Inquiry & Analysis.
I am interested in a discussion of the foundations of the Austrian view- as the participants of this forum understand them. I have been reading in this area and I have a lot of material at my disposal; so I am not seeking links or suggested reading; I have fundamental questions and I need a living person to engage me- not just a pointer to another text or dissertation. I realize the kind of discussion I want is not everyone’s cup of tea. But if some of you reading this post are interested in an analytical exploration of ideas and experience, I invite you to join me in a sincere discussion.
The very first topic of discussion I would like to open regards the view of participants concerning the ‘ergodic axiom;’ or, how do Austrians (theoretically) anticipate future events?
with kind regards,
kalinz
kalinz: Inquiry & Analysis. I am interested in a discussion of the foundations of the Austrian view- as the participants of this forum understand them. I have been reading in this area and I have a lot of material at my disposal; so I am not seeking links or suggested reading; I have fundamental questions and I need a living person to engage me- not just a pointer to another text or dissertation. I realize the kind of discussion I want is not everyone’s cup of tea. But if some of you reading this post are interested in an analytical exploration of ideas and experience, I invite you to join me in a sincere discussion. The very first topic of discussion I would like to open regards the view of participants concerning the ‘ergodic axiom;’ or, how do Austrians (theoretically) anticipate future events? with kind regards, kalinz
With regards to supposedly anticipating, or predicting, future economic events [if that is what you are referring to] , there is nothing in Austrian methodology that allows "Austrians" to consistently predict them, no more or less than there is in any other economic school.
Von Mises even devotes a whole chapter of Human Action to the fallacy of the economist as being someone able to predict future events.
Of course this has not prevented "Austrians", particularly those in the investment advisor profession, from claiming to make successful predictions about future events.
As far as I am aware, Von Mises' contention was that the Austrian methodology should be used to explain/understand only past events, and present day, unfolding events to some degree , not to make predictions about future events [i.e economic forcasting].
Speaking as a "post" Austrian, myself,[so my opinions don't really count ], I believe that no-one [i.e economist , investment advisor , tea- leaf reader] can consistently, successfully predict future economic events- and I also believe this to be pretty consistent with what Von Mises himself said.
However, others ["Austrians"] may well disagree with both myself and my interpretation of Von Mises' writings on this subject, and, I'm sure, would be more than happy to engage further on this.
Regards, onebornfree.
For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].
onebornfree- thank you for your post (and I hope you will follow up with more comments).
What I am thinking here concerns decision making- based on anticipation of future outcomes. To elaborate a little: when an austrian economist makes a decision about the role of the state in markets, trade, & commerce, what criteria does he employ at the most fundamental level- to predict what the future might look like based on the decision-makers choices- as in to have a truly free market, or to have one with the state as a major player. For instance, if Von Mises denies the ability to know the future outcomes of decisions- how does he posit truly free markets and deny the role of the state as desirable?
I find your comment (that you do not believe the knowledge of future events to be viable)- very interesting. It seems the foundation of Classical Theory is based on this very idea- the future can indeed be known by decision-makers. I am truly in the dark on the most elemental notion of this in the Austrian school. Please elaborate more.
kindest regards,
kalinz,
I am not familiar with the ergodic axiom. Could you define or link me to a good source that provides a definition? I'm not very far into my economic conceptualization and have begun my inquiry with logic, epistemology, and ontological realism. I've read introductory books on economics so excuse me for not having read Human Action yet as I'm preparing my familiarity with methodology, and what I've noted already, beforehand. What you say here seems somewhat in the area I've currently been researching, maybe, maybe not.
I have begun reading a paper by Uskali Maki today in which he is exploring explanations in the ontological realist sense and how this is a form of prediction. I haven't read the whole paper, so, you'll have to excuse my incompleteness on what he will eventually get to I'm sure, but I didn't want to pass this post up in order to also engage with another person in an area that may have to do with my current exploration.
Maki had this example using the quantity theory of money of a prediction derived from an explanation:
index:
M is stock of money
P is price level
Maki: An increase of M (of an economy) will result in a rise of P (in the same economy) by the same proportion, ceteris paribus. M increases by p% & ceteris paribus ---------------------------------------------------- :.P rises by p%
An increase of M (of an economy) will result in a rise of P
(in the same economy) by the same proportion, ceteris paribus.
M increases by p% & ceteris paribus
----------------------------------------------------
:.P rises by p%
What I read here is: an increase of the stock of money results in a rise of the price level with all else unchanged in the economy. With the money stock increased by a given priced percentage with all else unchanged provides an overall conclusion with the price level rising that given price percentage that the money stock increased by. [critique if need be] Yet due to contingent factors this is only a probability and it will vary and involve approximations.
Therefore this explanation leads to a prediction based upon all else staying the same with the changes noted in the equation.
Is that something within the realm of your original post? Even if not, if you could still direct me to my initial questioning in this post. Thanks.
I don't think any Austrian has said that predicting the future is impossible. If that was the case, you'd have to say that being an entrepreneur or an investor is a waste of time. What's impossible is consistently predicting very short-term events regarding complex systems like the stock market.
There are Austrians who have been very successful in predicting long term trends like Peter Schiff and Jim Rogers. In fact, Schiff, who I have been following for a while, is a living proof that the idea that consistent prediction is impossible is untrue.
You're familiar with Mises's treatment of probability in terms of case and class variations?
Freedom of markets is positively correlated with the degree of evolution in any society...
Think of it as a little kid [us] looking into a giant pot of food [the future].
