July 21, 2012

Ethics and Capitalism: An Interview with James A. Sadowsky, S.J.—Part 6 of 9


Economic Laws
Do you believe that immutable laws exist in the economy?
Yes.
But how are they established? The natural sciences permit the isolation of variables for the purpose of experimentation, but that’s not possible in the social sciences, where human complexity intervenes.
By means of mental experiments. One shouldn’t confuse prediction with the immutability of law.
But, to analyze the problem of inflation, for example, we have to factor in not only quantifiable aspects, but also intangibles, such as expectations, perceptions, etc., about which we cannot formulate immutable laws.
No, but let’s take another example: the minimum wage.  Can we say that the establishment of a minimum wage leads to unemployment? Not necessarily.  We would have to say that it would tend to increase idleness, but another factor, such as an increase in demand, can intervene, which can alter the expected result.
In what sense do you claim that the laws of economics are the “laws of God”?
In the same sense that physical or biological laws are, because they are an expression of the nature of things God has made.
How do you reconcile the idea of free will with these immutable laws that condition human behavior?
How do you reconcile the idea of free will with the immutability of the law of gravity? Look, if you throw me out of an airplane, I’m going to fall. One is free to be thrown or not, but not free not to fall if that happens.  Freedom pertains to the action that produces a determinate result, but not with the capacity to avoid those results.
If economic laws are so evident and immutable, why do economists differ in a way that natural scientists do not seem to?
They do not disagree about whether or not there are laws that are immutable. They disagree about whether a given law is immutable. I believe, however, that differences between economists are few and far between and these are greatly exaggerated. Between Paul Samuelson and Milton Friedman there might be ten pages of disagreement. In general, the disagreements do not concern laws, but rather politics, policy recommendations. In any case, physicists also disagree with each other. The major difference is that economists seek to establish not only laws, but also social priorities and policies. But by doing the latter they are not supplying economic answers. 
To Be Continued