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4.0 out of 5 stars From Eudaimonia to Utility Function, Economics is More than Just Math!, April 5, 2011
This review is from: Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street (Hardcover)
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Economist Tom Sedlacek's "Economics of Good and Evil" may be best read as a collection of similarly themed, but self-contained, essays. If there is a common theme, it is that the field of economics has become so overtaken with mathematical models and analysis that it often forgets that, at root, economics depends on the humanities. Its roots are in the humanities, and any attempt to be value-free risks severely economics' ability to say anything.

The first half of the book contains essays where various ancient and not-as-ancient worldviews are analyzed with an economic eye. We survey the Epic of Gilgamesh and it's contrast between the civilized city and uncivilized natural world, the New Testament's position on debt-forgiveness and communalism, to Descartes' as progenitor of the mathematical model of human behavior. To me the most interesting chapters here were on Bernard Mandeville's Fable of the Bees (which argued that markets turn vice into virtue) and Adam Smith (who Sedlacek argues WAS NOT a Mandevillian). Another intriguing chapter on Ancient Greek writers contrasts the Epicurean proto-utilitarian view with the Stoic proto-Kantian view. Needless to say, I think, economics followed Epicurus.

The second half of the book does the reverse of the first half: it takes economic ideas and reads them through the lens of philosophy. Here, we have a very interesting chapter on the tautological nature of economists' maxU concept (we act so as to maximize utility). Simply put, unless we can define "utility" in a non-subjective, concrete way, the idea that we act to maximize utility simply becomes "we act in ways we feel are the best way to act in order to achieve what we want to achieve" - a notion which is unfalsifiable only because it is vacuous. There is also a very good chapter on economics' tendency to equate economic health with growth. While growth CAN indicate economic health, we have recently seen reminders that growth does not simply equate to economic health BECAUSE GROWTH IS OFTEN FUELED BY DEBT, which is unhealthy. (In an interesting book, DEMOCRACY IN DEFICIT (Collected Works of James M Buchanan), James Buchanan argues that this was the logical, but unintended, effect of Keynesian policies.) Still another chapter questions the unrelenting faith in free markets (wondering why those who argue that markets can yield good results that no one particularly intended don't hold markets accountable when they also yield bad results that no one particularly intended).

The only two criticisms I have are for what I think are misrepresentations. At times, the author represents Epicurean philosophy as excessively materialistic, contrasted with the Stoic philosophy that is focused more on non-material well-being. This is not quite accurate, as Epicureans (like Aristotle) were very aware of the wisdom in moderation, particularly for its effect on the individual's well being. So, Epicureanism is materialistic to a point, but has much more commonality with Aristotle's thoughts about moderation than the author gives credit.

The second misrepresentation, I think, is the author's suggestion that the large majority of economists have been operating for some time on something like a rational choice model of behavior. This is a claim that is more repeated than argued with evidence in books like Free Market Madness: Why Human Nature is at Odds with Economics--and Why it Matters argue that it is time economics move away from the model of homo economicus, but they often fail to offer more than a handful of economists who were entrenched in that, and only that, model. I came away seeing the same possible flaw in Sedlacek (I may be wrong and it may be that most economists during the last 30 or so years have been rational choice theorists, but if so, I'd like some evidence of that. This book certainly didn't give it.)

Overall, though, the point of this book is less to argue particular positions - though the author does that particularly in the second section - but to argue the importance of the humanities for economics. Economics has long tried to keep value-neutral, even though many of its concepts are not value neutral. Economics has long tried to be a strict science even though concepts on which it depends, like 'utility,' are either wholly subjective or very difficult to define non-tautologically. Sedlacek's iconoclastic book is as wide-ranging as it is stimulating. A very interesting read!
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Showing 1-2 of 2 posts in this discussion
Initial post: Apr 25, 2011 8:47:16 AM PDT
I really like your review, even-handed, informative, and quite well written. Have you decided what you're going to do when you get to the dissertation stage of you C&I program? I taught research methods, statistics, and the sociology of education at Marshall Univeristy in Huntington, WV for 23 years. I served as the research person on a few C&I dissertation committees, and found students who, for the most part, were pretty smart but who were hard pressed to find a dissertation topic that really interested them and that would be of value if read by others.

Bob Bickel

Posted on Dec 2, 2012 8:42:34 PM PST
Austen lover says:
As for your comment about not many economists believing in homo economicus, I'm afraid I have to disagree. I think if you look at Greenspan's reaction to the debt crisis, (actually a lot of Friedmanites' reaction,) I think you see people who are annoyed and disturbed that people dare to behave differently than their models.
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