"When will it be ready, son?"
"Dunno."
"What will it taste like?"
"Well you don't know anything, do you, son. I'm going to throw in a barrel of salt to sweeten it."
"Wait minute. I do know that the more salt you put in, the saltier it will be, not sweeter."
"Oh really. And exactly how much salt will make it too salty for me to enjoy?"
"I don't know. But salt makes it saltier, that I do know. And I know a whole barrel will certainly do the job."
End of parable.
That's the situation. The economy is way too complicated and full of unknown future events to be able to say exactly when and what will happen. But we can say that salt makes it saltier than it would be otherwise. Meaning for example, that artificially low interest rates will lead to a boom and bust sooner or later. What exactly, down to three decimal places, is "too low" an interest rate? We can't know that. But we can know that close to zero percent is definately too low.
I think Peter Schiff is so successful because the gov't in recent years has not been very subtle in it's use of "salt" They have been throwing it into the soup by the warehousefull, not by the spoonfull. He is a smart person, a student of Austrian Economics, who understands what leads to what, and the govt makes his job easy for him by overkill. I mean a trillion dollar deficit. Is that a borderline case, like 3 tablespoons of salt?
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
wilderness: Maki had this example using the quantity theory of money of a prediction derived from an explanation: index: M is stock of money P is price level Maki: An increase of M (of an economy) will result in a rise of P (in the same economy) by the same proportion, ceteris paribus. M increases by p% & ceteris paribus ---------------------------------------------------- :.P rises by p% source
I forget who pointed this out (I believe it was Mises) but the above is incorrect, specifically the "by the same proportion" part, because it ignores marginal utility, which affects all goods including money. It also ignores that increases in M affect P over time, and in some sectors more than others, depending on the preferences of whoever receives the money first. We can say that an increase in M will result in a rise of P, but we cannot determine which parts of P, nor can we say by how much except that we know it must be LESS than a proportional rise.
IOW, if you were to double your cash holdings, would you then be willing to pay double for everything? Obviously not, and this is true for everyone.
"He that struggles with us strengthens our nerves, and sharpens our skill. Our antagonist is our helper." Edmund Burke
maxpot46:I forget who pointed this out (I believe it was Mises) but the above is incorrect, specifically the "by the same proportion" part, because it ignores marginal utility, which affects all goods including money. It also ignores that increases in M affect P over time, and in some sectors more than others, depending on the preferences of whoever receives the money first. We can say that an increase in M will result in a rise of P, but we cannot determine which parts of P, nor can we say by how much except that we know it must be LESS than a proportional rise. IOW, if you were to double your cash holdings, would you then be willing to pay double for everything? Obviously not, and this is true for everyone.
you're right. It was pointed out by Maki later in the article that this proportionality equation doesn't fit Austrian economics. I did mention I wrote that out without completing the article and Maki later uses that same equation to point out how Austrian economics explains that formula differently thereby adjusting it. You're correct it would be a more qualified explanation to rid the "by the same proportion" part. If that was gone along with keeping what I did manage to write in later in that post: Yet due to contingent factors this is only a probability and it will vary and involve approximations. It would be more accurate.
Though that formula of uniform proportionality is inaccurate, which I'm very glad you pointed this out, it doesn't swerve from the gist I was trying to portray which is of prediction derived from explanation such as what you wrote: it must be LESS than a proportional rise.
Thanks for pointing this out!
Edit: It's explained similar to how you put it on page 19 of the pdf with a citing to see von Mises; 1953 included.
Here's an article about the ergodic axiom. It seems that Keynes and Mises both rejected it, but aside from that they diverged radically.
http://mises.org/daily/3756
kalinz: What I am thinking here concerns decision making- based on anticipation of future outcomes. To elaborate a little: when an austrian economist makes a decision about the role of the state in markets, trade, & commerce, what criteria does he employ at the most fundamental level- to predict what the future might look like based on the decision-makers choices- as in to have a truly free market, or to have one with the state as a major player. For instance, if Von Mises denies the ability to know the future outcomes of decisions- how does he posit truly free markets and deny the role of the state as desirable? I see two ideas here being linked that are unrelated, I think. Let's try a FAQ style. Q: Can we know the future? A: No, of course not. Q: Can we know wether the state should be a player in the economy? A: Yes We can and do know that the state should NOT be a player. Q: But if you don't know the future, how can you know the state is bad always? A: That is like asking "If you don't know wether you will be healthy or sick tomorrow, how do you know you should not be hit on the head a couple of times with a baseball bat?" WHATEVER THE STATE DOES is like hitting the economy over the head with a baseball bat. That is the Austrian viewpoint, and many a book has been written by the Austrian greats to explain this and to prove this. The essence of the argument, as I understand it, is that no matter what happens, people will sooner or later figure out what is best for them, and thus just leave everyone alone [making sure they don't get violent] and everyone will be happy. The state never ASKS people for permission to do what it does. It is always coercing someone or other by force or threat of force [jail]. Which means someone is being made to do what he has already figured out for himself is bad for him. How can this be of any use or benefit for that person? Q: But it may be benefiting some other fellow. A: Oh, it definately is. If you hold up Peter at gunpoint and give his money to Paul, you have hurt Peter and aided Paul. How has this created a net benefit to the economy? Q: OK you have shown that the state is of no benefit whatsoever to the economy as a whole. But still, at worst the state just has a net influence of zero on the economy. Why do you say such a harsh thing like "It is like hitting the economy with a baseball bat?" A: If Paul knows the govt will steal for him, will he bother to actually do soemthing productive? Like create wealth? Get a productive job? Q: Of course not. A: There you are. Two thirds of the work force is being wasted. One guy, Peter, is supporting himself, Paul, AND the govt guy with the gun. Throw out the govt and all three people will have to get a job doing something productive. Everyone will be better off. I find your comment (that you do not believe the knowledge of future events to be viable)- very interesting. It seems the foundation of Classical Theory is based on this very idea- the future can indeed be known by decision-makers. Yes it is the foundation of Classical Theory, apparently. But not of Austrian Economics.
