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The New Leader. 84.6 (November-December 2001): p2.

GEORGE P. BROCKWAY, who initiated the NL column called “The Dismal Science” and presided over it for almost two decades, died on October 5. He was 85 years old.George P Brockway

An imposing figure, Brockway tended to dress conservatively, although you could detect a bit of whimsy in his bow ties, soon confirmed by a quiet sense of humor. His voice was unexpectedly soft, but you also quickly recognized that he knew where he was coming from and where he wanted to go.

Brockway was born and brought up in Portland, Maine; his parents were rock-ribbed New England Republicans. During one of our periodic lunches with him, we wondered how a reputedly tough bargainer who had built one of the country’s major independent publishing houses came to have an unabashedly strong liberal commitment. While a student at Exeter, he explained, he was asked by the school magazine to take the Herbert Hoover side in an exchange on the 1932 Presidential election. Given his family’s politics, he eagerly accepted the assignment. “But after reading what I had written,” he said, “I realized I didn’t believe a damn word of it.”

At Williams College Brockway majored in English and was editor of the literary magazine. The teacher he felt had the greatest influence on his thinking, though, was a philosopher of history, John William Miller, who focused on the interrelation of man and nature. Since a sheepskin and a Phi Beta Kappa key did not automatically open the door to a job in 1936, Brockway spent a year at Yale on a graduate fellowship before joining McGraw-Hill as a trade book salesman.

In 1941 he signed on as William Warder[1] Norton’s assistant at the prestigious, growing W.W. Norton and Company. Besides selling books, in relatively short order he was editing prominent writers, developing the Norton Anthology series, and shrewdly buying up the backlists of other firms. By 1958 he was named president, and in 1976 he became chairman of the now wholly employee-owned company, structured to resist the advances of corporate raiders.

What Brockway did not anticipate was Reaganomics, whose highflying inflation and 21 per cent loan rates threatened Norton’s collapse. Despite discovering that he didn’t really have a friend at Chase Manhattan, he somehow managed to overcome the crisis. Then, on the train home one night, he decided he didn’t want to do what he was doing anymore and would retire at the end of 1983, at age 66. But first he set about carving out a second career. Thus the query we received from him asking if we would consider a regular column “on what used to be called political economy.” Familiar with his writing from several pieces he had done for us over the years, and pleased with two sample columns he submitted, we said yes.

“The Dismal Science” began its 20-year run in the NL of January 11, 1982. Brockway’s relaxed conversational style, and his daring to insist, for example, that an economic recovery with 6 or 8 or 10 per cent unemployment is not a recovery, instantly won him an appreciative audience. Even those infuriated by his central thesis–that “economics is a branch of ethics, not of natural science”–could not resist reading him. In these pages, of course, that will no longer be possible. But we would note that a thoroughly revised, handsome fourth edition of his second book, The End of Economic Man, has recently been issued. His two other books on the subject, Economists Can Be Bad for Your Health and Economics: What Went Wrong and Why and Some Things to Do About It, are also available.

We will miss his demystifying wisdom and his collaboration, but most of all we will miss George Pond Brockway’s friendship.

 

[1] Ed.:  In error The New Leader wrote “Walter Norton’s assistant.”  The name was William Warder Norton, or W.W. Norton

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By George P. Brockway, originally published March 7, 1988

1988-3-7 Serving Two Maximizers Title

WITH THE EXCEPTION of philosophy, all disciplines start with assumptions.  I’ll be glad to discuss the exception with anyone who wants to stay after class. For now, let’s concentrate on two assumptions of economics as it is generally taught and understood. The first is that economic producers are profit maximizers. The second is that economic consumers are utility maximizers. Sometimes these assumptions are explicitly stated, as by mathematical economist Gerard Debreu, and sometimes they are accepted as too obvious to warrant discussion, as by Frank Hahn, another mathematical economist. On the other side a considerable literature exists questioning their realism. Given the enormous range and variety of what people do, not to mention the comparative effectiveness of those doings, it is argued that the multitudinous actions cannot all be examples of profit maximization. It is similarly said that the different ways we spend our money – certainly idiosyncratic, frequently wasteful and occasionally counterproductive – suggest that utility maximization is an idea without much real content.

