The Plausible Impiety of the Modern Economist

by Forgot About Keynes

In celebration of its eightieth birthday, Penguin has published a series of short works; one of these Little Black Classics is a collection of two pieces by the Victorian art critic John Ruskin.

The common thread between “Traffic,” a lecture delivered by Ruskin to businessmen at the Wool Exchange in Bradford in 1864 and “The Roots of Honour,” the first chapter of “Unto this Last,” is a defence of cultural and civic life against what he saw as the rise of business as a religion.

In “The Roots of Honour,” the political economy to which Ruskin refers is what we now know as the field of economics, which is professed by its practitioners to be value-free.

“The social affections,” says the economist, “are accidental and disturbing elements in human nature; but avarice and the desire of progress are constant elements. (Ruskin, 2015: 33)

This would be an appropriate standpoint, he argues, if it were not for the fact that “the social affections” are anything but dispensable. It makes as much sense to base economics on the assumption that everyone is above all self-interested as it does to base a science of gymnastics on the premise that people do not have skeletons. We could roll such people into balls or stretch them into canvasses – but there’s not really much use in thinking about people in this way if we’re going to apply this branch of thought to actual people that have genuine skeletons.

What good is there in a science, he asks, which is unable to solve its most fundamental problems? Why for instance, we might ask, in the aftermath of the 2007-8 financial crisis, were policymakers preoccupied with inflation rather than unemployment?

This isn’t really the point for Ruskin, however, because he did not believe that we could have definitive answers to such problems – because for him, it was futile to frame human activity and endeavour in terms of efficiency instead of justice.

No man ever knew, or can know, what will be the ultimate result to himself, or to others, of any given line of conduct. But every man may know, and most of us do know, what is a just and unjust act. (Ibid.: 37)

This is because labourers aren’t machines running on steam, magnetism or gravitation—or the apparent economic analogue, self-interest—people are so much more complex than that. We don’t maximise productivity by appealing to people’s greed, he argues, but what truly drives them – their “affections.”

One of the greatest errors of economists, he argues, is their refusal to believe that ordinary people could work for any incentive other than what their labour is worth on the market.

We do not sell our prime-ministership by Dutch auction; nor, on the decease of a bishop, whatever may be the general advantages of simony, do we (yet) offer his diocese to the clergyman who will take the episcopacy at the lowest contract. (Ibid.: 44)

Economists accept that certain professions should be set outside the remit of the market but not all – and yet, argues Ruskin, this isn’t good enough. We shouldn’t necessarily afford our democratic leaders or our physicians or our spiritual leaders a greater level of dignity than any other profession.

The natural and right system respecting all labour is, that it should be paid at a fixed rate, but the good workman employed, and the bad workman unemployed. The false, unnatural, and destructive system is when the bad workman is allowed to offer his work at half-price, and either take the place of the good, or force him by his competition to work for an inadequate sum. (Ibid.: 45)

In other words, it is more important to pay workers fairly than it is to pay them as little as legally possible. This might lead to a lower capital share of GDP but then so be it.

Ruskin argues that people have always respected soldiers more than merchants because their job, ultimately, is to put their life on the line for their country – this is honourable. The merchant, on the other hand, is expected to act selfishly – this isn’t honourable.

The merchant’s first object in all his dealings must be (the public believe) to get as much for himself, and leave as little to his neighbour (or customer) as possible. (Ibid.: 50)

The work of soldiers, physicians and lawyers is honourable because they are judged according to their own professional standards. Soldiers die in the defence of their families, neighbours and compatriots; physicians work to keep people healthy; lawyers serve justice. Ultimately, all honourable work is judged according to a normative standard. We wouldn’t turn a blind eye to corruption in healthcare or justice – so too should it be in commerce.

What good then, is there to be found in the essence of exchange?

It is no more his function to get profit for himself out of that provision than it is a clergyman’s function to get his stipend. The stipend is a due and necessary adjunct, but not the object, of his life, if he be a true clergyman, any more than his fee (or honorarium) is the object of life to a true physician. Neither is his fee the object of life to a true merchant.

All three, if true men, have a work to be done irrespective of fee—to be done even at any cost, or for quite the contrary of fee; the pastor’s function being to teach, the physician’s to heal, and the merchant’s, as I have said, to provide. (Ibid.: 52-53)

The honour in business is to provide; not for the sake of making money out of any given activity but for the purpose of making goods and services available to people, irrespective of earnings.