I see two ideas here being linked that are unrelated, I think.
Let's try a FAQ style.
Q: Can we know the future?
A: No, of course not.
Q: Can we know wether the state should be a player in the economy?
A: Yes We can and do know that the state should NOT be a player.
Q: But if you don't know the future, how can you know the state is bad always?
A: That is like asking "If you don't know wether you will be healthy or sick tomorrow, how do you know you should not be hit on the head a couple of times with a baseball bat?" WHATEVER THE STATE DOES is like hitting the economy over the head with a baseball bat. That is the Austrian viewpoint, and many a book has been written by the Austrian greats to explain this and to prove this.
The essence of the argument, as I understand it, is that no matter what happens, people will sooner or later figure out what is best for them, and thus just leave everyone alone [making sure they don't get violent] and everyone will be happy.
The state never ASKS people for permission to do what it does. It is always coercing someone or other by force or threat of force [jail]. Which means someone is being made to do what he has already figured out for himself is bad for him. How can this be of any use or benefit for that person?
Q: But it may be benefiting some other fellow.
A: Oh, it definately is. If you hold up Peter at gunpoint and give his money to Paul, you have hurt Peter and aided Paul. How has this created a net benefit to the economy?
Q: OK you have shown that the state is of no benefit whatsoever to the economy as a whole. But still, at worst the state just has a net influence of zero on the economy. Why do you say such a harsh thing like "It is like hitting the economy with a baseball bat?"
A: If Paul knows the govt will steal for him, will he bother to actually do soemthing productive? Like create wealth? Get a productive job?
Q: Of course not.
A: There you are. Two thirds of the work force is being wasted. One guy, Peter, is supporting himself, Paul, AND the govt guy with the gun. Throw out the govt and all three people will have to get a job doing something productive. Everyone will be better off.
I find your comment (that you do not believe the knowledge of future events to be viable)- very interesting. It seems the foundation of Classical Theory is based on this very idea- the future can indeed be known by decision-makers.
Yes it is the foundation of Classical Theory, apparently. But not of Austrian Economics.
More faq:
Q: But what about interest rates? Isn't the govt providing a valuable service, fine tuning the economy to make sure interest rates are at their most desirable?
A: Huh? Most desirable for who?
Q: For the economy, silly.
A: Is the economy a person?
Q: The economy, you silly amateur, is the aggregate of all the people in the country.
A: So a certain interest rate is good for everybody in the country?
Q: Sure. And the govt, in its infinite wisdom, knows exactly what that is.
A: Wait a minute. If I want to borrow money, what rate is better for me, a higher one or a lower one? And what is better for the bank? So how can you say that rate X is ideal for us both. The borrower would be better off at at X minus something, and the bank better off at X plus something. So in a sense X is bad for us both.
The reality is that we have to know the unknowable. What would the interest rate be had the govt not butted in? Say it is Y. If X is different than Y, then someone is worse off, me or the bank, but someone. If X=Y, who needs the govt beaurocracy with thousands of paid employees living off tax money to do what would have been done without them?
In any case, once more the govt has either robbed Peter to help Paul and itself [if X is not = to Y] or just robbed Peter to help itself [if X=Y].
Thank you everyone for your posts. I want to address each person in the best way I can, and I look forward to more of your views. I think a central tract relevant to each person should incorporate an approach to the significance of the ergodic axiom. Smiling Dave has posted a link above- an excellent book review containing a concise expression of this key constuct of Classical Theory- for purposes here, we may understand the ergodic axiom is as follows:
Treat economics as a science- and develop it with rigor as a system, applying to the system the condition that in an interval of sufficient duration, previous states (or very close approximates) will occur- as in statistical methods used in dynamics. Thus treated, economics as hard science allows the economist to predict future outcomes- as the astronomer predicts the celestial orbits.
So we see how this enables market practitioners who have data samples from the past to employ statistical methods to predict the future, in effect, to know the future. In this way, decision-makers can, based on the data, know future outcomes and make rational choices.
Should not each of us ask, how else can one make rational choices, unless he somehow uses the past to ‘know’ the future? And remember, all efficient market models rely on this aspect of Classical Economics.
So now, I circle back to my earlier query… how does Mises (or the Austrian School) make (or justify) rational decisions about targeting future outcomes… as in promoting the decision to have a free market as opposed to a mixed one… and I ask this based on the search for a guiding principle in Austrian economics which can be articulated by the participants here- again, in their own words, so to speak.
I continually read Mises, but his text does not answer my questions as I read, and only living persons in real time answer questions as formulated specifically.
