Ancient Wisdom, Modern Economics
by Thomas Hibbs - July 1, 2007
Reprinted with permission.
Small Is Still Beautiful: Economics as if Families Mattered
Joseph Pearce, Intercollegiate Studies Institute, $18, 350 pages
Joseph Pearce's Small Is Still Beautiful is one part commentary on and one part updated application of E. F. Schumacher's famous Small Is Beautiful. The constant reference to a book that many consider a minor classic is both a strength and a weakness of Pearce's own book. Imitating Schumacher, Pearce wants to return us to fundamental issues of economic life; he asks questions—concerning virtue, ecology, and the common good—too often suppressed in discussions undertaken by professional economists. But aside from some useful references to contemporary examples, the book does not extend Schumacher's argument in any notable way. Indeed, certain key issues, particularly concerning the prudential application of ancient wisdom to contemporary economic realities, are hardly addressed at all.
Following Schumacher, Pearce argues that the discipline of economics needs a threefold reform. It needs (a) a metaphysical self-critique that would address the question of ends, not just of means; (b) an expansion of its modes of inquiry to include qualitative experience as well as quantitative data; and (c) a greater attention to the wholeness of the human person rather than a reductionist focus on "economic man." These suggestions are all to the good. In mainstream philosophy, the narrow account of human action and motivation has been under fire for some time; what remains to be done is to determine precisely how a richer conception of human agency ought to inform the discipline of economics and where one ought to draw boundaries between economics and philosophical ethics.
Pearce is acutely aware that an older vision of the human person and the human good subordinated economics to a larger metaphysical conception of the cosmos and the place of human beings within it. The absence of any overarching sense of the whole is a precondition of a certain strain of modern liberalism, whose goal is to render us masters and possessors not just of external nature but of our very selves, which we can make, unmake, and remake according to our will. In response to this modern project, Pearce refers us to Solzhenitsyn, who criticizes the notion of infinite progress as an illusion of the Enlightenment, and to Schumacher, who urges that any activity that does not admit a self-limiting principle is of the devil. The notion of freedom as an untrammeled right to creation and re-creation is indeed problematic, perhaps even demonic. But there are significant obstacles to recovering this older conception of the universe, not least in modern natural science and its attendant disenchantment of nature.
For the ancients, even apart from metaphysics, economics could never be the highest science. The word derives from the Greek term oikos for household. As the science of the domestic sphere, economics exists alongside ethics, which is the science of the perfection of the human agent, and beneath politics, the architectonic art of the human good. In this sense, Pearce's slight reworking of Schumacher's subtitle—from Economics as if People Mattered to Economics as if Families Mattered—is closer to the ancient sense of economics. It also points up the enduring significance of local communities for our economic and political life.
Indeed, the notion of subsidiarity, derived from the tradition of Catholic social thought (of which Schumacher was so fond), surfaces with great regularity in Pearce's book. Put negatively, subsidiarity judges that it is "wrong to assign to higher levels in the organization functions which could be carried out lower down." There is a certain danger with this common way of defining subsidiarity, since the fundamental insight here is not so much about degrees or levels in a hierarchy as it is about certain natural communities and institutions, and the duty of the state to recognize these naturally existing societies and to aid in their flourishing. Pearce comes very close to capturing this point in his quotation from Pope Pius XI's Quadregesimo Anno: "Every social activity ought of its nature to furnish help to the members of the body social and never destroy or absorb them."
One might welcome the recovery of ancient wisdom as a guide for modern life, but surely this cannot be done uncritically, particularly when it comes to the spheres of politics and economics. Even in the ancient world itself, political philosophers recognized, indeed insisted upon, the distinction between the best regime, abstractly considered, and the best feasible regime. In his Politics, for example, Aristotle spends most of his time talking about the ways in which we might marginally improve what he calls perverse regimes, namely, democracy and oligarchy. Given his focus on economics, Pearce objects that in the move toward modern economics, we have lost the sense of natural price or of the objective value of products. The "price mechanism" now floats freely and allows mere preference or demand to determine the value of things. But the older notion of natural price or natural value is connected to a much more static conception of economics and a repudiation of usury. If the moderns naïvely think of our resources as infinite, the ancients seemed to give too little thought to the possibilities for the expansion of wealth.
Consider, in this context, Pearce's wonderful chapter titled "Small Beer," which details the flourishing of microbreweries. Pearce describes it as a small business counterrevolution that offers beer drinkers greater choices. Now, it is clear from this discussion that the threats to small business from the interests, power, and financial resources of monopolistic large businesses are great. But, of course, as passionate a defender of capitalist economics as Adam Smith was acutely aware of the dangers of monopolies and advocated government intervention to curb such practices. So, the question for Pearce is whether he is fighting a battle to reform or to replace capitalism. He clearly realizes that socialism will not free us from evil. Pearce also cites the welcome movement of the use of green technology by private corporations as an example of the ways in which large institutions can empower the smaller. But that seems to leave open the possibility that the current capitalist system could be reformed or adjusted in such a way as to foster precisely the sort of opportunities that Pearce esteems.
This is one of a number of examples where Pearce's project would be enhanced by a more careful sifting of the relative virtues and vices of ancient and modern economics. If Pearce's book fails to raise the difficult philosophical and pragmatic questions about the relation of ancient wisdom to modern economics, he also ignores one of the most powerful avenues of engagement with contemporary conservatism, namely, the parallels between our economic vision of things and trends in bioethics. Underlying both is a libertarian view of choice combined with a conception of matter, including the human body, as raw stuff, the property of its possessor, stuff that can be shaped according to, and whose value is determined by, our preferences. The question of how closely related our economic self-understanding is to our seemingly inevitable slide into genetic creation and re-creation needs a thorough investigating.
Such an investigation might be the starting point for a fundamental reassessment of conservatism, in both theory and practice. In passing, Pearce himself uncovers a number of oddities in the contemporary term conservatism, which seems to be not so much about caution and preservation as it is about bold proclamations of progress and the remaking of the world according to human desire. Pearce's book raises a number of important issues, but in the end it makes us acutely aware that we do not yet have the sort of book about conservatism that we so desperately need.
Thomas S. Hibbs is the author of Arts of Darkness: American Noir and the Quest for Redemption, forthcoming from Spence Publishing.
