Kenneth Ewart Boulding Model Definition

Part III – Kenneth Ewart Boulding Model and Definition

WHILE Kenneth Boulding the economist was working on the first edition of his essentially conventional textbook, Kenneth Boulding the British expatriate, poet, and devout Quaker had been going through the most serious spiritual crisis of his life.

The rise of Fascism, culminating in the outbreak of war in Europe, had severely shaken the pacifist movement in Great Britain and the United States. Many pacifists abandoned their opposition to war in the face of Nazism, Hitler's persecution of the Jews, and his savage assault on other nations and on the basic values of Western civilization and religion. How was it possible, in the name of humanity, to remain aloof from the greatest struggle against inhumanity ever waged?
Boulding found his own pacifism undermined. Increas­ingly, he found himself unable to love his enemies. He felt overwhelmed with anger:

1 feel hate rising in my throat. Nay on a flood of hate I float, My -mooring lost, my anchor gone, 1 cannot steer by star or sun . . .
1 hate! 1 hate! I hate! I hate! I hate this thrice-accursed State, Til smash each hlooshot German face That travesties the human race!

On May 15, 1940, a mystical experience reestablished Boulding's faith in the pacifist ideal. Emerging from his bath, he saw Christ suffering on the cross, assuming the sins of all mankind, of people no better than the Germans, no better than Boulding himself. His hatred disappeared. Once again, Boulding felt kinship with all men. His faith in nonviolence was renewed.
Hatred and sorrow murder me. But out of blackness, bright I see Our blessed Lord upon his cross. His mouth moves wanly, wry with loss Of blood and being, pity-drained. Between the thieves alone he reigned: (Was this one 1, and that one you?) "If I forgive, will ye not too?"
My vial of wrath breaks suddenly, And fear and hate drain from me dry. There is a glory in this place: My Lord! 1 see thee face to face?

Boulding was later to develop highly sophisticated analyses of peace and of methods of resolving conflict. It is important, however, to keep in mind the mystical basis of such work— and, indeed, of all of Boulding's concerns. Western thought is accustomed to drawing a sharp distinction between "mysti­cal" and "rational" knowledge. The full-fledged mystic is ushered into a separate epistemological world and quietly left there. Those with mystical tendencies are expected to lead schizoid existences, segregating what they know according to the positivistic bias of the modern world. Yet this dichotomy remains open to question. Socrates, the rational analyst of Greek ethical and religious beliefs, was guided by an inner voice and subject to deep mystical trances. The twentieth-century Jesuit and mystic Pierre Teilhard de Chardin was a leading geologist and paleontologist. Such examples cast doubt on the necessity for a radical divergence between "inner illumination" and the rational pursuit of truth.

Teilhard, the contemporary thinker who has most influ­enced Boulding, wrote on the "mysticism of science." Science itself, he argued, embodied religious ideals:

Rightly or wrongly, modern man has put his interest in an unbounded destiny beyond himself. And we have now all em­barked to explore and conquer that future. Hope in a limitless future: the two essential characteristics of a religion.10
But without a higher mysticism of love, science would collapse in materialism, mechanization, brute force, and amorality:
In order to sustain and extend the huge, invincible and legit­imate effort of research in which the vital weight of human activity is at present engaged, a faith, a mysticism is necessary.

Whether it is a question of preserving the sacred hunger that impels man's efforts, or of giving him the altruism he needs for his increasingly indispensable collaboration with his fellows, religion is the soul biologically necessary for the future of science. Humanity is no longer imaginable without science. But no more is science possible without some religion to ani­mate it.

In this view, mystical and rational knowledge find har­mony in the region of science's highest purpose and human­ity's greatest good. Can such a relationship be found at less exalted levels? Out of his spiritual crisis, Boulding began his long struggle to bring the mystical and rational sides of his own life and work together.

At the spring session of the Syracuse quarterly Quaker meeting in 1941, he met Elise Marie Bi0rn-Hansen, a blond, Norwegian-American graduate student who was applying for membership in the Society of Friends. After a whirlwind courtship, the two were married in August.

Meanwhile, Boulding had decided to leave Colgate; the pleasant life in Hamilton had not been enough to offset four years as an instructor without a raise in his $2,400 salary. He accepted a job as an economist with the League of Nations Economic and Financial Section, which had recently moved to Princeton, New Jersey. His task was to study the problems of European agriculture. But his greatest concern was now the problem of World War II.

Having emerged from his spiritual crisis with his pacifist faith renewed, Boulding felt a deep responsibility to com­municate to others the necessity of abolishing war through disarmament. For him the question of war was fundamentally religious. The proximate cause of war, he realized, was insti­tutional: 'We have war because there are independent coun­tries; bodies of people organized for the essential purpose of maintaining their national independence by war." Yet the solution was not a world state; a sense of the need for diversity, plus a profound distrust of the centralization of power, prevented him from advocating such a course. A world state would hold a monopoly of all the means of violence, un­checked by other sovereign powers; a nation protected the area in which freedom was not a concept but a living reality. "It is right,!' said Boulding, "that men should have a home, and it is right that they should have a homeland. Our problem is to destroy the spirit within a nation that gives rise to war."