Warm regrards to all
Kalinz
P.S. Smiling Dave- your latest post appeared while I was writing this one- so I add this post script for you; I am posing these questions with some very basic contrasts in mind, note: pure reason (rationalism) versus scientific method (reason plus empiricism) versus more abstract mathematical method (efficient market models). I am looking for the Austrian articulation of method more than of specific results on any given issue- as in statist versus anti-statist. That is, the fundamental method which guides all thought and conclusions.
kalinz:P.S. Smiling Dave- your latest post appeared while I was writing this one- so I add this post script for you; I am posing these questions with some very basic contrasts in mind, note: pure reason (rationalism) versus scientific method (reason plus empiricism) versus more abstract mathematical method (efficient market models). I am looking for the Austrian articulation of method more than of specific results on any given issue- as in statist versus anti-statist. That is, the fundamental method which guides all thought and conclusions.
From what I've seen, the Austrian school claims that it works like high school geometry. it assumes self evident axioms, and using classical deductive reasoning such as found in any good book on simple logic, reaches conclusions.
Any one with a mind realizes that the only possible way to refute this is to either 1] show that a given axiom is false, or 2] show that the rules of deduction have not been followed. But since the axioms are pretty obvious, and the deductions pretty carefully done, it's very hard to do this.
So the usual criticism is to call it "unscientific" because it doesnt use heavy math, or gather data and draw conclusions from that. Oh well.
So I guess "pure reason" is the answer.
It claims that the scientific method is not very useful in studying economics, because the scientific method is ultimately based on experiment. In an experiment, you examine two situations that are absolutely identical in all repsects but one, and see how that one change affects things. Well, how are you going to do that in an economic universe? Tell people to go back in time and do the housing bubble all over again, but this time put in one new regulation?
As for abstract Math, it has a bad name in Austrian circles, mainly because other economic schools have tried to use it in the most absurd ways. I think personally that bottom line, the reason that Math is scorned in AE is that for the simple things, you dont need Math. And for the intricate things for which Math might conceivably be useful, their very complexity means that you will never find a formula that nails the situation down.
I've seen people saying that Math needs numbers, and the essence of economics [that I like vanilla ice cream a little more than chocolate ice cream] is not something that can be numbered [I don't like vanilla "1.36 times" more than chocolate]. But I think there is a field of math that studies this kind of thing, lattice theory. I'm not sure if the results there are applicable to economics, or are besides the point. Just saying.
Smiling Dave- Okay, very good.
Pure reason. Rationalism. Now, for me, things come into better focus.
Yes, I agree with you when you say- if the axiom is true, and the rules of deduction are followed- one cannot refute the conclusion. So, if the Austrians do employ this method successfully (and yes, since elementary logic is not difficult for most thinking people once they focus a bit) Austrians must begin with axioms which are either self-evident, or preface the main argument with establishing the truth of the axiom they plan to use to launch the main argument.
Now we are in a better position to turn toward an examination of the statist versus the free market controversy. In fact, if you are willing, I would like to play the devil’s advocate with you. Let’s begin by recognizing explicitly the fundamental Austrian axiom which is used to begin the anti-statist argument. But you should be the one to do that- to formulate the statement for us.
My intention is to look at your axiom and to see if it is indeed self-evident- and that is your challenge- to formulate it such that it is self-evident. Otherwise, you must then establish your primary axiom by way of reasoning from some still more primitive self-evident truth.
And as a reminder to everyone- allegory, metaphor, and such ancillary literary devices, while sometimes very convincing- and pleasing to read, do not constitute rigor, because they shift the elements of the argument to different classes which do not actually apply, however aptly employed.
I very much look forward to this engagement. Your turn, Smiling Dave.
Sincerely,
kalinz:I very much look forward to this engagement. Your turn, Smiling Dave.
Murray Rothbard did a much better job building up AE from absolutely nothing [axioms like "people will prefer to pay less for something than more"] in Man Economy and State. And Mises' Human Action is all about that too.
Sadly I cant work my way through them, attention span ain't what it used to be. A Dilbert strip is more my speed.
I did read Economics in One Lesson by Hazlitt, from where I learned why the state is only harmful. Its an easy read, short book, free too.
Here: http://jim.com/econ/
The gist of the argument, as I understood it, is in my earlier posts. You can strip them of the metaphor and story line and see the logic underneath. Or you could read Hazlitt, who certainly does a better job than me.
Ah what the hell, let me try.
1. taking money from a productive person by force and giving it to an unproductive person will not improve economic conditions
2. In fact, it will make things worse, because the productive person will have less incentive to work further, and less cash to work with and invest. Thus there will be less produced and thusthere will be less to go round for everyone.
3.Every thing the state does is nothing but taking money from a productive person by force and giving it to an unproductive person
4. conclusion from 1, 2 and 3: The state can only make things worse.
Is the above statement true in many situations? Maybe. Is it without doubt true in every possible situation? Not so clear at all. (As an example, if the father of four children, refuses after a divorce to provide any financial assistance to those children, and a judge then rules he must [by law]provide support according to his means- it might be that he will help the economic community by helping his children to become productive citizens (though while very young, these children could not be characterized as economically productive). In the real world, this is an example of forcible transfer of money from the productive to the unproductive, and in my view- in the longer term likely to be contributive to the improvement of economic conditions. Conclusion: this statement cannot be regarded as a self-evident truth is all possible cases.
If the first statement is not all inclusive of all possible cases, and it is not self-evident as an all ecompassing truth- then the second statement does not follow in all cases necessarily. Therefore it cannot be part of the fundamental foundation of the anti-statist position. Even if it is an empirical fact in many cases, it is not a logical truth is all cases.
