Ecce Homo Oeconomicus: DOA

By John D. Mueller,  Director, Program on Economics and Ethics,  Ethics and  Public  Policy Center

Starting in 1972,
economics departments at major American universities abolished the
requirement that students learn the history of economics before being
granted a degree. This accounts for much of the confusion in public
discussion of economic policy. Today’s neoclassical economic theory
rightly develops three elements that can be traced to Aristotle and
Augustine (the theories of utility, production and exchange). But it
neglects the most fundamental element (final distribution), and poses
models of economic behavior that fail to capture the realities of
personal, family, and political life. …

Personal economy. Modern
economic theory inaccurately posits individuals who always act
selfishly (even when being “altruistic”) and narrows all economic
choice to the means of self-gratification. …

Family economy. Modern
economic theory begins by inaccurately assuming hypothetical sexless
adult individuals who interact solely by means of explicit or implicit
exchanges. …

Political economy.
Aristotle’s exploration of the two forms of justice, “justice in
exchange” and “distributive justice,” remains the indispensable
starting point for addressing basic questions of economic fairness. …
“From each according to his ability, to each according to his needs” is
a fairly accurate description of the family—but not the government, to
which Karl Marx mistakenly applied it.

Divine economy. While good
government is a blessing for saints and sinners alike, Augustine noted,
it must not be mistaken for the City of God, whose goal lies beyond
this life. Yet from Augustine’s “divine trace of equity stamped on the
business transactions of men” to Adam Smith’s famous “invisible hand”
of Stoic pantheism, economics has always been essentially a theory of
providence, divine as well as human.  …

A Light Unto the Dismals. To be fair, even the Nobel awarders began to glimpse some of this 15 years ago.

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