The warlike spirit, he thought, could only be destroyed through the agency of a power which transcended the cares of this world. Such was the message Boulding gave in his William Penn Lecture of 1942, "The Practice of the Love of God."
True forgiveness comes only in a flood of divine love, that wells up in our souls from places too deep to be hurt by mortal injury, love that draws us together with God and with our enemy in a healing, uniting experience.
This was why, "apart from the love of God, there is no end to the cycle of war."

Boulding's strong convictions about war were shared by his new wife. Together, in the spring of 1942, they drafted a circular, "A Call to Disarm." Fellow Quakers considered it seditious and urged them not to distribute it. When Boulding showed it to his superiors at the League of Nations, he was told that if it were sent out he would be fired. He resigned his post, and copies were distributed that summer. The Bouldings were fearful of serious repercussions, but somewhat to their chagrin, the "seditious" document provoked not the slightest response. In the meantime, Kenneth accepted a job offer from Fisk University, a small black school in Nashville. Two years later, he and Elise issued a second pacifist letter, calling on all people to abandon their allegiances to earthly countries and join the Kingdom of Truth. This letter received as little reaction as the first.

After a year at Fisk, Boulding received a highly attractive offer to come to Ames, Iowa, as an associate professor at Iowa State College. There the economics department had pioneered in developing a multidisciplinary approach to agri­cultural problems, an approach which came to be called the "Ames School." Under the creative leadership of the depart­ment chairman, Theodore Schultz, the Ames approach was being extended to.other areas of economics. To this end, Schultz wanted to find a general economist, give him a year to become familiar with labor issues, and thus create a labor economist uncommitted to the conventions of the field. Boulding was recommended for the job by Albert Hart, an old friend from Chicago. He happily accepted.

Despite good intentions and a year of study, Boulding never settled into labor economics; only one paper written at the time, "Collective Bargaining and Fiscal Policy," reflects his association with this specialized area. Yet participating in the Ames School affected him profoundly. As he wrote later, "I did not really succeed in becoming a labor econ­omist, but the effort ruined me as a pure economist. I became convinced that in any applied field one had to use all the social sciences. . . ."15 At Ames he began for the first time to integrate his insights into economic theory with his convic­tions about the nature of man and the future of society. In 1945 he brought out his second book, The Economics of Peace, which attempted to outline the basic needs and prin­ciples of postwar economic reconstruction. The book had grown out of the work Boulding had done at Princeton, but reflected his new view of economics:

Economic problems have no sharp edges; they shade off im­perceptibly into politics, sociology, and ethics. Indeed, it is hardly an exaggeration to say that the ultimate answer to every economic problem lies in some other field.

The analytical framework of The Economics of Peace was Boulding's "bathtub theorem," which held simply that the rate of accumulation was equal to the rate of production less the rate of consumption. Production could be likened to the flow of water "from the faucet, consumption to the flow down the draim The difference between these two flows is the rate at which water in the bathtub—the total stockpile of all goods—is accumulating."17 The principal economic effect of war was to drain the economic bathtub in a great waste of consumption; filling the tub again was thus the first task of reconstruction. The size of the tub was not, however, unlim­ited; a time would come, as stockpiles were increased, when the rate of accumulation would decline. This rise in the stockpile to the point where people were no longer willing to hold further accumulations was the fundamental cause of the end of a boom and a subsequent slump and unemployment, which Boulding saw as the most serious problem facing mod­ern society. By its massive destruction of wealth, war put off the day of reckoning when mankind would have to face living with an economy that did not grow:

It is the shadow of the classical "stationary state" that hovers over our day, and though it may be postponed by wars, by new discoveries, and by the opening up of new geographical areas to investment, yet these things only seem to be a post­ponement.
It was with the problems of the stationary state, therefore, that postwar planners would ultimately have to grapple. The postwar boom would finally end, and the horrible danger would then be that another war would be needed to drain the tub. How could the familiar cycle of death and reconstruction be broken? Competition, despite its virtues in promoting eco­nomic progress, was insufficient to deal with the real prob­lems of a stationary state. The modern peacetime economy would have to reflect a synthesis of capitalist and socialist elements.

The Economics of Peace was generally well received by its academic critics. That it never was a resounding success with the wider audience to which it was addressed may have had something to do with its moralizing tone and with its appear­ance at a time when most people were still thinking only about winning the war. The book was truly ahead of its time —and of later preoccupations with conservation and human welfare in a slow-growth or no-growth economy.

BOULDING believed that peace, economic stability, and the safeguarding of the natural environment would require man­kind to turn away from greater and greater accumulation of capital goods. Consumption, he contended, was neither a trivial nor a merely technical issue; the very survival of society depended on a correct understanding of it.

