Every basic biology text I remember had somewhere near the middle a set of transparencies displaying the systems of the human body. As you flipped the pages of the skeletal, circulatory, endocrinal, muscular and, most interestingly, the reproductive systems, the living potential of the human outline seemed to thicken, like a candle being dipped. But each page could also be viewed on its own, and the full human being would be reduced to a network of veins, a structure of bones, or brightly coloured globules of flesh and organs. These slices of life weren’t inhuman—but they were certainly less than human.
Markets can be functionally dissected in the same way. The dominant slice—that is, the slice commonly believed to be the best predictor of the way markets will behave—is the rational, mathematical model known as “neoclassical” economics. In his May 2005 Harper’s article, “Let There Be Markets,” Gordon Bigelow argues that neoclassical economics, with its emphasis on “utility maximization” (people making “a rational calculation of what will serve them best”), exerts a strangle-hold on the meaning of markets. Almost all economists believe that “markets operate in a scientifically knowable fashion . . . self-regulating mathematical miracles, as delicate ecosystems best left alone.”
The “creation narrative of our society,” Bigelow says, is one of a vast array of individual human beings, bound to each other and to the world itself by means of a universal glue known as “the market.” The market, here, is not a specific organization but an organizing principle. It is not a form of relationship but the grounds for relationship. It’s a beautiful picture, says Bigelow, with one rather major flaw: it’s not real.
Reality shows that human beings are not lonely creatures offering up their talents in exchange for food, fun, and family. Instead, we are social animals whose desires begin and end in the context of relationships. Reality shows that we are not rational calculators, choosing our acquisitions on the basis of careful analysis of what we need. Instead, we make our decisions based on social norms and the experience of others. Finally, since markets are social, reality shows that economic power will concentrate at the centre rather than diffuse outward into a state of natural equilibrium.
Bigelow puts his finger on something of key importance, and he’s not the first one to identify the problems with neoclassical economics. He refers to the “post-autistic economics” movement initiated by graduate economics students at the prestigious Grandes Ecoles in France. These students published an open letter declaring their impatience with economic models that had little relation to real world dynamics. The post-autistic economics review that eventually emerged now has 5500 subscribers, which isn’t bad for a newsletter devoted to the so-called dismal science.
Anne Mayhew’s article on the movement’s international website, which I ran across a few years ago, suggests that economists go even further back to early 20th-century America to find alternative viewpoints on free-trade and the role of regulation in the market. The economists of the interwar period, known as “institutionalists,” were not revolutionaries with magnificent, utopian visions. They were reformers who offered pragmatic ways to restrain the more pernicious effects of industrial economies. Some reached even further back to Adam Smith who as Bigelow points out actually took a dim view of greed as a means to human happiness. The invisible hand of self-interest might bring wealth, but it wouldn’t cultivate goodness.
When Bigelow turns to history, however, he isn’t looking for resources. He’s looking for people to blame. And he finds them in the middle-class, mid-19th-century, English evangelicals. For evangelicals, the pessimism of Adam Smith and David Ricardo (who saw capitalism as a catalyst for class conflict) was a repudiation of the hand of Providence. Earthly goods were no substitute for salvation, but they were certainly a signal of blessing. They saw the free market as “a perfectly designed instrument to reward good Christian behaviour and to punish and humiliate the unrepentant.” Helping the poor meant saving their souls, not providing social assistance. Bigelow even blames the evangelical Charles Trevelyan, Assistant Secretary of the Treasury, for the Great Hunger in Ireland. Trevelyan, convinced that the potato famine was the “result of Irish backwardness and self-indulgence,” stopped corn-relief shipments, reasoning that the fear of actually starving to death would develop the Irish economy. However, instead of “stimulating” Irish industry, Trevelyan’s tactic caused the death of one million people.
