The Cruel Twist of Fate: Imagination

Karl Popper suggested that the amoeba, if it has an erroneous theory, will probably forfeit its life; but humans have the capacity for reason, can criticize theories, and discard those that crumble under criticism. But, in a cruel twist of fate, god (metaphorically) furnished us with an imagination that can conjure up that which cannot exist. For that reason we are still forfeiting our lives in defense of erroneous theories.

Ludwig von Mises on Society and Cooperation

 Mises argues for liberalism in ways reminiscent of arguments for socialism:

"Society is the union of human beings for the better exploitation of the natural conditions of existence; in its very conception it abolishes the struggle between human beings and substitutes the mutual aid which provides the essential motive of all members united in an organism. Within the limits of society there is no struggle, only peace. Every struggle suspends in effect the social community. Society as a whole, as organism, does fight a struggle for existence against forces inimical to it. But inside, as far as society has absorbed individuals completely, there is only collaboration. For society is nothing but collaboration" (Socialism, p 316 of Yale University Press edition/281 of Liberty Classics edition).

This is a beautiful passage and part of Mises's evolutionary arguments. Your world view determines whether you think the ideas of Marx or Mises will generate this happy situation.

All of us in society, even if we are "competing," are engaged in the cooperative effort to discover those products and processes that are best, a view Friedrich Hayek later elaborated on in his essay "Competition as a Discovery Procedure".

Karl Popper's "Virus"

 In The Poverty of Historicism, while talking about the uncertainty of progress, Karl Popper wrote "For we cannot exclude the logical possibility, say, of a bacterium or virus that spreads a wish for Nirvana" (1957, p 157). What is interesting is that Popper was infected with this virus—initially, Marxism, gradually decreasing in virility to socialism and then interventionism.

In 1914, at the age of 12, Popper read Edward Bellamy's utopian novel, Looking Backward:2000-1887 (Hacohen, 2000, p 67-68); and, without guidance, it is hard to believe that he would have been able to engage with it critically. In fact, in his intellectual autobiography, he criticizes himself for his uncritical acceptance of Marxism (1982, 33-34). In that same book he demonstrates that while into his seventies he has still not rid himself of the disease, writing "... if there could be such a thing as socialism combined with personal liberty, I would be a socialist still" (36).

As far as I know, Popper, while sometimes mentioning free markets positively, never condemned socialism for its negative economic consequences that have resulted each time it has been tried. Even the voluntary socialist experiments of the 19th century (e.g. by adherents of Owenism in the U.S.) and of Zionists in Israel have been, if not outright failures, difficult to sustain. Perhaps his rejection of economism—the idea that economic welfare is a guide for social policy and a characteristic he identified in Marx's writing— led him to believe that such a criticism was unnecessary and would reduce him to Marx's level.

The failure of Popper to embrace the economics of Mises and Hayek has led to the perpetuation of error, most visibly in the person of George Soros, and put humanity at risk of another dark age. Edward Bellamy would be astonished.

Hacohen, M. H. (2000). Karl Popper — The Formative Years, 1902-1945. Cambridge: Cambridge University Press.

Popper, K. R. (1957). The Poverty of Historicism. Boston: Beacon Press.

Popper, K. R. ([1976] 1982). Unended Quest. La Salle: Open Court.

The Economic Calculation Debate: Misunderstanding Mises and the Austrians

Andy Denis, a Senior Lecturer in the Department of Economics at City University London (see his home page), has written a paper, Economic calculation: private property or several control,
 that disputes Mises's requirement of private property to permit economic calculation.
First of all, he suggests that several property, or multiple ownership, is to be preferred to private property and that control is to be preferred to ownership. These preferences, in Denis's opinion, take a socialist or planned economy out of the realm of impossibility, at least in terms of Mises's argument.

As I see it, Denis completely misses the point that the owners of private property, singly or severally, value it and are at risk when purchasing or investing. Without the risk of loss -- what Nassim Taleb calls an 'absence of "skin in the game"' -- prices are simply wild guesses and do not reflect the values or opportunity costs of market participants.

Denis does mention the principal-agent problem, in which owners are subject to the will of managers, talking as if this process amounts to expropriation.  Certainly, this situation is a problem in a publicly held, bureaucratically run, stock corporation; but he fails to recognize that owners may withdraw their property from the managers if they are dissatisfied with the results. If there are no owners, there is no one to value the results, and hence no one to withdraw the property. If the benefits and costs of control are added to his system, he arrives at a point where it is hardly different from that of private property.

Perhaps Mises fails to adequately stress the connection between the ownership and valuation of property, leading Denis to misunderstand the thrust of the argument. But it is also possible that Denis, in his eagerness to upend the Austrian/Misesian argument, has a great incentive to ignore or misinterpret it.