CHAPTER 1

Angles of Vision

To live is to war with trolls in heart and soulTo write is to sit in judgment on oneself

Peer Gynt—Henrik Ibsen

Like Monsieur Jourdain in Moliere's Le Bourgeois Gentilhommewho was surprised at learning that he had been talking prose allhis life, so in everyday life persons live and interact, and know somuch about socio-economic reality without ever having attendeda formal lecture of social science. Nature of practical realm issuch, that ethical and economic considerations, get juxtaposedand merged together. The title of this chapter, is reminiscent ofHirschman's (1980) Frank E. Seidman Award Lecture, "Moralityand the Social Science: A Durable Tension," in which he considerseconomics, as a product of Machiavelli-Montesquieu-Smith-Marxtradition. From seventeenth century onwards, the weltanschaung ofthe social science, has been narrowed down, and has come to beknown as wertfreiheit. Contrary to this, Hirschman suggests, that

The mutual exclusiveness of moralizing and analyticalunderstanding may be nothing but a happenstancereflecting the particular historical conditions underwhich scientific progress in various domains wasattained.

Money income as visualized by the economists as earned, andit accrues through an application of various elements, impartingvalue and productivity, in a specific and technically describedproportion and process. These factors or elements, have beentraditionally categorized, by the economists, as land, labor, capitaland enterprise, due to their analytical properties, though theyassume specific forms and shapes, generally known as goods andservices, in the open market. Thus the act of earning, needs to beconsidered in terms of self-interest, as a motivation manifestedin behavior, as against ethical norms, and considerations, inbroader liberal arts context. An act of earning, indeed forms, thebasis of all claims, in such a construct. Various disciplines ofliberal arts, add and impart multi-dimensionality, to an otherwisestrictly economic principle of scarcity, being the environmentfor economic activity. The two archetypes, that emerge, forinstance, in the case of claims are, economy versus polity. Whileself-interest guides the individual, as the basic unit of analysisin economics, it is the public interest, that leads the way to animprovement of the performance, according to the politicalcriterion of unanimity. (Buchanan 1987) Justice consists, inan orderly and fair settlement of claims. It is of the essence ofenforceability of the contracts, and the transferability of the claims,to private property rights, as constituent part of the doctrine ofpolitical economy, given the "ideal of social institutions." (Rawls,1971) In an exchange oriented political process, agreementsemerge from the revealed preferences of individuals, into"observed political outcomes." (Buchanan, 1987) Economics in thismulti-dimensional setting, provides a set of symbols, and a syntax,to the entire debate of rights, duties and privilege in the modernsociety:

A policy oriented analysis has to be based upona complete framework broad enough to allowcomparisons of alternative choice patterns. GeneralSystems Theory essentially provides a point ofview in context of an inherent order, regularityand nonrandomness. General Systems Analysisinvolves analogies which are of course, involved inall abstractions. Thus equivalence relations may bepostulated between the systems in such a way thatmay not represent correctly, and thereby the systemmay prove to be abortive. These dangers are mostprobable in social sciences and less probable in physicalsystems, while biological systems are somewhere inbetween. Social systems do not allow a possibility ofcontrolled experiments and only experiment we knowof, is human history itself. Thus history in this contextdefines capacity of theory to survive over alternativecircumstance. A generalization based upon practicalunderstanding of present, requires of necessity,information about the past.

Thus knowledge of liberal arts, in general, imparts insights and addspower to theoretical models, thereby, making them more useful.Human knowledge, has grown tremendously, over the twentiethcentury. Thus, the capacity for analysis, can be attributed andascribed to insights, afforded by the portrayal of human conditions,in historical as well as literary narrations, and descriptions overthe ages. The point is particularly illustrated, and exemplified byHirschman pertaining to an understanding of social reality,and its "laws of change," inherent in "the kind of cognitive stylethat hinders or promotes understanding." Problem of excessiveparadigmatic thinking, and application, particularly comes out morethoroughly, in Kuhn-Popper controversy in Philosophy of Science(1965), on questions pertaining to logic of discovery, and dangersof normal science. Kuhn especially emphasizes, the pre-existingresearch agenda, of the relevant community of scientific interest,labeled by him as "rules" of "game" or "an edifice, an organizedstructure of science which provides the scientist with a generallyaccepted problem-situation." Contrast this, with the dictum A. N.Whitehead a generation earlier, of an "elucidation of immediateexperience as sole justification of a thought." Popper on the otherhand suggests, "that science is essentially critical: that it consists ofbold conjectures, controlled by criticism and it may therefore, bedescribed as revolutionary."

