All Commentary
Sunday, April 1, 2007

The Vanity of the Philosopher: From Equality to Hierarchy in Post-Classical Economics

University of Michigan Press • 2005 • 323 pages • $40.00

Economists Sandra Peart and David Levy have written a deeply interesting but ultimately unsatisfying book. While the work uses a major episode in the history of economic thought to cast light on an issue still of great importance today, I believe that the authors’ methodological predilections and their misunderstanding of the proper relationship between scientific theory and practical life result in their dancing around the periphery of that issue.

Peart and Levy’s central argument is that, under the sway of the racist views current during the late-nineteenth and early-twentieth centuries, economists abandoned the axiom of human equality held by earlier practitioners, such as Adam Smith, David Ricardo, and John Stuart Mill. The authors make a convincing case that what the leading opponents of “classical” economics chiefly rejected was its assumption that human nature is the same everywhere and that people differ primarily due to their unique life history and the particular circumstances and incentives they confront. This implies that an “expert” is unlikely to make better choices for some individual than he is for himself. That egalitarianism was anathema to intellectuals like Charles Dickens, Thomas Carlyle, Francis Galton, and John Ruskin, for whom the white race had the mission of directing the lives of their genetic inferiors. A logical extension of racist thought, especially when coupled with the new understanding of evolution proposed by Darwin and Wallace, was eugenics, which advocated top-down control over human breeding in the interest of “improving the species.”

Evangelical Christians rejected white racial dominance based on their belief that, after the Fall, all people were incapable of self-perfection and stood equally in need of God’s grace. Therefore, they allied with the classical economists in a number of prominent public debates. For example, both groups demanded the prosecution of the white governor of Jamaica, Edward Eyre, for indiscriminately killing over 400 of his black subjects to quell an episode of civil unrest, and were opposed by the racists, who lauded Eyre for dealing resolutely with “savages” who refused to appreciate the benevolent tutelage of their white masters.

Unfortunately, racist ideas eventually triumphed even in economics, as Peart and Levy demonstrate with quotes from leading economists, including Alfred Marshall, F. Y. Edgeworth, Frank Fetter, and A. C. Pigou. As a consequence, the assumption that each person should count equally when evaluating the merit of some policy was replaced by the idea that certain people may have a significantly greater capacity for happiness than do others, entitling them to preferential consideration.

The authors having persuaded me that the demise of classical economics was closely tied to the increasing weight given to race in explaining human affairs, I kept expecting to reach their debunking of those racial doctrines themselves. But the nearest thing they offered was a mathematical analysis of how folk wisdom could possibly compete with scientific models in guiding decisions.

I found this disappointing for two reasons: First, the proper outcome of scientific research is not practical advice but theoretical understanding, and so trying to measure a scientific model on the same scale as a proverb represents a categorical confusion. Second, it isn’t even that near to the discussion I hoped to find—in fact, their defense of folk wisdom strikes me as being irrelevant to their central concern, because it could be true both that folk wisdom is often a match for scientific experts and that the racists were right in that the folk wisdom, say, of the Lithuanians is superior to that of the Latvians.

But Peart and Levy do not merely avoid examining the evidence for racist views: they disparage any effort to do so, asserting that the danger of taking such theories seriously outweighs the value of any scientific truth they possibly contain. Here again, I think the authors suffer from same fundamental confusion as did the eugenicists: theoretical understanding is not a rival of, or potential substitute for, practical judgment. No genuinely scientific theory should be declared beyond the pale because it is politically incorrect. The best safeguard against such horrors as Nazism and Stalinism lies in realizing that even if their key theories were scientifically sound, it would not justify the policies they were said to imply, for such matters can never be resolved based solely on scientific facts but involve ethical judgments as well. For example, there is nothing incoherent in a scientist’s hypothesizing that race is an important factor in human action while still regarding racial persecution and discrimination as immoral.

While Peart and Levy have written a fascinating and well-researched book that successfully illuminates an important factor in the transition from classical to neoclassical economics, their work falls short of its promise due to the authors’ failure to recognize the gulf separating theoretical speculation from practical reasoning.

  • Gene Callahan is a writer and economist who teaches at the State University of New York at Purchase.