3. Every thing the state does is nothing but taking money from a productive person by force and giving it to an unproductive person
With all due respect, Smiling Dave, the above statement in does not follow from the first two at all; and worse yet- it is blatantly false. (In December 1942 the forces of Imperial Japan attacked the United States at Pearl Harbor, U.S. territory in Hawaii- and the United States’ Congress declared war. Subsequently the state prosecuted war against Japan for four years in defense of American freedom. (As an almost natural byproduct of this war, the US economy economy emerged from the depression and became the dominant economy of the world.)
In my honest view, this conclusion is invalid, based on all the above.
And a reminder to all: The function of the state is primarily national defense; and thus its role rightly extends beyond affairs of exclusive economic focus.
Smiling Dave, please try again. I want us to be able to come to consesus, if possible.
Regards,
What I think "giving to the unproductive won't help matters" means is "giving to the unproductive won't help matters now". So if I force a guy to pay child support, at time 1 the guy's productivity decreases while consumption increases. This means that output falls or falls below its potential. More present goods are consumed and used in prejudice to future goods.
Here's three axioms:
property is axiomatic (property includes property in ones person and scarce resources; This is distinct from the natural right of property which is a theory involving the concept of justice. NR of property has also been explained as an oak law, ie. ceteris peribus and Newton's first law are also examples of oak laws, used to determine just(ice) property because such laws exist as long as nothing interferes with them but anyways that is neither here nor there as the topic was axioms)
human action is axiomatic (praxelogic)
consciousness is axiomatic
OK, one at a time. I won't quote your whole post, but will refer to the numbers in the post.
1. If we assume the parent has an obligation [i.e. owes the money] to the child then of course you are right. There is an an implicit assumption that we can make explicit and hopefully settle this. So the revised version with everything spelled out is:
taking money from a productive person by force and giving it to an unproductive person TO WHOM THE MONEY IS NOT DUE will not improve economic conditions
2. now that 1 is fixed, 2 can follow.
3. was not meant to follow from 1 and 2. it is a description of what the state does, by definition of the word state.
here's a quote from http://en.wikipedia.org/wiki/State_%28polity%29
"A state is a set of institutions that possess the authority to make the rules that govern the people in one or more societies, having internal and external sovereignty over a definite territory. In Max Weber's influential definition, it is that organization that has a "monopoly on the legitimate use of physical force within a given territory". It thus includes such institutions as the armed forces, civil service or state bureaucracy, courts, and police."
There ya go. To paraphrase, a state is that which uses force to boss people around and take their money, and tells them its all legal and great.
Now when they take someones money by force, they give it to someone who would not have gotten the money any other way. Otherwise, why use force? In other words, it went to an unproductive person.
The counterexample you give has two parts. First, the state took peoples' money and bodies by force and made them fight a war. Even if we assume that the war could not have been avoided, which I highly doubt [what do the japanese need to fight us for?], the state's armies are less efficient than private armies. Maybe we needed an army, but not a bad one, which is what the state gave us.
The truth be told, Mises himself was of the opinion that a state's only job was to provide defense. But many Austrians nowadays disagree with that. In my lifetime, all I have seen was total failure of the military to defend us, or to win a war for that matter. We did not win Vietnam, we did not win in afghanistan or Iraq [why are we still fighting there if we won?], and all the wars in my lifetime have been totally pointless.
Which makes me very suspicious about every war.
As for the war saving the economy, yes that is the official myth that is spoon fed to us all. I remember reading that in Samuelson's book and not really understanding it. In any case the facts are quite the opposite. This site has plenty of proof that its total nonsense. You can do a search in the literature section and in the media section.
Here's a logical challenge for you. Show me the axioms and line of reasoning that proves the following: taking many many many raw materials out of a country and dropping them out of a plane onto another country, thus destroying the raw materials, will revive a depressed economy in the first country.
4. having patched up 1,2,and 3, 4 now follows.
Let me add in a "0" here, as well.
0. I am giving you not the best statement of the axioms, nor the offical Austrian version, but my own. The sources I mentioned in the earlier posts do a much better job.
wilderness:property is axiomatic
I am not sure what that one means. Does it mean there exists in the world scarce resources and human bodies?
Smiling Dave: wilderness:property is axiomatic I am not sure what that one means. Does it mean there exists in the world scarce resources and human bodies?
yes. Because semantically the term property means scarce resources, ie. human bodies. It is axiomatic cause it takes a scarce resource, ie ones own person/body, to attempt to even question if there is property or not. Did that help?
edit: I am not saying scarcity external to ones person is axiomatic, though it is also defined as property too. Because while trying to question if external manifestations exist or not that is not self-evidently known. But Austrian economics is based on resources being scarce. That's fundamental as the world is finite.
yes wilderness, it helped indeed.
TY
cool!
wilderness:But Austrian economics is based on resources being scarce. That's fundamental as the world is finite.
And this is what the socialists deny.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
This will be my last post today, I look forward to seeing you all again tomorrow.
In order: fakename- I believe the temporal dimension is of critical importance in the consideration of all economic factors. But that said, right here, right now, I am trying to limit the breadth of the discussion to focus on the very fundamental issue of axioms and logic as utilised by the Austrian approach. At this point I will insert some very personal aspects of my own experience: It has been the history of my engagement with the Austrians that the logical apparatus is somewhat abused (though I am sure it is done in good faith, and it is a very easy process to unfold- I myself have been often guilty) and thus find the logical approach of Austrian Economics to be quite problematic. Given your remarks regarding the time dimension, if you will give me the time, I will specifically address your thoughts at a later date (soon).
wilderness- do you mean?
