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Bonus Quotation of the Day…

… is from page 20 of Deirdre N. McCloskey’s insight-filled 1994 collection, Knowledge and Persuasion in Economics:

The truth about Nazism and the Holocaust is that they came from Western civilization, from its best as from its worst, from academic positivism itself as much as from irrationalism.

DBx: Science is a stupendous monument to human intelligence. It is also an indispensable tool for countless of the tasks that make possible modernity’s marvels. Science is indeed real. But neither human society in general, nor the economy in particular, are machines or processes subject to being improved, or even to be well understood, by the application to them of the methods that have proven so useful in the natural and physical sciences.

Put differently, social and economic problems are not scientific problems. There are two chief, related reasons why these problems aren’t scientific ones. The first reason is that the knowledge necessary for modern society to operate is necessarily dispersed across millions of different minds. For example, no central economic planner can know just how scarce is iron ore relative to bauxite relative to cotton relative to balsa wood relative to human labor relative to….

The second reason is that social and economic problems unavoidably involve individuals’ subjective preferences, including preferences for the bearing of risks. There is no ‘correct’ allocation of resources – no scientifically determinable ‘right’ amount of production of sofas, soap, steel, skyscrapers, supermarkets, and on and on – that is independent of the subjective preferences of millions, even billions, of individuals. Social and economic ‘problems’ have no solutions; they have – as Thomas Sowell frequently reminds us – only tradeoffs.

Put another way, because individual preferences are subjective (and often changing), there is no objectively correct allocation of resources that can be determined and engineered scientifically in the same way that there is an objectively correct ‘solution,’ say, for scientifically determining how to engineer six ounces of clay into a vessel such that the vessel is made to hold the maximum possible amount of liquid that can be held with a vessel engineered out of six ounces of clay.

To insist that society in general, or the economy in particular, should be engineered for the better according to science is not only to reveal a failure to understand the role of science, but also to reveal a failure to understand society and the economy. Humanity is not a science project (and pointing out that humanity is not a science project is not, by any means, to deny or denigrate science). But by mistaking humanity or society or the economy as being a science project, one risks creating hell on earth.