The Political Economy of Human Happiness

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Benjamin Radcliff. The Political Economy of Human Happiness. Cambridge University Press, 2013.

Political scientist Benjamin Radcliff takes on the formidable task of demonstrating that government intervention in the economy is positively associated with human happiness. He expects both the nations and the US states with more interventionist policies to have generally happier citizens, and he presents statistical evidence to support that claim.

Many readers may react to Radcliff’s claims with skepticism, especially if they are unfamiliar with social-scientific methods in general and studies of life satisfaction in particular. Readers who follow his presentation all the way through may become more receptive to the possibilities of finding out how happy people are and relating their sense of well-being at least partly to the economic and political conditions of their lives.

A longstanding issue

Although the idea of measuring happiness is fairly new, the idea that government ought to promote the general happiness is as old as the Declaration of Independence. Before the eighteenth century, “happiness had always been conceived of as either something that only a tiny handful of exceptional people might obtain through long application or something to be found only in the next world.” New philosophies of secular progress changed that. Joseph Priestley asserted, “The good and happiness of the members, that is the majority of the members of the state, is the great standard by which every thing relating to that state must finally be determined.” John Adams declared that “the form of government which communicates ease, comfort, security, or, in a word, happiness to the greatest number of people, and in the greatest degree, is the best.”

In very broad terms, that meant democratic government. But how democratic, and how powerful? Did government facilitate the “pursuit of happiness” mainly by leaving people alone to find it themselves, or by actively helping them meet their needs?

Liberal democracy developed alongside a closely related institution, the market economy. While they complemented each other in many ways, they were also in some tension, especially because the economic inequalities generated by the market contrasted with the fundamental equality recognized by democracy (though originally limited to white males). Was the role of the democratic state to protect the property rights of individuals and respect their freedom to use their property as they saw fit, or was it to insure that all citizens benefited from the wealth available? James Madison wanted only a limited democracy because he feared the power of the majority to redistribute the wealth of the richer minority. Thomas Jefferson, on the other hand, argued that property rights were contingent on the use of property for the common good. He favored progressive taxation, free public education, and land grants to anyone who wanted to work the land. Thomas Paine anticipated the modern welfare state by suggesting that the state provide a basic income for people who failed to make a living through no fault of their own. These early differences of opinion developed into the familiar debate between modern-day conservatives and progressives. Conservatives want to protect private property and economic activity from the state, while progressives want to use the power of the state to improve the lives of people poorly served by market outcomes.

Critique of the market economy

Radcliff’s view of the market economy is interesting because it is simultaneously so positive and so negative. This passage gets to the heart of it:

Given that the market does fulfill more basic human needs than other modes of production, and given that the gratification of such needs are [sic] essential for human happiness, the market certainly does, as its conservative proponents argue, warrant its status as the basis for any economic system devoted to “making human life as satisfying as possible” [in the words of Einstein]. There is also much to be said for the contention that the market promotes human liberty: we can acknowledge both the practical and ideological limitations of market freedoms without dismissing them as being empty or without value. At the same time, the market demonstrably and of necessity operates in dialectical opposition to the most basic and universal of human moral codes, in that it demands that some individuals (employers or investors) use other human beings (employees) solely as means to making profits for themselves.

All  “civilizations” have had a “mechanism that allows an elite segment of society to expropriate from the productive majority a portion of the surplus wealth created by that group’s labor, with surplus conceived of simply as the difference between the actual level of economic production and the amount required for the subsistence of the workforce.” Capitalist democracies accomplish this through wage labor, in contrast to the more coercive mechanisms employed in pre-democratic societies. In Radcliff’s view, that doesn’t remove the essentially exploitative nature of the arrangement. Workers must receive less than the value of what they produce, so that owners can make a profit. The labor market commodifies workers, turning them into means of extracting profit rather than ends in themselves, in violation of Kant’s moral imperatives.

I find this argument a little more extreme and categorical than necessary to support the general argument for the progressive state. The claim that “all wage labor contracts are of necessity exploitative” depends on the assumption that the entire value of what is produced is attributable to the workers, and profit is an expropriation of that value. But if capital contributes anything that enhances value, such as plant and equipment, can’t profit be a legitimate return on that capital contribution? Granted that the share of rewards going to the workers is often unfairly low, doesn’t it depend on the bargaining power of labor vs. capital in the negotiation of wages? Aren’t there some employees, especially managers and elite professionals, who are overpaid because of their ability to influence their own compensation? And while I agree that commodification is a very useful concept, and that being “subject to market forces that are beyond their control” is a significant problem for modern workers, I’m not convinced that dehumanization is a uniquely economic problem. As a sociologist, I would argue that every social institution has the potential to treat people as objects of control rather than creative subjects. Governments conscript armies and jail dissidents; churches indoctrinate and persecute; even families over-discipline and abuse. I’m sympathetic to Radcliff’s main argument, that progressive policies can promote happiness by protecting citizens against the ravages of the capitalist marketplace. But I fear that many readers may reject the book out of hand because they can’t get past his somewhat blunt assumptions.

Fortunately, Radcliff also draws on fairly mainstream critiques of free markets, including the work for which Joseph Stiglitz received the Nobel Prize in Economics in 2001. The idea that a free market is optimally efficient in allocating resources to the most productive uses turns out to be true only under certain circumstances (such as perfect information by all parties) which are rarely if ever achieved. Left to themselves, markets often display boom and bust cycles in which resources are invested foolishly or not at all. Radcliff also questions whether productive efficiency is a sufficient goal anyway. “It seems evident that simply maximizing the total amount that the economy produces, without regard to what is produced or, more importantly, how it is distributed, need not translate into greater well-being.”

Social democracy

Radcliff then presents the “grand argument” for the interventionist political economy he calls “social democracy”:

Social democratic institutions…are the only effective countervailing institutions for limiting the market’s potential for converting human beings into commodities….

The institutions of what I have labeled as social democracy–the labor union, the welfare state, and labor market regulations to protect workers–can be argued to positively affect overall quality of life because they provide a higher standard of living, reduce insecurity, improve satisfaction with one’s work, and promote one’s sense of dignity and equality with one’s fellows. These things in turn help to nurture positive emotional and psychological well-being, which spills over from work to personal life, facilitating the creation and maintenance of the close interpersonal relationships that so contribute to a satisfying life.

My next post will present Radcliff’s evidence in support of this hypothesis.


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