Harvey Mansfield on economists

Kent Guida sent me this very interesting article; here are a few bits:

The economists I know are generally, as individuals, sober and
cautious, the most respectable of all professors and in their honesty
and reliability representing the best in bourgeois virtue. But when
they get together as economists, they give way to boyish irrational
exuberance over the accomplishments and prospects of economics as a

…Overconfidence in overcoming chance is the way of life recommended by
economists. It is the way of life known as progress by liberals and as
growth by conservatives, who are secretly united by overconfidence in
their knowledge of the future which they describe diversely and call by
different names.

…Now, the main consequence of living the over-confident life is to
believe that virtue is not necessary. Perhaps this is the main cause as
well as consequence of that life. Virtue is a chancy quality because
you may not have it or live up to it. It seems less reliable than
self-interest with its allies, fear and greed. Everybody has
self-interest, which is not true of virtue. But at least virtue does
not depend on predicting the future. On the contrary, virtue is a
resource for everyone when bad times come–something to fall back on,
to give cheer, to restore. On top of that, virtue will save you from
being corrupted by good fortune as well. This is the great truth taught
by the Stoics.


This strikes me as an attempt to defend virtue as a more practical strategy than scientific prognostication. But however hazy predictions may be, they are (on the personal level) likely to triumph over predictable and easily manipulated virtuous people. While I am uncomfortable about the implications of economic thinking on proper behavior, a defense based on practical returns doesn't seem (heh) optimal.


If you liked this article, you might find this interesting: http://static2.capitalreach.com/aei/media/10349.mp3. It's a presentation given by Mansfield back in 08 at AEI. I think I remember it being about his new book on Tocqueville, but what I mostly remember is the extended critique of Sunstein's "Nudge." Mansfield approached Sunstein's work from a similar stance, what about a citizen's virtue? If some government "choice architect" all but makes your important decisions for you, what are you left with in terms of your virtue? What have you gained as a person? I found it interesting.


I've never found virtuous people to be easily manipulated.

The first line in the quote seems to directly contradict something Mansfield said a while back: "The building where I used to work was shared with economists, who, living the sort of life they describe, had no incentive to flush and sometimes failed to do so." --- http://gregmankiw.blogspot.com/2006/10/libel-from-harvey-mansfield.html

Do any economists actually say "Greed is good"? It seems instead like something you hear anti-economists say when they put words into economists' or capitalists' mouths.
The truth behind that phrase is a little more subtle & hard to convey, I think. I think what economics tells us is that altruism has a dark side. To exhibit naked altruism, you must have a recipient who is powerless. To extend your altruism, the transaction must be the result of your decisions. To the extent that the receiver can demand his own self-interests, it ceases to be altruism & simply becomes a standard economic transaction. This is an improvement over altruism in the sense that the transaction is an integration of 2 individuals' interests instead of the imposition of virtue from the powerful to the powerless.
The dilemma is that when we don't find outlets for our own virtue by subsuming our own interests to the interests we perceive in others, we find something missing in ourselves.
This is one reason that our biology makes progress difficult to accept. Our brains are programmed to static lifestyles in small tribes. We have become better than that, but our psychology isn't built for the new paradigm.
There remains the fact that there are people in need, so altruism is useful. But, it is useful because self-interest has not been allowed to operate, not because it is superior to self-interest. I think we will always find objects for altruism, such as caring for injured birds, etc. But, at the risk of sounding cynical, I think in the end it is our own needs that are driving that behavior.
I think this is a large ingredient in the persistent myth that the poor in our country are constantly doing worse at the expense of the rich. The idea that there are people we can help by supporting the right political party, and with other people's money no less, salves these psychological dilemmas in ways that are easy for people. Every time you're listening to the radio and someone argues against the minimum wage, you can feel the tingle of self worth that comes from altruism, so the idea that there is a powerless & growing underclass that needs political support would be very difficult to depopularize.

That's a good point. But, maybe much of these discussions hinges on the problem of the definition of "greed". I tend to be frugal. I don't have the latest Ipod because I'm greedy & I like having $300 instead.
But your point about virtue is well-taken.

Is overgeneraliztion a virtue? Harvey heal thyself.

If one wants something and trades what one has with others to get it, even if one drives a hard bargain, this is virtuous.

If one uses deception, theft or violence (threatened or actual, private or public) to get things, even to give them away to others, this is not virtuous.

Interesting article. Brings to mind, of all things, Michael Lewis' book, Moneyball. The book seems to be loved by economists (ok, by everyone), but think of Billy Beane's perhaps most famous line from the book: My shit doesn't work in the playoffs.

That's the humility (well, kinda) of a man who knows how things work, knows what works, perhaps better than anyone else in his profession - yet admits that, on the biggest stage, the outcome depends on factors beyond his control.

Where is the economist who is willing to say, "My shit doesn't work in a recession." Or, "My shit doesn't work in a crisis." Or, "My shit doesn't work and I don't know why."

Prediction isn't the goal of economics, economists are interested in understanding structure so that we can entertain counterfactuals and make policy recommendations.

I wouldn't say it follows that prediction isn't a goal, though. Those policy recommendations are based on the idea that the state of the world under policy regime X is going to different than the world under policy regime Y. That's a prediction that can, in theory, be tested. I don't think you can call a field of study "social science" if it doesn't make testable predictions.

In any case, based on the excerpt, I think Mansfield gets it wrong. I haven't seen any economists who think seriously about these kinds of questions say virtue is unnecessary or that self-interest can replace virtue. Instead, as he points out self-interest is more reliable than virtue.

For conservatives, even the most virtuous society has prisons and police and courts. You can say society or maybe even the government has a role in promoting virtue but it is incredibly unwise to structure society so that it depends on virtue for its existence. By contrast, if you structure society so that self-interest is harnessed for the greater good, that society has a reasonable chance of remaining strong.

These were all points well-known to Adam Smith.

I would rather economic models be conservative with the potential for an upside surprise than overly optimistic with downside surprise.

Prediction isn't the goal of economics, economists are interested in understanding structure so that we can entertain counterfactuals and make policy recommendations.

Nonsense. Entertaining counterfactuals is precisely the art of applied prediction. Your point is like saying, "Prediction isn't the goal of physics, physicists are interested in understanding structure so we can engineer things."

Harvey tries to bury the point that, yes, there were some economists who saw this coming, because that would get in the way of his bloviating.

Yes, as far as I know there was Roubini and now you bring that guy Rag Raj. It makes it 2 as far as I know. Out of, what, a few thousand economists in academy and finance? Terrific.

Now I'm totally convinced that economists are the gift to Humanity and not a bunch of over-educated arrogant putzes one would think they are.

Everybody needs to read RE's comments. It's so true, Nassim Nicholas Taleb has already wrote of this in his FOOLED BY RANDOMNESS years ago even before THE BLACK SWAN. Econ students that I know at school disregard Nassim because of his tone and personality, but Russ Roberts at ECONTALK and CAFE HAYEK and also Steve Levitt seem to have learned a great deal from him. What's funny is that Tyler Cowen disrespects and doesn't understand Nassim, but finds this essay, which is what Nassim already pointed out about economists being arrogant bastards, interesting. Tyler might need to slow down on his speed reading sessions or quit the econ profession altogether along with most economists who got everything wrong about the current crisis.

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