Metaeconomics is fundamentally about the problem of having too much emphasis on the Market or too much emphasis on the Government. It is about the essential need to bring empirical reality and ethics into finding balance: It is essential to achieving a good capitalism. Why? Well, because of the natural tendency to excessive Greed. As DeWaal (2009) would have it, we live in an age of Empathy: Ego based Greed is out. The Greed needs to be tempered, balanced, and perhaps bounded, with Empathy-based ethics. And, as Metaeconomics makes clear, it is because there is a dual nature of human nature, but it is an old story, from Smith (1759/1790):
As it suggests, expressing the moral sentiments is all about Empathy as the starting point, perhaps leading to Sympathy with (not for, but with), and then possibly to compassion (or not). Solomon (2007) agrees: There is something (empathy-sympathy -compassion based ethics, the moral and ethical dimension) beyond mere Self-interest at work. Yet, Self-interest is still the key feature of a viable and good capitalism, as Smith (1776/1789) made clear. And, reality, please.How selfish so ever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others [Smith 1759/1790, The Theory of Moral Sentiments, quoted in Solomon 2007, p. 64, who adds: Without compassion (sympathy ), there would be no foundation and no motivation for ethics].
As the story about Metaeconomics unwinds, the case will be made that the something essential to tempering mere Self-interest is an Empathy (and ethics)-based Other-interest. And, that a viable and good capitalism requires balance in Ego&Empathy, selfish&selfless, person&people, person&community, Self&Other (the latter shared with others, but internalized within Own-self)-interest. Remember: Metaeconomics is about the person. At a larger scale, the balance needs to be in Market&Government. An integrated Smith (1776/1789) & Smith (1759/1790) represents it. As Smith tried to teach us, it is about seeking a way for each person to maximize their Own-interest in their own (humane and liberal) way, which includes both Self&Other-interest. It cannot be emphasized enough. The goal, the possibility for happiness (and peace), depends on Own-interest, not Self-interest only. Said Own-interest involves humanely including others, represented in the underlying ethic that gives content to the shared Other-interest. For the early analysis and claim that interdependency, jointness, and nonseparability of a dual interest is represented in Smith (1776/1789) & Smith (1759/1789), see Lynne (2006). For the latest claims about Adam Smith and dual interest, especially on how the moral sentiments relate to Empathy and Sympathy, leading to the moral and ethical dimension of the economy, see Lynne et al. (2016, esp. pp. 245â250).
Dual interest reasoning can be used to provide new insights into solving old economic puzzles, resolving paradoxes and anomalies. It can be used to suggest and guide new empirical testing on a way to a more reality-based economics. So, hang on, here we go, on a potentially fun and productive ride toward an ethics-based, and, yes, a reality-based, economics.
After going through the formal model and several demonstrations and applications showing how it works, the book turns to proposing new insights into resolving the irritation (and outrage) surrounding current policy issues when balance is missing. And, we feel it often. We eventually move, in the last chapter, to speculation on how Metaeconomics could play a substantive role in saving a liberal and humane democracy-based capitalism, through balancing. The current version is doing badly, and, is under fire from several quarters : See Deneen (2019a, b); Fukuyama (2006); Goldberg (2018); Hedges (2018); Hirschfeld (2018); MacLean (2017); McCloskey (2019); Stanley (2018); and Stiglitz (2019), to list a few. We need to first develop and explain Metaeconomics to make sense of the fire, and to develop the new analytical machinery on how to put it out, or, at least manage it, before we can fix it: So, hang on.
Metaeconomics Represents Both Dimensions of Adam Smith
Adam Smith was quite aware of the duality and jointness within Own-self, which perhaps has not been enough appreciated. In fact, the seeming disparity in focus of the two books at one point came to be characterized as being âdas (the) Adam Smith problem (as suggested by the German historical school),â as though Adam Smith did not know the need for, or how to, balance the two tendencies. Wrong.
