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Noneconomic objectives in the history of economic thought
American Journal of Economics and Sociology, The, Oct, 2004 by Andrea Maneschi
Some economists may object to these definitions and characterizations of policy objectives, arguing that so-called noneconomic objectives relate to variables that have an eminently economic content, such as specified levels of production, consumption, imports, or government revenue. Moreover, as shown in the previous paragraph, noneconomic variables can be assumed to affect social utility in as immediate a way as economic variables such as consumption, directly highlighting the tradeoff between them. Nevertheless, the distinction between these two ,sets of variables is worth making on theoretical as well as policy grounds, despite the fact that it confines the term "economic" to the levels of real income or of consumption. It has also been pointed out that a variable that is designated as "noneconomic" in the short run may well be "economic" in the long run. For example, if the threat of an embargo exists, it may make economic sense to increase the production of crops in the short run so that in a future year the consumption of food may be higher than it would otherwise be. A multiperiod optimization model can thus transform noneconomic variables into economic ones.
II
Noneconomic Objectives in the Classical Period
IN MERCANTILIST TIMES NO DISTINCTION EXISTED BETWEEN economic and noneconomic objectives. In fact, the very concept of a noneconomic objective can hardly be applied to an economy that does not take the maximization of consumer welfare as its primary goal, since a noneconomic objective has been defined above as one whose satisfaction represents an obstacle to this maximization. Indeed, there is convincing evidence that one of the primary noneconomic goals of mercantile policy makers, national power, was regarded by them as consistent with the goal of economic development. According to Jacob Viner (19482 pp. 292-293), "by the mercantilists power and plenty, were regarded as coexisting ends of national policy which were fundamentally harmonious," though he recognized that "economic sacrifices might have to be made in order to assure national security or victory in an aggressive war."
With the birth of classical political economy, mercantilist goals were harshly criticized, beginning with Adam Smith's multi-pronged attack on them in the Wealth of Nations. The dismantling of mercantilist restrictions on economic freedom was advocated so that they could be replaced by Smith's "natural system of perfect liberty," in which the interest of the consumer takes precedence over that of the producer. At the same time, Smith did not hesitate to advocate certain noneconomic objectives. For example, by maintaining that "defence ... is of much more importance than opulence," Smith (1976 [1776], pp. 464-65) supported England's navigation acts. That he was willing to forego some economic efficiency in exchange for greater national security, so that the latter fits Johnson's definition of a noneconomic objective, is made clear by his statement that
