There is a lot not to like about Economics. <\/p>\n
It seems that most streams of economics appear to be a means for justifying the existing power structure, with the benefit being that economists are given (relatively) high positions within that power structures. <\/p>\n
Political economist Blair Fix makes a good argument that modern Human Capital Theory<\/a>, which resembles a toxic mix of Social Darwinism, and emerged largely from the University of Chicago. <\/p>\n The short version, to use Ayn Rand pulp fiction (and pulpier philosophy) as an example, the investor who pays scientists to create “Reardon Metal” is responsible for all the value derived from this wondrous material.<\/p>\n The scientist who creates this material adds no value, neither does the army of workers who labor to manufacture this material and forge it into shape. <\/p>\n If this sounds non-sensical, note how this is identical to the justification for paying obscene remuneration to founders and CEOs. <\/p>\n The little people just don’t mater:<\/p>\n If there was an award for the most pernicious scientific idea ever, what theory should get first prize? I would vote for eugenics<\/a>, a theory that claims we can \u2018improve\u2019 humanity through selective breeding. <\/p>\n If there was a second prize, I\u2019d give it to human capital theory. I think of human capital theory as \u2018eugenics light\u2019. It purges the idea that abilities are innate (and that we should selectively breed the \u2018fit\u2019). But human capital theory keeps the Nietzschean idea that humanity\u2019s success can be attributed mostly to gifted \u00fcbermensch<\/a>. <\/p>\n Among us, human capital theory claims, walk individuals who are unfathomably productive. These \u00fcbermensch produce more in an hour than most of us do in a week. Take just 1% of these top individuals, and you\u2019ll find that they outproduce the bottom half of society!1<\/sup><\/a> According to human capital theory, then, we could do away with half of society with no great loss to economic output. Of course, few human-capital theorists advocate such atrocities. But my point is that their theory contains the seeds of eugenics \u2026 even Nazism. <\/p>\n The ethical problems with eugenics and human capital theory are easy to spot. But what about the scientific problems? These are more difficult to tease out. Eugenics is based on the hard truth that many traits are heritable. Similarly, human capital theory is based on the reality that some people earn hundreds of times more income than others. Where both theories go wrong, however, is that they misunderstand humanity\u2019s social nature. <\/p>\n Yes, many individual traits are heritable. But it is a fallacy that traits that are good for individuals are also good for society. That\u2019s the core scientific flaw in eugenics. And yes, it\u2019s true that some people earn far more than others. But it\u2019s a fallacy that this income is caused by traits of the individual. In reality, income is a social trait. <\/p>\n My goal in this post is not to rigorously debunk human capital theory. (I\u2019ve done that here<\/a>.) Instead, I\u2019m going to chart its rise and speculate about its eventual fall. I\u2019ll do so by looking at the rise and fall of eugenics. What\u2019s ominous is that the theory that debunks eugenics is today still more obscure than eugenics itself. In a century, will something similar hold for the theory that debunks the idea of human capital?<\/span><\/p><\/blockquote>\n He then compares this to experiments in animal and human eugenics:<\/p>\n In the 1990s, geneticist William Muir conducted experiments on chickens to see what would improve egg-laying productivity. In one trial, he did exactly what the eugenicists recommend \u2014 he let only the most productive hens reproduce. The results were disastrous. Egg-laying productivity didn\u2019t increase. It plummeted<\/i>. Why? Because the resulting breed of hens was psychopathic. Instead of producing eggs, these \u2018uber-hens\u2019 fought amongst themselves, sometimes to the death. <\/span><\/span> <\/p>\n The reason this experiment didn\u2019t work is that egg-laying productivity is not an isolated property of the individual hen. It is a joint property of the hen and her social environment. In Muir\u2019s experiment, the most productive hens laid more eggs not because they were innately more productive, but because they suppressed<\/i> the productivity of less dominant chickens. By selecting for individual productivity, Muir had inadvertently bred for social dominance. The result was a breed of bully chicken that couldn\u2019t tolerate others. <\/span><\/span> <\/p>\n <\/span><\/span> <\/p>\n The lesson here is that in social animals, traits that can be measured<\/i> among individuals (like productivity) may not actually be traits of<\/i> the individual. Instead, they are joint traits of both the individual and their social environment. Here\u2019s evolutionary biologist David Sloan Wilson reflecting on this fact: <\/span><\/span> <\/p>\n <\/span><\/span> <\/p>\n <\/span><\/span> <\/p>\n Muir\u2019s experiments \u2026 challenge what it means for a trait to be regarded as an individual trait. If by \u201cindividual trait\u201d we mean a trait that can be measured in an individual, then egg productivity in hens qualifies. You just count the number of eggs that emerge from the hind end of a hen. If by \u201cindividual trait\u201d we mean the process that resulted in the trait, then egg productivity in hens does not qualify. Instead, it is a social trait that depends not only on the properties of the individual hen but also on the properties of the hen\u2019s social environment. <\/span><\/span> <\/p>\n <\/span><\/span> <\/p>\n \u2014(David Sloan Wilson in When the Strong Outbreed the Weak<\/a>) <\/span><\/span> <\/p><\/blockquote>\n<\/blockquote>\n A key problem with eugenics is that it neglects the social nature of human traits. It assumes that productivity is an innate trait of the individual, and that breeding for this trait would lead to a better society. It\u2019s a seductive idea that is deeply flawed. In all likelihood, selectively breeding people for productivity would, like chickens, lead to a psychopathic strain of human.<\/span><\/p><\/blockquote>\n This sounds a lot like the sociopaths who are in the top 1% of the 1%, doesn’t it? <\/p>\n Jamie Dimon seems to be the apotheosis of such a process. doesn’t he?<\/p>\n The ground work for human capital theory was laid just as eugenics fell out of favor. In the 1950s, economists at the University of Chicago tackled the question of individual income. Why do some people earn more than others? The explanation that these economists settled on was that income resulted from productivity<\/i>. So a CEO who earns hundreds of times more than a janitor does so for a simple reason: the CEO contributes far more to society. <\/span> <\/p>\n The claim that income stems from productivity was not new. It dated back to the 19th-century work of John Bates Clark<\/a> and Philip Wicksteed<\/a>, founders of the neoclassical theory of marginal productivity.3<\/sup><\/a> Clark and Wicksteed, though, were concerned only with the income of social classes<\/i>. What the Chicago-school economists did was expand productivist theory to individuals<\/i>.<\/span><\/span> <\/p>\n