Bigelow paints evangelicals with a wide brush, and makes it sound as though the evangelical movement belonged to the middle-class and to the well-positioned. To a large extent, this was true, says Herbert Schlossberg. Even the Methodists, devoted to evangelizing the poor of England, were mostly comprised of well-off artisans and merchants. Yet there were influential evangelicals who were deeply concerned with the welfare of the poor. Encouraged by William Wilberforce, Hannah and Martha More gave up a “sparkling social life with the London intellectual elite” to work among the poor inhabitants of rural Cheddar. The two sisters, at times bucking opposition from community “pillars,” lived the rest of their lives “establishing schools, religious services, women’s clubs, and some semblance of economic activity” in the Cheddar region, supported financially by Wilberforce and other members of the “Clapham sect.”
Following the debacle in Ireland, the spiritual economics of the evangelicals went into retreat before re-emerging, desacralized and mechanized by the mathematicians in the late 19th century. Bigelow says the “scientific turn . . . only served to enshrine the faith of their evangelical predecessors.” It did even more than this. It removed economics from the realm of moral argument. The secularization of economics armoured it against the compulsions of compassionate religion and shared humanity. Neoclassical economists chafe at the notion of social provision—the idea that society as a whole might be responsible for our weakest members. They consider it an inefficient element in the model. Mutual care, as Bigelow points out, is just friction in the market machine.
The students at the Grandes Ecoles pled for a return to reality. What does this actually mean? Should economics students really believe that mathematical models are useless as predictors of economic development? Not at all. In fact, viewing the market as a mechanism could be a helpful metaphor. The problem that members of the post-autistic economics movement have with neoclassical economists is that the neoclassicists understand the market, first and foremost, as a machine. Falling into the danger of mental pictures, neoclassicists allow the mechanistic metaphor to devour its subject. If the market is a machine, it is at its most efficient when it operates with a maximum of automation and a minimum of intervention.
As Anne Mayhew points out, the market should be understood, first and foremost, as a human institution and a layered cultural artefact. Markets can, therefore, be sliced, not only mathematically but also morally, politically, legally, and, even, religiously. A mathematical model would have a difficult time accounting for the market value of tithing, for example, since tithing redistributes income to non-profit-making centres and less efficient individuals. At the same time, reducing income gaps between individuals in close proximity increases happiness and decreases class conflict. There is no immediate payoff for those who tithe, but the long-run effect is greater social equilibrium.
Some may complain that this turns markets into “a cultural construct” that social engineers will attempt to manipulate and distort beyond recognition or useful function. However, recognizing the humanity of an institution does not turn it into a lump of wet clay. The market relationships of buying and selling are a natural way for human beings to relate to one another. Exchange is the inevitable side effect of a diversity of talent and resources. That said, like any other human relationships, markets are prone to abuse and inequities. The regulation of markets, therefore, is not itself a necessary evil. Instead, it is a necessary restraint on evil.
At this point, someone will bring up the word “tyranny.” And they are right to do so. When does the regulation of markets become tyrannical? Because both government and the market are institutions, they are somewhat fluid entities and conditioned by the social environment. A secure border the day after 9/11 looked differently from a secure border on the day before. A marketable commodity in one year might be a social hazard the next. The attempt to create bright-line tests to decide when government has become tyrannical or for when our markets have begun to own us must always fail.
All human institutions are prone to “institution creep.” The state tries to take over the market, the church tries to take over the state, the market tries to take over the school. Tyranny occurs whenever a given aspect of human existence, or a given human institution, is controlled by some other aspect or institution. Totalitarianism is simply tyranny writ large. It occurs when all features of private and social life are taken hostage. The reason for this is that all human beings are given to idolatry and try to create their own salvation from whatever materials are ready to hand.
In order to resist an institutional creep of the market, it is necessary to begin thinking about it differently. If the market is only a technology, it will become as ubiquitous as the personal computer. But if it is an institution, the kinship we have with our fellow citizens will demand that we think about markets through the lens of human flourishing and justice.
