Some Metaphors Are Better Than Others: Deirdre McCloskey and the Capital Debates

by Philip Pilkington

Fixing the Economists Article of the Week

Well, my previous piece on the work of Deirdre McCloskey generated some discussion. I just thought that perhaps I should lay out what I find problematic about her work.

Follow up:

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The problem with McCloskey is that she practices a sort of false postmodernism of the most insipid kind. Now, I’m not one to throw around that term too much — I greatly admire many of the post-structuralist philosophers. What I mean when I say that is that McCloskey reduces everything to literary criticism and then consigns rational debate to the bin.

I think that this is disingenuous in the extreme because, of course, she herself as a working economist does think that some theories are more true than others that are more false. But the discourse in her books shuts the debate down before it reaches this stage. Consider the following passage on the Cambridge Capital Controversies from her book The Rhetoric of Economics,

The metaphor [of ‘capital’] got out of its coffin in an alarming fashion in the Debate of the Two Cambridges in the 1960s. The violence of the combat suggests that it was about something beyond mathematics or fact. The combatants hurled mathematical reasoning and institutional facts at each other, but the important questions were those you would ask of a metaphor: Is it illuminating, is it satisfying, is it apt? How do you know? How does it compare with other economic poetry? Do we want to talk this way? Why not? After some tactical retreats by Cambridge, Massachusetts, on points of ultimate metaphysics irrelevant to these important questions, mutual exhaustion set in, without decision. Daniel Hausman, a philosopher of economics, noted this in his book on the subject (1981) and nearly saw why. The reason there was no decision reached was that the important questions were literary, not mathematical or statistical (or philosophical). The debaters were answering the wrong questions, as though showing mathematically or statistically that a woman cannot be a summer’s day. No one noticed. The continued vitality of the idea of an aggregate production function (in the face of mathematical proofs of its impossibility) and the equal vitality of the idea of aggregate economics as practiced in parts of Cambridge, England (in the face of statistical proofs of its impracticality), would otherwise be a mystery. (p45)

“Oh, those silly old economists!” we are supposed to say, “how on earth didn’t they realise that they were really just dealing with metaphors?” After a chuckle we go back to our respective camps without having really said anything at all.

The problem with the above paragraph is that the debaters were not as silly as McCloskey thinks. Joan Robinson, who kicked off the debate, knew exactly what it was all about. Indeed, I would say that Joan Robinson had one up on McCloskey because she saw that what was at issue here was only secondarily a question of metaphor. Primarily it was a question of a literary trope that McCloskey seems unaware of; that is, an ’empty’ or ‘floating signifier‘**. Floating signifiers are words without defined meanings. And this is precisely what Robinson found the idea of ‘capital’ to be. (It is also what Sraffa sought to avoid by using a neo-Ricardian framework — in this view, which Robinson adhered to, capital is quite clearly defined as dated labour inputs; or ‘dead labour’, to use Marx’s metaphor).

But of course this all gets buried because McCloskey — doing some rather half-hearted literary excavation — wants to insist that its all about metaphor. Well, let’s take the metaphorical aspects of the Capital Debates then.

The question then becomes which is a more apt metaphor for capitalist society? Is the notion that every person gets compensated exactly in line with the marginal product they produce a superior metaphor to the idea that capital and labour struggle over the social product? That is not an airy fairy question. There is an answer to such a question. But McCloskey seems to imply that there isn’t. She pretends that all metaphors have the same standing. But this is nonsense.

Let’s show why this is nonsense by taking two different metaphorical sentences about modern capitalism.

(1) Modern capitalism is like a machine that grinds over the globe, taking in underdeveloped societies at the front and spitting them out with higher levels of development out the back.

(2) Modern capitalism is like a turtle that gets up out of the ocean and climbs on the beaches of underdeveloped societies before plodding along for a while and then finally falling asleep in the sun of a newly developed country.

Now, are these two metaphors equally valid? Of course not! Metaphor (1) contains information that actually describes some features of modern capitalism. Metaphor (2) is a confused hodge-podge that conveys nothing of relevance about contemporary capitalism. If it were read out of context Metaphor (2) might be considered a sort of absurdist or surrealist joke, while Metaphor (1) would not be out of place in a glossy magazine like The Economist. One metaphor conveys information better than the other — which tries to scramble communication for surrealistic laughs.

So, back to the Capital Debates. Which metaphor is better for describing the world we live in? Well, let’s see. We know from recent empirical work by James Galbraith and his team that income inequality largely tracks the upswings and downswings in financial markets. Well now, the marginalist would have to then say that the marginal productivity of capital tracks the stock market.

Okay, but I would say that the stock market is more so speculative because it crashes all the time and it’s P/E Ratios are all over the place. Indeed, if the marginal productivity of capital tracked the stock market it would be terribly volatile, wouldn’t it? It seems to me highly unlikely that the production share of capital goes through such swings. In which case the stock market is more likely a redistributive mechanism that is utilised by those with already existing economic power and thus the “division of the social product” metaphor seems a better fit.

Now, all that considered, the Cambridge UK theory is looking a lot more plausible than the old marginal productivity theory. Not only that but it appears ever more pressing given that we are faced with such horrendous income inequalities today.

In an ideal world, where both sides of these debates had an equal say in the halls of academia and policy, McCloskey’s relativism would be a harmless distraction. But if it were ever taken seriously today it would simply mean that we should all just stop arguing rational points at all. After all, it’s only a whole pile of metaphors! And the Capital Debates are really just about people with different metaphorical constructions about how the world works (no they are not… but let’s play along…)! We’re never going to agree, anyway, so what’s the point!?

I’ll tell you who wins the day should that nonsense ever be accepted: the group with the most institutional power. That is, the group of economists from out of which McCloskey comes. In another essay McCloskey defends the Greek sophists. She paints a nice picture but she forgets to mention one thing: the sophists were trained to wield the power of the state over their fellow men. And as the great filmmaker Errol Morris once said:

Well, someone comes up to you and says “I’m a postmodernist” or “I don’t care about truth” or “Truth is subjective and there are all kinds of different versions of truth, your truth, my truth, someone else’s truth”, and then you say to them “Oh, so it doesn’t matter to you who pulled the trigger? It doesn’t matter to you whether someone committed murder or not? Or someone in jail is innocent or not? That’s just a matter of personal opinion?” I strongly think that our intuition is that it does matter. It matters a great deal what happens in the world.

In her relativism McCloskey forgets that, well, some people are in jail just as some economists find it more difficult than others to get jobs and publications.

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** Actually McCloskey probably is aware of ‘floating signifiers’ as her emphasis on the ‘oomph’ factor in empirical work deploys such a floating signifier. The question then becomes: why did she want to veneer over this aspect of the debates? The answer, I would say, is because she wants to remain above and beyond these debates while providing a ‘metacommentary’ but if she actually studied them properly she would be forced to realise that some of the participants were not as naive as she thinks that they were. In that case she might — shock! — have to actually take a side in the debate by weighing up the logic and completeness of the arguments put forward.

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