Economics at deeper level of socio-economic controversy,raises questions about the possibility of equilibrium, versuspersistence of disequilibrium, and growth, in terms of open andfree markets. These questions focus, upon the smoothness andoptimality characteristics, of the socio-economic processes, ascontrasted to inefficiency and wastage of resources. Assumptionof self-interest, about homo economicus in this context, wassupposed to produce, a stable equilibrium system. If such anassumption is relaxed, it is argued, then an evolutionary process,will tend to reduce the "fitness" of individual "actors," to anextent, that they are altruistic, while the overall system will reap,the benefits consequent upon altruism, and will tend to grow faster.(Simon, 1993) This differential growth, is attributed to the elementof cooperation, and the consequent synergistic contribution tothe overall system output. On the other hand, individual altruistssuffer and are eventually liquidated in an evolutionary contrast.In a completely structured political system, as in economicrealm "Individuals choose identifiable economic interest." As amatter of contrast, these actors pursue, their private objectives andinterests, that they cannot appropriately attain, through marketexchange processes. While economic exchanges, can be easilyevaluated, according to criterion of efficiency, inherent in thedivisibility of goods and services, changing hands. This evaluation,is made possible, by a comparison and contrast, of actual politicaldecision rules with the rule of unanimity, reflecting the choice ofrelevant political aggregate. In modern times however, thefocus of economists' attention, has been, more in the direction oftechnical, rather than normative considerations, as celebrated inthe Veblen's concept of "trained incapacity." Nevertheless,related fields of liberal arts seem to have a definite role to fill thegap. With the development of human capital formation approach,as a more formal component of economic theory, since earlysixties, this gap between economics and other disciplines, has beenincreasingly bridged. It may be observed en passant, that Arrow(1994), holds on to his "Learning by Doing" (1962) argument, thatit is the society, that reaps the permanent reward, ascribed tolearning, since the serial number of the machines, is raised, andlabor requirement of production is reduced. His newer argument,about individualism and socialness of the knowledge affirms,"Information may be supplied socially but to be used it has to beabsorbed individually." This he considers, is "not very compatiblewith neoclassical paradigm, particularly not with rational choice."Despite his emphasis, on social dimension, Arrow does considerthe alternative possibility, that growth in knowledge may beexogenous to the economy, in addition to the postulate, thatknowledge grows as inherent consequence of economic process.Also he reviews, the Hayek's classification of scientific andtacit knowledge, and observes, that Hayek does not assign duesignificance to the technological knowledge, and the relative easewith which it is transmitted.

The rationality Postulate

Rationality is the most pervasive assumption in most disciplinesof the liberal arts. Anthropology, sociology and psychoanalysis,greatly emphasize the functional reasoning. A behavior pattern,that is functional, is usually goal oriented. These goals need not beexplicit. They can be latent or conscious. A presence or an absenceof these goals, determines whether or not behavior patternsor institutions are functional. Economists have largely beeninvolved, with the consequence of rational choice, as contrastedto the process. This enables the economist to perform the task ofdetermination of values. Contrasted to this, is what psychologistsrefer to, as the notion of "rationality." "Their concern is with theprocess of thought rather than the outcome." Rationality isinteresting, only if its application, produces non-trivial solutions.This is in terms of "styles of behavior," that follows definite goalachievement, within the constraints specified, for such a modeof action. If a goal is suggested for example, as maximizationof performance in terms of a criterion, e.g. expected value, sucha criterion function yields principles, and postulates that allowsystematic ordering of preferences, in a consistent manner. On theother hand, constraints and conditions, arise out of the technicalcharacteristics of a problem situation. These characteristics, maypertain to elements, exogenous (e.g. environments) or endogenous(e.g. characteristics of organism) to the system under study. In thiscontext, rationality consists in logically explicit formulation ofassumptions, about goals and constraints from a valid premise

