American Journal of Economics and Sociology, The: Editor's introduction

The word "economics" derives from the Greek word "economicus," which means household management. In ancient Greek times the citizens of places like Athens lived on small farms of less than 10 acres in size and harvested barley, wheat, olives, figs, and grapes. Their households consisted of extended families and some slaves as well. In ancient times, household management meant more than going shopping and arranging the cleaning person to come on Tuesday. Economics included husbandry and agricultural arts as well (Baeck 1994, p. 1). Household management in this sense was an immensely complicated matter and it became even more complication with the establishment of large country estates in Roman times and after. (1)

The symposium that graces the first part of this number of the American Journal of Economics and Sociology, deals with some modern threads that are part of the fabric of modern family life in urbanized settings. A sizeable segment of the American population have found that private home ownership eludes them, and they have had to make their way in rental units or worse. Unlike during ancient times and even as late as the first part of the 19th century, precious few families in North America actually live on farms. Still in the modern urban household there is a great deal to be managed, and more to be negotiated between marriage partners, as the lead article in this issue makes clear.

Professor Allen M. Parkman discusses the negotiation of housework between men and women as revealed through the data of the National Survey of Families and Households. The setting for his study is the modern American household, which consists of two members of opposite sex, roamed to each other and Living in a dwelling without servants, slaves, animals, or even relatives. It is well known that when one spouse goes out to work in order to gain a "second" family income there are lost opportunities associated with that decision. The extra real income that is earned (and can be measured) is really a misleading index of how family living standards have changed in the two-person working household. That is because the extra time devoted to workplace activity must be deducted from time that would otherwise be spent doing other things. As the saying goes, "there are only 24 hours in a day."

Consider what happens after, say, the woman gets a full-time job and stops working as a full-time homemaker--the production of household goods and services rapidly plummets in quantity and quality. The excitement of the buffet line is substituted for the thin chime of the dinner bell. On Table 3 in his article, Parkman lists several household activities and records the number of hours that each spouse devotes to these activities. It turns out that wives going to work only contribute a much more limited amount to family welfare than at first might be imagined from looking only at the take-home pay. The time a woman devotes to each household task plummets and the man of the household doesn't pick up the slack--at least not by so much (as measured by Parkman's regression routines). Households in which there are both children and working parents reveal a somewhat different statistical pattern. If mom devotes less time to the children, does dad pick up the slack?

That question is addressed in the Michael Leeds and Per von Allmen paper. They analyze the data recorded in the Panel Study of Income Dynamics to discover that wives' home production behavior is shaped more by the working status of the wife than by any other single factor considered in that study. But for the husband, things are quite different. He will pitch in more effort for household chores but only if there are children to be managed and nurtured. Such a picture of family life and commitment to the next generation is a pleasing one indeed. But what can be said about families that are missing one parent, typically the biological father who has either left or died?

The Gary Painter and David I. Levine study offers us a somewhat sobering picture of child development in the proverbial "broken home." The likelihood of the maturing child dropping out of high school or worse is about 6 percentage points higher than in households where both biological parents remain together under a single roof. According to Painter and Levine, it is family income that accounts for so much of the socially undesirable measurements about children and their development. Obviously, single-parent households or households with at least one nonbiological parent present (for example, the stepfather), also do not bode well for childhood development and success. But what normative implications follow from these measurements? The authors are reluctant to prescribe social remedies or treatments, preferring instead to merely highlight and measure the phenomenon itself.

Professor Cathleen Whiting demonstrates a normative no-holds-barred approach to debunking the great American dream about every family "owning" its own home. Whiting is a reformer who wants to redistribute income from the rich to the poor by engaging government tax power. Her prose will raise feathers on the bonnet, of many economists who might point out (1) that the redistributions that she proposes will discourage home building and in the end make matters worse or (2) that even if income were redistributed, Whiting might not be pleased with the manner in which her chosen "poor" choose to spend the new fruits of the redistribution. Cynics suspect that many of the recipients of such windfall redistributions would go for broke down at the local gambling casino rather than go to the real estate broker. A more reasonable criticism of Whiting's thesis is that each person makes his or her own tradeoffs with whatever disposable income is available, and there is no guarantee that any redistributions will cause home ownership to increase rather than new car sales or even college education. It is not at all clear that income redistribution by itself will result in a new pattern of home ownership.

