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STIGLER: But why did my desires now take that form in 1880 but not in 1810? I want to give a utility-maximizing explanation for that if I can. And it's a terrible thing, because you see most of the things in this world are not easy to explain, and yet I hope I have a principle if I were clever enough that would explain all of them. But most of the time if you ask why people got socialistic, for example, in the latter part of the 19th century, the intellectuals in particular, what kind of an answer would you get? I can't imagine what the answer is. It's completely ad hoc.
REASON: Joseph Schumpeter's theory was an economic theory of sorts, saying that a subsidized class develops out of capitalism. There is some sort of a preference on the part of the capitalist middle class to subsidize intellectuals, and these intellectuals inherently bite the hand that feeds them, because it is their interest to sort of propagandize for their own power to take over.
STIGLER: That's irrational on the part of these entrepreneurs. They're supporting potential intellectual traitors.
REASON: But it's only irrational in the long run if they in fact think that socialism is going to make their heirs poor. But they might have thought that socialism was going to make them wealthier. And in fact, a lot of people at the beginning of this century thought, and I'm sure quite sincerely, that socialism was a superior system in terms of material wealth. So why can't we just say that those people, given their limited information, were simply wrong, that they accepted what was in fact not in their best interest?
STIGLER: That's what I call the error theory. My complaint against that is, unless I manage to explain when errors are made and why and what kind, I have stopped all explanation; since one of the graceless things about errors is that they can come from anywhere and go in any direction. Of course I can say that the middle classes in particular were mistaken as to both the democratic nature of socialism and its humane nature, and as to its economic efficiency. And that explains that event. And then if socialism goes into decline, I can say that they saw through the error. And if it doesn't go into decline, the error persisted. And so....
REASON: That is a very frustrating way to analyze history. On the other hand, errors exist.
STIGLER: I think they do. I don't deny, for example, that the 1918 Prohibition amendment was an error. The American people were not prepared to abide by such a restriction. That means it was socially an error; it was an untenable policy. And I have no doubt some errors last longer than that. But in general the errors have to give way, it seems to me, to increased knowledge. You see, if you play your error game, why did England overturn private enterprise on a wide scale, so that now this greatest of industrial nations and a very pretty civilization has a lower standard of living than even, let us say, Italy? What does it take to see through an error? So the error theory doesn't seem to me to help.
REASON: But you would have to argue that they are worse off overall for having adopted self-interested policies. So we both have trouble explaining it.
STIGLER: The only thing is that I'm prepared to continue to try to explain it on a principle. Whereas if you play the error game, you ought to start working on the question, What kinds of errors really are made and last? Nobody I know has tried that game. Milton Friedman, whom I greatly admire, says that the reason that India is crazy is that it got emancipated when Harold Laski was in the rider's seat in the West as an intellectual, whereas Japan got emancipated when Dewey walked around accompanied by good friends like laissez-faire economists and so forth and so on, and that's why Japan's been an economic miracle but India has been a shambles economically. I think that's an awfully simplistic reading of the role of the intellectual in life.
REASON: What is that role?
STIGLER: I'm still working on how to study the role of the intellectual. And my skepticism is not very popular with intellectuals. I understand that, since it's denigrating. In a way, I even have a slight streak of inconsistency in a related matter. I'm always complaining that we shouldn't be reformers, we should be scholars. We're more influential as scholars, because if we prove something, everybody believes it; whereas if we beg for something, they're skeptical.
REASON: The economist as preacher is ineffective, but the economist as scientist actually gets things done.
STIGLER: Very, very effective. And yet as a scientist he's obviously a reformer, too. He's trying to get the rest of his profession to change their tunes.
REASON: So that's the inconsistency?
STIGLER: It's a sort of one. Although there's this difference- that you try to get them to change, not by changing their case, but by demonstrating the superiority of alternatives.