Comments on four papers on economics and human heterogeneity

American Journal of Economics and Sociology, The, July, 2005 by Malcolm Rutherford

Let me begin by saying that I found these papers to be a fascinating set to read. All deal with the issue of "difference": Are all people basically the same and to be treated as of equal worth, or are there important qualitative differences between individuals or groups that might lead to them being treated differentially?

Dimand's paper is an attempt to look broadly at the issue of "the other" in classical and neoclassical theory. The paper is wide ranging; involving a thesis that classical and neoclassical economists tended to "exclude" certain groups (including women, the working class, and nonwhites) from the operation of their general principles, the general principle in question being that "all people are capable of judging their own best interest and making rational choices."

Now, I must say that I have a serious problem with the characterization of this "general principle," particularly as applied to classical economics and classical utilitarianism. While it is quite clear that Adam Smith and the later utilitarians did accept a general principle of equality, they never argued that all individuals actually do make rational decisions. What they did argue was that individuals all had equal potential and could be educated to understand their own best interest. What is in one's best interest, especially when it comes to matters of long-term interest or of public policy, is certainly not simple, transparent, or immediately obvious. People are likely to know their own immediate interests the best, so that the state should not attempt to direct the industry of private people; but that is a long way from saying that individuals are always the best judges of their own best interests.

It is common within classical economics to find the argument that various groups do not behave in their own best long-run interests: the laboring classes in their reproductive behavior, certainly, but also (for Adam Smith) the landed class in their support of mercantilist trade restriction and monopolies. This has nothing to do with differences in innate capacity but with differences in education and conditions of life, and it is not at odds with their "general principle" as I have restated it.

An example, and one that is very conspicuous by its absence from Dimand's paper, is James Mill. Mill, of course, was an ardent utilitarian but, as is well known, he was a great advocate of widespread education. People need to be educated so as to be able to understand their own best interest, and what is in their own interest is often quite complicated. Consideration of the impact of actions on other people, choosing the right government, and selecting the right policies are all difficult problems. This is a problem that also concerned J. s. Mill, and in his Representative Government Mill advocated proportional representation, plural voting, and a literacy test for the franchise in order to reduce the influence of the ignorant. Thus the principle of each to count as one is modified on the basis of educational attainment.

On the issue of women and family life, it is true that Adam Smith does not discuss the division of labor within the household, but it is difficult to infer much from this concerning his more general attitude toward the capacity of women. As for women's work being unproductive under Smith's definitions, I would think that in 1776 a great deal of women's work produced tangible output (women spun, knitted, made clothing, participated in the harvest, and so on).

On the issue of Asiatic societies, Dimand discusses only Marx. Again, I think the work of James Mill on India is instructive and more central to classical economics. Mill, like many classicals, used the Scottish four-stage theory that saw societies "progressing" through the stages of hunting and gathering, pastoralism, agriculture, and commercial society. Mill, in contrast to many others at the time, argued that India (and China) were backward and that "progress" in these countries required close contact with Europeans as well as legal reforms. Again, Mill did not regard Asiatic people as inherently inferior but as capable of "civilization"; and however Eurocentric his viewpoint, he discussed Indian society entirely within his analytical system of Scottish conjectural history and utilitarianism.

John Rae appears to have had more doubts about the possibility of "civilizing" nonwhite peoples such as North American natives. Nevertheless, it is not clear to me to what extent Rae regarded the "effective desire for accumulation" to be a matter of heredity as opposed to a matter of culture and way of life. He mentions both as possible causes, but his discussions seem to focus on the latter. Senior and later Fisher refer to Rae on this matter, the latter using an apparently racial interpretation--but so did J. S. Mill, and it is not the case that Mill thought the effective desire for accumulation was a matter of racial difference. On the more general issue of saving and provision for the future, the idea that people quite generally suffer from some kind of "deficient foresight" is to be found widely in both classical and neoclassical economics.