American Socrates

When Did Economists Stop Caring About Justice?

Charles M. Rupert Season 1 Episode 33

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Why did economics stop asking moral questions? In this episode of American Socrates, we uncover the forgotten roots of political economy—where ethics, power, and justice were central to understanding wealth. Learn how modern economics lost its soul, why GDP isn’t enough, and what thinkers like Amartya Sen and Friedrich Hayek can teach us about freedom, inequality, and the future of economic thinking.

Keywords: political economy, moral economics, Amartya Sen, Friedrich Hayek, GDP, justice, economic history, philosophy of economics, capitalism critique, American Socrates podcast

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Let's start with a story. An economist and an Ivy League school gave a talk about how to solve childhood malnutrition in India. After a long presentation full of regression models and cost-benefit curves, the student raised their hand and asked. But what if we just made sure children didn't starve? The economist paused, confused for a moment, and then said, well, that's not an economics question. There's a problem that we're facing. Economics today is filled with people who can calculate the optimal calorie-to-dollar ratio for the hungry, but can't tell you whether letting kids go hungry is wrong or not. The story is fictional, but it gets at a point that is all too real. People like Larry Summers, who once proposed we could solve global inequality by dumping toxic waste in poor countries because their value of life is lower in economic terms. And he meant it mathematically, of course, because in modern economics, morality isn't just inefficient, it's unworthy of consideration. And that's a serious problem. This isn't just a case of a few bad apples. The real scandal is the institutional rot we see across academia. Take this little-known nugget. Political economy has largely fallen into the crack between philosophy departments and economics departments at most major universities. Each side is assuming that the other one is handling it, and that the subject is irrelevant to their own discipline. If you ask a philosopher about inequality, you'll get a long treatise on Rawls or utilitarianism. Maybe if you ask an economist, you'll probably get a spreadsheet. If you ask who's responsible for deciding what a good society looks like, they'll both shrug. But that question what kind of world should we build? Used to be the entire point of economics. Adam Smith, Karl Marx, John Stuart Mill. They weren't just playing around with numbers. They were arguing about things like justice, freedom, and human dignity. That's the tradition of political economy. But then something happened sometime after Alfred Marshall. We stopped asking what the economy ought to be for, and started pretending we could just measure whatever it is. We traded moral indignation for mathematical modeling, and economists sort of became precision engineers. And now we get public policy designs, like an algorithm with human values patched in after the fact, if they're patched in at all. So today I want to ask what happened to political economy? Why did we stop asking big questions? And how do we get back to an economics that serves people and not profits? Welcome back to American Socrates. I'm your host, Charles M. Rupert. Let's go back to the beginning. Before economics was a math problem, before it was a department, back when it was still political economy. Adam Smith, J.B. Say, David Ricardo, Karl Marx, whatever their disagreements, they were all trying to do the same thing. They're all asking what kind of society ought to exist, and how economic systems are going to shape the human lives within that society. They were pretending to be neutral or even objective. They weren't building abstract models of utility or rational actors. They were wrestling with power, with poverty, with morality and human nature. Adam Smith is a great example of this. People love, to quote The Wealth of Nations, especially his line about the butcher, the baker, acting out of their own self-interest. But they rarely mention that Smith, who was a moral philosopher and a friend of David Hume's, by the way, also wrote a book called The Theory of Moral Sentiments. That book is about sympathy, about virtue, and about justice. To Smith, markets were not a replacement for morality. They were embedded within that morality. There was no economics without strong moral arguments about what a decent life looks like. His whole argument for capitalism takes the form of a moral argument that capitalism would improve the wealth of everybody. If it's not doing that, then you can get rid of capitalism. He even argues that the government should intervene into economics on the side of workers, against any kind of unspoken conspiracy of all the masters to suppress wages. The laissez-faire attitude that is often associated with Smith is really only true concerning trade and commodity production. He's all for an intervention for workers when injustice is being perceived. Karl Marx, who would later launch his fierce critique of capitalism, was also trained in philosophy and in history. His work is as much a moral and political argument as it is an economic one. When he writes about alienation or exploitation or surplus value, he's not describing a glitch within the machine. He's describing the human problem and asking how we ought to fix it. The problem