Economics Questions

Re: Why Capitalism?

Zavoi — Sat, 29 Jan 2011 09:16:56 GMT

Danny Sanchez:
As I outlined in my OP, the wants of each and all are more bountifully provided the more individual income is tied to the individual's contribution to consumer satisfaction. Insofar as contribution-irrelevant privilege becomes a factor of income, that tie is slackened, and the bounty for each and all is decreased.

At the margin, a tiny (0.01% tax) would have such a small impact on the total productivity of the economy that the economic harm to the tax-receiver would be easily overwhelmed by the benefit to him/her. (Even better, we could make it a miniscule capitation tax, which would theoretically have no impact at all on the effect of contribution on income, in absolute terms.) So for any given privilege system, there is at least one counterexample to this universal generalization (“each and all”).

Danny Sanchez:
While I disagree with Schelling's analysis (which seems to imply that "slippery slope" reasoning plays a much greater role in the establishment of a legal order than it really does), it at least has the merit of being firmly grounded in individual ends, and does not posit any kind of trans-individual-end duties. The latter kind of moral absolutism is the distinguishing characteristic of the doctrines that are commonly called deontological, which makes sense because the term is derived from the Greek word for "duty".

I think the confusion may stem from my use of the word “deontology,” while in my mind I’ve stripped away what you’re saying is the essence of deontology. For example (not to dwell too much on specifics), Hoppe’s deontology (Argumentation Ethics) in its original form may consist of two points:

(A) Behavior X is a performative contradiction.

(B) Performative contradiction is an inherently bad thing.

You’re saying that (B) is the essence of deontology, being a trans-individual-end duty, while I’m in favor of discarding (B) entirely and just sticking with (A). I continued to refer to this sanitized theory as “deontology,” but so as not to quibble over definitions, we may just refer to it now as “casuistry.”

This raises the question: why would casuistry matter to anyone? Why would it affect anyone’s actions? Schelling’s point is that even though casuistry might not in itself speak to people’s ends, people interested in the material benefits of cooperation find it in their interest to adjust their behavior in response to casuistry if they expect that others will do likewise. (E.g., the difference between using conventional or low-yield nuclear weapons of the same power.) Casuistry can be of concern to materialistic actors even though it does not appeal explicitly to anyone’s ends.

Re: Why Capitalism?

mahall — Fri, 28 Jan 2011 17:40:39 GMT

So did I, even though I had already understood and agreed with all of it. Someone has really been honing their essay skills. Or maybe just the clarity of understanding made it come out that way naturally. In the same vein, I found this post on the same subject by Adam Knott to also have unusual clarity and power.

That was well written and very effective. Thanks, I appreciate the reference to it. It helped me clear my thoughts.

Re: Why Capitalism?

AJ — Fri, 28 Jan 2011 07:42:04 GMT

mahall:
Excellent stuff Mr. Sanchez. I must say I had an 'Ohhhh' moment reading it.

So did I, even though I had already understood and agreed with all of it. Someone has really been honing their essay skills. Or maybe just the clarity of understanding made it come out that way naturally. In the same vein, I found this post on the same subject by Adam Knott to also have unusual clarity and power.

Re: Why Capitalism?

AdrianHealey — Fri, 28 Jan 2011 05:10:16 GMT

Danny,

have you read Nozick's 'Invariances', especially the chapter 'The Genealogy of Ethics'? I'm not sure wether or not you'll totally agree with it or denounce (big) parts of it, but I think you'll like it.

If you have read it; any comments?

Basically Nozick makes a naturalistic argument for ethics, i.e. explains it in non-moral terms and states that the function of ethics is to promote mutual coordination, cooperation and benefits. (He, as he always does, adds a whole lot of 'buts' and is way more subtle than I'm presenting it here, though.) He also states that ethics can say more than just 'don't aggress one another' and that there are multiple layers of ethics, each functioning to serve mutual coordination. The first level is the level of respect (which can be compared to the libertarian 'don't aggress'), the second through forth one are the ones that call for subjective, positive, moral obligations that shouldn't be enforced by force.

Again; I'm narrowing it down incredibly, but it's a very interesting argument.

Re: Why Capitalism?

mahall — Wed, 26 Jan 2011 19:53:43 GMT

Mr. Green,

Ahhh, I understand. Mr. Sanchez was refering to individual affirmation of another individuals value judgement (comparison).

I believe there is a word out there which is used to describe the evolving court until it achieves it's most common sense general rules but it won't come to mind. I'd say this is similar, minus the legislation part, to how court rulings develop today. Present rulings being reference to prior rulings to substantiat their decisions and such.

Is there a body of work which you feel covers justice in Capitalism the best?

Re: Why Capitalism?

