THE SOCIAL-LABOUR "TRADE-OFF": SOCIAL DISCIPLINE IN ECONOMIC THINKING

In the car, I listened to a fascinating edition of RN Drive's 'Religion and Ethics Report'. During the report, host, Scott Stevens interviewed well-known Age columnist and economics correspondent, Ross Gittins and subsequently Tim Harcourt, another well-known Australian economist. The topic was the notion of social value and its application to economic theory (and practice). Indeed, the very juxtaposition of economics with religion - or even ethics! - may seem jarring to 'pure' economic theorists. In this regard, Tim Harcourt denominated himself, with self-deprecating humour, the "airport economist" in reference to Milton Friedman's brief sojourn at Sydney Airport. Friedman, answering a reporter how he knew so much about Australia and how long he had been here, replied: "I just got here". I must say, nonetheless, Harcourt did not come across as Milton incarnate! ______ What was so engaging about these interviews? Well, the discussion ranged across Hayek and Friedman, across Adam Smith and John Neville, economic adviser to the Hawke Government. Interspersed, though, were numerous anecdotes in which Gittins and Harcourt fondly recalled their Salvation Army band father and 2nd Cornet position in the S.A. Band and their Jewish Methodist father and quiet Adelaide upbringing respectively. According to Tim Harcourt, his father would say to acquaintances, "I'm the only Jewish Methodist in Adelaide" (a complicated story). I may be wrong, but anecdotal evidence or humour is not something ordinarily associated with economic expertise, patterns or behaviour! ______ And this is precisely what was so fascinating.. In a world of econometric tables and economic rationalism, what economic value could Gittins' position in the S.A. Band, the intricacies of Harcourt's background or John Neville's Christian slant on labour mobility theory even remotely portend for economic discipline and practice and, in the final analysis, economic growth? Ought policy makers and corporations fret about the adventitious facts of personal and family life to homo economicus and the lives their economic "inputs" live? ______ In response, Gittins and Harcourt state, most assuredly, YES. From Gittins' perspective - and I hear echoes of Clive Hamilton on this point - the fundamental nostrum of pure laissez-faire theory will be devastating to actual economic stability. Uncontroversially, I think, Gittins says Australian households are rapidly replunging themselves into a sea of debt and ultimate despair. The externality, to paraphrase Gittins, for governments and socio-economic stability will be enormous. Consumerism dominates ecnonomic discourse and, in turn, the advice proferred to successive Australian governments. Explosive income gains and the consequent income gap (cf Gini Coefficient) has exploded beyond the 20% to secure a top-heavy marginal portion to the top 1%. This is not, according to Gittins, the stuff of social happiness. ______ I find this argument intriguing beyond the usual socio-economic disparities to which the 'society vs economics' debate refers. In fact, Harcourt rightly acknowledges, Adam Smith himself insisted upon the right to a minimum wage and corporations' responsibility to society within the context of a competitive market. Whereas they looked to each for their livelihood and ultimately their bread, the butcher, baker and candle-stick maker intermediately relied upon a socially conscious business class to avert the trade distortion of imperalist monopoly and social dislocation. Workers had a right to fair work conditions and a decent wage. Reminding me simulataneously of Coase's Theorem as well as Keyne's later work on the problem of abundance/affluence, Gittins asserted that the moral dimension is central to the discipline of economics as a social science. "Physics envy" apart, Harcourt subjoined, neither practicing economists nor elected officials and wider policy makers can ignore the economic and moral value of social harmony and mutual responsibility. _______ I would not agree completely Gittins and Harcourt's accounts regarding economists' moral deficiency. For instance, I would disagree with Harcourt's assertion that Hayek operated within a non-moral (I am reluctant to say amoral) economic framework. As Harcourt rightly stated, Hayek was above all a liberal who opposed collectivist solutions to the inefficiencies of human enterprise. I would argue it was precisely this liberalism which impelled Hayek to his 'catallaxy' theory of spontaneous order and the overriding principle of price discovery in efficient markets. One should remember, furthermore, Hayek used his Nobel Lecture (and authored several papers) denouncing rational economists pretensions to scientific accuracy in economic thought. Not to labour the point (no pun on labour mobility lol), I think I have refracted the discussion Gittins and Harcourt continue to lead. ______ 'Economics", to conclude, "in a moral void, no one in their rational as opposed to rationalist mind could honestly (another non-economic adverb) want that"? Could they??