Saturday, November 12, 2011

"He's Mixin' Up The Truth With Something Funny, I Start To See"

I consider the following propositions to be well-established:
  1. Adam Smith did not use the phrase "The invisible hand" to refer to the optimality properties of a static general equilibrium supposedly brought about by the workings of competitive markets.
  2. Thomas Carlyle did not coin the phrase "The dismal science" to refer to Thomas Malthus's anti-utopian theory of population. According to that theory, human population responds endogenously to increased prosperity, thereby making impossible any rapidly established, long-lasting general rise in per capita income beyond the custom and habits of mankind.
  3. John Maynard Keynes, in The General Theory of Employment, Interest, and Money, did not explain widespread and persistent unemployment by sticky, rigid, or slowly adjusting money wages and prices - a pre-Keynesian theory that, in fact, he opposed.
Many economists, I claim, teach the opposite of these propositions. Here, for example, is Tyler Cowen falsely characterizing Keynes' theory (at least, if "Keynesian" is supposed to refer to that theory):
"You can even give this all a Keynesian take... Since 1997-2000, there is downward pressure on lots of wages, but morale matters and labor market incumbents retain a favored position. Though some wages fall, employers resist that downward pressure, and pass along a lot of the burden of adjustment to new job seekers. Even if that original downward pressure on wages is smallish, new job seekers have to make big adjustments in their career plans, majors, ambitions, etc. to get through the door at all. They didn't." -- Tyler Cowen
It seems to be a quixotic and never-ending task to oppose demonstrably false statements about economics, often made by economists. Gavin Kennedy illustrates such a quest in defense of my first proposition.

16 comments:

Turner said...

I believe the phrase 'the dismal science' was coined because economists were arguing against slavery.

Anonymous said...

Wait, wait, wait! I know what you're talking about in points 1 and 3. But not 2. I take it that you allow that Carlyle coined the term "dismal science", and that the disagreement is whether he was making reference to to the prevailing Malthusianism of political economy at the time. If this is not so, what was he referring to?
-Will

Matías Vernengo said...

Exactly. Thank you.

Matías Vernengo said...

Turner is correct Will. The term appears in the infamous article 'An Occasional discourse on the Negro Question.' For more see the following paper: http://ideas.repec.org/p/mlb/wpaper/715.html

Gavin Kennedy said...

More important Carlyle was entertaining fairly disgusting ideas about what he called, in one edition of his infamous pamphlet 'On the Negro Question', viz: 'On the Nigger Question'.

It had nothing to do with so-called 'Malthusianism, a wholly invented attribution many years later.

Robert Vienneau said...

Thanks for the comments. Of the three topics I chose, I know least about Carlyle. I found the paper recommended by Matias useful.

Reese2101 said...

The 3. point I believe is an extremely important but overlooked point. I confronted one of my new-Keynesian teachers a few months back asking him whether it could really be true that Keynes could be summed up by this statement only. He reaffirmed the normal perception. Then I started reading the General Theory and I was quite surprised when I came to chapter 19 of the GT.
Keynes in no way stated that prices or wages are fixed by default. Actually, price flexibility could be damaging in many respect when the economy is already positioned in a recessionary state.
Not many economists (to my knowledge at least) have formalized the ideas asserted in chapter 19. But I did stumble upon an articly by Tobin(1975) in which, I think, he eloquently formalizes at least some aspects of Keynes' worry about price flexibility. He tries to formalize the destabilizing effect of price flexibility and shows using a simple model (which is actually quite neoclassical in form) that a recessionary economy can end up in a state in which the recession turns worse with rising unemployment and falling output as a result of increasing price flexibility.
But I haven't really heard of any other formalizations of the subject.
But, still, a very interesting point.

Magpie said...

Although Carlyle was clearly racist, my understanding is that the debate was not as straightforward as it appears.

The gist of the situation, as I understand it, is that the British and Foreign Anti-Slavery Society (BFASS), convened at Exeter Hall, included or was supported by individuals like J.S. Mills and Herbert Spencer, all of whom rightfully deplored slavery all over the world, but considered that the situation of the working class in the British Isles (including Ireland, still in the midst of the Great Irish Potato Famine) was natural and unavoidable (hence, the "dismal science" phrase).

To put Carlyle in perspective, I think we should remember Nassau William Senior's words, referring to the Irish Potato Famine: the famine "would not kill more than one million people, and that would scarcely be enough to do any good."

Rightly or wrongly, Carlyle seemed to consider that slavery or serfdom, with a guaranteed mutual dependence relation between master and slave/serf, was preferable to the capitalist/worker relation, where unemployment was always a risk.

