Steve Horwitz and I assess Jane Smiley’s discussion of economists and economics. Passages on economists, rationality, and moral philosophy:
We assume people are “rational,” but we don’t mean they are omniscient or wise or even quick learners. We mean people want to make themselves as well-off as possible; people try to shape the world according to their values, whatever those may be. Free-market economists also assume that people are ignorant, and we show that markets teach them how to use resources wisely.
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Some notable exceptions notwithstanding, it is–as Smiley writes–”human nature to cheat, monopolize and buy off others.” But we see this as a reason to distrust politics rather than markets. Political incentives exacerbate knavery. Centralizing power in the hands of the state, which is Smiley’s implied alternative to free markets, will not make things better. It will put more power in the hands of the sorts of people Smiley fears.
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Murray Rothbard once said that “it is no crime to be ignorant of economics,” but that it is “totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” It is tempting, therefore, to dismiss Smiley’s article as little more than sound and fury. Yet it does signify something profound and troubling: economists’ failure to communicate the essential insights of our discipline. Jane Smiley’s contemptuous and uninformed dismissal shows that we really need to redouble our efforts.
