E.K. Hunt on Rationalistic Subjectivism, part 3

Lisa Rogers eqwq.lrogers at state.ut.us
Mon Feb 12 09:34:26 MST 1996


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]



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