A typical system involves the objects, attributes, and parametersof the system. Parameters of the system, include input, process,feedback control, and a restriction. A system state, is describedby the parameters of the system, by taking a number of differentvalues. Attributes of the parameters, are the properties that allow,assignment of a value, and a description. Relationships, link theobjects and the attributes, and may be first order or second order.A first order relationship describes, the functional necessity, whilea second order relationship involves complementarity. Synergyis, for example, a complementary and therefore, second orderrelationship, where cooperative action of the independent agents,produce together total effects, that may be larger, than the sumtotal of their independent effect. Mutation and selection,defines and determines, the process of learning, that producescommon values, and indeed, most taste patterns. Contrasted tothis, in an exchange economy, the process of learning producestechnology. Technology, focuses and aims, at production ofgoods and services, exchanged for services of factor inputs, in themarket, and used by the consumers, for the satisfaction of theirdemand. Ultimately, taste and technology relations together,determine the economic values, in terms of interaction of supplyand demand. These two types of matrices, indeed, are the forcesbehind the market determination of values. Tastes determine, whateconomists ordinarily call, utility function, which is also knownas a criterion, or preference function as well. Subsumed underthis catchword, is an entire set of behavior pattern, that has beentraditionally considered, by the economists to be "rational choice."Despite the actual practices, the model structure is quite resilientand flexible enough, to absorb and enlarge the orbit of analysis,with "minor alterations in the utility function," to include a wholerange of behavior pattern, otherwise considered to be irrationaland emotionally determined. (Becker, 1962) (Frank, 1987, 1988)(Hirschleifer, 1978) According to Scitovsky, economistshave traditionally abdicated their search about consumer behaviorand have tended to emphasize "that consumers know what they aredoing the best they can" to an extent that can be considered to be"unscientific." That a more thorough investigation into consumerbehavior, in terms of "physiological psychology," can indeedrender, a better and clearer view, of the equilibrating tendenciesbetween consumption and production processes and patterns.Thus traditional emphasis, on mass scale production utilizingeconomies of scale, and meeting consumer demand, at mostpopular level ends-up, producing lesser variety and leaves littleroom, for the exercise of novelty. Beyond an application ofinter-disciplinary approaches strictly to consumption, such a lineof reasoning also shows, that the traditional theory of consumerbehavior, ends-in ignoring, the finer differences between variouscategories of necessities, comforts, and luxuries, attributable toscientific considerations. Also, that an extension of suchconsiderations, can yield substantial insights and information,into questions of status seeking, and status consumption aswell. (Scitovsky, 1976, pp. 108-11)) An important contributionof Scitovsky, is particularly the emphasis, that he placesupon consumption as a cultural activity, involving "stimulusenjoyment." (Scitovsky, 1976, pp. 226-36) Thus, in Scitovskyparadigm, the entire question of cultural skills, is brought intolimelight, since it is a major driving force behind taste. In apedestrian sense, a basic level of consumption skills, is ordinarilyimparted to all the members of society, as the minimum sensiblelevel of learning. The extent and the nature of specialization inconsumption skills, is however, determined by the degree andintensity, to which "stimulus satisfaction:" learning is pursued, bythe individual consumer. (Scitovsky, 1976, pp. 189-92) He goes onto argue, that the fine arts are:

vast stocks of past novelty accumulated over centuriesand.... as if culture or consumption skills are thewindows through which to watch and enjoy a colorfulprocession that passes whether or not it was viewed andenjoyed by anybody (Scitovsky, 1976, p 227)

What economists have done, over the ages of the development ofeconomic thought, has been an enumeration, of the various ways,an economy adds to human welfare, in terms of its nature, extent,and composition. Nevertheless, there is a lack of emphasis upon,"the economy's place in the total scheme of human satisfaction."(Scitovsky, 1976, p 80) An economy in terms of various kinds ofcircular flows, establishes a system of "reciprocity," in "renderingand receiving satisfaction," and the need to pay, what a marketprice occasions it. Psychologists on the other hand, often talkabout work as "a source of stimulation," and the fact that it is,itself pleasant. Thus we talk, in terms of structure of marginalutilities, from various kinds of work, just like marginal utilitiesfrom various kinds of goods and services, in consumption. Whenwork is challenging, the reinforcing effect of rising arousal, usuallycarries one, beyond the point of optimum comfort, often creatingtension, and an inner compulsion, to continue, until the challengeis met. (Scitovsky, 1976 p. 93) Economics studies, the calculusof stimulus and response. Thus, human action is determined, bythe responses and reactions of human mind, to external shocksand stimulants. Animal behavior, contrasted to human behavior,demonstrates no major differences, between what an animal maydo for itself, and what it performs for "instrumental" reasons.Instrumental and intrinsic characteristics and considerations,involve a complicated process of reconstruction in humanbehavior. (Martindale, 1978) Thus the measure of civilization,is determined by the extent, and the nature of separation ofinstrumental and intrinsic elements. On the other hand, humanmind is indivisible. It does not possess water-tight compartments,specially designed to deal with specific aspects of human life i.e.religious, economic etc. Consequently, human mind acts as a unit,with individual actions demonstrating, profound relationships, andbearing common characteristics. Since individuals are the basicunits, composing society, the attitudes and actions of society, areinterrelated. (Mitroff & Kilmann) Economics as the study ofdecision process, focuses and discovers, economic interrelations,arising out of individual motivational structure. Thinking andfeeling, are two diametrically opposite routes, that bring anindividual to a point of decision. Individuals tend to specialize,in one of the two. The process of thinking, generalizes frompurely personal to purely impersonal. On the other hand, feelingindividuates and personalizes:

The highest form of feelings are found in ethicalsystems, literature and art, which stress the uniquenessand individuality of all people—the fact that each personmerely as one of an infinite number of similar "means"to be manipulated for society's ends. (Kant)