Date: Mon, 12 Feb 1996 09:34:26 -0700 From: Lisa Rogers <eqwq.lrogers-AT-state.ut.us> Subject: E.K. Hunt on Rationalistic Subjectivism, part 3 E.K.Hunt 1992 _History of Economic Thought: a critical perspective_ HarperCollins Ch.6 Rationalistic Subjectivism: The Economics of Bentham, Say, and Senior Summary by Lisa Rogers [begin part 3 / 3] However, every theory draws upon that portion of reality deemed "relevant" and "important", which have no meaning unless it is specified "relevant and important with respect to what problem?" [and to whose problem?] which entails value judgements in the very foundation of the process of theorizing. Senior reveals his true mission, for one page after claiming that the Political Economist's scientific "conclusions, whatever be their generality and their truth, do not authorize him in adding a single syllable of advice", he states that "it is fatal to neglect" the conclusions of his "science". In other words, his own values certainly were such that government *should* do what his allegedly pure theories concluded to be *good* for the economy / society. The alleged scientific / normative split collapsed. Senior's Four Propositions Senior claimed these general propositions to be self-evidently true from ordinary experience and introspection, and claimed that all the rest of his work flowed logically from these premises. [quote] 1. That every man desires to obtain additional Wealth with as little sacrifice as possible. 2. The Population of the world ... is limited only by moral or physical evil, or by a fear of a deficiency of those articles of wealth which the habits of the individuals of each class of its inhabitants lead them to require. 3. That the powers of Labour, and of the other instruments which produce wealth, may be indefinitely increased by using their Products as the means of further production. 4. That, agricultural skill remaining the same, additional Labour on the land with a given district produces in general a less proportionate return [diminishing returns.] [end quote] Senior on Utility Maximization, Prices, and Gluts He believed that all economic behavior was calculating an rationalistic, i.e. aimed at the maximization of utility. However, Senior rejected Bentham's notion of the diminishing utility of wealth as it increases for one person. No matter how rich, "no person feels his whole wants to be adequately supplied;... every person has some unsatisfied desires which he believes that additional wealth would gratify." Plus, desires are not comparable, so one cannot judge if taking from the rich and giving to the poor would actually increase aggregate utility or not. Senior held that exchange value depends on utility, but he did not develop a price theory. He claimed that general gluts are impossible, because common observation "proved" the desire for wealth to be insatiable. (He did not notice or recognize periodic crises.) Senior's Views on Population and Workers' Welfare After 1830, he still believed that raising the "moral character" of the poor was the only way to reduce the birth rate and alleviate poverty, but it was not being accomplished by economic development after all. Instead it was necessary to "create habits of prudence, of self-respect, and of self-restraint" which the arrogant workers obviously lacked. He stressed that the only alternative to "moral and physical evil" [as a result of over-population and poverty] was the "fear of deficiency", i.e. imminent starvation. Like Malthus, he believed that the whole social good required "partial suffering" (of the poor, of course.) Senior on Capital Accumulation and Abstinence He agreed with Say that capital was productive in the same way as labor, and even more important than labor. Despite his claim that morality had no place in scientific political economy, he gave a moral justification for profits that is still used today. It was not enough to show that the *physical capital* was productive, he had to show that the ownership of capital involved a real human cost analogous to working, in order to give profits the same moral justification as wages. He invokes a new term to "express the act, the conduct of which profit is the reward, and which bears the same relation to profit which labour does to wages. To this conduct we have already given the name of Abstinence ... Abstinence expresses both the act of abstaining from the unproductive use of capital, and also the similar conduct of the man who devotes his labour to the production or remote rather than of immediate results." "To abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of the human will." This then is the sacrifice of the owner, equivalent to the sacrifice of the worker, which merits the reward of profits. Both workers and owners endure pain. [Ouch!] Government must protect private property rights in order to assure the profits that induced abstinence, which resulted in the accumulation of capital, which could cause manufacturing capacity to grow at least as fast as the population. The most important source of a nation's prosperity was the abstinence of the capitalists. Senior on Rent and Class Distribution of Income He differed from Ricardo on land rent. He thought technical improvements had increased agri-productivity a lot. Also, he defined rent as "an advantage derived from the use of a natural agent not universally accessible." It was a return to any ownership that conveyed monopoly power because the object could not be freely reproduced. As income, rent was morally justified, because it was the only "means by which the population of a country is proportioned to the demand for labour. In this as in many other cases, nature has provided that the interests of the landlord and the interests of the public shall coincide." He asserted that, by his definition, wages and profits included some rent, as variations in land-fertility were the same as variations in the productivity of various workers and machines. Since all types of income were virtually identical, then there is no fundamental distinction between classes. Later, this came to mean that capitalism was essentially classless, and if there were no classes, there was no class conflict! Senior wrote "In the natural state," the relationship between a worker "and his master has the kindliness of a voluntary association." Their interests were in harmony and were best promoted by a free market and the protection of private property. Social Harmony Versus the Political Economy of the Poor The concept of class conflict was labelled by Senior as "the political economy of the poor," which was believed only by those "whose reasoning faculties are either uncultivated, or perverted by their feelings or their imagination." [He, of course, had no feelings or imagination at all, and was perfectly unbiased.] People who thought correctly would support the "economics of the rich" which promoted the welfare of all of society. By the mid 19th c. industrial capital had clearly reached supremacy over the landed aristocracy [in both economic and political influence.] Increasingly, capitalists hired managers, and profits, like rents, became clearly a return on ownership alone. The distinction between capitalists and landlords, profits and rents, became unimportant. The advocates of the "political economy of the poor" have continued to insist on the importance of the distinction between income on work and income on owning. The critics of Senior still insist that there is a fundamental, ongoing class antagonism, and that capital is never a result of "abstinence." They say that capitalists don't suffer, they _enjoy_ making money. Senior himself admitted that capitalists were showing off by having money and good credit, while spending lavishly would actually hurt their social reputation among their peers. His statement that the "desire of wealth for its own sake" was "instinctive" was yet another contradiction to his own claim that [capitalist] abstinence was "among the most painful exertions of the human will." [end part 3 / 3] --- from list marxism-AT-lists.village.virginia.edu --- ------------------
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