Commenting on this post entitled “The Economic Way of Thinking,” Greg Webb asks:
Is there any other way of thinking?
Alas, the answer is yes. I can think of at least three common ways of thinking that are decidedly not the economic way of thinking.
The first ‘other’ way of thinking is the undisciplined way of thinking (at least about most economic matters). It is probably the most common ‘other’ way of thinking. This way of thinking mistakes results (such as high wages) for causes of the very results that are desired (such as high wages). It seldom looks beyond the most immediately perceived phenomena, and perception of these immediately recognized phenomena is mistaken for a reliable understanding of economic reality. For example, high tariffs, because they do protect some jobs in some industries, are reckoned to promote greater employment throughout the economy. A higher legislated minimum wage, because it marshals the power of government to prevent anyone from being paid wages lower than the stipulated minimum, is reckoned to raise the wages of low-skilled workers. Locally grown food – because it is not shipped in from many miles away – is reckoned to be better for the environment than is food grown in distant locations. Workplace-safety regulations by government are simply assumed to work as advertised and to work wonders that could and would be achieved by no process other than by ham-fisted commands from the state.
A second ‘other’ way of thinking is a consequence of what Thomas Sowell calls the “unconstrained vision.” Practitioners of the unconstrained way of thinking are too often oblivious to the many tradeoffs that attend all choices in reality. Unlike people more attuned to reality – that is, those who recognize that reality’s constraints are far tighter and more inflexible than our romantic sides fancy them to be – unconstrained thinkers either do not recognize, or refuse to come to grips with, the fact that not everything that is good is worth the cost of its achievement – and that not everything that is bad is worth the cost of its obliteration. Unconstrained thinkers are also typically gripped by romantically unrealistic notions of the abilities of people wielding power, as well as of the trustworthiness of such people. Unconstrained thinkers, because they can imagine people with power exercising that power for the greater good and only for the greater good, are unwilling to suffer any imperfections in reality – for why suffer such imperfections if a Great and Good Leader (or Great and Good Council) can possibly make the world a better place?
A third ‘other’ way of thinking is the social-engineering way of thinking. In this way of thinking, there is no economic problem, properly understood; there is only an engineering problem for society. The various competing desires, goals, plans, and expectations of millions of individuals are assumed to be reducible to a grand and stable social-preference ordering. Society is thought of more or less as if it is a sentient creature – a super-large individual. Alternatively in this vision, society is thought of as an organization with a specific function and purpose – like a gigantic firm – rather than as a spontaneous order that maximizes the prospects for multitudes of individuals each to pursue their own individual goals with as much success as possible.
Whether the social engineer conceives of society as a sentient super-creature or as a super-sized firm, the social-engineering thinker believes that there is a ‘correct’ way that society should be arranged and a ‘correct’ allocation of resources – a correct way and a correct allocation of resources that is, at least in principle, discoverable by dedicated social engineers. The task, then, is for these dedicated public servants to arrange society in just the way that will ‘maximize’ wealth or happiness or whatever dependent variables the particular social engineers have divined are of most importance to ‘society.’
Of course, someone can be more than one type of the above ‘other’ thinkers. That is, someone can combine any two, or all three, of the above ways of thinking into one mix.
I do not argue that the above three ‘other’ ways of thinking that I mention here are the only three alternatives to the economic way of thinking; I’m sure there are more than these three. But these three are indeed prominent ways of thinking that are ‘other’ than the economic way of thinking.