These considerations therefore show that Wisdom is both Scientific Knowledge and Intuitive Intelligence as regards the things of the most exalted nature. This is why people say that men like Anaxagoras and Thales ‘may be wise [sophoi] but are not prudent,’ [phronimoi] when they see them display ignorance of their own interests; and while admitting them to possess a knowledge that is rare, marvellous, difficult and even superhuman, they yet declare this knowledge to be useless, because these sages do not seek to know the things that are good for human beings. Prudence on the other hand is concerned with the affairs of men, and with things that can be the object of deliberation.--Aristotle, Nicomachean Ethics, 6.7.5 (translated by Rackham) [1141bff].
In the Ethics, Aristotle reports a popular prejudice against Anaxagoras and Thales that they have esoteric and technical knowledge of useless subjects (metaphysics, astronomy, physics, etc.), but lack knowledge of human affairs. Ancient popular opinion seems to have been unmoved by, or unfamiliar with, the idea of (to use some anachronism) technological spin-offs of pure research. Surprisingly enough, in Plato's Theaetetus, Socrates seems to embrace a version of the popular prejudice against Thales [174a]* in order to argue that there is, in fact, a permanent (potential), multi-faceted (political and social) problem for philosophers.
I doubt that Aristotle is endorsing the prejudice against Thales in the passage of the Ethics because, as he reports in the Politics, he is familiar with the story of Thales's ability to make a fortune on his skill at monopolizing olive presses in Miletus and Chios [1259a]. Interestingly enough, in the Politics, Aristotle portrays popular opinion as being confused about the source of Thales's ability to make a fortune and it (public opinion) ascribes it to Thales's ability to use esoteric knowledge about the stars to practical ends. (I have discussed this at greater length here.) And, in fact, in the Politics, Aristotle implies that Greek political elites could create local market monopolies as a source of public revenue "for many states need financial aid and modes of revenue." Given that Aristotle clearly recognizes that consumers have to pay more than they otherwise would under such a monopoly, Aristotle here knowingly sides with ruling elites against at least some of the citizens (and non-citizens).
What does any of this have to do with two Nobel laureates in economics?
As I have mentioned before (recall here, here, and here), in 1943 George Stigler -- then at Minnesota, where Milton Friedman became his office-mate (but Chicago trained and eventually a pillar of 'Chicago economics') -- published a blistering attack on the assumptions behind the "simple technique" of the "new welfare economics" (NWE) in the American Economic Review. Paul Samuelson (then already at MIT which he would turn into the greatest economics department of the next few decades) was one of the named targets and wrote a scathing response. (I believe Stigler and Samuelson had overlapped a bit at Chicago when Samuelson was an undergraduate there.)
The epigraph at the top of this post is also the epigraph to Stigler's short piece. Stigler insists that the normative presuppositions of NWE ought to be different than the assumptions in pure (positive) economics. Stigler argues for greater self-understanding on the part of economists about the essentially political nature of welfare economics when applied to societies. In context, Stigler’s point is meant to warn against two tendencies: first, the tendency to import the representative agent into the pure part of economic analysis; second, the tendency to forget the contentious nature of tacitly assuming that that society’s ends are unified.** Stigler does not advocate removing (controversial) policy ends from economics, but rather advocates transparency about ends ("bringing the existing ends to the surface.") Along the way, he makes fun of economists' hyper-specialization within the academic division of labor. In particular, he insists that economists are overlooking important insights of "modern social theory." (Stigler mentions Wallis, Durkheim, and Parsons among others.)
It would have made my life easier if Stigler had quoted the passage on Thales from Aristotle's Politics. For, from Stigler's vantage point, Aristotle and Samuelson are presenting themselves as policy experts to ruling elites and are assuming consensus over major ends. (Of course, neither Aristotle nor Samuelson ignores class conflict!)
But a moment's further reflection suggests a more subtle point. Samuelson's NWE is presented in (then) "formidable" mathematical language (see also here and here), and is esoteric in the way that the astronomical science of Thales and Anaxagoras is purported to be. And, Stigler clearly implies in his 1943 AER piece that the mathematical formalism cannot deliver genuine policy advice because "theory and statistics are too weak to yield really defensible estimates of individual gains and losses" and, thus, make compensation a mere "analytical trick." Thus, Stigler believes that Samuelson and his allies are creating the circumstances in which popular prejudice of the sort directed at Thales and Anaxagoras as reported by Aristotle is likely. That is to say, it's not just that the NWE is ignoring other social sciences at its peril, its aim to become the key policy science through its oracular non-transparent appeal to elites -- promising them to deliver the levers by which the economy can be directed [the context is, first, Great Depression, then the planned war-economy] -- will lead to long run social problems for economics absent a better understanding of its role in society.
Ironically, it was one of Stigler's 'Chicago' colleague, who in 1954 created the analytical trick through which economists could dispense with "statistics" to figure out compensation. That colleague was A. Harberger, the intellectual father of the Chicago Boys in Chile (see here for details) with, how to put this delicately, not entirely salutary results. So, Stigler was prescient, but in 1943 he could not have foreseen that he was warning his own school.
I close with more Aristotle:
It is also clear that Wisdom cannot be the same thing as Political Science. (Aristotle, NE, 6.7)
* The story of Thales in the well is echoed in the famous story about Hume stuck in the bog. I have to admit that knowing of the story about Thales has made me suspicious about the anecdote about Hume and his fishwife (which I used to enjoy sharing).
** I am oversimplifying here: Stigler notes that in NWE individual ends are treated as "random," while collective ends are "organized" and unified. Foucault attributes the point to Gary Becker (1962), and I have been crediting Alchian (1950, following a hint in Arrow) [recall], but Stigler sees where it is heading already in 1943.