This review appears in the Spring 2011 edition of the Intercollegiate Review. See the issue’s Table of Contents here.
Redeeming Economics: Rediscovering the Missing Element by John D. Mueller (Wilmington, DE: ISI Books, 2010)
Redeeming Economics is a substantial book in more than one respect. Some 450 pages long, the study covers topics as diverse as currency regimes, the nature of family life, and the metaphysical foundations of social knowledge—all woven into an underlying narrative of the problems with and solutions to contemporary economic thought.
Mueller’s project is undoubtedly ambitious, and given the narrow, specialized research produced by most academic economists, it is refreshing to encounter this capacious engagement with the big questions of political economy. On the other hand, the broad scope of the work leaves less room for detailed arguments, and many of Mueller’s claims are unlikely to convince those who specialize in the many academic fields and subfields he traverses. Perhaps the most serious criticism of the work is that it would have to be many thousands of pages longer to defend adequately all its bold claims.
Nonetheless, the book brings a number of unique insights to the table and should serve as a catalyst for a reexamination of deep issues of ethics, law, and economic policy that remain neglected but vital. Coming at a time when those in charge of managing the world economy are reexamining many traditional assumptions, Redeeming Economics is instructive in both its insights and its limits.
The main strengths of the book are twofold. First, Mueller shows that modern economics marginalizes questions about the nature and origin of our “loves and hates,” and is thus inattentive to the most fundamental sources of human motivation. Economic theorists tend to respond to this criticism in two ways. Some throw up their hands, reference the so-called fact-value distinction, and assert that, as a science, economics cannot speak about ends, only about means. Other economists accept ends as a valid object of investigation, but attempt to reduce ends to “selfish” principles of wealth maximization, which are assumed to motivate everyone deep down. Mueller convincingly argues that motivations can be substantively diverse and that they characteristically regard other persons. Indeed, the love and hate we harbor toward others emerges as the most basic font of human action, with significant consequences for economics.
Mueller illustrates that loves and hates have systematic features that are open to reflection and understanding, and yet are not reducible to a purely “economic” logic of the maximization of wealth, power, or pleasure. Granted, this line of argument is not entirely original. Many critics have called attention to ambiguities regarding the proper interpretation of “utility functions” in economics. Amartya Sen, for one, famously argued that it is a profound mistake to think that preferences are (or should be) fundamentally economic, egoistic, and unchanging. Rather, Sen suggested that the narrow view of economic egoism that pervades contemporary social science is an unfortunate by-product of simplified assumptions that proved useful shortcuts for other aspects of economic theory. In response, he called for a richer understanding of the variety of motivations.
Mueller develops his own analytic framework for thinking about the unique role that love plays in guiding our decisions about resource allotment between ourselves and others—a framework that is not so much unorthodox as idiosyncratic. Rather than talk simply about “preferences,” which can include our love of others alongside more self-regarding concerns (as Sen does), Mueller wants to distinguish how we rank the importance of persons (what he calls issues of “final distribution”) from our judgments about how to value the scarce means we use to fulfill ourselves and others (what he describes as Augustine’s understanding of “utility”). Mueller formalizes this with the claim that an individual will divide his wealth with those he loves in the proportion that he loves them: “If there are only two of us, and I love you equally with myself, then I will give you the use of half of what I own: it’s that simple.” Then, Mueller intends the question of “utility” to refer to an individual’s reasoned choice of how to use this allotted wealth to procure goods that best satisfy “the wants of the persons who are the end or purpose of [one’s] action.”
It is not clear what this analytic framework adds to traditional preference theory as articulated by Sen. Moreover, it is far from obvious that personal wealth is or should be disowned in strict proportion to how much we love someone. Nor is it clear that one should always seek to satisfy the wants of loved ones, since their particular desires might well be vicious. Mueller clearly thinks his bifurcated account of preference—preferences “for” persons and preferences for things as means to satisfy persons—is distinctive and important, while most economists would simply speak of a unified set of preferences, including preferences for satisfying particular persons. This is not the only area in which Mueller’s final position does not appear that much different from the neoclassical economists he criticizes. However, Mueller certainly enriches our understanding of the relationship between love and economics through his thoughtful engagement with these notoriously complex issues.