In other words, it seems Carlyle was trying to highlight what he perceived as hypocrisy from the BFASS and those economists. At the time, it was published a cartoon (entitled "Telescopic philanthropy") representing the general idea. You might find it by Googling "telescopic philantropy".

Eventually, Mill mollified his position on that and other related issues, as women's rights.

Spencer went on to establish Social Darwinism and to coin the "survival of the fittest" phrase.

The History of Economic Thought website has a good overview:
http://homepage.newschool.edu/~het/

Search for Thomas Carlyle and then the Negro Question Debate.

Cheers.

Anonymous said...

Thanks for the info, everyone. I was unable to get through to the paper Matias recommended, but I read the summary and the original speech here: http://homepage.newschool.edu/~het/texts/carlyle/negroquest.htm.

Interestingly, the context leading into Carlyle's use of the famous "dismal science" epithet is a denunciation of supply and demand theory. Given the "problem" of former slaves resting idle unless they got higher wages than the sugar barons wanted to pay, political economists apparently wanted to encourage immigration to the West Indies until wages were pushed down to a level consistent with profits. Carlyle instead says that the former slaves should simply be forced to work. How this will help the Irish (whose lot he abhors) he does not say. The piece is highly illogical.

Mill's response is surprisingly radical, given his stodgy reputation.

-Will

Magpie said...

As it appears Carlyle's writings are not clearly understandable, perhaps it would be useful to consider his own words.

I will quote him extensively, so as to avoid selective quoting, and I apologize if this offends and makes this text too long (Carlyle's text can be found here: http://en.wikisource.org/wiki/Occasional_Discourse_on_the_Negro_Question):

This is the paragraph where the "dismal science" phrase appears (my emphasis in all quotes):

"Truly, my philanthropic friends, Exeter Hall Philanthropy is wonderful; and THE SOCIAL SCIENCE-NOT A 'GAY SCIENCE,' BUT A RUEFUL-WHICH FINDS THE SECRET OF THIS UNIVERSE IN 'SUPPLY-AND-DEMAND,' AND REDUCES THE DUTY OF HUMAN GOVERNORS TO THAT OF LETTING MEN ALONE, IS ALSO WONDERFUL. NOT A 'GAY SCIENCE,' I should say, like some we have heard of; no, a dreary, desolate, and indeed quite abject and distressing one; what we might call, by way of eminence, THE DISMAL SCIENCE. These two, Exeter Hall Philanthropy and THE DISMAL SCIENCE, led by any sacred cause of Black Emancipation, or the like, to fall in love and make a wedding of it,-will give birth to progenies and prodigies; dark extensive moon-calves, unnameable abortions, wide-coiled monstrosities, such as the world has not seen hitherto!"

What did this science have to say about how to resolve the situation in the West Indies, where the black population was demanding higher wages from white plantation owners?

"Science, however, has a remedy still. SINCE THE DEMAND IS SO PRESSING, AND THE SUPPLY SO INADEQUATE (EQUAL IN FACT TO NOTHING IN SOME PLACES, AS APPEARS), INCREASE THE SUPPLY; BRING MORE BLACKS INTO THE LABOUR-MARKET, THEN WILL THE RATE FALL, SAYS SCIENCE. Not the least surprising part of our West Indian policy is this recipe of 'immigration;' of keeping down the labour-market in those islands by importing new Africans to labour and live there. If the Africans that are already there could be made to lay down their pumpkins and labour for their living, there are already Africans enough. If the new Africans, after labouring a little, take to pumpkins like the others, what remedy is there? To bring in new and ever new Africans, say you, till pumpkins themselves grow dear; till the country is crowded with Africans; and black men there, like white men here, are forced by hunger to labour for their living? That will be a consummation. TO HAVE 'EMANCIPATED' THE WEST INDIES INTO A BLACK IRELAND; 'FREE' INDEED, BUT AN IRELAND, AND BLACK! The world may yet see prodigies; and reality be stranger than a nightmare dream."

After introducing the "dismal science" phrase, Carlyle additionally assimilates here the situation in the West Indies to that in Ireland (although he assimilates both cases here, he mentions Ireland abundantly in the text).

For Carlyle, the abolition of slavery in the West Indies somehow created a new and "black Ireland". That is, the problem was similar, in that its solution was an application of supply and demand analysis, although the specific imbalances were different: excessive supply of labour in Ireland and excessive demand of labour in the West Indies.

"Science's" solution for Ireland was stated among others by Nassau William Senior; it was quoted above, and presumably Carlyle found it distasteful, perhaps for obvious reasons, in spite of his manifest disdain for the Irish: in essence, Malthus' theory of population (although not used by Malthus himself, by then dead for over a decade).

