I think we are not yet ready to say that in complex areas of life, such as economics, we have all the answers and understand all the principles that we need to and it is possible to go on "auto-pilot" and never have to pay attention or use judgment about the results. I believe that our legal system and, in simpler form, rules of games tend to show the practical kinds of problems that arise with many specific rules or regulations in open-ended contexts. In the realm of legislation, there are laws written which turn out to be bad laws, laws actually counter-productive to their purpose. Sometimes, as in the case of loopholes, laws are incorrectly phrased or they can be complied with in ways that were unintended, unanticipated, and undesired. Sometimes laws are passed which are intended to be helpful, but which do more harm than good; the actual consequences of a law may not conform to the expected ones. In some cases, new inventions or discoveries make new laws necessary or old ones obsolete; organ transplant and other medical discoveries have brought about a host of new moral and legal concerns; and so has computer "hacking". In some cases, such as Sunday closing laws, changing social customs and beliefs, force change. Specific laws just do not always pass the test of time. Changing conditions or new perspectives often make change in them desirable. If constitutional laws once passed were immutable, and the priority of any inconsistent laws the only aspect up for review, it seems likely we would soon find ourselves in a society less than desirable. Our only hope is continuous reasonable reflection and judgment about the directions we are heading and the means we are using to get there. If we are going to make mistakes, at least continued reason and reflection offer the opportunity to discover them.

Even in as relatively simple a game as football, rules are periodically seen as needed changing. Collegiate and professional leagues, at this writing, continue to wrestle with the issue of official calls which seem patently incorrect on video tape. Hash marks are narrowed or widened as offenses or defenses tend to dominate the game in ways that make it not as exciting or not as competitive. Goal posts are moved back, and rules are changed about the spotting of the ball after missed field goals, when kickers become proficient from so far away that field goal attempts take some of the significance out of defense.

Given what happens in sports and in law, it is simply hard to imagine that anything as open-ended and intricate as economics could have both its scientific and its moral elements captured perfectly in principles that would be accurate and precise enough to preclude the need for judgment and that would never again require judgments to be made about their overall justification, their benefit, or their fairness.

What I am discussing are the kinds of problems referred to by Robert Kennedy above where gross national product takes on a function it cannot fulfill and was never intended to have, as being a measure of the full value of an economy. One does not want to be in the position that, I believe, Disraeli already claimed about Americans: "They mistake comfort for civilization." Nor does one want to be involved in the Nixon-Khrushchev kind of debate where one claims superiority of their economic system by virtue of the greater power of their rockets and the other claims that superiority on the basis of the much greater quantity of television sets. One simply does not want to equate wealth or quality of life generally with amount of money or with amount of products and labor available, unless money and the products and labor available can be shown to specifically be of worthwhile benefit.

The whole value of any economic practice is to improve (or keep from worsening), the quality of life. Any economic practice that essentially diminishes, or obstructs the improvement of, the quality of life is a counterproductive one; any that improves, or prevents the worsening of, the quality of life is a good one.

Therefore every economic practice needs to be examined in light of how it effects people and their quality of life, in order to determine whether it is a good practice or a bad one. That does not mean merely examining how much money is made (or spent or lost). It means looking at how much good or harm is done by that money's being made, spent, or lost. There is not always a direct correlation between money, trade, and quality of life, certainly not always a simple one.

Of course, people may disagree in some cases about what is the measure of quality of life -- of what things are good or bad, desirable or undesirable, helpful or harmful. People may disagree about what counts as an improvement or what counts as a decline. But those disagreements need to be made explicit and resolved, not ignored or allowed to remain hidden, in order to make good judgments about the economy.

