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An Economics with Humans in It? Beyond Behavioralism

Updated: Dec 21, 2023


The Review continues a sequel started herein with the Review of McCloskey's other two recent books Leave Me Alone and I'll Make You Rich and Bettering Humanomics.

All three books build from the earlier McCloskey 3-book 1700+ page trilogy with all six books leading to the claim that an economics that sees what real Humans are about is needed. It is time to build a Humanomics about Humans not just an Economics about Econs.

And, as even McCloskey admits to learning in exploring the economic history, Humanomics is really needed to answer the main question McCloskey has been addressing: What drove the dramatic rise in income per capita for Travelers on the Spaceship Earth starting around 1800? The average has increased from around $3/capita/day to $33/capita/day, even more in some areas, 3000 to 10000 percent, and, check your situation: Divide your income by 365 days, and, well, congratulations. Your great-great-great grandparents would be in awe. So, what drove the Great Enrichment, as McCloskey characterizes it?

Well, McCloskey lays claim to the notion it was the new idea about giving liberty and freedom to ordinary people to have a go at making wealth. It was about an evolving ethic that included giving dignity and equality of opportunity to ordinary people, who became the Bourgeois. It was the ethic content of the Bourgeois Deal that drove the Great Enrichment. And, bottom line, it is all explained by Humanomics, an economics about the Human with their ethics within. This book continues the story about how to make said Humanomics even better, to ensure the Great Enrichment continues.

As is common in McCloskey books, key ideas are put forth in titles of the parts and chapters.

Part I: Economics is in Scientific Trouble. Chapters are: an antique, unethical, and badly measured behaviorism doesn’t yield good economic science or good politics; economics needs to get serious about measuring the economy; the number of unmeasured “imperfections” is embarrassingly long; historical economics can measure them, showing them to be small; and the worst of orthodox positivism lacks ethics and measurement

Main MetaEcon reaction: Yes, Humans are not like rats in a box pushing food levers, maximizing self-interest only like Econs. Also, Humans are jointly consumers & citizens, so rats maximizing self-interest only in politics, or as government bureaucrats, well, that does not work either: The Public Choice School of Economics gets it wrong. And, of 108 items on the imperfections list, a couple really catch a MetaEcon eye, like the notion that self-interest is not the only thing at play in a Human: As DIT makes clear, the shared other-interest, the ethic, is key in tempering it. And, on the tragedy of the commons, as DIT makes clear, it is quite easily avoided with adequate attention to the shared other-interest in sustaining the Spaceship system: Carbon caps, anyone? Also, positivism in science is fundamentally flawed because it makes the unfounded claim that everything can be relegated to an understanding under the heading of science, not seeing the key role of the humanities. As a MetaEcon argues, it is about an understanding of the jointness in science & ethics, joint STEM & Humanities. So, in a Humanomics, it is about jointly arising incentives (behavioralism) & ethics, the Humanities bringing in the ethic taking the frame beyond behavioralism. And, on measurement, yes: oomph matters, not just statistical significance, and, the humanities can help find the oomph, also being empirical with the word at play, paying attention to conversation is empirical, like McCloskey has found in exploring the role of the ethic.

Part II: Neoinstitutionalism Shares in the Troubles. Chapters are: even the best of neoinstitutionalism lacks measurement; and “culture,” or mistaken history, will not repair it; that is, neoinstitutionalism, like the rest of behavioral positivism, fails as history and as economics; as it fails in logic and in philosophy; and, neoinstitutionalism, in short, is not a scientific success.

Main MetaEcon reaction: The Douglas North et al styled neoninstitutionalism is flawed for the same reason as is the notion of the self-interest only Econ of (Micro)Economics. Said neoinstitutionalism which also uses a version of SIT does not rest on empirical grounds, lacking in measurement about the real nature of an Institution N. In contrast, true Neoinsitutionalism based in an integration of old Instiutional Economics and modern Behavioral Economics , is based in real observation looking into the content of Institutions N.

True Neoninstitutionalism sees the key role of the shared other-interest evolved and held in an Institution N, while neoinstitutionalism relegates N to mere rules. Said rules arise only from the incentives of the Econ, building only rules that serve self-interest, period. Flawed, indeed. And, yes, neoinstitutionalism has not been, and never will be, a scientific success in that it fails to see that an Institution N arises out of the interplay of the self & other-interest, the Profane F & Sacred S . True Neoinstutionalism makes clear that an Institution N holds the ethic at play, and is built to minimize transaction costs, the latter clearly in the shared other-interest.

True Neoinstitutionalism also sees that culture reflects the Institution N coming out of good Ideas D that work for people who search for sufficient reason to give content to and continue supporting the culture. Also, then, and change in culture must come from each person pondering new Ideas D about the best Institution N to embed in that new and improved culture. It is not about repairing the economic system by repairing the culture, but rather, it is about new Ideas D that the other can go along with: Again, the ethic is key.

Part III: Humanomics Can Save the Science.   Chapters are: but it’s been hard for positivists to understand humanomics; yet we can get a humanomics; and, although we can’t say private max U;  we can save an ethical humanomics. 

Main MetaEcon reaction: Absolutely. Positivists see only science, facts resting on hard data, generally deemed hard if statistically significant, with no room for Humans making judgements about sufficient reason as sought in the humanities. In contrast, Humanomics is being built on a foundation of science & humanities, with Human judgment at play. So, yes, makes sense. And, it is not about max Profit and the max U it can buy, at least not entirely. As DIT makes clear, such self-interest driven effort is primal, and in some sense is necessary, but it is not sufficient. As Adam Smith claimed, it was essential to temper the arrogance of self-love represented in self-interest only with the sentiments, the latter reflecting what the other can go along with. An ethical humanomics sees the need to strike good balance in the joint arrogance & sentiment, self & other-interest composing the own-interest. Pursuing the own-interest was about pursuing good balance in the jointly Profane F & Sacred S, the latter reflecting the Institution N evolved by people on the way to finding sufficient reason for the economic action being considered. An ethical humanomics can be saved.

And, a key frame of reference regarding saving an ethical humanomics: "The locus of ethics is not the society but the person. 'Social justice,' as the Austrians say all the time, to the puzzlement of their colleagues left and right, is meaningless (p. 175)." Absolutely. It is not puzzling to a MetaEcon, in that DIT makes clear the ethic is internalized within the own-interest, as it is carried within the shared other-interest. It is not about You or the We in general: Rather it is about Me & We, with the We being my We, reflecting the common ground on which We walk-together, what the other can go along with going every direction. There is no such thing as social justice "out there" somewhere, but rather the justice internalized within each person, on which we act jointly, as in self & other(shared) -interest, the latter reflecting justice along with the other virtues beyond prudence.

For the details, like 30-pages or so, sorry, but lots of content in this book, click here.

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