for Marx is in a nutshell, that capitalism produces fabulous things, but we don't all get to enjoy them. It's deeply unfair. It's a biased system. And if with if we could correct it, if we could make the right kinds of changes, it would become more fair. So for a long time, economics was never just about what is. It was about what ought to be. It would ask questions like, what is wealth really? Who is really creating it? Who deserves to keep it? And how should it be distributed in a fair society? And underlying all of that was the most important question of all. What do we want from the economy? What kind of life should it be making possible for every citizen? That was the spirit of political economy. It was messy. It was less scientific, but it was moral and it was human. But then something changed in the late 19th and early 20th centuries. Economists started to get self-conscious. They wanted to be taken seriously as scientists, not just moral thinkers or some kind of armchair philosophers. Physics was the gold standard of academic prestige at the time. It was precise. It was mathematical. It was predictive. It was clean. And so economists rebranded themselves. Political economy became just economics or scientific economics. Values were replaced with variables. Justice was kind of swapped out for efficiency. Human beings were reimagined as homo economicus, the rational actor who always makes decisions to maximize their utility, whatever that means. By the time we hit the mid-20th century, the transformation was nearly complete. Economists were no longer debating the good of society. They were optimizing supply curves. They were calculating marginal rates of substitution. And they started drawing a hard line between positive economics, you know, what is looking at what is and normative economics, what ought to be, what should the norms be? They claim, only to be the first part describing what is that was the real science and thus the only thing worthy of true academic pursuit. But that was a sleight of hand, because every model is itself a moral story. Whether the economists like it or not. If you assume that the GDP growth is always good, you're making a moral claim. If you design policies that protect markets over people, you're making a moral claim. If you define value strictly by price, then you're redefining what human life is worth and what it isn't. And that's a moral claim. This is what I mean by what I'm going to call the myth of neutrality in economics. Modern economics pretends to be like physics, but it's more like theology. The market is all-knowing. The market is all good. Growth is salvation, and the high priests attend the Brookings institutional events. You know, rather than going to Mass on Sunday. And while this might sound like an academic critique, it's really not. It's a political critique. Once we stop asking what kind of world we wanted, someone else started deciding that question for us. And the people who did. Are the people who benefit most from the world we currently live in. This transition wasn't without its opposition, and there were battles over what was happening. Let's put some faces to those battles and get an idea of how moral economics and cold, hard market logic began to intertwine in the early 20th century. On one side, you have guys like Frederick Hayek. He's an Austrian economist. He's a market fundamentalist. He's beloved by libertarians and conservative think tanks everywhere. On the other side, I want to showcase Amartya Sen, the Nobel Prize winner, philosopher and fierce defender of ethics in economics. They both care deeply about freedom, but they mean radically different things by that word. To Hayek, freedom means no one else gets in your way. He saw any government action, even well-meaning programs, as slippery slopes to tyranny. You want price controls. You want central planning, social safety nets. That's all the same stuff. It's all dangerous. He famously argued that when governments try to fix markets, they end up breaking liberty. What Hayek feared the most was coercion. He thought markets were amazing, precisely because no one has to force you to buy or sell anything, so they're completely free. It's a God given freedom. If the state stays out of it, individuals then are free to make their own choices, even if those choices lead them to inequality, or poverty or suffering or death. Even the destruction of entire civilizations. That's just the price you have to pay for liberty. His most famous book, The Road to Serfdom, warned that too much planning leads to dictatorship and his influence is everywhere today. From President Ronald Reagan and Prime Minister Margaret Thatcher to the modern libertarian movement. In many ways, he gave us the moral defense of neoliberal capitalism. Markets are messy and uncaring, but hey, at least they're free. So compare him then to Amartya Sen. You get the same concern, but a totally different vision. Sen agrees that freedom matters, but he's going to ask, what good is freedom if you're too poor or too sick, or just too excluded to even exercise it? Sense shifts the focus then from this formal freedom to, you know, kind of freedom on paper to a real sense of freedom. You know what you are you are ctually able to do and be in your society. He calls this your capability set. Do you have the capability to be healthy, to get an education, to participate in democracy? If not, you're not really that free. Regardless of the government's level of interference in the