Michael J Green — Wed, 26 Jan 2011 19:32:03 GMT

If the content of Johnny's value judgement cannot be meaningfully affirmed or denied it gives the judge and court a difficult task.

Only if the court is going to judge the case by the standard of "affirming (or comparing) individual value judgments." Given the immediate and long-term problems* with such a standard, adjudicators rely on some other, much simpler and less subjective standard. Any orderly society ultimately looks to general rules with as few exceptions as possible. "Nobody may steal" is general and simple, in that it relies exclusively on ascertainable facts. If we can agree on what constitutes legitimate property (itself based on general and simple rules), then judging a case of theft requires no subjective valuations. Either the property is mine and you gained possession of it without my consent, or you did not. "Nobody may steal unless he anticipates gaining more utility from the stolen goods than the original possessor" relies predominantly on subjective valuation and, as such, leads to inconsistent and seemingly contradictory court decisions. Two cases, seemingly alike, could receive opposing judgments, even by the same judge. There is no way to affirm - no way of objectively stating - that the thief gained more utility than the victim lost, and thus no way to affirm the judge's decision as correct or consistent with past cases.

The court's task, then, is to judge each case according to the rules that have evolved, studying precedent and staying consistent with past cases. It is because value judgments cannot be "affirmed" that we must rely on general rules.

*Long term in that judging each case on its unique merits makes acting legally practically impossible. How am I to know that others will view my utility gain/"value judgment" is greater/"correct" in any action I take?

Re: Why Capitalism?

mahall — Wed, 26 Jan 2011 18:40:55 GMT

Mr. Sanchez,

Thank you for the examples, I can see where my statement faulted.

Is there a good material you could refer me to which speaks on private courts in Capitalism? If the content of Johnny's value judgement cannot be meaningfully affirmed or denied it gives the judge and court a difficult task.

Re: Why Capitalism?

Daniel James Sanchez — Wed, 26 Jan 2011 07:51:41 GMT

Actually, no, just because it has to do with "truth" and "falsity", it doesn't mean it has to do with "verifiability" and "falsifiability", because that gets into all the epistemological problems about whether, for example, natural science involves, verification, or only falsification, or only corroboration, et cetera.

The real crux of whether you are dealing with existential propositions and science is whether there can be any coherent consideration regarding truth or falsity at all; whether a proposition can be affirmed or denied, subject to "yes" or "no", regardless of how tentative or certain that "yes" or "no" is.

"The character of Agamemnon was based on a real person", for example is an existential proposition, even though, given our limited knowledge, it is a very tentative one. The same is not the case for the content of a value judgment. "Johnny taking that apple from the fruit vendor is preferable to letting his baby daughter go hungry" cannot be coherently affirmed or denied even tentatively, without judging it against the standard of an individual's desires. And since there are multiple individuals with their own desires that it could be judged against, it is simply not either true or false in the same sense that Agamemnon really having lived is either true or false. It is simply not a proposition about existence; it is only an utterance that reflects the value judgment of an individual.

That the person has that judgment of value can be affirmed or denied ("Johnny judges that taking that apple from the fruit vendor is preferable to letting his baby daughter go hungry, because he demonstrated as much by taking the apple"), but the content of his value judgment ("Johnny taking that apple from the fruit vendor is preferable to letting his baby daughter go hungry") cannot be meaningfully affirmed or denied, without judging it against the standard of an individual's desires.

Re: Why Capitalism?

scineram — Wed, 26 Jan 2011 07:38:40 GMT

Danny Sanchez:
(And no, in spite of what you might have heard from Marx and Molyneux, ideology is not a dirty word.)

Haha, both Marx and Molyneux are hardcore ideologues.

Re: Why Capitalism?

mahall — Wed, 26 Jan 2011 07:11:42 GMT

Well, shut my mouth, Heh. Excellent stuff Mr. Sanchez. I must say I had an 'Ohhhh' moment reading it.

Science has a requirement of falsifiability, hence praxeology does not require it since the existence of values cannot be falsified. Am I correct in this statement? It seems fair to look at Rothbard's natural right as simple value judgment as a 'what ought to be' statement.

Re: Why Capitalism?

Daniel James Sanchez — Wed, 26 Jan 2011 06:17:28 GMT

Another response to mahall from here:

mahall:

Mr. Sanchez or to whom it may concern,

I'm guessing you would refer to yourself as a Misesian? Is there a obvious critique of Rothbardian natural rights that I do not see? Did he take it too far so it became nearly Randian?

I'm having a hard time putting it to words. I'm just wondering if there is any consensus I'm not aware of.

As I say earlier in this thread,

"The natural law tradition of Rothbard alleges that one can objectively discover what ends all men, by virtue of their nature as men, ought to have: that the ends, according to which men judge laws, can themselves be held up to a standard. This standard is, in effect, an alleged "super-end" that transcends individual human ends."

