Published in The Edge Malaysia, 13 Jan – 19 Jan 2014.
In the popular television series, “The Big Bang Theory,” physicist Leslie Winkle ends her budding romantic relationship with fellow physicist Leonard Hofstadter after she discovers the fundamental incompatibility in their Physics beliefs, or faiths if you will. While Leonard believes in string theory as the basis for the Grand Unified Theory in Physics (think of this as the holy grail of Physics), Leslie believes in the main competitor to string theory – loop quantum gravity – as the basis for the Grand Unified Theory. The following (hilarious) conversation is illuminating:-
Leonard: Sorry, Leslie, I guess I prefer my space stringy, not loopy.
Leslie: Well, I’m glad I found out the truth about you before this went any further.
Leonard: What truth? We’re talking about untested hypotheses. Look, it isn’t any big deal.
Leslie: Oh, it isn’t, really? Tell me, Leonard, how will we raise the children?
Leonard: I guess we wait until they’re old enough and let them choose their own theory.
Leslie: We can’t let them choose, Leonard, they’re children!
If you simply reread that dialog, you will notice that that conversation is highly applicable to a wide range of subjects. I am certain that the reader can easily pinpoint examples of topics in which the Leonard-Leslie conversation is poignant. On my end, given my economist-in-training status, I associate that piece of dialog with my personal journey of Economics faiths.
The most primitive clash in Economics beliefs is also arguably the most well-known. By this, I mean the differences in beliefs between the Adam Smith markets-type folk in one camp, and the Karl Marx socialism-type folk on the other. I think it is fair to say that anybody who has given some thought to the modern day economic system would have had to at least consider for themselves the various advantages and disadvantages of these diametrically opposed faiths.
This essay is not about these various advantages and disadvantages, but rather to describe the process in which I ‘discovered’ my faith. For the sake of posterity, I believe in markets. I believe that markets are unparalleled in their ability to maximize individual choice, allocate resources and enable social mobility. I recognize that these statements have caveats. After all, it is not necessarily true that those goals should be the ideal goals of an economic system. Neither is it necessarily true that markets always achieve those goals.
The point I am making here is not so much that markets have advantages and disadvantages but the method in which I choose to place my faith in markets as opposed to alternative faiths, a Marxist socialist system, for example, is that I must have, at some point or other, weighed the advantages and disadvantages of the various faiths. When I say that the market system is better or, to generalize the argument, a given thing is better, I must have asked, “Better relative to what?”
The key idea here is that we do not live in a vacuum where only absolute ideas take place. This has always held true throughout history; it is not some advent of the digital age. Various ideas have been taken as fact only to be later cast aside, simply because human beings have the capacity to imagine counterfactuals. For instance, a famous example is when Copernicus proposed that the Sun, and not the Earth, was the center of the “universe”. It went against the conventional wisdom of the time and was labeled as blasphemous. Yet, as we now know, given new information and given new advancements in astronomy, Copernicus was right.
Thus, having faith in an idea implies that I believe that idea to be the most “true” out of any other idea that I have encountered. Thus, since ideas do not exist absolutely by themselves in their own vacuums, it follows thus that for a belief to be judged “true”, it must be judged against other beliefs as well. Continuing the logical process, to judge those other beliefs, we require knowledge and careful evaluation of these other beliefs. When we fail to undertake a careful and well-researched evaluation of our personal beliefs against those other beliefs, we are being intellectually lazy and, worse, dishonest. Indeed, we do a disservice to our beliefs by not testing them against some alternative that may exist.
Consequently, a careful evaluation of our beliefs may either be strengthened or weakened by the arguments of these other beliefs. If it is weakened, then we may ask if our belief is actually that “true” after all. If it is strengthened, it must mean that it held up very well against the flaws and inaccuracies of these alternative beliefs. Whichever the case, the decision is for the individual to make and that decision cannot be made without access to information and knowledge about alternative beliefs. Yes, they could make one’s faith weaker but is getting a better idea or better understanding of what is “true” not a good thing in itself? Why should anyone shun that? Analogously, they could also make one’s faith stronger. Is finding out that one’s faith more “true” also not a good thing?
Therefore, when I say that I believe in markets, I mean that I believe in markets relative to all the alternatives that exist that are known to me after having attempted to, at least, get a preliminary understanding of what these alternatives are and what the arguments for these alternatives may be. For instance, when I say that I believe in markets, it means that I believe the arguments for organizing an economic system around some central planner are not as compelling as organizing an economic system around individual choice. Therefore, exposure to alternative ideas in our society and in our individual lives to either reaffirm or reevaluate our faiths is an absolute necessity in civil society. It is a critical component of being an individual thinker and decision-maker. Bringing it back to the case of markets, to maintain my faith in the market system, I would have needed to evaluate Marx’s arguments for a socialist system which, if you think about it, would have been a significantly more difficult task had I not been able to use the word ‘Marx.’