It is no exaggeration to say that consumption is the most important and intractable problem of a mature capitalism. As the total stock of real assets grows, the time must come when the rate of accumulation—i.e., of investment—must decline, and eventually indeed must decline to zero. . . . The great problem of the modern age, therefore, is how, eventually, to increase consumption to the point where full production can be maintained.

Boulding eventually decided to give a full-scale treatment of economic analysis by means of his new theoretical ap­paratus. The result was A Reconstruction of Economics, which appeared in 1950. This work was his main contribution to economic theory; it sought, in effect, to explain economics in terms of capital rather than income. The concept of liquid­ity preference—the desire to hold cash rather than assets that earn a return and are less easy to convert into cash—enabled Boulding to see the purchase of goods and services not as a series of income flows to producers and suppliers but as a set of asset,transfers. Here the basic analytical framework was the balance sheet. Liquidity preference also permitted Bould­ing to solve the problem of value, which had plagued earlier debates on the nature of capital. Capital had no intrinsic value; it was merely a heterogeneous collection of physical objects which were continuously being valued and revalued.

Valuation is an essentially "present" process, arising out of the opinions, beliefs, and sentiments of the owners of physical capital (including money) operating on the stocks of the vari­ous forms of the physical capital actually in existence at the moment of valuation. Neither the past history of capital nor even its future prospects can affect its present value except in so far as these things affect the state of mind of its owners. It is true, of course, that both past history and future prospects do affect the present state of mind of owners, but this connec­tion is by no means .a stable one, and valuation always pro­ceeds through the intermediary of the present state of mind, or "asset preferences," of owners.

Boulding could thus revive his application of population the­ory to analyze the- composition of capital stocks without becoming embroiled in the question of the effect of periods of production on the price structure.

A Reconstruction of Economics embodied a unified ap­proach to both micro- and macroeconomic phenomena. Asset transfers, as expressed in a balance sheet, provided the best understanding of economic behavior, whether of the firm or of society at large. Boulding had, in fact, construed eco­nomics as a discipline for handling inventory. What mattered was what was "in the bathtub." Consumption meant the de­struction of assets, calling forth production at the other end of the process and requiring the consumer to have an income. But enjoyment was in many cases different from consump­tion, since one enjoyed a painting by having it, and so too with a violin, a house, or a pair of ice skates (eating was an obvious exception). Maximizing welfare, enjoying one's as­sets to the utmost, meant minimizing consumption and, from a social standpoint, production and income. In modern capi­talist societies, however, the minimum acceptable level of consumption was likely to be rather high, given the desire for full employment. But this could deplete the earth's resources and lead to less human welfare. Eventually, Boulding held, the rate of accumulation would decline to zero; with output just equaling consumption, we would attain the equilibrium of a stationary state.

No economist pursued the lines of thought which Boulding had advanced in A Reconstruction of Economics. The eco­nomics profession was just emerging from the upheaval of the Keynesian revolution and was not about to reconstruct itself again along Boulding's non- or anti-Keynesian lines. For his part, Boulding did not recant. But, though he continued to believe in the fundamental validity of his views, he did not press them.

If A Reconstruction of Economics did not point the future direction of economics, it did give some indication of the fu­ture course of Boulding's thought. In the preface he had writ­ten, "I have been gradually coming under the conviction, disturbing for a professional theorist, that there is no such thing as economics—there is only social science applied to economic problems. Indeed, there may not even be such a thing as social science—there may only be general science applied to the problems of society."21 The book's first two chapters were titled "An Ecological Introduction" and "The Individual Social and Economic Organism"; they contained such subheads as "Reality as an ecosystem" and "The homeo­stasis of the balance sheet." Boulding's early interest in population theory had clearly been expanded into a broad, "or-ganismic" view of society. At the heart of the bathtub theorem was, of course, the issue of conservation. Under the influence of Norbert Wiener's recently published Cybernetics (1948), he had come to see the problem of reaching eco­nomic equilibriums as part of the general theory of homeo-static or self-regulating mechanisms.

At Ames, Boulding had become convinced that to under­stand and solve economic problems, it was necessary to look beyond the conventional bounds of economics. He felt, more­over, that he was part of a growing movement of scholars seeking to unify the social sciences:

We are, I believe, on the threshold of a new attempt at inte­gration in the social sciences, perhaps even in general science. Past failures in this respect—notably those of the Spencerians, the Marxists, and the Institutionalists, who integrated a num­ber of specialized errors into erroneous generalities, should not discourage us. The integration is clearly coming, not by the erection of a vast and tenuous superdiscipline, but by the reaching out of all the specialized disciplines towards one another.

A Reconstruction of Economics was one attempt to move economics toward such an integration. It was to this great goal that Boulding would now increasingly dedicate his efforts.