Such a positing of "trans-individual ends" is untenable because, as I said in the OP of this thread,

"There can be no purposes other than individual human purposes. There can be no ends, other than individual human ends. There is no conceivable human standard by which to choose ends that would not by definition be an individual human end in itself."

In his economics, Rothbard recognizes this truth. In his quest for a science that dictates why men ought to choose libertarian ends, he discards it.

Because there can be no conceivable ends other than individual human ends, the valuations that result from the prioritization of ends can also only be individual and personal. In other words all values, whether they have to do with how we treat goods, or how we treat men, are subjective. In his economics, Rothbard recognizes this truth. In his quest for an objective libertarian ethic, he discards it.

Furthermore, as Mises wrote in Theory and History, values are not "existential propositions." Existential propositions,

"assert something about the state of the whole universe or of parts of the universe. With regard to them questions of truth and falsity are significant."

Values, on the other hand,

"are voluntaristic. They express feelings, tastes, or preferences of the individual who utters them. With regard to them there cannot be any question of truth and falsity. They are ultimate and not subject to any proof or evidence."

Science is about truth vs. falsity. Therefore, science can only ever be about analyzing existential propositions, and not judgments of value. In other words, science can only be "wertfrei" ("value-free", in this particular sense).

Rothbard characterizes economic science in as wertfrei, but in his quest to "verify" libertarian values and "disprove" non-libertarian values, with regard to his "science of liberty", he, in his own words, endeavors to

"cast out the hobgoblins of Wertfreiheit"

In sum, Rothbard's ethical theory (in distinct contrast to his economics) abandons the methodological individualism, methodological subjectivism, andWertfreiheit that are each essential for all sciences of human action. In coherent theories about acting individuals, there is simply no conceivable place for universal ends or objective values that are posited as subject to affirmation or denial.

Re: Why Capitalism?

mahall — Wed, 26 Jan 2011 05:10:38 GMT

Mr. Sanchez,

Wow, thank you for such a all-inclusive response. I believe clarity of thought was exactly what I was lacking. I feel I am on better footing now after reading your explaination.

It certainly is weak to try and attempt to debate by jumping straight to "these ethics are objective!" and not establish utilitarian free market principles first. Since we would fall victim to the same idol worship critism we give to statists/socialists.

Re: Why Capitalism?

Daniel James Sanchez — Wed, 26 Jan 2011 04:23:49 GMT

My reply to mahall's post in another thread...

mahall:

Thanks for the one star rating when I was simply asking a question...

Liberty student is right, you shouldn't take it personally. Threads of this type often get a one star rating immediately after one certain member in particular comes online.

mahall:

William,

Thank you for the link. It seems to me Mises felt capitalism is best supported on utilitarian grounds while Rothbard felt it needed something extra to cover all the bases, if that makes sense. So natural rights theory and utilitarianism are not really a verus scenario but two different means reaching the same end?

If all one cares about is winning arguments by any means necessary, and not about the truth of the position, or clarity regarding why you yourself want the social order to be a certain way, then I suppose it's not a "versus scenario". If one adopts such a sophistic approach, there aren't any versus scenarios with regard to arguments. You could take this approach as far as you want to go. "Libertarianism, because of human utility! You don't understand economics? Okay, libertarianism because the state violates natural rights! You're religious? Okay, libertarianism, because the state violates God-given rights! You're into logic? Okay, libertarianism because to advocate anything else would be a performative contradiction! You're into evolution? Okay, libertarianism because it furthers the species! You're into aliens? Okay, libertarianism because Xenu demands it!"

To me this approach is not only distasteful, but it is ultimately counterproductive, because it discredits us in the eyes of others. I think this eclectic approach to argumentation betrays a tendency to fetishize libertarianism, and the latter causes non-libertarians to dismiss us as a monomaniacal sect who has nothing to say to those who aren't already "liberty lovers" at a gut level.

As I argue in this thread, I think even on an individual level, and even for the most gut-level liberty-lovers and state-haters among us, it is at bottom about human utility, and we have simply come to think of the property rights order that we perceive as associated with the greatest possible human prosperity as "just" and "righteous" (and even concocted rationalizations for why it is "objectively" so), because we simply prefer life to death, health to sickness, and prosperity to destitution both for ourselves and our fellow man, and that we therefore ardently want the legal/moral order that is harmonious with those preferences.

I think it is time we acquired clarity of thought (not to mention argumentative power) by recognizing that, and by dropping both the emotional rhetoric and the specious claims of moral absolutism.