The second strength of the book is that it provides an accessible exploration of important economic phenomena neglected by mainstream perspectives. Mueller reflects at length and in depth on the economics of family life. He provides an extraordinarily insightful examination of the value of parental “investments” in children, along with a consideration of why mothers generally contribute a distinctive proportion of this value. This helps Mueller rebut the so-called stork theory of economics, implicitly endorsed by many economists who presume that human persons come into the world readily equipped with all the skills needed to live a productive life. Mueller further examines the dynamics and incentives of “human capital” formation, as well as the social costs of abortion and larger demographic trends.
Perhaps the least persuasive part of the book is the historical narrative laid out in its first half, a story of the decline (from Adam Smith) and redemption of economics (rediscovering Aristotle, Augustine, and Aquinas). Historians of economic thought will not be satisfied with Mueller’s account, as Mueller paints with a broad brush that is often inadequate to the careful work of intellectual history. Entire schools of thought are dismissed with a handful of proof texts. Adam Smith, the villain of the narrative, is supposed to have unmoored economics from its scholastic perfections by holding that “no one ever shares his wealth with anyone else.” This accusation cannot be sustained if one reads Volume 2 of Smith’s System of Moral Philosophy, or Book 1, Chapter 2, or Book 4, Chapter 2, of The Wealth of Nations—or, indeed, much of the secondary literature on Smith. Mueller’s account of the “Public Choice” approach to political economy is likewise inadequate and unclear. He oddly associates Public Choice with a stylized and outdated voting model developed by Anthony Downes (which, as critics have rightly noted, assumes an implausible distribution of voter preferences). At the same time, Mueller’s treatment ignores the important problem of rent-seeking (politicians crafting laws to benefit the special-interest groups that help elect them), which stands at the heart of the Public Choice approach as represented by its founders, James Buchanan and Gordon Tullock.
However, these examples stand in stark contrast to Mueller’s engagement with the Nobel laureate Gary Becker. Despite the fact that Becker’s “economic approach to human behavior” represents the antithesis of everything Mueller believes about the nature of preferences, Mueller’s treatment of Becker is nuanced, charitable, and erudite. One wishes similar care had been extended to other interlocutors—but this would undoubtedly have resulted in a much longer and likely different historical narrative.
Perhaps the most exciting parts of the book come in the final chapters with Mueller’s more detailed policy proposals. After a thoughtful reevaluation of national income accounting (particularly with regard to disambiguating labor and property income), Mueller proposes an alternative tax regime that would treat all income alike, collecting revenue more efficiently while ending the IRS’s direct relationship with most citizens. A consideration of demographic trends leads Mueller to conclude that Americans will inevitably have to choose between decreasing the abortion rate, increasing mass immigration, or seriously cutting social benefits. Finally, Mueller offers a brief history of monetary instruments, currency regimes, and inflation that leads him to cautiously endorse a return to the gold standard.
These are, of course, all issues that economists have been considering for some time. Mueller sees his own policy intuitions as deriving from the framework of “neoscholastic” economics outlined earlier in the work, and he supports his positions with empirical analysis. However, this analysis is generally not determinative and the arguments would be strengthened by engaging more with the existing literature on these topics. Nonetheless, Mueller does make a number of concrete and interesting proposals which deserve to be taken seriously by mainstream economists. Moreover, he persuasively connects these proposals to deeper insights into the nature of family life and human development, and does so in ways that are profoundly instructive for economic analysis at large.
Ultimately, Redeeming Economics tries to establish more in 450 pages than is perhaps possible. However, Mueller himself states plainly that he intends this book as but the first step in a larger renaissance of economic thought, unburdened by the narrow and inhumane perspectives that have informed so much of contemporary economic thought. Mueller helpfully calls our attention to the ultimate economic importance of our love for other persons, and his insightful policy analysis shows how such loves do make a difference. Moreover, his focus on the importance of the family for economic questions provides a helpful corrective to modern economics’ preoccupation with the “individual” as the basic unit of analysis. One hopes others will answer Mueller’s call to fulfill the promise of economic inquiry by reconsidering the nature of the human person and, in so doing, provide new resources for the realization of the common good.