But such heckling by cynics and economists (they are often not the same) is of no interest to Whiting, who hammers away at what she dubs the "myth of market efficiency." The American dream of home ownership is largely a myth. Still, the fact that almost 50% of net investment in the United States is used for home building and/or renovation does make the United States economy rather distinctive among the economies of the world. Regardless of the rest of the world, Professor Whiting wants more housing (in the form of home ownership) for those who do not own.

It remains an open and interesting question why the democratic political process has not made this a vibrant issue even in this federal election year. Perhaps future political leaders will find some grist for their mill in Whiting's forceful paper. We are thankful to Professor Whiting for such a stimulating and controversial piece.

Our last article in this series is by Dr. Barbara A. Wiens-Tuers. She takes a look at one important segment of the U.S. job market--those engaged in nonstandard employment opportunities such as self-employed individuals. (2) According to Wiens-Tuers, the "nonstandards" have smaller chances of accumulating the sorts of nonfinancial assets that include home ownership. This is unfortunate because many of the nonstandards are responsible people with excellent credit risks. Wiens-Tuers insists that she has discovered a lacunae in the market systems--a profit opportunity that is relatively untapped by today's financial middlemen. Perhaps the publication of her article will encourage financial brokers to present the loan applications of nonstandards in new and dramatic ways.

Alternatively, I suspect the problem may not be easily cured because the federal government by way of its Fannie Mae and Fannie Mac criteria might refuse to provide loan guarantees for "promissory notes" executed by individuals engaged in "nonstandard" employment. This refusal will make their notes less liquid and therefore discourage financial intermediaries from making these loans in the first place. This is a problem with government regulation and the structure of financial markets, and not a problem with market entrepreneurs missing out on profit opportunities. Obviously, there is much more that needs to be said about the credit-worthiness of "nonstandards" and the reality of our current imperfect methods of qualifying borrowers for government benefits, but this article is valuable in pointing out the problem. As is welt known, a large segment of the U.S. workforce is presently engaged in "nonstandard" employment (Arum and Mueller 2004, pp. 170-202).

Continued from page 1.

Next we move on to a "Symposium on Noneconomic Objectives in the History of Economic Thought." This Symposium was first presented at the History of Economic Society meetings that were held in conjunction with the Allied Social Science Meetings in January 2002. There the questions that were asked included whether "noneconomic" constraints derive from government processes and end up always putting a constraint on competitive market outcomes.

It is clear that the development of orthodox economics in the 20th century gave rise to the frequent complaint that the norm of "economic efficiency'--allocating scarce resources to their most valued uses--had swallowed up all competing norms and goals of public policy, including ideas about social justice and common decency. (3) Most alarming in our own time is the willingness on the part of many to jettison concerns about basic human rights for the security of low fuel prices and/or the gluttony and wastefulness of modern forms of middle-class life. Again, we can imagine the ride to the buffet line in a gas-guzzling SUV. In some ways the modern sociologists have engaged in a pitched battle against the modern economists on the inappropriateness of the efficiency criteria when it disguises gross disparities in income and wealth distribution. In the American Journal of Economics and Sociology it is appropriate that we examine other "noneconomic" criteria in the canonical literature from which most of modern economics (including orthodox) economics derives. How about Adam Smith for starters?

Professor Bruce Elmslie takes a look at a major policy intervention to which Adam Smith devoted much theoretical ingenuity, in his 1776 masterpiece, The Wealth of Nations. Since food prices enter into the costs of producing all goods and services in the economy by way of market wage payments, it was intellectually challenging to ask what the effects of subsidy payments for agricultural output were on the entire economic system? The financial subsidy was called in Smith's time the "bounty on raw materials" (i.e., food). Smith's analysis of the food bounty suggested that it really did not promote material living standards at all and, far worse, depreciated the currency and served to hamper the natural and ordinary development of the market system. Thankfully, Smith concluded, this government intervention in pursuit of entirely noneconomic objectives or promoting agricultural output only punches a dent in the efficiency framework but does not produce a complete economic wreck of the economy as might be originally expected to happen. (4)

Professor Andrea Maneschi's contribution to this Symposium is of great value. He pointed out that noneconomic objectives were a constant focus in both the early 17th century economic literature and (therefore) were "also included as parts of the 18th century literature as well. They were especially important in informing and shaping many of the leading topics in the centuries-long discussions about international trade relationships and national prosperity. In his contribution to this issue, Maneschi rationally reconstructs these arguments and suggests that noneconomic criteria became a permanent part of orthodox economics in the subfield of international economics. Maneschi's works contradicts those who insist that noneconomic objectives are seldom to be found in that literature.

