I thought I'd finished with Tim Worstall. But not quite as it turns out, for he left a comment on this blog yesterday which really does blow his whole position apart.
I'd said:
It is impossible to suppose that a man who can argue (as you did in the Guardian, very recently) that "Things in markets are worth what the markets say they are worth" is a true heir of [Adam] Smith
His response? This:
As I've said before, no one thinks that all markets all the time produces the optimal allocation of resources.
The argument is not over whether markets *always* produce either "just and moral" prices, as opposed to simply market prices, or whether they *always* produce an optimal allocation of resources. It's over when and where do they and when and where do they not.
That's fine Tim. I agree. But let's be clear what you have conceded here. What you're saying is:
1) Markets don't necessarily produce the optimal allocation of resources;
2) We don't know when they do, and when they don't;
3) In that case the economics you espouse provides us with no useful information - we're left making our own choices;
4) In that case you either can't sustain your claim that economics is a rational science, or alternatively you can say it is, but the results it produces are of no use to anyone;
5) As a result economic decisions are always subjective;
6) The economic theory you espouse can never be used to justify intervention in the economy because it is clear that it cannot predict optimal outcomes, and we could not tell is those had been achieved in any event.
Put bluntly, this means you're about as far away from objectivity as it is possible to get: you pretend you're objective when you know you're not. That's not just a failure of objectivity and a lapse into subjectivity, it's rank hypocrisy.
And it's rank hypocrisy that you use for a particular purpose, which is always to favour markets when they suit the well off and to oppose regulation when it suits the least well off. This is readily apparent from your argument against the minimum wage recently where you said there was a moral argument for abolition because this interfered with market outcomes: market outcomes you now admit you cannot predict. The only morality on offer therefore was your own, designed in this case to harm the well-being of those on the lowest pay in our society.
At some points over the last couple of weeks I seriously wondered why I bothered to engage with you. Now I know two things: one you definitely do not know what you're arguing, and second that all the arguments you and your ASI colleagues put forward for the supremacy of the market are pure bunkum: they're simply a subjective argument for the endowment of favour on those you choose.
It was worth getting to this point. The argument with you has been won. I'm satisfied with that outcome. So please don't bother me again: it's now abundantly clear it's not worth my time dealing with you or your like.
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I don’t understand. In your points 1 to 3 you seem to be saying that because the state of economic knowledge is not complete, it is worthless. Surely the same could be said of any other field of intellectual inquiry?
Don’t you think that markets ever work, for anything? If so, then surely it is reasonable to try to establish the common criteria according to which we would want activities organised in markets or not. The study of “when and where do they and when and where do they not” (or “Economics”, in short) does not seem an obviously pointless activity.
I don’t think that examining that question precludes answers that are strongly consistent with social justice and moral outcomes.
Eric
I’m saying that markets provide imperfect indicators
In that case to argue we should not intervene in them has no justification
On occasion of course they work best – that’s true for over half our economy, I’m sure
But I can think of no market in the UK where intervention is not needed. Take a simple example. In some parts of Africa you won’t drink coffee made more than two or three miles form your home – because you won’t know what someone has put in it. Of course there should be a market in food. Not disputed. But an unregulated market in food would be a disaster
We need to intervene – we need to do so on the basis of judgement – we should expect outcomes as a result that ‘positive economists’ say are sub optimal – and that’s fine because they can’t prove the point either way
So pragmatically we have markets. But we can’t have economics that declares that they are the only optimal way or organising society – becasue that is just wrong
That was my point – and I stisk with it
Richard.
Yes, well I think I agree with that, given a broad enough definition of intervention.
But I think my point is that your post is attacking economics, rather than the conclusions Worstall draws from economics. Economics is the use of evidence and logic to draw conclusions about markets, rather than the conclusions themselves.
You say that economics is entirely subjective, and non-rational. So, when you say about half the economy should be organised as markets and Worstall says 90% (or whatever) there’s no more way to decide between those positions than if I say chocolate is better than ice cream and you claim the opposite? Surely there is. You have looked at the facts, and applied logic and you have reached a conclusion. You are doing economics (congratulations!). When Worstall does it he reaches a different conclusion, but that’s not a good reason to dismiss the value of considering the question in a structured manner, testing theories against empirical evidence.
Actually, I personally would not use the word “science” to describe economics, because it lacks the repeatability of the scientific experimental method. But describing the discipline (or whatever you want to call it) as non-rational and subjective seems an over-reaction to the rather fundamentalist conclusions that Worstall and others draw.
Your argument dismisses the work of some very good people over the years: Gunnar Myrdal, for example, Joan Robinson or Amartya Sen.
Eric
You’re right of course
Economics has a value: just not positive economics of this sort
And of course it’s rational, but it’s also subjective
I shouldn’t fall into the trap of over – reacting to an extreme view
Richard
Tim claims he has been banned from this blog, but has a response here:
http://timworstall.com/2009/01/06/well-that-tells-me-then-2/
He’s not banned
If he had something sensible to say and stopped encouraging abuse he’d be allowed on
His choice
Richard
Goodness me. Someone on the Internet gracefully backs down a bit instead of saying I’m completely wrong about everything and calling me evil. 😯
Are you sure you’re a blogger, Richard? 🙂
Eric
The right wing have turned the net into an arena for abuse
I’m pretty robust – I admit – but debate means listening, and sometimes even conceding you’ve made a mistake
I haven’t got a problem with that! I know I’m fallible
It’s my genuine regret that others won’t debate in the same way
Richard
Richard, thats a lot of assumptions from a very simple statement. The first one simply restates the point – but the rest are bunkum
Alastair
Henry Ford got away with saying history was bunk, but added nothing to the debate by doing so
Nor are you adding anything either
The days of asserting the great god of the market works are over. Haven’t you noticed?
Richard