1. Property includes property in ones person and scarce resouces (property is axiomatic)
2. Human action is axiomatic.
3. Consciousness is axiomatic.
You will correct me if I have misconstrued you. I have neglected to point out the importance of definitions as opposed to axioms. An axiom is only meaning ful if it is preceded by adequate definitions. So we may say definitions must be prior to logic. This of itself sets an important limitation on the use of logic in discourse about the real world. Now, this is not necessary when the topic of logic is very everyday language like:
Humankind is mortal. Socrates is a human. Therefore Socrates is mortal.
No need for definitions here, as everyone immediately understand s the denotation of the words. But when we are discussing a topic like economics, this assumption should never be made in a discussion of the fundamentals. Now with that said, I will address you three axioms on Monday if you will bear with me.
Smiling Dave: Yes you have fixed number 1 in the sense that you have made the statement more clear as to what you meant to say; but the part of the statement you inserted makes it unacceptable as a self-evident axiom- until you can properly inform us that your value judgement of who is deserving and who is not- is a fact in the world and not just a part of you belief system. Many reasonabl e people who practice reason and logic may not share you personal values- that is, they may think people who are disabled either physically or mentally, are the aged, are the unemployed through no fault of their own, are the poor through no fault of their own; and so on in an absolute myriad of categories are each and all deserving even the way children are in the first case all deserving of the same coercion of the law to redistribute wealth from the productive to the unproductive. But this alone is not the chief problem with your number 1. Number 1 was flaw from the beginning and remains so because the second part of you statement is not evident in any way- not as regards the world of living men and women- which is to say redistribution of wealth will not improve economic conditions. The quality of conditions is also a relative notion based on a specific value system- as in the optimum condition for the capitalist, as opposed to the optimum condition for the laborer.
So 1, 2, 3, and 4 remain inadequate and cannot launch Austrian Economics on its way. Not based on self-evident axioms anyway. Now, if you want to say your personal belief system is not relevant to the logic- you must still clear up your definitions as I (belatedly) noted at the beginning of this post.
Respectully to all,
P.S. Anyone who may have posted while I was writing this will forgive me until tomorrow.
kalinz:So 1, 2, 3, and 4 remain inadequate and cannot launch Austrian Economics on its way. Not based on self-evident axioms anyway. Now, if you want to say your personal belief system is not relevant to the logic- you must still clear up your definitions as I (belatedly) noted at the beginning of this post.
OK you got me. I have to defer to the classics then.
kalinz: wilderness- do you mean? 1. Property includes property in ones person and scarce resouces (property is axiomatic) 2. Human action is axiomatic. 3. Consciousness is axiomatic. You will correct me if I have misconstrued you. I have neglected to point out the importance of definitions as opposed to axioms. An axiom is only meaning ful if it is preceded by adequate definitions. So we may say definitions must be prior to logic. This of itself sets an important limitation on the use of logic in discourse about the real world. Now, this is not necessary when the topic of logic is very everyday language like: Humankind is mortal. Socrates is a human. Therefore Socrates is mortal. No need for definitions here, as everyone immediately understand s the denotation of the words. But when we are discussing a topic like economics, this assumption should never be made in a discussion of the fundamentals. Now with that said, I will address you three axioms on Monday if you will bear with me.
The only change I would make, as I mentioned to Smiling Dave, is property is axiomatic when it comes to 'in ones person'. Property in scarcity external to the person is not axiomatic. It is contingent. Yet the earth has not been falsified in being finite. Thus, scarcity is fundamental in the world, with the individual person being scarce to begin with.
yes. Definitions on Monday - til then!
kalinz: onebornfree- thank you for your post (and I hope you will follow up with more comments). What I am thinking here concerns decision making- based on anticipation of future outcomes. To elaborate a little: when an austrian economist makes a decision about the role of the state in markets, trade, & commerce, what criteria does he employ at the most fundamental level- to predict what the future might look like based on the decision-makers choices- as in to have a truly free market, or to have one with the state as a major player. For instance, if Von Mises denies the ability to know the future outcomes of decisions- how does he posit truly free markets and deny the role of the state as desirable? I find your comment (that you do not believe the knowledge of future events to be viable)- very interesting. It seems the foundation of Classical Theory is based on this very idea- the future can indeed be known by decision-makers. I am truly in the dark on the most elemental notion of this in the Austrian school. Please elaborate more. kindest regards, kalinz
In general "Smiling Dave " appears to have [very aptly ]answered some [most?] of the questions you might have for me.
However , if you wish to further explore my own particular brand of insanity on this issue, you can private message me and we can go from there, as there is a lot more to be said about the issue of economic prescience, in my opinion- I'm just not prepared to explore it further here.
onebornfree:In general "Smiling Dave " appears to have [very aptly ]answered some [most?] of the questions you might have for me.
Thx for that, onebornfree. I love getting [positive] feedback.
I'm very curious about something you wrote, that you are a post-Austrian.
What does that mean?
And I'm guessing you dont want to post your opinions here, lest you be snapped at.
I was thinking more about my 3 axioms, and how you swept them away so easily.
It seems to me that axiom 1 is the crux of the whole thing. The others are either self evident, or follow from 1.
Your argument against 1 is that the unproductive person may DESERVE the money, depending on what the assumed moral values are.
I remember now seeing something in Mises that is relevant.
His argument, if I recall correctly, was as follows. Let's accept for the sake of argument, that a certain group deserves money for nothing. Maybe it's the poor, maybe the elderly, the helpless, whatever. They all deserve a piece of the pie. Fine.
