GLS Shackle and the Link Between Theology and Marginalist Economics


Yesterday I came across an interesting and unusual paper by Bruce Littleboy entitled ‘Religious Undercurrents in the Writings of GLS Shackle‘. As readers of this blog will probably be aware Shackle is one of my favourite economists. I had never, however, associated anything that he wrote with religion and I was unaware until reading this essay that he was a devout Christian.

Frankly, I think that Littleboy is wrong to attribute any religiosity to Shackle’s writing. But, in being wrong, Littleboy has raised an interesting question — albeit not the one that he thinks he has raised; namely: what is the connection between theological and economic discourses. I will argue that it is actually the form of economics that Shackle attacks that aspires to the theological.

In the essay he quotes Shackle as writing:

Decision is not, in its ultimate nature, calculation, but origination. (p3)

In response to this Littleboy writes:

Origination is an attribute of the Divine, and Christian creed regards humans as holding as a gift some fragments of God’s nature. (p3)

This is the theme of the whole essay. In Shackle’s exploration of decision-making he found many themes which might also be found in religious texts. But Littleboy never really makes what seems to me the obvious point: economics and theology deal with very similar questions. They deal, ultimately, with how we should structure social relationships and moral norms.

When we use terms like ‘utility’ what we mean is the same as what the theologians meant when they discussed human beings pursuing ‘grace’. When we say that human beings maximise their utility we are basically saying that human beings seek grace in their everyday lives.

The words are different but the semantic meanings are basically the same. Both utility and grace mean something like “what is good”. These spectral and rather mysterious entities are never observed but they are assumed to exist. They are also discussed in very similar frames. Grace is discussed in a world where an omnipotent and benevolent God reigns supreme; while utility is discussed in a world where an omnipotent and benevolent Market reigns supreme. Both of these entities — again, spectral, mysterious and unseen — effectively do the same thing: they guarantee coherence and promote the ‘best’ outcomes. Literally they are different; substantially they are the same.

Indeed, need it even be said that Adam Smith — the person who introduced the Market — had in mind the Protestant idea of God when he invoked the Hidden Hand? He quite literally borrowed the metaphor from theological discourse. That borrowing has since been buried but it is never buried too deep. The Market allows for perfection because It is benevolent.

So, what was it that Shackle was doing? The following passage from Littleboy’s essay points in the right direction:

Shackle’s framing of the human predicament is as much a contrast to God’s complete knowledge as it is to the similar claim of perfect knowledge in the hubristic (if not impious, even blasphemous) economic models of the orthodox kind. (p5)

Shackle, I think, saw the essentially religious underpinnings of marginalist economic discourse. He could see that this was, in fact, a form of pseudo-secular religion (how can it be truly secular when it so firmly believes?) and that struck him, as it strikes others, as absurd. He saw no place in rational discourse about the world for religious vagueness and so he tried to construct a theory of human decision-making that did not rely on a benevolent entity that reconciled all of our problems automatically.

Marginalist economics is modern religion. If you look closely you can see it when you listen to its adherents. They derive authority from doctrines that are effectively mystical. As the discourse becomes more mathematical it becomes increasingly difficult to tell what the underlying assumptions are. This leads to giving them even more mystical authority. Shackle’s work was an attempt to explore these underlying assumptions and remove from them any mysticism. He wanted a theory that was truly secular. He kept his religion, as it were, in another room.

Perhaps this is what gave Shackle the ability to see behind the mask. Perhaps he knew what belief was all about and he saw that many of the marginalist assumptions were in fact grounded in belief proper. Marginalists, for example, believe that the future can be known through objective probability estimates. Press them on why they hold this belief and they cannot answer. This is the same structure that dogmatic religious person’s hold; they do not even know that they believe because they have not even questioned what it means to believe.

Shackle was against dogmatism. He did not like it. If you think that the Market produces perfect outcomes you have to explain why and through what mechanism. That does not mean constructing a little piece of mathematics that builds in the assumption of what you are trying to prove. That is tautological. It means explaining how such conditions might be achieved given what we know about human psychology and lived experience. Likewise if you think that the future can be known with objective probabilities you have to either prove this by demonstration or you have to make a very convincing argument why we should assume this. Marginalists cannot do either. They never even consider these questions because, frankly, they are beyond them. All they have is their belief and they will cling to it like a dying man clings to life.


About pilkingtonphil

Philip Pilkington is a macroeconomist and investment professional. Writing about all things macro and investment. Views my own.You can follow him on Twitter at @philippilk.
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2 Responses to GLS Shackle and the Link Between Theology and Marginalist Economics

  1. Anon says:

    economics and theology deal with very similar questions. They deal, ultimately, with how we should structure social relationships and moral norms

    Nope. Now of course social scienes are “soft” in the sense that it is usually hard to get solid evidence so theory has a larger role than on hard scienes. This is why you could claim that all soft sciences are akin to religion. But I don’t think so. If you accept a counter-intuitive theory based on its merits (which hopefully include at least some degree of external consistency) you are not in the realm of belief, intuition or pre-rationality.
    In economics there are many counter-intuitive issues. Comparative advantage in trade, paradox of thrift in macro and so on.

    Abour “marginalism”, I have no idea what that is supposed to mean. If it means having some models in which agents optimize some objective unfction in your toolkit while being aware that in reality agents use heuristics (Akerlof&Yelln’s near rationality concept comes to mind) I fail to see the problem of that.

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