He clearly finds the supply and demand solution to the West Indies problem distasteful, as well, although he does not explain his reasons for that. (CONT NEXT COMMENT)

Magpie said...

In any case, Carlyle does not hide his contempt for black people, and his appreciation of the Irish, if less explicit, does not appear much better either.

Although perhaps not so clear, he does, however, hint to a non-"Scientific" solution to the English Isles's problems:

"How pleasant, in the universal bankruptcy abroad, and dim dreary stagnancy at home, as if for England too there remained nothing but TO SUPPRESS CHARTIST RIOTS, BANISH UNITED IRISHMEN, VOTE THE SUPPLIES, AND WAIT WITH ARMS CROSSED TILL BLACK ANARCHY AND SOCIAL DEATH DEVOURED US ALSO, as it has done the others; how pleasant to have always this fact to fall back upon: Our beautiful Black darlings are at last happy; with little labour except to the teeth, which surely, in those excellent horse-jaws of theirs, will not fail!"

While Carlyle's text is pompous and sarcasm doesn't help understanding, but as a chartist sympathizer, he was condemning the repression of the chartist movement in England. For an overview of the chartist movement, see here: http://en.wikipedia.org/wiki/Chartism

I believe the interpretation given above to be consistent with Charles Dickens' own in "Bleak House" (Dickens, his contemporary, took Carlyle's side in the controversy). In Chapter 12 of said novel (entitled Telescopic Philantropy, too) Ms. Jellyby allegorically represents Exeter Hall and the abolionist and colonising movement; her children, the British Isles' poor (the chapter can be read here: http://www.classicreader.com/book/221/4/)

The following text accompanying the "Telescopic Philantropy" cartoon (and the cartoon itself), in a more modern, simple and hopefully accessible language:

" 'Telescopic Philantropy', 1865. 'Little London Arab: 'Please M. Ain't We Black Enough to be Cared For?' (With Mr. Punch's compliments to Lord Stanley)' (...) Dickens had highlighted and satirised the growing numbers of the middle classes who expended much time, effort and money on raising funds to 'civilise' (particularly black) foreign peoples, rather than concentrating on the problems of the poor at home" (here: http://www.mediastorehouse.com/telescopic_philanthropy_1865/print/1233065.html)

So, beyond his odious views on race and language, is my opinion that Carlyle had an alternative for the "scientific" solution to the problems of Ireland and the West Indies.

Other intellectuals of the time, who I believe have not being accused of racism (like Dickens, perhaps) shared at least some of his positions.

More importantly, that Mill himself eventually moderated his views on workers' rights would seem to indicate he came to accept this part of Carlyle's diatribe.

However, everyone is free to make their own mind.

As final notes:

(1) Thomas Carlyle also took Jamaica's governor Edward Eyre's side in a shameful incident of lynchings, later on.
(2) By the time the cartoon was published, the subject of slavery and poverty at home was further complicated by the European second stage of colonisation in Africa and Asia, promoted in the name of bringing progress to "uncivilised" peoples. Herbert Spencer supported this movement, as well.

I intend to post some more on this matter (including links to views in favour and against Carlyle and the details of the controversy and its contemporary relevance) in my own blog. If there is any interest, all are welcome to have a look.

Magpie said...

Actually, after some reflection and some re-reading Carlyle, I must correct myself.

At the end of my second comment in this thread, you can find the following:

"He [Carlyle, that is] clearly finds the supply and demand solution to the West Indies problem distasteful, as well, although he does not explain his reasons for that."

I was mistaken there. I missed it, but in the Carlyle quotation preceding my mistaken observation, Carlyle did explain why he opposed the supply and demand solution to the West Indies labour problem:

"If the new Africans, after labouring a little, take to pumpkins like the others, what remedy is there? To bring in new and ever new Africans, say you, till pumpkins themselves grow dear; till the country is crowded with Africans; and black men there, like white men here, are forced by hunger to labour for their living?"

Apologies to the readers.

Anonymous said...

Magpie, I don't want to hijack this comment thread with debate on an esoteric matter. If you post about the Carlyle/Mill dispute on your blog, I will be happy to comment there. The main point is that Robert's assertion was completely correct: Carlyle's use of "dismal science" did not refer to Malthusian theory.
-Will

Magpie said...

Will,

Fair enough.

-----------

Robert,

Apologies, I did not intend to derail the discussion.

Magpie said...

As promised, my take on the "dismal science" epithet, and its relation to the Irish Potato Famine and the Negro Question Debate.

If this subject is still of any interest:

Dismal Science: Mill and Carlyle.
http://aussiemagpie.blogspot.com.au/2012/01/dismal-science-mill-and-carlyle.html

Robert Vienneau said...

Magpie, Thanks for the link.