But the question is, what if you are doing something that SHRINKS THE PIE ITSELF TO ALMOST NOTHING? Then of course everyone, including the poor helpless elderly, all suffer.
My axiom 1 says that if you take money from a productive person to an unproductive person, the future pie will be smaller. There will be LESS in the future for EVERYONE. A simple analogy is if a hungry orphan wants a steak from the milk cow [and there is no refrigeration], and he indeed deserves it and needs it, he will nevertheless suffer if you give it to him. Because there will be no more milk when the cow is dead. Most of the meat will rot. The poor orphan will wind up with less than he had before, when he at least got a bucket of milk every day.
I assume here that every system of morals wants those it considers deserving to get more, not less
Bottom line: Axiom 1 should be revived, the earlier suggested fix to it erased. And it now stands true. Your original attack on it was "but what if the unproductive person deserves the money?" The reply is "Then he is getting really screwed. He will have a little bit more now, and a lot less later."
One more analogy. The law of gravity says that if you drop something it will fall.
"But what if you drop a little baby who will be killed by the fall?"
"Mother Nature makes no exceptions."
Here too, axiom 1 says giving to the unproductive shrinks the future pie for everyone. This a law like the law of gravity. It applies even if the unproductive deserve to get what you give them.
Smiling Dave,
Keep in mind that axioms are different than logical deductions. The axioms don't have a premise and a conclusion. Logical deductions do. They are both in true demonstration sound. Yet the concepts are categorically different and it may become philosophically confusing if these terms are used interchangeably. I would suggest reflecting on that and see if you are using the terms correctly. I don't have that much time at the moment, but it seems you might be confusing the two terms. I'll be back later.
wilderness: Smiling Dave, Keep in mind that axioms are different than logical deductions. The axioms don't have a premise and a conclusion. Logical deductions do. They are both in true demonstration sound. Yet the concepts are categorically different and it may become philosophically confusing if these terms are used interchangeably. I would suggest reflecting on that and see if you are using the terms correctly. I don't have that much time at the moment, but it seems you might be confusing the two terms. I'll be back later.
yeah you are right. ok then:
1 is an axiom, a self evident truth. [because the productive person by definition knows what to do with the money to make more wealth in the world]
2. is a theorem, follows from the argument attached to it
3. is a tautology. it is just restating the definition of a state
4. is a conclusion from 1,2 and 3.
Smiling Dave: onebornfree:In general "Smiling Dave " appears to have [very aptly ]answered some [most?] of the questions you might have for me. Thx for that, onebornfree. I love getting [positive] feedback. I'm very curious about something you wrote, that you are a post-Austrian. What does that mean? And I'm guessing you dont want to post your opinions here, lest you be snapped at.
" I'm very curious about something you wrote, that you are a post-Austrian.
What does that mean?"
Other than the fact that I do not believe in "movements" anymore, political or otherwise, I'm not really sure!
As somebody once cautioned [Mencken?] : "Never join a club that would actually consider having you as a member " - or words to that effect.
True "Miseians" , "Rothbardians"," Hoppeians" etc.
Besides, as I see it, according to my own official and unique interpretation of praxeology , there was only one "Misean" - and that was Von Mises himself, just as there was/is only one "Rothbardian", one "Hoppeian" , one "Mengerite" etc. etc.
Likewise there is only one me [ not that I'm comparing myself intellectually to any of the three above, in any way, shape or form].
"And I'm guessing you dont want to post your opinions here, lest you be snapped at."
I'm past all that , and am fully at peace with my own insanity , so : "Water off a ducks back".
Greetings everyone.
Jon Irenicus- Forgive me for not answering your post till now. The discussion of Probability is very inviting indeed. Let’s do it- but not just right now. For the moment, I want very much to explore the view of participants here regarding Mises and the development of Austrian Economics from a rather traditional synthetic deductive approach. As soon as we get a little further along with this- I look forward to a discussion of the contribution of Mises & probability to the foundations and development of the Austrian view.
wilderness- Note: I am here not trying to restate anything Mises has said- rather I am interpreting you- you as the representative of the Austrian approach.
Okay, you are presenting a primitive statement(s) which I will try to re-state and you tell me if I am wrong. We are to build a logical system from the ground up- and the place to begin is with the human individual- the person; the person is the foundation of scarcity and property. The individual person is unique to himself and he will regard or recognize himself as scarce (finite, limited- full of want?) and valuable. As the person bodily owns himself, this may allow the introduction of the term property. When you say this is axiomatic, you mean it is the beginning statement to be accepted on some basis and from which other statements may be posited or premised and valid conclusions drawn- you hold it as true of course- and expect reasonable people should concur- as each person with developed states of consciousness will have these features in common. If someone objects that he does not find the axiom self-evident perhaps you will say it is nevertheless true- and provides the most primitive axiom for Austrian Economics. This you will say is the absolute beginning point and must be accepted- for discussion and elaboration to proceed.
So wilderness, what of this I have just said?
It is my wish that perhaps you will offer this axiom again, stated in your way but further clarified with another set of statements or premises which can follow from this first and reach an irrefutable conclusion through deduction, to lay the Austrian foundation just a little further- so I may better understand you.
wilderness and Smiling Dave- Yes. Smiling Dave I refer you to the post of wilderness regarding the categories of concepts.
