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Progressives and Their Consistent Failure to Understand the Incomprehensible Complexity of Reality’s Details

Commenting on this EconLog post by Pierre Lemieux, Thomas Lee Hutcheson writes:

I judge that Capitalism does a pretty good job of aligning the interests of profit-making firm owners with those of people. Economic theory helps understand circumstances in which the alignment is less than perfect — externalities like pollutants and CO2 and methane emissions being perhaps the biggest exception. Theory also helps understand how to tax raise resources to transfer to those whose participation or inability to participate in the market economy yield insuffuent levels of consumption, especially of services like health care.

Much evil has been done in misapplying theory to make Capitalism align better with the interests of people (and more in tryin to replace Capitalism with other systems).. As Libertarians generally understand how and why this mis-alignment occurs, I invite then to join with Liberals and Progressives to find ways to reform the policies that seek that better alignment.

Mr. Hutchison’s view is mainstream. Pick an economist or political scientist at random and you’ll likely find someone who will nod approvingly at Mr. Hutcheson’s remarks. But I believe these remarks to be wholly, if innocently, in error. Below is a slightly edited reply that I left at EconLog to Mr. Hutcheson’s remarks:

Thomas Lee Hutcheson: With respect, you confuse blackboard theories with reality. Almost anything can be shown on a blackboard, and welfare economics is full of lovely pictures explaining just how god would intervene in reality if god were a government official. But god isn’t in charge. The human world is manned only by imperfect human beings. These human beings – including Nobel-laureate economists – cannot begin to comprehend the complexity of modern economic reality. In its details, this complexity is literally incomprehensible to mere mortals, and it will remain so.

The only way to make welfare-economics demonstrations of ‘optimal’ interventions into the market remotely plausible is to reduce the complexity of the modern economy to such a degree that its details become close to being comprehensible to we mere mortals. But any such reduction in the complexity of the modern economy to make it conform to the unstated assumptions of welfare economics would first torture and then destroy the patient that the welfare-economics doctors are trying to make more perfect.

Of course the real-world economy is imperfect; each of us can see countless imperfections every day. And just as many people pray to god to cure their cancer or to improve their job prospects, many people – especially Progressives – pray to the state, which they treat as a god, to make the world more perfect by eliminating these imperfections. But this move is based only on faith.

Far too much of welfare economics is secular theology that is mistaken for science. Apart from failing to come to grips with the enormous, incomprehensible reality of modern market economies, Progressives commit another scientific error: The assumption of individual self-interest that drives many of welfare-economics conclusions about alleged market failures is dropped when Progressives theorize about the politicians, bureaucrats, and judges who are to be in charge of correcting market failures.

Why do Progressives consistently turn a blind eye to the reality that human beings in government are at least just as self-interested as are human beings in the market? The typical welfare economist and typical Progressive consistently fails to explain where the flesh-and-blood persons in government will acquire the detailed knowledge necessary to intervene in ‘improving’ ways – equations and graphs on blackboards, in textbooks, and in journal articles do not supply such knowledge – and why the self-interest of these government officials will be put aside as they attempt to move us closer to imagined perfection.


One of the many features that distinguish true liberals from Progressives, and from conservatives in the Trumpian mold, is the following. True liberals understand that reality is imperfect, but that markets generate outcomes that are pretty good – outcomes that are vastly better, for ordinary people, compared to what life was like before capitalism and what it would be like without capitalism. We liberals, appreciating the enormous treasures of modernity made possible by what Deirdre McCloskey calls “market-tested (or trade-tested) betterment,’ don’t agonize over the relatively minor deviations here on earth from heaven. (Compared to what life was like before capitalism, we moderns are damn close to being in heaven; we’re certainly far nearer to heaven than we are to the hell in which nearly every human being lived until just a few hundred years ago.)

Progressives and other statists seem to have little appreciation for just what the market order has in fact accomplished. Taking for granted the benefits of modern capitalism, and able to imagine heaven on earth, Progressives and other statists resort to coercion to attempt to move society from pretty good to perfect. This attempt is not only destined to fail on its own terms, it’s also invariably fatal.

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