Personally, I see much merit in those objections; yet I also see force in the rejoinder that it would be irrational not to try to maximize profit or utility, as the case may be. If you can get more of either, why shouldn’t you? Indeed, since maximum profit comes from the most efficient use of scarce resources, can it not be said that you have a duty to seek it? After all, this is the way Adam Smith’s invisible hand seduces selfish behavior into producing public good. Nevertheless, I’m going to demonstrate that the whole scheme is inescapably fallacious.

For look at me, a profit-maximizing man. Not only am I clever, bold and ruthless; not only do I stretch the law as far as it will go in my favor (but no farther); not only do I push my employees to the limit and deal as sharply as I can with my suppliers and my customers; not only am I admired and feared as a keen and tough competitor-beyond these delightful qualities I am necessarily a workaholic. As long as there’s another dollar-another penny-to be made, I am after it, not like a hawk (I have no time for soaring), perhaps like a weasel.

If there’s no way to squeeze more out of my regular employment, I go moonlighting; and when I finally fall into bed, I lie awake a long time scheming ways to increase my profit tomorrow.

Unfortunately, I never get to enjoy my winnings. I’m too busy. If I were to relax a moment, a main chance might pass me by. Literature is full of monsters like me. Dickens would have had to shut up shop if he hadn’t had such people to write about.

Literature is full of utility maximizers as well-charming wastrels who live a life of endless pleasure. Women are supposed to be enchanted by them.  Until very recently, women were themselves supposed to live such lives. As Thorstein Veblen saw it, only when women were successful at this utility maximizing did their profit-maximizing husbands enjoy any utility-albeit a derived utility -from the profits they piled up.

So we have a conflict. A profit maximizer has to forgo utilities for lack of time. And unless a utility maximizer can manage to be supported by someone else, he (or she) will not have resources necessary to pay for possible pleasures.

No producer is only a producer, and very few besides children, the senile and the infirm are only consumers. Since producers are consumers too, they must be both profit maximizers and utility maximizers, and that is impossible. Can we narrow the situation down and say that an economic agent is a profit maximizer when he is producing and a utility maximizer when he is consuming? Then we must ask why he is producing at this moment instead of consuming. Why is he moonlighting instead of gazing at the moon? If he has a job, he has no doubt accepted the responsibility of maximizing profits at certain hours of the day, but why did he take the job? Why not emulate Henry Thoreau? After all, Thoreau was an exemplary producer: Goods he created still yield profits and utilities, all over the world, a century and a quarter after his death.

An obvious modification of the scheme calls for utility maximizers to do their best subject to the restraint of their wealth, while profit maximizers are clearly subject to the limitation of their abilities and their luck. Even an incompetent man may be a workaholic, however, and consequently unable to enjoy the utilities available to one of his status, while a remittance man may steal enough time from his pleasures to make a little profit for himself, just for fun. Thus the proposed constraints are, if precise, limited to a single case; or if they are vague enough to be general in application, they are also so general in implication that no useful inference may be drawn.

This conclusion is not merely a rhetorical flourish. Translate your thoughts into mathematics (as you must to get ahead as an economist these days) and you will reach the same conclusion very quickly. For each assumption requires that a variable be maximized, and the variables are assumed to be independent. But you can’t simultaneously maximize two independent variables-except by happenstance. If they are always maximized together, they are not independent: One is a function of the other, or both are a function of some third. In the present case, if the variables are not independent, neither are the assumptions.

One of them (perhaps both) must go. A sure way to screw up your mathematics is to make a lot of assumptions that are not necessary. The situation here, though, is not like that of Euclid’s parallel-line postulate, which was not provable from the other postulates. The parallel- line postulate led to our familiar, four-square, no nonsense geometry which is perfectly valid in its domain. The economists’ assumptions, in contrast, are mutually contradictory and lead only to confusion.

It is not surprising, therefore, that in practice economists tend to forget one assumption or the other. Jeremy Bentham, the founder of utilitarianism, based his system on the “principle which approves or disapproves of every action whatsoever, according to the tendency which it appears to have to augment or diminish the happiness of the party whose interest is in question.” In our time, the producer is more likely to be emphasized.

But forgetfulness of one assumption or shifting of emphasis will not do. Conventional economics is sustained by the tension between supply and demand, and they are, in turn, determined by maximization.