Warm regards,
Smiling Dave:1 is an axiom, a self evident truth. [because the productive person by definition knows what to do with the money to make more wealth in the world]
That's not an axiom. That's a possible logical deduction, meaning, it's not necessarily so. Because a person, via human action (the axiom), does know what to do with money, but it is only possible that the individual will make wealth. The other possibility is the person will not make wealth.
wilderness: Smiling Dave:1 is an axiom, a self evident truth. [because the productive person by definition knows what to do with the money to make more wealth in the world] That's not an axiom. That's a possible logical deduction, meaning, it's not necessarily so. Because a person, via human action (the axiom), does know what to do with money, but it is only possible that the individual will make wealth. The other possibility is the person will not make wealth.
Ok guys, you got me.
kalinz: wilderness- Note: I am here not trying to restate anything Mises has said- rather I am interpreting you- you as the representative of the Austrian approach. Okay, you are presenting a primitive statement(s) which I will try to re-state and you tell me if I am wrong. We are to build a logical system from the ground up- and the place to begin is with the human individual- the person; the person is the foundation of scarcity and property. The individual person is unique to himself and he will regard or recognize himself as scarce (finite, limited- full of want?) and valuable. As the person bodily owns himself, this may allow the introduction of the term property. When you say this is axiomatic, you mean it is the beginning statement to be accepted on some basis and from which other statements may be posited or premised and valid conclusions drawn- you hold it as true of course- and expect reasonable people should concur- as each person with developed states of consciousness will have these features in common. If someone objects that he does not find the axiom self-evident perhaps you will say it is nevertheless true- and provides the most primitive axiom for Austrian Economics. This you will say is the absolute beginning point and must be accepted- for discussion and elaboration to proceed. So wilderness, what of this I have just said?
Sounds good, but one point after I say this. All of those axioms (and there may be more I currently don't have the knowledge of all axioms). But yes, axioms are the 'first principles'. Now that one point. You say above: "As the person bodily owns himself, this may allow the introduction of the term property." Property isn't own. There is an axiom of self-ownership which would be more correctly used with the term own. Property is a substance, in other words a scarce good. It is not saying if the good is owned or not by definition, but due to the self-ownership axiom the property of a ones person is owned. They are they. They own (control/possess) themselves when they act (act being an axiom too).
All else of what you said seems fine.
kalinz: It is my wish that perhaps you will offer this axiom again, stated in your way but further clarified with another set of statements or premises which can follow from this first and reach an irrefutable conclusion through deduction, to lay the Austrian foundation just a little further- so I may better understand you.
Property A is Person A. When Person A is able to control their own property/person enough to have private property in the form of tangible goods Person A trades with Person B who also having the prerequisites of private property, etc... that Person A has, these two are able to make an economic exchange following the law of marginal utility. What this means is the economic good that Person A gives away in exchange with Person B such a good is a low marginal unit, ie. not valued as much, as the economic good that Person A receives from Person B. In other words, Person A and B each receive in the exchange what they value the most and they give away what they value the least. The economic goods that were exchanged were an extension of the property that each person is in and of their self. The exchange is made by Person A & B. Without private property and each person considered property unto them self, then the clarity in the exchange will not be present as some external force intervening in the exchange the laws of supply and demand will not be driven by Person A nor B but by the third party thereby distorting any exchanges that potentially happen.
Hope that came out ok. As I may have mentioned earlier my strong suit is not in economics but in the philosophy behind it. Yet I've picked up some economics here and there so I think this is true but I don't know how detailed or how much further I can carry the explanation.
Smiling Dave: wilderness: Smiling Dave:1 is an axiom, a self evident truth. [because the productive person by definition knows what to do with the money to make more wealth in the world] That's not an axiom. That's a possible logical deduction, meaning, it's not necessarily so. Because a person, via human action (the axiom), does know what to do with money, but it is only possible that the individual will make wealth. The other possibility is the person will not make wealth. Ok guys, you got me.
I think you're a lot better at economics than I am, so, now you might be able to carry the explanation further than I have in my last post when kalinz responds again.
I thank everyone for contributing to the discussion.
This is a good point in the thread to re-group and and to sharpen our focus going forward.
Let me state my personal goal for the thread- I would like to build up in our own language and words the foundation of the Austrian Economics (from the ground up!) and for the participants to reach consensus. That said, it is also my desire to limit the pre-economics discussion in the areas of policy, society, psychology, etc., except to the extent that these subjects- including philosophy- are extremely intersticed in the subject of economics and must be addressed as they arise.
First as a reminder and a precursor let me insert here a quote from Mises:
“It is true that economics is a theoretical science and as such abstains from any judgment of value. It is not its task to tell people what ends they should aim at. It is a science of the means to be applied for the attainment of ends chosen, not to be sure, a science of the choosing of ends. Ultimate decisions, the valuations and the choosing of ends, are beyond the scope of any science. Science never tells a man how he should act; it merely shows a man how he must act if he wants to attain definite ends.” 1.
So I hope we can proceed with the logic of Austrian Economics, but logic with statements which apply to the real world as we all experience it- and not to an ideal world, an imagined world, where all the elements are set to suit our own wants, or make our argument easier. We do not want premised an economic world posited with two people in it; we do not want premised an economic world with only just men acting rationally, and we do not subscribe to an economic eden where war and aggression and crime do not exist.
Please- let’s make the logic deal with the real world as it exists in our own experience- and build the economic science rationally from the ground up. Let us see if we can re-build Austrian Economics using the language of the participants.
I invite everyone to share.
1. Human Action. Introduction. Page 10. Fourth Revise Edition. Fox & Wilkes, San Francisco. 1949, 1963, 1996.