I’ve been reading with interest some of the materials David Jones and Chris Blosser posted the other day about the debates between Tom Woods and Tom Storck over economics and Catholic Social Thought. From what I can gather, one of the major areas of dispute has to do with economics status as a science, and specifically with the question of whether economic principles have any universal validity.
For Woods, there are certain economic principles (such as, say, the law of supply and demand) which are valid at all times and in all places, though of course how such principles are applied may vary (for instance, the law of supply and demand would still apply in a society with price controls; it’s just that what would be predicted by the law – shortages, black markets, etc. – would be different than where prices are set by the market). Storck, by contrast, seems to think that economic laws are historically contingent, and cites the German historical school of economics, among others, in support of his view.
I have to admit that I am more in sympathy with Woods here (big shocker). In Mere Christianity, C.S. Lewis argued against moral relativism by asking the reader to “[t]hink of a country where people were admired for running away in battle, or where a man felt proud of double crossing all the people who had been kindest to him.” In a similar vein, it’s hard for me to picture a society in which increases in the supply of a good or service make it more expensive. Perhaps, though, this is just the result of my own ideological blinders. Sure, economic principles appear to work in modern capitalist economies, but would they still hold in radically different circumstances?
An answer to this question can be found in R. A. Radford’s classic article The Economic Organization of a POW Camp. Radford was a prisoner of war in Germany during WWII. Economic life in the camps was greatly circumscribed, for obvious reasons. Yet over time, Radford noticed, certain features of economic life began to reassert themselves. For instance, individual prisoners were periodically issued parcels from the Red Cross, containing tinned milk, jam, butter, biscuits, bully, chocolate, sugar, and cigarettes. This led to trade among the prisoners for various items (as some prisoners would prefer chocolate to biscuits or visa versa), which soon developed into set rates of exchange and eventually a single item (cigarettes) being used as currency. From there all sorts of familiar economic phenomenon reappeared, such as inflation (when a new shipment arrived), speculation, arbitrage, and so forth. I really cannot recommend the article highly enough, and it is amazing to see such a range of basic economic principles validated in such an unusual environment.
Of course, the solders in Radford’s POW camp where raised in a market system, and so one could argue that it was social conditioning, rather than any universally valid economic law, that explains what happened in the POW camp, much as a feminist might try to argue that any apparent differences in personality or interest between boys and girls is due to social conditioning rather than differences between the sexes. At the very least, though, Radford’s article suggests that, even if economic principles are historically contingent, they are so ingrained in our society that practically speaking we are stuck with them.