In fact, he not only understood it but also had a kind of subtle sense of humor about it. Smith (1759/1790) saw the Empathy-based Other (shared with others and internalized within Own-self)-interest:
As Smith said it, Be Lovely: Humor. We really want to be liked by others, and to be part of the community. Smith (1776/1789) saw the Ego-based Self-interest, too: Be Loved. More humor. We want to achieve high status, otherwise be held in high regard, and become wealthy, respected, and admired, perhaps even envied: People are fascinated with the wealthy and their lifestyle. So, how do we achieve both, in good balance?(a Human) naturally desires, not only to be loved, but to be lovely. (Smith 1759/1790, cited in Roberts 2014, loc 282)
Well, Smith (1759/1790) clarifies it is about the moral dimension, the moral and ethical rules (see Samuels, Johnson, and Perry 2011, loc 3391), the moral community and ethical system widely shared. Each person, through paying attention to the moral community, tempers, and conditions works at tempering the pursuit of Self-interest. It is done within each person, through going to the Station of the Impartial Spectator: We go to the Station and reflect, ponder, and consider what is in the shared Other-interest. Just like Adam Smith, Metaeconomics sees the essential need to temper (we decide what to temper, at the Station) the more primal urges in the Self-interest, which is all about self-love. As Smith and Wilson (2019, p. 8) say it, seeing it as a key part of their Humanomics: âFor (Adam) Smith, âself-loveâ is necessarily at the core of our being⌠(but with maturation) conduct is shaped by learnt ⌠rules of social order originating in our capacity for mutual sympathetic fellow-feeling.â It is through empathy-sympathy we form that fellow-feeling in a shared Other-interest with our fellows: We then form a more lovely Own-self. Also, the social order, the mutual sympathetic fellow-feeling has nothing to do with social preference: There is no such thing. It is only about the Own-self, but with a shared Other-interest at play within.
So, Humanomics, a close relative of Metaeconomics, is also about the interplay of self-love (Self-interest) and fellow-feeling (shared Other-interest) in Smith (1776/1789) & Smith (1759/1790). The interplay of the two dimensions in Adam Smith was first proposed in Metaeconomics in the 1990s. In Metaeconomics, using modern terms, self-love reflects the Ego-based Self-interest and fellow-feeling reflects the expression of Empathy-based Other-interest. Also, by the time of Lynne et al. (2016), Metaeconomics had made the connection with ethics, the moral and ethical dimension of the economy arising in the Empathy-based Other-interest. The key role of ethics, also made clear in Smith (1759/1790), has recently been emphasized by McCloskey (2019), in pointing to the need to return to the (ethics based) humane liberalism of Adam Smith. Metaeconomics brings all of said threads together into one analytical system. It sees the essential role of balance in the Ego-based Self-interest and Empathy (ethics)-based Other-interest in finding the way to a truly humane and liberal economic system, a good capitalism.
Also, in modern terms, Metaeconomics points to the fact that we need to become mindful. We empathize, projecting Own-self into the situation of the other. Empathy takes us to Station of the Impartial Spectator. At the Station, in that frame of mind, we consider the possibility of joining in sympathy with, and perhaps even act on compassion for, the other. Yet, as Adam Smith makes clear, it is all still within the Own-self; it really has little to do with the other, per se. We seek to maximize our Own-interest. It is good for the person, and for capitalism, for a good and humane capitalism.
We all know the urges, and the need to temper same, as in eating too much; wanting sex too often; wanting way more material goods and pleasures than we really need: Excessive Greed is not beyond any of us, right? Yachts and way too many houses and cars at the high end; not enough money left to field a $400 essential at the lower end. So, Metaeconomics brings the moral and ethical dimension, as in Smith (1759/1790), back into view within the framework of the economics about the person, now better representing the real economic picture, the real nature of a Human. And, while Microeconomics gets it partly right, each person is partly an Econ, Metaeconomics clarifies we can be far more fun and interesting. We really are better characterized as a Human, after all. The distinction between the Econ and the Human is borrowed from Thaler and Sunstein (2008).
Smith also, then, saw the nature of true happiness (and, it was to be the essential feature of a good capitalism) requiring balance. Achieving balance in Self&Other was to Be Loved & Be Lovely. Metaec...