The Art of Misleading: How Economics Uses Sophistry to Keep Us Poor
The "Scarcity" Example: Overgeneralization and Equivocation
“...the economists, the scientific representatives of bourgeois production...”
(Marx, The Poverty of Philosophy (Das Elend der Philosophie 141, MEW))
Sophistry is a school of philosophy in ancient Greece. Most of us know sophists primarily from reading Plato. The picture that emerges is that sophists were not so much concerned with the truth, but instead with convincing people by means of rhetoric that they, the sophists, speak the truth. Whether that does justice to classic sophists or not, “sophistry” means today to deceive people with the clever use of language.
Sophistry, in that sense, is at the core of economics, the academic discipline. Contemporary sophistry, however, has significantly advanced over its antique counterpart. We can analyze this using the example of a generalized version of a famous sentence found in most economics textbooks.
“Economics is the study of how individuals, businesses, and governments make decisions to allocate scarce resources to satisfy various wants and needs.”
Why scarce resources? The seemingly innocent answer
In essence, in this sentence, economics is about the study of the allocation of scarce resources. Now, if you are like me, you might find this idea problematic. Why are resources scarce when it appears that they have, in many ways, become abundant through various technological and organizational revolutions? And why should economics not be about the creation or production of abundance using technology and sophisticated organizational methods?
The reply to this kind of question, which you will get from economists, is that nothing in their account of economics prevents us from pursuing economists in the latter sense. Because producing abundance through technological progress is compatible with the allocation of scarce resources, since “allocation” involves the idea of “production”.
Likewise, “abundance” and “scarce resources” do not exclude each other; that is, even resources that are in a sense abundant are still in another, technical sense, scarce, as long as we have not found a way to create matter from nothing or relative to the concept of “unlimited”.
Generalization and abstraction at the core of sophistry: Concept inflation
What happened here? How is the idea of economics that I suggested compatible with the scarcity conception of economics? The answer to that is that economists tend to use overly general and abstract concepts.
In the sentence “economics is the study of the allocation of scarce resources,” the meanings of “allocation” and “scarce resources” are so wide, and importantly, so uninformative, that you can subsume basically every other formulation of economics under it.
As long as we do not find a way to quite literally create unlimited resources, the sentence that “economics is about the allocation scarce resources” is always true. Likewise, as long as we conceive of production, trade, and what have you roughly the way we do, they always fall under “allocation”.
This whole situation might seem harmless at first. So, what if the discipline is defined by uninformative, overly general and abstract statements? Does that not allow for inclusivity and the co-existence of different approaches? In theory, it does, yet not in practice. Rather, overly general and abstract definitions are not seldom used for the following sophistic strategy.
From concept inflation to equivocation
First, sophists from economics to philosophy like to formulate their theories in overly general and abstract concepts. A strategy we might call, for the lack of a better word, “concept inflation”.
However, they do not seldom use concepts that have a clear ordinary language meaning. For instance, “scarce” has a clearly negative, restrictive meaning in ordinary language. When pressed on their concept use, sophists refer to the technical use when they have to defend their theories.
However, economists often follow the ordinary language meaning of "scarce" in their work and hope that others and the public do so too. In that sense, they equivocate the technical use with the ordinary language use, depending on the context that fits them best.1
This, in a nutshell, is the sophistic strategy we see at work here. In the following, I outline the consequences of this strategy.
When scarcity entered liberal economics
While you can mean “scarcity” in a relatively innocent technical sense, it has historically and politically speaking clearly a rhetorical framing function in accordance with its ordinary language use.
Economics, since the age of liberalism, has turned from statecraft, which was concerned with developing progress and the wealth of countries, into an abstract discipline that mainly seemed to have the function of supporting the transition from feudalism to capitalism, and today, of justifying capitalism.
Defining features of capitalism are (a) poverty, which is, abstractly speaking, a form of scarcity, and (b) false or artificial scarcity in general. (a) If economists claim that resources are scarce, they hope to elicit the picture in the population that poverty as a result of resource scarcity is normal and natural. (b) Artificial or false scarcity in capitalism is the intentional restriction of resources or goods to increase prices or generate exclusivity, despite there being sufficient supply to meet demand.
A mundane example of artificial scarcity can be witnessed on the housing “market”. Developers and investors may hold onto properties without developing or renting them out, waiting for values to increase. This practice reduces housing availability, drives up rents, and exacerbates homelessness and poverty among residents who cannot afford the inflated costs. However, if resources are normally scarce, artificial scarcity can be veiled as a supposedly natural state.
Scarcity and the “fight over scarce resources”
The idea of scarcity constantly reinforces the idea of a constant fight, of constant competition over resources. And as Marx already saw, the idea of competition has the function of justifying a system that brings about few winners and many losers. This conception of economics is in stark contrast to a conception of economics as the statecraft to create abundance for all.
Again, economists will claim that none of that is intended. And indeed, many economists will operate with these terms without that intention while nevertheless causing the ideological effect, originally intended by the theoretical founders of liberal economics.
"Scarcity," for them, is supposedly merely a technical concept. But if we look at the history of economics, we see that exactly the capitalist conception of scarcity is reinforced, which makes sense because “scarcity” evokes in most of us the ordinary language meaning of scarcity instead of the “technical” use in economics. This tacit switching between ordinary language meanings of terms and their technical use is indeed at the core of the sophistic rhetoric of economics.
The self-defeating use of “scarcity”: What it says about economics
Moreover, most resources are scarce. In a certain sense, all allocatable resources are scarce. Therefore, we should ask ourselves why scarcity is relevant for the definition of economics.
If “economics is the study of the allocation of scarce resources” is trivially true given the wide and abstract scope of the concepts used in it, then we do not need the concept “scarce” since it is analytically contained in the meaning of the technical sentence “allocation of resources”, since all resources are technically speaking “scarce”.
This redundant use of “scarcity” suggests even more that “scarcity” plays a rhetorical, sophistic role by means of semantic framing.2
Concept inflation and equivocation have unfortunately become common in philosophy too. For a more detailed discussion see Jeuk and Petrolini (preprint): “Analytic Intellectualism on Skillful Action: Between Descriptive Poverty and Conceptual Overgeneralization”, in particular pages 19-24. For a similar critique see Jeuk and Spang (preprint): “Ideal Theory cannot (and should not) use Scientific Idealizations”.
“Scarcity” is not the only concept that has an ideological function in economics. The same goes for “market”, “competition”, and even “allocation”. All these terms seem technically innocent but have a semantic framing function. cf. Jeuk and Spang (preprint): “Analytic Marxism and Economic Feasibility. A Defense of Central Planning.”