Kenneth Boulding Economics Definition

Kenneth Boulding Economics, Boulding Economic Definition

BY THE TIME he returned to Michigan after the year in Palo Alto, Boulding's work looked more and more like a juggling act in a circus of the intellect. Economics, general systems, the study of conflict resolution and peace, social the­ory, philosophy of history, religion—books and articles of his appeared in all these areas. In the 1960s he joined two more invisible colleges: ecology, a suddenly popular subject in which he had long been interested; and grants economics, a field which he founded dealing with one-way transfers of goods, services, or money.

Despite his incredible variety of subject matter, Boulding's work during this period was nothing if not cohesive. This can be seen through a consideration of Boulding's critique and defense of economics. Boulding's main reproach to eco­nomics was that it lacked sufficient scope. His experience at Ames had convinced him that there was a great need for a unified social scientific approach to economic phenomena.

Boulding thus came to have a new respect for the Ameri­can institutionalist economists Thorstein Veblen, John R. Commons, and Wesley C. Mitchell, who had attempted just such an approach. In a 1957 article, "A New Look at Institu-tionalism," he went so far as to place himself directly in their camp:

In a letter to me a few months ago, Professor Ayres accused me of having become an institutionalist. If a somewhat de­spairing concern for dynamics in theory (without losing a sense of the very real accomplishments of statics); if a very strong concern for integration in the social sciences and for the bringing of contributions from psychology, sociology, and the biological sciences into the construction of better theories of individual behavior and social change; if a strong (if scepti­cal) interest and sympathy with empirical methods is enough to make me an institutionalist, then I gladly accept the title.
Boulding was not a socialist; he believed in a pluralistic capitalism based on a market economy. He was, however, sharply critical of the economic libertarianism which was ex­pressed most forcibly by Milton Friedman. Interestingly enough, Boulding did not deny the value of the market as an agent of resource distribution and a mechanism for economic decision making. Rather, his opposition to Friedman was based on the conviction that a large part of economic activity and the motivation for it lay necessarily outside the reach of the market and of market forces. He framed his argument in terms of the three organizers of society—love, fear, and exchange—which he had set forth in The Image. Economic libertarianism, he argued, did not look beyond exchange; it failed to take into account the vast amount of economic ac­tivity predicated on love (the "integrative system") and fear (the "threat system").51 Taxation, an institution of legit­imized coercion, was part of the threat system. The upkeep of one's children and aged relatives, foundation grants, and government subsidies, pensions, relief payments, and aid to dependent children were all part of the integrative system. All three organizers, Boulding held, were necessary in any soci­ety. An exchange economy could not operate successfully without both a broad integrative matrix of trust and alle­giance and the legitimized threat system represented by a code of law. To look exclusively at exchange meant misrep­resenting the general nature of economic life, as well as ig­noring much economic activity. Boulding did not dismiss the importance of exchange as a social organizer; what he wanted was a more comprehensive economics.

Boulding termed as the grants economy that part of eco­nomic life which did not involve exchange. This notion was first set forth in "Notes on a Theory of Philanthropy" (1969).53 He himself received a small grant from the Ford (1962),52 and elaborated in "The Grants Economy" Foundation for the study of grants, and together with an enthusiastic associate, Martin Pfaff, Pfaff's wife Anita, and Janos Horvath, he established the Association for the Study of the Grants Economy. In 1973, Boulding published The Economy of Love and Fear: A Preface to Grants Economics, which argued the general proposition that "the one-way transfer, far from being something extraneous or extraordinary in the general organization of social life, is an integral and essential part of the system, without which not only community but organization and society itself would be vir­tually impossible."54 In this book he developed a micro and a macro theory of grants and applied both theories to charity phenomena, public finance and the provision of public goods, the theory of organization, and various contemporary politi­cal controversies.

In a series of lectures given in 1953, Boulding had distin­guished between the economic ethic and the heroic ethic in man. The economic ethic was expressed by the merchants and traders who relied on the "lore of nicely calculated less and more"; the heroic ethic was the possession of civiliza­tion's great saints, sinners, and standard-bearers. Both ethics, he felt, were needed in society:

. . . there is a great deal of complementarity between the economic and the heroic in the last great production function of the universe; this is to say that attempts to be purely eco­nomic or purely heroic are generally unsuccessful. Without the heroic, man has no meaning; without the economic he has no sense. ''

Two decades later, Boulding was able to find in the study of grants a way for economics to approach the heroic side of man, where the deepest motives were love and fear, not the desire to turn a profit. Economics would thus become at once more true to life and more morally sensitive. What better way to broaden its scope!

