I wrote:
> > In a passage which seems to summarize his message, Tom Walker
> wrote: >>The NAIRU story and the Phillips curve story make sense if one
> assumes that capital's brief is efficiency and labour's is waste.<<
>
> > Tom, that sure seems like you're mixing normative concepts (efficiency)
> and positive concepts (NAIRU, Phillips curve) in a strange way.<
Tom ripostes:
>No, I'm saying that the supposedly positive concepts are covertly grounded
>in normative judgments and they simply don't wash if you make those
>judgments explicit and challenge them.
The PC is a concept that arose simply from empiricism (of Irving Fisher and
later A.W. Phillips) rather than being ground out by the application of NC
theory. (In fact, that's the main criticism that the NC economists have of
it, i.e., that it didn't spring full grown from the head of Walras.) That
doesn't mean that no normative assumptions crept in (especially since old
Irving was really horrible on issues like eugenics). But those normative
judgements don't automatically undermine the empirical generalization, just
as references to Isaac Newton's search for the Philosopher's Stone don't
undermine his physics. (I can also imagine that old Isaac's attitidues
toward non-Europeans was not politically correct. Should we then reject his
physics?)
More importantly, as I said, it's possible to attach more than one
normative meaning to the empirical generalization. If there's not a unique
mapping between normative preconceptions and empirical generalizations,
then a normative critique is pretty weak if not totally bogus.
To beat an empirical generalization, you have to show that the data can be
explained better by another generalization or a different deductive theory,
i.e., show that the correlation isn't based on any reasonable causation
that it is instead is an accident which can be explained in other terms. So
what is your theory of the relationship between unemployment and inflation?
I don't think empirio-criticism of the PC will go far in the US, since
there are several major periods in which the unemployment rate falls
(rises) and inflation goes up (falls). Worse, like other generalizations in
economics, it's a _ceteris paribus_ relation. The PC only works in an
unvarnished fashion if what I call "hangover inflation" (Tobin's "inertial
inflation" with an overlay of "conflict inflation") stays constant, there
are no supply shocks, and the parameters of the PC itself (such as the
NAIRU) never change.
The only way to beat the PC is by developing a better theory.
>BTW, this is not something I dreamed up by myself. There is a rich
>literature on it ranging from critical theory to hermeneutics to
>deconstruction.
References to hermeneutics and deconstruction don't convince me. I've never
been into that kind of lit crit sh*t. I prefer logic, empirical research,
and the philosophy of science (methodology).
> > Are you saying that if we reject the normative view that "capital's
> brief is efficiency and labour's is waste," we should reject both the
> Phillips Curve and the NAIRU, _even if_ they fit the empirical data? <
>1. The Phillips Curve and the NAIRU do not unambiguously "fit the
>empirical data".
That point is irrelevant to what I said, because the empirical validity of
the PC was in the independent clause. That is, I was saying: (1) _assume_
that the theory fits the data. Then, (2) given this assumption, is it
reasonable to reject the theory because it doesn't fit one's normative
likes? (I don't like the way the aging process is affecting my body and
mind. Does that mean I should reject its existence, even though empirical
evidence suggests that it's happening?)
>2. Fitting the empirical data is not prima facie evidence of a causal
>relationship.
Right. Obviously, I agree, because I reject the NC theory of the PC (one
specific causal relationship) but see that the PC might easily be seen as
the result of the workings of the reserve army of labor in an economy with
fiat money (another causal relationship).
>3. We should reject the Phillips curve and the NAIRU if a. they don't fit
>the empirical data or b. we can find a better
>explanation for why they do (if and when they do).
Okay. Of course, what I'm trying to do is (b).
>4. The SOP [standard operating procedure] in economics has been to assume
>that the geocentric theory is right and to search for
>subsidiary explanations for the "perturbations" in the orbits of the
>planets. One can explain away quite a bit that way.
I am in no way responsible for what orthodox economists do. (Perhaps I
should add that to my signature file.)
> > (Mind you, I am quite conscious that the empirical data reflect the
> power of capital and institutional framework of the country being
> studied. But we live under that power and that framework.) Are you saying
> that one should reject a positive theory based on the fact that you don't
> like its moral implications?<
>This last question simply restates your initial normative judgment that
>_I_ am mixing normative and positive concepts as a positive statement that
>I _am_ mixing the normative and the positive. Thanks for illustrating how
>it's done.
