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Freedom and the Morality of Economics

John Dewey

John Dewey

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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