If Boulding criticized economics for being too narrow, he also proselytized for the broader application of ecnomic techniques. Conflict and Defense (1962),56 his major con­tribution to peace research, relied on the theory of oligopoly as the primary means of analyzing various forms of conflict. Boulding combined the economic analysis of imperfect com­petition with Lewis Richardson's models of international conflict and the game theory of John von Neumann and Oskar Morgenstern, in an attempt to develop a general the­ory of conflict. His object was to demonstrate that conflict processes were not arbitrary, random, or incomprehensible, for he firmly believed that in the understanding of those pro­cesses lay the opportunity for their control. Economic theory provided tools for explaining behavior which was not in large part economic. In Economics as a Science (1970), Boulding discussed the place of economics in the general study of soci­ety. He suggested that it might be valuable to have a notion of "biological profit" and to discuss ecological equilibrium in terms of the economic conception of the invisible hand.

Perhaps most significantly, Boulding emphasized the im­portance of economics in providing a general theory of value. He was convinced that one of the major weaknesses of mod­ern thought was a positivistic bias which treated values and value judgments as givens not susceptible to rational analysis. Boulding's desire for a broad, reasoned discussion of values was bound up with his deep religious feelings. In "Some Con­tributions of Economics to Theology and Religion," the dis­cussion centered on the question of value:

If the economist, then, has anything special to say in the area of the Great Values it is that values, whether great or small, are always the result of acts of choice. Values do not "exist" independently of the actions of the valuer; they are quantities which are conveniently descriptive of acts of evaluation. It is these acts which exist, not the values. The "price" of a com­modity is not a physical quantity like its weight; it is a quan­tity descriptive of an act, either of exchange or evaluation, and is meaningless without the actor. The economist therefore shifts the discussion of value from the value as a "thing" to the evaluation as an act.

For Boulding, religious values too were inextricably bound up with the actions of people in this world. What mattered was what was done; this was the touchstone of religion.

Boulding believed, however, that the course of action which was selected was more likely to depend on the opportunities available than on abstract preferences, since the same set of basic preferences could produce widely differing behavior as the opportunities changed. On this proposition rested his best hopes, for the world. By nature people were good; the object was to provide them with opportunities to exhibit this basic goodness. The creation of such opportunities depended, above all, on the expansion of knowledge.

From this brief survey of Boulding's later work, it is evi­dent how naturally what he had to say in one area fed into what he had to say in another. Throughout these writings ran the same overriding ethical concerns. Embracing the whole was a broad ecological view of all aspects of life. Growth and development were fundamentally evolutionary, taking place gradually as populations shifted in size and nature. In Bould­ing's ecological model, knowledge, as represented by the image, played an important role, increasing in importance as the members of a population grew more sophisticated. At the highest level of man and society, change could take place as a result of conscious iatent:

With the development of self-consciousness in man, the evolu­tionary process became at least in part teleological, that is, directed by an image of the future in the minds of the active participants who were capable of affecting the system.
Boulding elaborated his evolutionary view of human his­tory in two books, The Meaning of the Twentieth Century and A Primer on Social Dynamics. The former was subtitled "The Great Transition"; it argued that in the twentieth cen­tury, society was undergoing a fundamental change from a "civilized" to a "postcivilized" state—that is, to a very high state of technological development. Boulding postulated three great ages of man. The first was one of precivilization, where people lived at subsistence level by hunting and gathering food. Between 8000 and 3000 B.C. a major transition began to take place which, by a two-stage process, created civilized society. There was, first, the invention of agriculture, which freed some fraction of the population from the neces­sity of producing food. This led in turn to the rise of cities. Under civilization, which lasted for perhaps 5,000 years, be­tween 75 and 80 percent of all people were farmers, support­ing the remainder by the surplus food they conveyed through some form of physical or spiritual (priestly) coercion. Some­time in the Middle Ages, all this began to change under the impact of technology. While the population itself increased dramatically, the percentage of the population needed for food production gradually decreased. An exchange economy began to supersede the old coercive system of economic ex­ploitation. The standard of living rose.

