Economics 101 – Adam’s Fallacy

In a recent New York Review of Books, Robort Solow reviews the new book from Duncan K. Foley, Adam’s Fallacy: A Guide to Economic Theology. It’s a good, critical review of an interesting book. The following quote, which Solow highlights as a clear statement of Foley’s premise stood out.

“For me the fallacy lies in the idea that it is possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome, from the rest of social life in which the pursuit of self-interest is morally problematic and has to be weighed against other ends. This separation of an economic sphere, with its presumed specific principles of organization, from the much messier, less determinate, and morally more problematic problems of politics, social conflict and values is the foundation of political economy and economics as an intellectual discipline.”

The review suggests that Foley sometimes deviates from this definition. But that quote, as written represents a key problem we face when we try to cash out economic theories and economic policies in a brodaer social context. Most moral and ethical systems regard self-interest with suspicion (or even downright abandon.

Foley’s statment of “Adam’s Fallacy” is worth remembering when we hear anyone put forward new economic policies, then claim they will be socially beneficial.

[tags] Economics [/tags]