One of the points of this book is to try to get economists and others who think about, or report on, economic matters to understand and discuss economics and economic principles and ideas in terms of their actual effects on people and quality of life, not just in terms of formulas and numbers, and particularly not just in terms of amounts and flow of money. Most economics books do not tend to do that. There may be a few paragraphs here and there about how certain economic conditions affect living, but for the most part, there is very little explanations about how economic rules, principles, and practices relate to daily life, labor, resources, productivity, burdens, benefits, and the quality of life as it is actually experienced. (Federal Reserve Board chairman, Alan Greenspan pointed this out to Congress in a wry pithy comment during one set of hearings when he voiced concern about the stock market's being so overvalued that it might someday lose a trillion dollars, and then said that an amount that large would actually show up somewhere in the economy.) I will argue that in too many cases then, ideas that improve an "economy" actually force a decline in quality of life, because we have lost sight of the point, because we have confused means with ends, and because we have mistaken symbols for substance.

This is not a book that argues for or against capitalism, communism, socialism, or any other sort of particular economic system; it is a book that will try to explain what sorts of things to look for, and how to recognize them, in order to be able to assess or judge the real merits of any economic practice, principle, or entire system.

In some cases, particularly in the modern industrialized and computerized world, specialized knowledge is necessary to be able to perform some work well enough to be able to earn a living at it, or even to do it at all. In many cases knowledge is the key to saving time, money, and labor. That is obvious to anyone who noticed how long it took to perform a task he was learning as opposed to how long it took once he learned all the steps and became proficient. It is also obvious with regard to the invention, awareness of, and facility with, time-saving and labor-saving machines. 

But knowledge and understanding is also important for social and emotional well-being. Belief and understanding influences emotions. For example, the anticipation of enjoyment brings excitement; the expectation of misery brings dread. An understanding mind can find beauty or interest or see reasons for doubt and despair where others might see only what appears to be mundane and normal. Many people would save time and trouble if they understood themselves and others better, and if the values they learned and developed, and the pursuits they made to realize and achieve them, really met their needs and served them well. This is obvious in the extreme cases of adults who were so emotionally deprived and abused as children that they have beliefs and pursuits in life that cause them and others much agony. But it is also true of those who lead relatively normal lives but who pursue socially accepted values which are not in reality the most humane or reasonable. Such people then often feel empty, frustrated, diminished, or unsatisfied even when they get what they want and are doing everything society tells them they should. Many marriages begin with socially inculcated, but extremely unrealistic, expectations, and in many cases child rearing is made much more difficult than necessary by societal notions about children. On a broader scale, frustration and loss of potentially joyful and useful social interaction often results from confusing the graceful tact and honest civility that permits and encourages proper social and emotional intimacy with an overdeveloped ritualistic etiquette that stifles and prevents it. Civility and understanding promote the benefits of social interaction though they sometimes may allow social errors. But a formalized mechanical etiquette meant to eliminate those social errors far too often prevents the great amount of good while precluding only minimal harms.

The complaints of materialism's being encouraged by certain economic systems is the often reasonable, sometimes not reasonable, lament that in those systems people tend to mistake the value of "things" for the ends those things are really meant to achieve. An easy example is children's toys and the kinds of advertising that promote them. Children are made to desire certain toys because those toys are made to appear to bring excitement and stimulation. But all of us have been disappointed by toys that did not do what they appeared to do in that regard either because the advertising was essentially fraudulently unrepresentative (as in dramatic camera angles, time lapse sequences, fictitious animations, etc.) or because we did not understand it was the imaginative use of the toys that made them fun and exciting. Unfortunately most toys do not come with imaginative use included, and it is also not sold separately. Similarly, those brought up on television, without access to hearing radio dramas and comedies, don't understand that in terms of the mental stimulation, radio was every bit as exciting as television. Reading can be every bit as exciting as either. (When people think reading is too slow, they are obviously not talking about reading something really enjoyable, for no one would say it is worse to have longer enjoyment than shorter; or they simply do not have time for enjoyment, which is sad when their life and leisure is not in their control; sadder still when it is and they do not exercise that control to bring them reasonable joys.) And each can be informative or entertaining in its own special way.⁽¹⁾

Because I am a photographer, I tend to marvel at the incredible array and high prices of cameras that are supposed to help people take better pictures with greater ease and less understanding. For people who just want snapshots, they are extremely helpful in that regard under most normal conditions -- some of the very expensive ones are good under some very difficult conditions. But as of this writing, most people who want to take really good pictures would be better off trying to gain the knowledge how to do that instead of working harder at their job to earn enough money for an expensive camera that they still do not use properly because they have not learned or figured out what they need to do as the photographer to make a picture come out good. The art of photography is not so much knowing how to work the camera technically, but in knowing what makes a good subject for a picture, how to find or form that subject, and in knowing what things your camera can or can not capture the way you want to. Technical innovations do not solve the aesthetic problems; and it is the aesthetic problems that many people who spend lots of money on these cameras are really trying to solve. 