I do not see what I'm saying here as being a normative judgement. How was
my interpretation that you were saying that the PC was invalid because you
didn't like its normative underpinnings "normative"?
> > But the positive/normative mix could be very different: it seems to me
> that the NAIRU theory could easily be interpreted as an argument for
> overthrowing capital. "Capitalism requires a reserve army THAT BIG to
> keep it from punishing us with accelerating inflation??"<
>That faint hope relies on your substituting the normative "capitalism" for
>the positive "the economy". Nice finesse if you can pull it off. I'll
>stick to going for the juglar.
Why is capitalism a normative concept? I don't get that at all. If
"capitalism" is normative, why isn't "the economy" normative?
And what is "going for the jugular"? Does that mean that you are asserting
that even without major institutional change, the unemployment rate can be
reduced to zero without the capitalists using their control over the
economy to punish us with inflation? (Institutional changes might mean the
establishment of full-scale social democracy a la Sweden in the good old
days or full-scale fascism a la Italy or Germany in the bad old days or
the war-economy of the US between 1942 and 1945. Alternatively, we could
establish socialism. But I think it's safe to assume that this won't happen
in the near future.)
I think it would be useful to try to get the unemployment rate to zero --
as a real-world experiment testing the PC. (It also would be a good thing
for working people.) But the powers that be won't allow it.
> > I am no positivist, but I think that _trying_ to separate positive and
> normative concerns is a useful step in many cases (as is being aware of
> the way in which one's moral commitments shapes the questions one asks,
> the data one looks at, the research methods one uses, etc.)<
>That's what I was talking about, looking at the hidden moral judgments
>underlying the allegedly positive claims about unemployment and inflation.
>And frankly, if you go back just a bit in the history of American teaching
>of political economy -- good old late 19th century laissez faire social
>darwinism -- the moral judgments are not hidden in the slightest.
>Unemployment is unambigously a sign of the unemployed's sinful habits.
Just because the main believers in the PC accept the lineal descendent of
Social Darwinism (NC economics) doesn't mean that others might develop
other theories which explain the phenomena (the empirical generalization)
that the PC represents.
BTW, the hard-core NC types of the Chicago school reject the PC. Their
rejection is tainted by their manifest Social Darwinism (it's not hidden at
all). So we should reject their rejection of the PC. That is, we should
accept the PC. QED, at least if one accepts the validity of a normative
critique.
>Have a look at the 1909 book by J. Laurence Laughlin, _Latter Day
>Problems_, in which he talks about the Christ-like "sacrifice"
>(abstinence) of the capitalist as the creative source of wealth. I'm not
>exaggerating. Or see the 1938 labour economics textbook by Royal
>Montgomery in which he scrupulously presents the unions' *stated* position
>on the hours of work followed by what he
>coyly advises the reader is their *real* motivation.
The 1909 book preceded Fisher's discovery of the PC (and I doubt that he
read Montgomery's book before his discovery), though I'd bet that his
attitudes were similar. But this seems too much like a "guilt by
association" argument.
>My point -- and I've made it over and over again -- is that if you do a
>historical read through of a lot of these "positive concepts" you find out
>that they started as explicit and quite extreme moral judgments that over
>time got "moderated" by expunging some of the more defamatory or laudatory
>premises. But to do such a historical read would lead us into the
>temptation of quoting from old books.
I notice that Marx made a lot of defamatory references to ethnic groups --
including his own group, the Jews. Does that mean that Marxian theory -- a
"moderated" and cleaned-up version of what Marx wrote -- is _a priori_
invalid? Or are you saying that the normative nonsense _shouldn't_ be
expunged from the theory?
I guess my problem is that I don't believe in the theory of Original Sin,
i.e., that since a theory is historically based on outrageous nonsense its
intrinsic connection with that nonsense can never be broken, so the best
one can do is to repudiate the theory altogether. Instead, I think that a
theory should be rejected on the basis of logic, empirical research, and
methodology, with a theory only being truly rejected when a better theory
is presented.
So what is _your_ theory that replaces the PC? What does it recommend in
terms of policy?
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~JDevine
"Is it peace or is it Prozac?" -- Cheryl Wheeler.