Finally, Professor Joesph Persky provides an illuminating focus on one very clearly controversial "noneconomic" objective, namely, that of equality. The title of his contribution is "When Did Equality Become a Noneconomic Objective?" That title is meant to be ironic. Indeed, the discussion of poverty and how its worst effects might be mitigated has long been a centerpiece for economic comment and discussion. Indeed, the debate over the reform of the English poor laws in 1834 generated pages of discussion and heated debate. Similar debates involving welfare economics absorbed much paper and ink during the 20th century and continue today, as can be seen in many articles and essays, including several of the essays included in the first part of this journal issue. Indeed, I cannot resist mentioning the stimulating work of the self-made economist Henry George who in the last quarter of the 19th century made the phenomenon of poverty in the midst of "progress" the special topic that interested him the most. Henry George's ideas had an enormous influence on the social sciences and encouraged the early founders of this journal to set up this journal in the first place (Forstater 2002).

The problem is not when did noneconomic objectives first become part of economics but rather when and where did economists lose interest in these topics. According to Persky, that "moment" came with the N. Kaldor and John R. Hicks revolution in welfare economics. Only income and wealth distributions that might be assented to by the interested parties became of interest. If this Symposium makes any single contribution, it is that "noneconomic" criteria are there in the main of economic literature if only one cares to take a look.

We conclude this issue with several interesting book notes. Mr. David Grant of the LVMGroup in New York City reviews Alan Ebenstein's book on F. A. Hayek. For those interested in the bibliographical analysis, Professor Yann Giraud of the University of Paris recommends a magnificent book by Mr. Kenneth E. Carpenter, former editor of the Harvard Library Bulletin, on the French translations of Adam Smith's Wealth of Nations. Mr. Andrew R. Timming of the University of Cambridge recommends the recent Harrod and O'Brien book on the possibility of "global" unions Finally, a note on Arum and Mueller's edited book on self-employment concludes this October issue.

Notes

(1.) During Roman times and especially in the conquered territories outside of the Italian, it was common for rich landlords to cultivate large estates with the help of slave labor. On the matter of the size of the farms, see R. Pipes, 1999, pp. 99-105.

(2.) Self-employment is a global phenomenon and it is something that is going on not only in the United States (see Arum and Mueller 2004) and the review of that book in this issue of the AJES.

(3.) Compare Hayek's critical remarks about the concept of social justice in Hayek 1976, pp. 62-100.

(4.) See Moss 2001, pp. 295-300 for a complementary account of the broader significance of Smith's analysis of the corn bounty in terms of Samuel Hollander's contributions to our understanding of the history of classical economic thought.

References

Arum. R., and W. Mueller. (2004). The Reemergence of Self-Employment: A Comparative Study of Self-Employment Dynamics and Social Inequality. Princeton: Princeton University Press.

Baeck, Louis. (1994) The Mediterranean Tradition in Economic Thought. London: Routledge.

Forstater, Mathew. (2002). "How the AJES Got its Mission Statement in 1941. Adolph Lowe's Plea for Cooperation and Constructive Synthesis in the Social Sciences" American Journal of Economics and Sociology 61 (April): 779-787.

Hayek, Friedrich A. (1976). The Mirage of Social Justice. In idem., Law Legislation and Liberty. Volume 2. Chicago: University of Chicago.

Moss, Laurence S. (2001). "Ricardian Economics: Reasoning about Counter-intuitive Tendencies When System Constraints are Present." In Eds. E. Forget and S. Peart, Reflections on the Classical Canon: Essays in Honor of Samuel Hollander. London: Routledge Publisher, pp. 290-317.

Pipes, Richard. (1999). Property and Freedom. New York: Vantage Books.