamental assumption that everyone is of equal value, and everyone deserves a chance to be heard. Democracy is where we need to take a stand.
And I am so grateful that you have brought him into the discussion. I agree that we have to just have to start over to rebuild an alternative American (not Austrian) explanation of how society and the economy work in real life.
Well said -
The notion of the utility function was out there in my pass through in the 50′s/60′s – and never usable as all those curves fit in some way past data that whose assumptions were no longer valid.
Wilfredo Pareto was to me just the favorite priest to the rich since he excused everything provided “choice” was increased – good and bad were redefined so the rich could screw us and not feel guilt. Economic decisions affect good and bad in a Society via other effects beyond the amount of choice in the system.
Indeed the idea of a setting the prices for ones wares to max out some utility curve – getting away from Pareto from a moment – always seemed an idea that justified a bit of math but was impossible to implement in the real world – pricing was an art where good guessing was rewarded – not a science.