The Beginning of Economic Wisdom

The Beginning of Economic Wisdom

Mini Teaser: Two primers on economics reveal a lingering philosophical divide in the intellectual imagination of our time.

by Author(s): Michael Novak

In part two, consisting of ten short chapters, Lindblom tries to make some sense of what market systems mean--for efficiency (about which he has doubts), freedom, human personality, culture, "the masses" and democracy. He is much influenced by the social philosophers of the Frankfurt School and others (he specifically mentions Jürgen Habermas) who have for many decades severely criticized market societies, for which they in fact show considerable contempt. Lindblom is now more kindly disposed toward markets than they, but they remain his reference group and his brake.

Much of the systematic ambiguity in The Market System derives from Lindblom's unspoken, nearly invisible, yet omnipresent idealism about human beings, human institutions, and their possibilities. When he speaks of "freedom", "democracy", "rationality" and "efficiency", he seems to have in mind so pure a standard for each that, if it were made more explicit, acceptable members would turn out to a null set. For example, he is disheartened by the deficiency of freedom in the lives of workers, because when they show up daily for their factory jobs they are "controlled" by the incentives offered them. But to confound their many incentives with "controls" is to imagine so pure a state of freedom, altogether apart from costs and benefits, that one wonders if even angels may enjoy it. In real life, when the incentives are not just right, one brother says "no, thanks" and seeks employment elsewhere, even though the other brother, for other reasons, goes ahead and enters the factory. Is that not a considerable freedom, imperfect as it is?

In politics, Aristotle wrote, one must be satisfied with a tincture of virtue. In ethical reflection, it is a great mistake to expect the same perfection as one finds in logic, mathematics and the deeper reaches of metaphysics. The range within which finite, imperfect and largely ignorant human beings can enjoy freedom is not unbounded. Yet it is a domain altogether real and precious, worth dying to protect.

The side-by-side publication of these two self-described primers on economics nicely illustrates a crucial divide in the intellectual imagination of our time. One would have thought that the collapse of socialism, both behind the Iron Curtain and in the practical economic thinking of social democrats and democratic socialists, would have thrust virtually all intellectuals and social commentators into a grudging but realistic embrace of democracy and capitalism--these two imperfect yet precious systems--in order to make of them the best that our finite capacities permit us. That is what Charles Lindblom has done. But many of the same voices that once hated America and capitalism still hate America and capitalism, some now more desperately than ever. Their own lack of a workable and available alternative, and the disappointment of their earlier socialist illusions, seems, if anything, to have given them an even sharper edge.

Today's anti-capitalists are mostly not self-described communists or socialists; they declare themselves to be environmentalists, or vibrate against globalization without particular labels for themselves. The trouble with the greens is that, by the end of the summer, they turn out to be reds. Just as in the bad old days, they want the state to command private businesses. And the trouble with anti-globalizers is that those living in the most forlorn parts of the world not yet included in the global system remain today the most desperately poor, ill and likely to die young. As before, envy and the undifferentiated impulse to leveling are at work.

The deeper problem seems to be that neither democracy nor capitalism provides much in the way of pure, idealized outcomes, romance, poetry or myth. Both are systems for adults who have crossed what Joseph Conrad called "the shadow line" that separates illusion and fantasy from a sense of limits and reality. While Professor Lindblom seeks a reasonable idealism, struggling admirably to quell his own romantic tendencies, it is Professor Sowell who better exemplifies the sense of constraints that the ancients used to call phronesis ("practical wisdom" or, in some translations, "prudence").

Sowell's prudence is the habit of mind better suited to democracy and capitalism. Considerably less enamored of pretty ideals, more attentive to the multiple ways in which things can go wrong in human affairs, men and women of practical wisdom rejoice in the limited good effects that, despite everything, may actually be achieved. They count as blessings those imperfect beauties that utopians reject as flawed. What can we do when faced with such a tension except once again to recall Wallace Stevens, who observed in verse: "Our paradise is the imperfect."

Michael Novak is the George Frederick Jewett Scholar in Religion, Philosophy and Public Policy at the American Enterprise Institute. He is also the 1994 winner of the Templeton Prize for Progress in Religion.

Essay Types: Book Review