Brooks’ “liberals hard, conservatives soft”: a false dichotomy

In today’s New York Times, David Brooks writes about “the two cultures” he observes:

Most of the psychologists, artists and moral philosophers I know are liberal, so it seems strange that American liberalism should adopt an economic philosophy that excludes psychology, emotion and morality.

Yet that is what has happened. The economic approach embraced by the most prominent liberals over the past few years is mostly mechanical. The economy is treated like a big machine; the people in it like rational, utility maximizing cogs. The performance of the economic machine can be predicted with quantitative macroeconomic models....

Conservatives, who are usually stereotyped as narrow-eyed business-school types, have gone all Oprah-esque in trying to argue against these liberals. If the government borrows trillions of dollars, this will increase public anxiety and uncertainty, the conservatives worry. The liberal technicians brush aside this soft-headed mush. These psychological concerns are mythological, they say. That’s gaseous blathering from those who lack quantitative rigor.

Brooks is clearly against the hard liberals, and on the side of the soft conservatives. The tone of the article is that non-“mechanical” perspectives are being ignored in the economics that prevails among those associated with the Democrats, the party in power. 

Yet little is as Brooks describes it. For a start, traditional economics – whether monetarist/supply-side or Keynesian – has been on the defensive since the financial crash. In its wake, there has been a search for a “new economics” that aims to take on board Brooks’ notions about psychology. Behavioral economics in particular has become one of the favored approaches (see, for example, Animal Spiritsby George Akerlof and Robert Shiller).

Indeed, an entire new organization, the Institute for New Economic Thinking (INET), has been established with the objective of promoting non-traditional economics. And who is behind INET? George Soros, one of the most prominent and wealthiest liberals (and bogeyman of the right). This points to another flaw in Brooks’ argument: that liberals are the hard ones, ignoring the emotional side. Most of the writers in the behavioral vein, including Akerlof and Shiller, are liberals. They use the argument that the irrationality of actors in the market (individuals and institutions) creates the need for the state to step in and regulate. (Their view assumes that the state functionaries are elite and not subject to the same irrational impulses that everyone else supposedly suffers from.)

Maybe Brooks was thinking about something other than behavioral economics. Maybe the aim to measure “happiness” instead of, or in addition to, the usual quantitative measures like GDP? Well, if so, there too he’s wrong: probably the highest-profile proponent of this idea among economists is Joseph Stiglitz, a liberal.

Liberals are more associated with psychological theories, but my guess is that there are conservatives out there too that are working with these ideas (I just can’t think of any right now). But no matter what political-philosophical persuasion, Brooks’ basic idea is a misguided one. Psychology can have a place within economics, but it does not negate the need for an objective, scientific approach to understand macro-economic dynamics. Classical economists, from Smith to Marx, wrote about psychology, but still sought to discover the laws of motion of the market-based economy.

The emergence of behavioral and other non-traditional economics is based on (a) the lack of confidence among traditional economists following the unexpected crash; and (b) the general low-opinion of people’s capabilities, and thus blaming the meltdown on qualities such as greed and stupidity. But these approaches cannot grasp the broader, structural forces at play. They are also ultimately pessimistic, since they posit the inherent irrationality of people who, by their definition, are incapable of fundamentally changing.