Tag Archives | utilitarianism

The Price of Everything: Neoliberalism and its blind spots

Neoliberalism is among the most influential social, political and economic forces of our time. Danu describes the neoliberal project and examines its effects upon higher education in Australia by beginning with a simple question — does it produce good social outcomes?

The Price of Everything

Have the economic reforms pursued in Australia since the early 1980s produced positive social outcomes?

To give this question proper consideration, we shall need to do a number of things, beginning of course with an explanation of what economic reforms are in question. To do this, I will focus on one particular policy area — higher education policy. This is an area of policy to which the sort of economic reforms we will be discussing have been applied visibly and purposively; it is also a policy area in which we can comfortably discuss social outcomes. We will also need to tackle the more difficult issue of evaluating what constitutes a positive social outcome and how we might recognise one.

Let us turn first to the discussion of the economic reform itself. ‘Since the 1980s’ is code for a number of related and complementary notions and assumptions about economics, society and human behaviour that became widely influential and accepted around this time — the sort of constellation of ideas that we might best describe as a movement. The movement in question has been variously described as ‘neoliberalism’, ‘economic rationalism’, ‘free-market’, ‘Friedmanite’, ‘lassez-faire’, ‘small government’ and even ‘Reaganomics’. These labels all emphasise different aspects of the movement and are largely interchangeable, though my preferred term is neoliberalism, which I will use hereafter.

Attempting a precise definition of such a fuzzy category as neoliberalism is a futile exercise, so let me instead lay out some of the core principles that underwrite it. At heart, neoliberalism combines a libertarian political philosophy with an economic world-view. That is to say, it invokes an image of humanity as a collection of rational individuals each acting in their own self-interest — the role of public policy on this view is to ensure each individual has freedom to exercise his or her rational choices as efficiently as possible. Efficiency here means with as much information (price signals) and as little interference (government) as possible. Neoliberals believe that in this state of affairs, the sum of each individual’s rational, self-interested choices in a perfect market will secure the best possible outcome for all. Free markets, free people. (In that order.)

By valuing education wholly on economic terms, we begin to deprive ourselves as a society of the capacity to comprehend our own folly in doing so.

When former US President Ronald Reagan famously said, ‘government is not the solution to our problem, government is the problem’, we can see what he was getting at. Similarly, when former UK Prime Minister Margaret Thatcher more ominously said ‘there is no such thing as society’, we see she was appealing to a vision of homo economicusEconomic Man. Continue Reading →

✱ Being economical with the truth

When Malcolm Turnbull asked Cabinet Secretary Robert Armstrong, during the famous Spycatcher trial, the difference between a misleading impression and a lie, Armstrong replied that a lie was a straight untruth whereas a misleading impression might be regarded as being ‘economical with the truth’. The phrase promptly lodged itself firmly in the language.

If the phrase is pithy and/or apt, it’s because we have some idea that economics is concerned with making choices about distribution, and doing so as efficiently — that is with as little ‘waste’ — as possible, where in this case waste refers to sharing information that did not need to be shared.

The choices that economics is concerned with are those that involve some sort of goal-directed action, which is to say they are practical choices. Economics is, after all, a practical science. It is therefore inseparable in some sense from other practical sciences, if we are to take seriously, as Aristotle did, the idea that the goal such actions are directed at is a good, or flourishing, life. For Aristotle, the practical sciences were economics, politics and ethics, though economics then meant something closer to ‘household management’ than perhaps what we mean by it today.

Incidentally, the ‘economy of truth’ line comes originally from Edmund Burke, where he relates it to the exercise of virtue in the proper amount (an Aristotelian idea), which shows how much things change even as they remain the same.

Policymaking, also a decidedly practical activity, can be regarded as a combination of all three of the practical sciences — what ought we do, who for and how much? This is probably not how many would frame it today, though it comes close to the view of Adam Smith, who also argued that questions of morality, politics and economics were inseparable.

There seems to be a great deal of confusion today as to whether to regard economics as a branch of knowledge — a technical means for providing information to help make choices — or as a framework by which such choices can be made. Some people argue for a conflation of both. It seems trivial and a little churlish to point out that it might be helpful to decide on this in some fashion before we engage in policymaking, but all evidence suggests this is advice that frequently goes unheeded.

A major source of this confusion is that money has for some time now been supposed to act as a stand-in for utility, which is to say, happiness. The rather loopy train of thought leading to this proposition is far too convoluted to relate today, but it’s hard to talk seriously about contemporary economics or policy without making reference to it, as it informs much of what we think we know.

In hugely oversimplified terms, the thinking goes like this. What’s good is what produces happiness. We’re unable to say precisely what happiness is (utility might be a more useful term) but it would be helpful if we could quantify it somehow. If we can somehow measure happiness (or utility), we can do things that will increase the amount of it that we gain over the amount we lose — we can maximise our marginal utility. Despite a number of variously amusing and/or embarrassing attempts to measure happiness (including the hedonometer), economics as a discipline has largely settled on using money as a proxy — close enough!

In this sense, economics is connected with ethics — utilitarian ethics — so much so that the manner of the connection has become very nearly invisible. Economists often proceed as if what they are doing is value-free, but the very methods they employ are profoundly value-laden. This would be perfectly fine were it not for the fact that the ethical system being employed is mostly incoherent, in no small part because of those methods.

All this is simply by way of saying that when we want to analyse how economics informs or shapes a policy we must remember that economics is hardly the neutral, value-free approach it is often assumed to be. Rather it comes fully laden with its own values (many of which derive from utilitarianism) — it just usually doesn’t declare them as such. This is not to devalue or discredit economics as a valid way of thinking about things, it is merely to insist on the inseparability of economics from ethics and politics. Good policymaking begins when we proceed from this observation and think through the implications carefully. Anything less is simply being economical with the truth. ◾