(This is a first post, focused on where equity fits in the world of economics.)
Economics somehow defined
By Orlando Roncesvalles
Economics was once said to be the study of the “ordinary business of life.” Today that definition seems to falter if only because many now can’t or won’t accept “ordinary business” as just getting up everyday to work and then going home to eat, rest, and watch tv. There must be more to life than that. Otherwise, the only specialties in economics that matter would be labor economics, the economics of food and shelter (agricultural economics, urban planning), and the economics of entertainment. Okay, so we need to sleep and that presupposes elements of conscience and health, which should make economists also study the economics of health and spiritual care.
It’s no longer about ordinary business
That’s not what happens. Economists are a wily bunch. Somehow they’ve embedded “work” into the conjunction of human and physical capital, which has then led to serious questions about saving and investment, and thus we have all sorts of controversies about the “macroeconomy,” business cycles, monetary economics, and the role of “finance.” The scope of “life” itself took on deep meanings about households functioning as “agents” so that the time horizon of economic decisions could encompass overlapping and future generations. In short, economists worked up models where economic actors didn’t even die!
So where do we now go with economics? I don’t know. It certainly is not about the universe, and mathematical economists emulating the physicists are now pretty much in disrepute. The good economists turn to math or just plain-vanilla logic, not for window dressing but as necessary cogs for weeding out bad theories. At least, Occam’s Razor still lives. The even better economists camp out with historians to explain the past, while humbly admitting that the future can only be seen through a thick fog. Economists cannot make time travel, nor make easy profits. They let fantasies stay within the bounds of Hollywood and Ponzi artists.
Then, it was a case of choice
The discipline of economics remains then a study of human behavior, but differentiated from anthropology, sociology, psychology, psychiatry, political science, history, or literature. Where to draw the line seems a mystery but it’s in there somewhere.
This leads to another view on economics as, grandly, the study of human choice. The emphasis here is on the element of choosing. We choose because we’re not dogs, or (pet) rocks, or robots.
Whether we like it or not, humans do grapple with a task or choice all the time. That choice often involves division, something we intuit as a matter of taking a whole and breaking it down into parts or portions. That “whole” may literally be time, as in the question of what we do with our time. But why divide? Is it because time inexorably passes, but is finite because we are mortal? Is it because we say, “No man is an island?” Is it because we strive to solve the “economic problem”? We remind ourselves that the economic problem, according to the textbooks, is that of who should produce and use whatever it is that we decide to produce; this problem boils down to Adam Smith’s “division of labor” – the division of tasks – and also to the distribution or allocation of the things produced among those who wish to use these things. There are thus two sides to the economic problem. One shows how we make the economic pie; the other, how we divide it.
There is thus no avoiding the idea that economics is about division. The positive side of economics looks at how we do the division; the normative side asks how we should do the dividing.
But can it discover fairness?
The distinction is however not clearly cut. Imagine that we were given a certain or particular division to undertake. Suppose that we then ask if the suggested division is “fair.” Is that a fair question? It seems not because it would be a form of begging the question. But it also seems more correct to ask if the division was fairly arrived at, and fair is fair because division is first a process and then an outcome. There is no chicken-egg problem in analyzing answers to fair division questions. Still, we haven’t yet a clear idea of what fairness is.
The dictionary definition of fairness is interestingly hopeless. Merriam-Webster gives the one meaning of interest as “marked by impartiality and honesty: free from self-interest, prejudice, or favoritism.” In a way, it seems that fair is, like many primitive concepts, something more easily recognized than defined. The literature on fair division suggests that fairness is characterized by being “envy free.” Here, we get to define freedom from envy in a sense close to Rawls’s idea of justice. “Envy free” (or justice) means that we wouldn’t want to trade places with others. There is peace on earth, a secular Christmas.
There is no end
So there we are. Economics has traveled from the business of life to the choices we make, and we end with asking, “Is it fair?” I conclude from all this that economists are philosophers at heart, and pesky ones for sure. They are incomprehensible much of the time, but that’s perhaps because thinking is hard, and because we still haven’t fathomed a bunch of other mysteries. One is about what choice really means in today’s age of artificial intelligence and robots. There are others: Where do machines end and humans begin? Is there a fundamental difference between machines and man? Do humans have souls? If they do, do animals also have souls? Are there alien civilizations out there who laugh at us humans for our propensity to engage in internecine wars?