market. In his view, development isn't about GDP. It's about expanding these capabilities. So if a society has soaring wealth but millions of people can't afford insulin. Sen would say that's not a very free society. That's just a market with a national flag that waves over it. In short, then Hayek thinks freedom means the absence of interference, while Sen thinks that freedom means the presence of opportunity. And that changes everything about how we want to view our economic conversations. The core of their disagreement goes something like this. Hayek worries about too much government and worries about too little democracy. Suddenly, economics is political again. Both claim to protect human freedom, but in practice, Hayek's version has often meant protecting the freedom of corporations to do things like exploit their workers. While Sen's vision demands that we build systems that actually deliver human dignity to all of its citizens. This is not just a philosophical disagreement. It's a vision for the economy on both sides. Neither is actually being neutral here, although he claims that he is. It's whether we want to build a society where freedom means no one can stop you ever from doing the things that you want to do, or a society where freedom means that you actually have the power to live a fulfilling life. And that brings us back to where we started. Political economy asks these kinds of questions. Scientific economics avoids them as if they were the plague. So what happens when we take the soul out of economics? When we replace justice with efficiency and people with rational actors, what happens then? Well, we get an economy that works beautifully. It's seamless, at least if you're one of the owners. Let me take a few real-world examples here. The first one is austerity. When governments slash things like health care and education and food aid in order to balance the budget or curb the deficit. They ask us to live within our means. And it's easy when you're rich, but it gets progressively harder the poorer you are. And your society. Telling a man in poverty to tighten his belt is perverse. Or, as Oscar Wilde put it. To recommend thrift to the poor is both grotesque and insulting. It's like advising a man who is starving that he ought to eat less. This logic comes straight from the myth that markets must be free, and that governments must be lean, even if lots of people have to suffer to make them that way. Again, that's a moral decision. Did you agree to that, or is that just something you were born under and have never known any different from? Another example might be something like climate change. Mainstream economists often frame environmental collapse in cost benefit terms. Is saving the planet worth it? Is that worth the hit to the GDP? Should we invest in mitigation, or should we just let poorer countries or poorer people absorb most of the damage? Because it's going to be cheaper on paper. Donella Meadows once said, we're going to go down in history as the first society that wouldn't save itself because it wasn't cost effective. Labor policy is another example. When workers demand higher wages or better conditions, the response isn't well. Is this just it's. Is this going to cause inflation? Morality is outsourced to this sort of faith in the invisible hand. But the invisible hand is blind, and it can often be misleading. There is no more reason to assume self-interest will lead us to our naturally best overall outcome than it would be to lead us to our collective ruin. In labor policy. The concern around inflation concerns the wealth of the wealthy. If workers have to starve in order to make sure that the wealthy preserve their wealth, then that's a sacrifice that the rich are just willing to make. And then there's the cruelest example of them all. You know, how do we measure success? The GDP goes up when a billionaire buys a second yacht, but it doesn't go up when a grandmother cares for her grandchild. It rises when we cut down a forest. But doesn't blink. If a community gets clean drinking water or not. When political economy dies. Economics doesn't become neutral. It becomes blind. And in that blindness, moral imagination is replaced by a ruthless and twisted managerial logic. We let the managers rule and they stop asking what kind of lives do we want people to have and what kind of world are we building? And instead they ask, did the numbers go up? Just assuming that that was the key to all success. But a rising line on a graph isn't always signs of a society improving itself, and it does not translate into collective well-being. But there is some good news here. The moral questions about justice, about dignity, you know, about what kind of world we want to live in. They never really disappear. They just got kind of pushed to the side. They were answers were all assumed, both by the right and the left, the liberals and the conservatives, the Democrats and the Republicans. They all collectively ignore these questions. But when they were pushed aside, when they were abandoned by economics in general, when they were buried under data and jargon. They were still there. They were quietly waiting under the surface for someone to start asking them again. And now people are starting to ask. There's a growing movement among thinkers and activists and just in everyday citizens that says, hey, we don't actually just have to measure the economy, right? We can reshape it. We can optimize it. You know, if you will. And that shift has