Economics and Philosophy: Do the Twain Meet?

Posted on April 22, 2013 by

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 Well, in one day it appears we have two interesting pieces of economic news.  In the greater scheme of life these may not rate at the top, but they may be significant.  On the one hand, we have learned that the Bureau of Economic Analysis, an arm of the Commerce Department that provides economic statistics, will in July be changing the way it measures GDP.  It will be including numbers such as research and development, which, apprarently before, was considered a cost of doing business but now is considered an investment.  We are told “entertainment” will also be added.  Now it may be that these and other measures have a valid case to be included.  But I am a little suspicious about some of the measures.  That leads me to the “philosophical” elements of this post.  Ultimately the question of how to measure GDP (or any kind of mathematical entity beyond simple calculation) is a philosophical or even ideological decision.  R&D was once a cost and now it is an investment.  Why the switch?  Pardon my conspiratorial tendency here, but it sounds suspiciously like President Obama asserting that government spending on infrastructure was not a cost to taxpayers but an investment.  I understand that an investment ideally brings a later stream of value (which would be GDP-worthy) but right now it is by my reckoning a cost.  Moreover, what does “entertainment ” mean?  We are told this change may add 3% to the overall GDP.  How convenient.  

The other interesting tidbit of news is the developing “war” of the economic researchers over the debt to GDP ratio.  The article in the April 22 edition of National Review Online gives a good analysis of this new battle.  But I wish to make a few comments also.  First,  again we see that economists cannot settle ultimate questions.  My guess is that this is just the first salvo.  One side has argued, with numbers, that the debt to GDP ration does matter at some point, which we are approaching rather rapidly.  The new study challenges that argument and essentially says that the ratio really doesn’t matter all that much.  Spend away!  In the long run, it will not be a battle of statistics but of policy, whether good or bad.  And policy will be a product of both pragmatism and ideology, not of the objective “God’s eye view.”  That seems self-evident, but in an age in which the “cult of science” is still strong, we need to be reminded.  Economists arguing about numbers, while important, will not solve the ideological issues.  The battle of ideas still rages. And here is where Christians may have–or find–a voice.  It will not be primarily in the evidential war but in the epistemological war.  If we can’t really say what debt does after some point, why do we insist on doing it anyway if it doesn’t seem to work anyway in doing what some economists say it does for the economy?  I’m just asking.

Please don’t think I am opposed to an empirical approach to knowledge. I am not. But after all is said and done the empirical evidence, even if it is accurate, must be interpreted. Beyond that, to be useful, it must also be placed within a philosophical, theological and ethical context. That is, it has to be explained and informed by knowledge that goes beyond the numbers. It has to be judged as good or bad, helpful or unhelpful, just or unjust. And right there can be Christian theology once again. Will the economic (not to mention the political and philosophical world) listen? I don’t know and I have been diappointed in recent decades. But that is no reason to stop trying. So bring on the studies. But let’s allow the normative side of analysis to have its day also.

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