But creating or buying and selling things to meet needs that cannot be addressed by things alone is not a mistake of economics but a mistake of knowledge about what ends we really do want to pursue and about what "things" or actions actually are likely to aid that pursuit and which ones will not. In some cases, of course, manufacturers and distributors hypocritically or fraudulently take advantage of the naivete of buyers; but often the manufacturer or seller is as ignorant of this knowledge as the buyer, and thinks he is doing the buyer a service. Many products and services fail to fulfill the need they were in good faith expected to fulfill. 

Further, it is not the fault of telephone manufacturers that too often we have little of importance to say to each other, or of camcorder makers that we have little of interest to show each other, and that we become estranged rather than intimate; it is not the fault of stereo manufacturers that people do not know how to enjoy Beethoven but instead have to listen to things they can enjoy more immediately or more directly, and more quickly. After all, these same manufacturers have, by their products, made the music of Beethoven, the voice of Caruso, the words of Churchill, the works of Michelangelo, and the ideas of Einstein more accessible to more people than ever before; and it is not the fault of microwave oven manufacturers that most people do not know how to cook anything really delicious and exciting. From a purely economic standpoint because of many of these things, more knowledge, art, and worthwhile social interaction are more available for less cost and effort than ever before in the history of mankind. Whether we use them to make our lives more enriched rather than more alienated has less to do with our economic system than to the social ends which we allow an economic system to be channeled. 

This involves questions of knowledge and understanding, and of having social values and a social system that encourages and facilitates learning; they are not questions of economic systems -- unless people make the judgment, or passively default to the idea, that social goals are purely economic ones. (And in a market economy then people would have to judge or assume, that (1) economic goals are purely financial ones, (2) that market transactions are the most financially profitable ones, (3) that financial profit should be the prime social goal and should be sought by any means no matter at what non-financial personal or social costs.) That is not the belief of most people. At this point there are clear socially acceptable limits to market transactions, not everything is legal or socially acceptable that is profitable. To say that in a market economy people cannot tell the difference between acceptable social practices and unacceptable ones, other than by whether they meet business or financial principles or not, is like saying that a tennis professional could not play tennis with his young children or mixed doubles with his wife and social friends without trying to beat them as badly as he could. Even in the financial stratospheres of professional sports, most athletes, though they want to win and cash in on their winnings, do not want to win by default against an opponent unable to play his best. And many athletes, as many other businessmen, still turn down higher salary offers from other teams or companies if they are living in cities where things other than financial wealth make them or their families happy. People are able to distinguish when market financial forces ought to be allowed to apply and when not. 