Boulding argued that this second great transition from a civilized to a postcivilized world did not really begin asserting itself until the twentieth century. A world of prosperity, jus­tice, and personal fulfillment was within reach. Progress to­ward this happy state of postcivilization was not, however, inevitable. War, overpopulation, and the exhaustion of natu­ral resources were traps which could destroy society and which society had consciously to avoid. The successful nego­tiation of the great transition depended on people with an enlightened image of the future and an awareness of the dan­gers which lurked along the way. For Boulding, such people included Pierre Teilhard de Chardin, Aldous Huxley, and H. G. Wells; together they made up a small invisible college capable of shaping man's best destiny. For this invisible col­lege, said Boulding, he was an unashamed propagandist.

The underlying thesis of The Meaning of the Twentieth Century was that the development of human society was an evolutionary process resulting from the growth of knowledge. The discovery of agriculture, the invention of new forms of social organization, the development of technology—these were responsible for moving man from pre- to postciviliza­tion. Boulding saw this view of history as fundamentally op­posed to the dialectical interpretation expressed in Marx's theory of historical materialism. Marx looked at history as a series of economic systems, each of which developed as the result, of a violent confrontation between opposing interests inherent in its predecessor. Thus an original, primitive com­munism was supposed to have given rise to a slave system, which eventually led to feudalism, which in turn was super­seded by capitalism. Marx's analysis—and attack—was fo­cused on the capitalist system; under capitalism, Marx pre­dicted, the plight of workers would become so acute that they would of necessity rise up and overthrow the dominant class of property owners, establishing a communist society once and for all.

Boulding not only disagreed with Marx's prediction but also opposed the notion' that dialectical conflict was a signifi­cant and positive force in human history. His Primer on So­cial Dynamics was an attack on Marxian dialectics. Boulding contended that dialectical elements in society were princi­pally contained in the "threat system" but were relatively unimportant in exchange and played almost no role in inte­gration. All three of these social organizers were, in fact, aspects of the basic learning process which underlay all human history, The dialectical process did not advance the growth of knowledge but was a hindrance to it, since dialecti­cal struggles prevented men from validating knowledge by direct or scientific methods and represented "a backward step towards the testing of images by the success of whole cul­tures, not by the testing of knowledge itself."

With Boulding's conviction that the growth of knowledge was the crucial factor in pushing society forward, it is hardly surprising that he reduced revolutionary change to the status of mere incidents imposed on the larger pattern of develop­ment. What really mattered was the sum of human knowledge, or noosphere. Only through an expansion of the noosphere would man be able to shape his own destiny, and make the human adventure truly teleological. Boulding's vi­sion is more sweeping, abstract, and religious than, say, John Kenneth Galbraith's essentially political view of the role of knowledge and its developers, but they are talking about the same thing: the industrial system has brought into existence, to serve its intellectual and scientific needs, the learned com­munity that may reject "the system's" monopoly of social purpose. In an age in which technology has shattered old social structures, wreaked terrible destruction through wars, and threatened the global environment itself, faith in knowl­edge as the source of salvation remains the common hope of the academic community.
Boulding's particular contribution has been to invest mod­ern economic and scientific knowledge with moral content. He has sought not only to unify science and religion but also to embody both in his personal and public life. Since World War II, the antiwar movement has been a primary focus of his public activity. In April 1958 he initiated a vigil in Ann Arbor to protest the continued testing of nuclear weapons. Two years later, he participated with a thousand other Quak­ers in a peace vigil in front of the Pentagon. He opposed the Vietnam war from the beginning, and in 1965 he helped plan and conduct the first antiwar teach-in. In 1966, Boulding served as a delegate to the World Council of Churches' World Church Conference in Geneva, where he was lionized as a leading economist who was also a practicing Christian.

Boulding was named president of the American Economic Association for the year 1968. This turned out to be a more difficult task than usual, for the Association's annual conven­tion had been scheduled to take place in Chicago. However, in the wake of the tumultuous Democratic National Conven­tion and the police assault on the anti-war demonstrators, many economists wanted the locale changed. There was a lively controversy, but it was Boulding's decision to make. After much soul-searching, he surprised many of his col­leagues by deciding to stick to the original plan, arguing that it was not in accord with the traditions of the Association to take unilateral political actions of this sort.

In-1967 he took a sabbatical from Michigan to be visiting professor of economics at the University of Colorado and director of the Program of Research on General Social and Economic Dynamics at Colorado's new Institute of Be­havioral Science. He liked Boulder, liked the mountains, and was somewhat unhappy about the lack of support he felt he was getting from the University of Michigan for his various general systems and peace research projects. The following year he became a permanent member of the faculty of the University of Colorado, where he felt quite content to get on with his own work in his own way.