And, the utilitarian and moral absolutist approaches do NOT always reach the same end anyway. In fact, generally they don't. Yes, Rothbard's moral theorizing conveniently came to a neo-Lockean formulation of "absolutely just" property rights that also happened to harmonize with the most beneficial formulation of property rights from a Misesian utilitarian perspective. I don't think it is entirely a coincidence that this harmony occurred in the doctrine of an ethicist who also happened to be a master economist. But there are a lot of "libertarian philosophers" who know economics only superficially, so it is not surprising that their ethical theorizing often arrives at prescriptions for society that, if implemented, unbeknownst to them, would impoverish and starve millions of people. "But, hey," they can always say in their defense, "it's not about utility; it's about doing whatever is simply most righteous/libertarian." The anarcho-capitalist Rothbardian can object to them, saying that there are false inferences in their "rational ethic", and that what they are calling freedom is actually slavery. But, because the dialogue is divorced from the common (and solid) utilitarian ground of the harmony of interests, such clashes of opposing ethical doctrines invariably devolve into vain logomachy and posturing by each side as being the "true libertarians".

Re: Why Capitalism?

Daniel James Sanchez — Mon, 24 Jan 2011 10:40:52 GMT

Zavoi,

As I outlined in my OP, the wants of each and all are more bountifully provided the more individual income is tied to the individual's contribution to consumer satisfaction. Insofar as contribution-irrelevant privilege becomes a factor of income, that tie is slackened, and the bounty for each and all is decreased. Cognizance of this fact among a society's thought leaders would create a general public animosity toward the notion of any kind of privileged system. Individual cognizance of this public opinion would convince each individual that any proposal that privileges him is off the table.

While I disagree with Schelling's analysis (which seems to imply that "slippery slope" reasoning plays a much greater role in the establishment of a legal order than it really does), it at least has the merit of being firmly grounded in individual ends, and does not posit any kind of trans-individual-end duties. The latter kind of moral absolutism is the distinguishing characteristic of the doctrines that are commonly called deontological, which makes sense because the term is derived from the Greek word for "duty". Theories aren't generally called deontological just because they refer to rules/principles that individuals adopt to serve their own ends. Rule utilitarianism, for example, is almost never referred to as deontological.

Re: Why Capitalism?

Zavoi — Mon, 24 Jan 2011 03:15:30 GMT

Danny Sanchez:
Whatever point in time at which you establish the legal code. Ideally a portion of a legal code will be worked out before relevant instances of conflict arise. To acquire near-universal assent, this portion of the legal code should be perceived to have a tendency to benefit most any person.

Such is to be expected in a flexible legal system – people will agree in advance on rules that they believe will mutually benefit them, on average. But as long as these are actual people (and not Rawlsian ghosts), there will still be points of disagreement over which a compromise must be reached (if nothing else, “Who if anyone gets to collect the 0.01% taxes?”).

Danny Sanchez:
the superior productivity of a society based on equality before the law over a society based on caste privilege,

If everyone would prefer to be the tribute-receiver given that they could have their way about it (and I think we agree on this), then it is not the case that for every “privilege” system, every person prefers equality to it. And so I ask: how can we define “superior productivity” such that (a) it is action-affecting (i.e. non-deontological) and such that (b) every person, upon rational analysis, is convinced that equality is superiorly productive?

Danny Sanchez:
…any given individual is not going to insist on your posited 0.01% tax, because he recognizes that the other individuals in that society will have notruck with it. In such a world, he knows that his self-privileging rule is simply off the table, and that his real choice is between (A) promoting a rule that does not so privilege himself and (B) effectively promoting no rule at all. He in turn will have no truck with such a tax levied in favor of anybody else.

This is precisely what I mean by “saliency.” If I prefer “tribute-to-me” over “equality,” then why do I not cause social discord by trying to push the equilibrium towards the former and away from the latter? The answer, as you note, is that I reasonably expect that other people will not cooperate with this proposal.

So, why would people so vigorously protest the 0.01% tax, given that failure to cooperate (“no-rules”) is so vastly dispreferred to either equality or the tax, that the difference between the two is negligible by comparison? The answer to this, following Schelling, is that concession of the 0.01% is concession to the principle that we will allow ourselves to be exploited by another; having made this concession, we can no longer “dig in our heels” and show determination to resist any further encroachment. Thus, such rules are effectively “off the table.”

But this talk of “principles” is deontological (or, as Schelling would say, “casuistic”) reasoning. As far as my own interests are concerned (ignoring the reactions of others), there’s no reason why an increase in the tax from 0 to 0.01% should be so much more unpleasant than an increase from 0.01% to 0.02%; the appearance of a qualitative difference originates from factors that “transcend the mathematical structure of the game” (top of 106/96) – and this is what I call “deontology*.”

*(I may be reverse-straw-manning deontologists, by attributing to them a more defensible position than they do actually argue. If so, you may take “deontology” to mean something like “casuistry” in Schelling’s sense.)