Visions & Analysis

Here's an excerpt from my dissertation:

Heilbroner, R., (1990) makes a distinction between vision and analysis, stressing evidence of both throughout the history of economic thought: “An awareness of these preconceptions forces us to recognise that the world we analyze is not just unambiguously there, but displays the characteristics that we project into it” (Heilbroner, R., 1990:1113). To explain “vision” he utilises Schumpeter’s conception of the preanalytic cognitive act:

[Visions embody] “the picture of things as we see them, and wherever there is any possible motive for wishing to see them in a given rather than another light, the way in which we see things can hardly be distinguished from the way we wish to see them”

Schumpeter 1954:42; (cited in Heilbroner, R., 1990:1109)

This undermines the objectivity of scientific enquiry, as well as highlighting the crucial role in which visions affect (and potentially prevent) learning. Ultimately choice itself is inherently subjective since it’s the product of the chooser’s own epistemic framework, as Shackle proclaims: “Your list of choosable things has to be constructed or composed by yourself before you can choose” (Ebeling, R. 1983).

Austrian economists are often labelled/dismissed as "ideologues" (see Pete Boettke vs Brad De Long). Bollocks. Being honest and open about values is not a concession that one is determined by them. Positivist critics might take the cowardly position of maintaining their own value-neutrality, but often the acceptance of a problem (rather than denial) is the best means to solve it. Sometimes it's a cry for help, sometimes a solution.

In economics, subjectivism is applicable to everyone. We all have preconceptions that shape our analysis, and we should confront them. My recent "3 quick points" sought to shed daylight on some lurking visions, and Jim has every right to respond by exposing my own:

Which in my [Jim's] view propogates the myth that whenever markets aren't providing all people with all they want, it must be the government's fault. A handy excuse.

Does saying that "just because the market isn't currently providing, doesn't mean it might not provide within a different institutional structure" propogate the above myth? I don't think so, because I don't think that government isn't part of the solution. On the contrary, i'm saying that government is the solution, but that solution may be to facilitate a market to emerge.

If Jim honestly believes that private companies have no role to play, then who's going to lay the pipes? Even government provision requires some form of contracting out. The idea that the private sector has no role to play, like the idea that the government has no role to play, is complete and utter nonsense. All i'm saying is that both have roles. That's all. It's not radical, it's not extremist...

In this case, I don't think i'm being a dogmatic ideologue.

Comments

[Jim]

"If Jim honestly believes that private companies have no role to play, then who's going to lay the pipes?"

There's a difference between publicly-funded contracting of the private sector to lay the pipes, and market-led, privately-funded investment. It's the latter which I was trying to point out is chronically lacking in Sub-Saharan Africa, which suggests to me that we need more of the former. Even the increased coverage in apparently succesful 'privatisations', such as that in Senegal, turn out to have been mostly publicly funded.

[AJE]

There's a difference between publicly-funded contracting of the private sector to lay the pipes, and market-led, privately-funded investment

You're definately correct to say this, which is basically the point I was trying to make in response to Owen.

What i'm trying to say is that it's not as clear cut as saying "the market failed, the government must provide", because in truth any solution will be some combination of both - perhaps a market providing (supported by a stable government and legal system) or perhaps a government paying (with a variety of degrees to which private firms are involved - they might tender the rights to one firm, they might allow different firms to operate in different locations, the might offer an advanced purchasing commitment like Owen suggests for vaccines).

These are all alternative institutions, and what i'm getting at is that the government's chief role is to decide the rules of the game, and sometimes (often) that's more important than becoming a player themselves to "correct" things.

I think you leap from the "latter" to the "former" too quickly - you're missing the middle step of asking "might the market provide under alternative institutional framework?"

I agree with you 100% that a lack of effective demand is a major constraint on the ability of a private market to function. But that doesn't make government provision the only alternative. Voucher systems are somewhere inbetween (government funding, but individual control/choice). They might not be the best solution for this problem, but they should be on the table, and they're one of many strategies that I think you're ignoring without sufficient reason.

To be honest I don't think i'm really contradicting what you're saying - i'm just trying to discuss it at a deeper level.

[Jim]

"Voucher systems are somewhere inbetween (government funding, but individual control/choice). They might not be the best solution for this problem, but they should be on the table, and they're one of many strategies that I think you're ignoring without sufficient reason."

I happen to think vouchers would be a pretty poor way to fund water and sanitation services, and you shouldn't assume that just because I didn't mention that option I was 'ignoring' it. But even if such a voucher system was suitable, it would probably still have to be largely funded by the government. That's the fundamental point I'm making - in very poor countries, the private sector can't be relied upon to fund the expansion of water services, and increased aid is much more likely to help. No doubt I could have spent more time getting into the details on institutional arrangements, but I think those are secondary issues to that of funding.

[AJE]

you shouldn't assume that just because I didn't mention that option I was 'ignoring' it
I'm sure that you're familiar with it and have thought about it, I only meant that it's an example of a type of institutional arrangement that isn't part of a "private markets failed therefore government is solution" mindset

in very poor countries, the private sector can't be relied upon to fund the expansion of water services, and increased aid is much more likely to help
I've not been trying to disagree with this statement - i'm arguing for an open mind on what governments can achieve if they use the private sector creatively and effectively

No doubt I could have spent more time getting into the details on institutional arrangements, but I think those are secondary issues to that of funding
I think they dictate funding, and are therefore primary. But you've every right to write a piece that focusses on funding, and I'm glad you're willing to remain in the discussion if it does move onto institutional variables.

Thanks for your thoughts.