already been happening. Even if you don't hear about it on the cable news. In Europe and in the global South, there's a push towards what's called degrowth or donut economics models that say the goal of the economy shouldn't be infinite expansion, but some kind of balanced system meaning human needs without destroying the planet. That sounds pretty obvious, right? Like that's what we should be doing, but it's actually a radical break from the more is always better thinking that dominates our politics and economic systems. At the same time, people are rethinking what real public investment looks like, not just giving people money, but providing the basic building blocks of a decent life. Universal basic services like housing, health care, education and child care. Public transit are more than market options that you have to afford their necessities, and we should be able to count on them. And it's not just policy ideas here. All over the world, people are creating alternatives from the ground up. Community-owned grocery stores, worker cooperatives, credit unions and community land trusts. Mutual aid networks. These are more than survival strategies. They're living proof that another economy is, in fact, possible, one that's more cooperative instead of competitive, more democratic instead of exhaustive. You see, the old story says the economy is like gravity. It's impersonal. It's on a scalable and best left alone. But that's only a good story to tell if you already happened to be rich. The economy isn't natural. It's very, very human, which means it reflects our choices, our values, and our failure to express those values. And if you want more stability, you need to write your own story here rather than simply accept the common narrative that you've been given. If we want something better, we do not have to wait for permission to be given from those above us. We just have to ask meaningful questions. We have to start by remembering. This whole thing is just made up, and it can be remade any time by anyone, anywhere. Though, in the end, we need to remember that we've been told for so long that economics is a science, not a conversation, that markets are natural, not political, and that justice is a luxury, something we're going to have to figure out after the numbers are all added up. But all of that is backwards. The economy is not like a weather system that gets reported on, and we all just have to deal with whatever's going to happen. It's a human story, and we can control what happens. Every story has a choice about who matters and why they matter. Political economy remembers all of that. It puts people back in the center of that equation. It says, Look, before we're going to talk about things like efficiency. Let's talk about dignity. Where is the line? How much damage can we let a person suffer before we've crossed the line? So before we optimize for things like growth, we can ask questions like who's growth? What is this growth for? For whom? What cost is it going to be? And so the takeaway here is pretty simple. Don't let anyone tell you that justice is infeasible or just too expensive. This world is not as good as it gets. What's unrealistic is building an economy without a sense of justice or a sense of care. I recommend you start asking these questions about that. The economist stopped like, what is an economy for? Is it just to make billionaires while everyone else suffers? Is an economy so that we're all supposed to get a decent life? Is it only supposed to be a decent life if you work incredibly hard? Is it, you know, you start work at 18 and you end at 85, and only then you get a decent life. What about people who need help from the beginning? That started far behind everyone else. Do they get help or do they just have to stay where they are? Is there social mobility in this system? Can people work their way out of poverty? Do we make that nearly impossible? These are the questions that we need answers to. Because if you don't ask these questions, somebody will supply the answers for you. They already have. They already are. We have answers to all of those questions right now. This is the world that we live in. And if you don't like the world that we live in, if there are problems with it in your thinking, if you think certain things are unfair or unjust, then you have to start asking those questions for yourself. Instead of accepting the answers of what is. And if someone says to you, I don't understand how the economy works. Tell them. Well, that's not really your fault. It was designed to be complicated so that you would try not to interact with it. Political economy, however, gives you the tool to try and understand how it works and how it could work for all of us. That gives you a voice to challenge the way things are. And that is where real change begins.

Thanks for tuning in to American Socrates. If today's episode of philosophy got you thinking in new ways, make sure to subscribe so you'll never miss an episode. New full episodes drop every Wednesday. If you enjoyed the show, leave a review. It helps others find us and it means a lot. And if you know someone who could use a little more practical wisdom in their life, share this episode with them. Want more? Visit americansocrates.buzzsprout.com for show notes, resources and exclusive content. You can also follow me on Facebook, Blue Sky, or TikTok to keep the conversation going. Until next time, keep questioning everything.

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