IT SHOULD BE noted that the appropriate tension is not provided by the “minimax” of game theory, where any economic activity has a single objective and the problem is to find the best combination of possible gain with the related possible loss. Various solutions to the problem may be proposed and investigated, but they will all be ranked on a single scale. In the case of profit maximization and utility maximization, there are two scales; and even if it could be maintained that, say, for every action, the value on one scale is the reciprocal of the value on the other, the theory would still provide no basis for picking the best combination.

The problem is indeterminate, and without mathematical solution, as we have seen it to be illogical and without reasonable solution. These are no mere quibbles; they go directly to the heart of conventional economic theory. Nor is appeal here being made to the realism or unrealism of the assumptions. Although such empirical appeal is not without validity, it is not being made here. Our appeal is to logic. Any theory that is illogical at the start will be illogical forever after. GIGO, as the computer people say.

And it has to be acknowledged that a great deal of garbage is in fact spewed out in the form of economic talk. Consider the arguments for privatization, for revenue-neutral taxation, for ubiquitous deregulation, for indifference to industrial pollution. These all turn on the axiomatic nature of profit maximization. Consider, next, the arguments for free trade, for unrestrained competition, even for the right (as proposed by some flaky Harvard pseudo-philosophers) to decide the specific functions of government one will support with one’s taxes-and how much. These all turn on the axiomatic nature of utility maximization. So the assumptions are not innocent.

But if we have to give up those two assumptions, what becomes of economics? Let’s look again at the reason for the failure of the assumptions. They seemed fair enough until we recognized that a profit maximizer must be a person, that a utility maximizer must be a person, and that in the vast majority of cases profit maximization and utility maximization must both be done by the same person at the same time.

In short, persons are, as my old boss W.W. Norton used to say, the absolute sine qua non. Economics is concerned with the maintenance of persons, not simply as biological entities, but as responsible agents-that is, as doers, as actors. Since the actions of one person involve others, they have an ethical aspect. The actual first assumption of economics, then, is that it is a division of ethics. It is the division of ethics that concerns money. On this rock a system can be erected whose orientation is quite different from that of the pseudo-science resting fallaciously on profit and utility maximization.

The New Leader

Originally published February 11, 1985

Between Issues

A TOAST to mark the appearance of his Economics: What: Went Wrong and Why and Some Things to Do About It began our very pleasant lunch the other day with George P. Brockway. Published by Harper & Row under the Cornelia and Michael Bessie imprint, the book grew out of, and to a large extent expands upon “The Dismal Science,” the popular alternate-

issue column Brockway started writing for us in January 1982. Pleased as we indeed are about that genesis, it also poses a problem. And it is a measure of this man-who in his book insists “economics is … a branch of ethics” – that we could engage him in a detached discussion of our views on the impropriety of reviewing works essentially derived from the pages of the magazine.

We would be remiss, however, if we therefore did not commend to your attention what Robert Heilbroner, in an advance comment on Economics, has described as “marvelously well written, a joy to read,” as well as “full of original and perceptive observations.” Brockway deftly draws on his better than 40 years as salesman, editor, president, and chairman of the board at W. W. Norton and Company before his retirement in December 1983 to deflate many of the assumptions commonly held by professional economists. Most significant, though, is the people-oriented philosophy that informs his thinking, which may be gleaned from the following in his opening chapter:

” .. .In the early 1980s, when upwards of 14 million men and women in the United States were unemployed, and there was much debate about whether we were in a recession or a depression, and how to end whatever it was, public attention was lavished on statistics supposed to indicate when recovery was finally under way. Among the ‘indicators,’ the rate of unemployment was understandably included. But this was, curiously, a’ lagging’ indicator. That is to say, standard economics held that something entitled to be called a recovery could be achieved leaving 6 or 8 or 10 per cent of our fellow citizens unemployed.

“An economics that is thus willing to disregard several million people will clearly differ in substantial ways from an economics that holds that full and just employment of men and women is the economic problem, and that a business recovery may be a means to that end, but certainly is not an end in itself.[1]

Guided by the same spirit, Brockway proceeds to offer several other ends, and the means for attaining them. Perhaps the most original dominates a chapter called “Property,”

bearing the subtitle “The Labor Theory of Right” – presented, as it happens (albeit in far too compressed fashion), in his column beginning on page 11.

Parting after lunch, we asked the former publisher turned author what he would be doing now. He responded, of course, that he had already started on a second book.

OUR COVERdrawing of AFL-CIO President Lane Kirkland is by Claudia Fouse.

            The New Leader


[1] Editor’s emPHAsis

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