There are forces at work to change that, but those are more psychological forces than economic ones. It is natural to apply successful ideas in one field to problems in other fields. Sometimes that works, but sometimes it does not. People may bring to business the things they learned in sports. They may bring to education the things they learned in psychology. They may bring to university management the things they learned in business, or to business innovation the understanding of creativity they learned from the arts. At this writing there is a trend to try to bring business or market techniques to education to improve it. The question of these kinds of transfers of technique is how much of any one area can apply successfully to how much of the other area. All such efforts need to be evaluated empirically and by judgment. Regarding empirical evaluation, for example, Elizabeth Anderson argues ("The Ethical Limitations of the Market"; Economics and Philosophy, 6, 1990; Cambridge University Press) that operating schools by market principles will preclude people from having a voice in how they operate, since she holds that in the market people have no voice but only the option to purchase or not to purchase ("exit"). Milton and Rose Friedman, in Free to Choose, argue that the market would give parents more options. That is an empirical matter, though I suspect neither will be right as a matter of general course. There are many successful private businesses and industries that ignore or do not understand customer's interests and are able to get away with it when customers have no better place to turn. There are many businesses and government agencies, on the other hand, who care about people's needs and interests, and who are adept at discovering them and catering to them. If the same people who honestly believe they doing a good job in public schools today regardless of what parents and others say, were to be in charge of private schools they still ran the same way, parents and others would have no more or less voice than they did before. In the market one has a voice to those businessmen who will listen; and one has an option in the public or private sector, only when an option (including exit) exists. The market works to meet needs when the market provides real alternatives to undesirable products and labor; it does not work to meet human needs when everyone competes with each other by putting out products and services that are merely different in the way they are undesirable. As one who has watched teachers, administrators, and school boards and superintendents repeatedly ignore what citizens seek academically, I have no reason to believe, as Dr. Anderson does, that citizens have voice in the operations of public schools now. (One principal in a local public school system I am familiar with even explicitly told a parent one time that she did not care what sort of program the parent wanted for her child since this was a public school, not a private one, and she did not have to cater to the desires of parents.) But I do not believe, as Dr. Friedman does, privatizing schools without changing out the staff or administration would give any different options or give the public more voice. In the area where I live, private schools are not in general significantly academically better than the public schools and, though different sometimes in other ways, are basically not that very different instructionally.

Any changes also need to be evaluated not only empirically with regard to the improvements or diminutions they bring about in regard to their stated goals; but they need to be evaluated with regard to broader judgment about whether those goals are the important ones, whether the instruments monitoring their achievement are accurate or not, and whether they are justified in light of the other kinds of harms or benefits (i.e., side-effects or unexpected consequences) their use causes or promotes. Evaluating free market techniques applied to new areas is no different. When businessman Fob James became governor of Alabama, he wanted an "inventory" of students' abilities. Tests were devised to be given at certain times. At issue, however, in Alabama, as elsewhere, is the question of what tests actually measure. To use James' analogy, it is not clear whether the "inventory" procedures he installed measure things of importance, or whether they keep track of trivialities while missing qualities of significance. Measuring knowledge, even if one could accurately do that, does not measure understanding, reasonableness, inventiveness, nor the ability to communicate. Nor does it measure curiosity or desire or ability to learn on one's own once one is out of school (and the average person is out of school far, far more than he or she is ever in school).

Unfortunately, many areas succumb to market judgments incorrectly, and then face periods of agony where people notice something is wrong but are not quite sure what, because the assumption is deeply embedded that the market techniques are not at issue. Advertisers influence print and television news, and network business offices force news and program directors to pander to short-term public interests. Pandering is in fact a problem in many areas of business because too many businessmen confuse pandering with serving the public. They argue that not to give the public what it wants is not smart business and is arrogantly trying to force your tastes on others. There are middle grounds between giving people whatever they think they want and are willing to buy on the one hand, and offering what you think is best for people though not enough people want it. One middle ground is to supply enough of what people want to make sufficient profit to offer what only a few want at first, and hope that other's tastes will improve as they are exposed. Another is to try to change tastes by subtle or interesting improvements in quality of what already is marketable. A third is by using successful promotional techniques to market initially undesired things of quality and value -- to make good and perhaps complex things as desired as fun and easy things. These middle grounds are not even necessarily anti-market practices, for promoting new or expanded lines is often more profitable than sticking merely to what sells today.

While a picture is supposed to be worth a thousand words, that is only true about those things which can be pictured. Many things, such as the descriptions of emotions and feelings, or some complex ideas, concepts, or relationships, can be expressed better in words than in pictures.  And many times the way an author would describe what might be seen in a movie or in a picture, is far different and far better than the way the viewer thinks of it when seeing it.  Movies made from books such as Jane Austen's novels, for example, pale in comparison to the books themselves, because it is her characterizations of what you are watching that are so observant, interesting, witty, and wry.  When you watch a movie made from one of her novels, it is like attending the events she writes about without getting to hear her observations about the event.  But it is knowing her observations that make it so interesting. It is not just seeing what she sees, but hearing or reading about the way she sees it that would be exciting about going to something with her. (Return to text.)