The root of honour is to be found outside of money, because we all have responsibilities to each other … and the greatest expression of such responsibility is to treat those in one’s authority as one’s own flesh and blood.

as the captain of a ship is bound to be the last man to leave his ship in case of wreck, and to share his last crust with the sailors in case of famine, so the manufacturer, in any commercial crisis or distress, is bound to take the suffering of it with his men, and even to take more of it for himself than he allows his men to feel; as a father would in a famine, shipwreck, or battle, sacrifice himself for his son. (Ibid.: 55)

The religion of Ruskin’s age, he argued in “Traffic,” was economic growth, but what is the point of growing the economy if this growth is not shared by everyone? What is the point of the economy marching forward if it leaves masses behind?

Getting on – but where to? Gathering together – but how much? Do you mean to gather always – never to spend? … it is because of this (among many other such errors) that I have fearlessly declared your so-called science of Political Economy to be no science; because, namely, it has omitted the study of exactly the most important branch of the business — the study of spending.

For spend you must, and as much as you make, ultimately. You gather corn: – will you bury England under a heap of grain; or will you, when you have gathered, finally eat? You gather gold: – will you make your house-roofs of it, or pave your streets with it? (Ibid.: 24)

The trouble with the miserly outlook of economists is that in professing objectivity, they overlook plain facts. What is the point of a reduction in the rate of poverty if such widespread poverty and destitution as that to which we have become accustomed (and economists and conservatives like to tell us is inevitable) is, in historical perspective in fact, not normal and essentially systemic?

For, observe, while to one family this deity is indeed the Goddess of Getting on, to a thousand families she is the Goddess of not Getting on. ‘Nay,’ you say, ‘they have all their chance.’ Yes, so has every one in a lottery, but there must always be the same number of blanks. (Ibid.: 26)

Ruskin reminds us that regardless of our start in life, which it is true we cannot change, the refrain “life is unfair” (usually followed by an implicit or explicit suggestion to “deal with it”) rings hollow. To economists, there is no reason to necessarily favour redistribution from the wealthy to the rest because the market is assumed quite capable of decided who should be wealthy and who shouldn’t. This is because economics implicitly assumes a meritocracy.

If people are willing to work hard enough, they too can become rich and simply being rich, we are told, doesn’t preclude others becoming rich. “It’s not a zero sum game.” Well, that’s one way of looking at things.

I beg you to observe that there is a wide difference between being captains or governors of work, and taking the profits of it. It does not follow, because you are general of an army, that you are to take all the treasure, or land, it wins (if it fight for treasure or land); neither, because you are king of a nation, that you are to consume all the profits of the nation’s work.

Real kings, on the contrary, are known invariably by their doing quite the reverse of this … There is no test of real kinghood so infallible as that. Does the crowned creature live simply, bravely, unostentatiously? probably he is a King. Does he cover his body with jewels, and his table with delicates? in all probability he is not a King. (Ibid.: 27-28)

Economics has developed a vast literature espousing the notions that greed is good, that selfishness is actually socially beneficial, that having more wealth than several generations of one’s family could possibly have use for is neither just nor unjust nor anyone else’s concern. But these are specious notions.

It may, on the face of it, seem wise to believe that pursuing one’s self interest would also benefit wider society – but then consider what came to light in England this past week. Undercover reporters filmed two former defence secretaries, Jack Straw MP and Sir Malcolm Rifkind MP, offering their parliamentary influence at a price.

Straw allegedly boasted to undercover journalists that he had operated “under the radar” to use his influence and change EU rules on behalf of a firm that paid him £60,000 a year.

There is no other way to describe this than as blatant corruption and if anything, the rates offered by the two compound the extent to which they have cheapened democracy. To what extent can it be said that the people of Britain or Europe benefit from the sale of such political influence? If anything, it is obvious that we all lose out when such transactions are made.

Greed isn’t universally good. Selfishness isn’t necessarily beneficial to society. Wealth isn’t purely a private concern. I’ll be exploring these ideas further in an upcoming post on the ethics of markets, looking in particular at the arguments of Michael Sandel. As it happens, he summed up the main arguments of his bestseller What Money Can’t Buy in a short video for the Guardian last month.