Reflections on Presenting at the Southern Economic Association/Society for the Development of Austrian Economics Conference of 2023

 I believe this year's conference was the last one I will attend. It's not so much that it was a waste of time and money, but that I very much doubt that I have another paper in me. In fact, there was only a mass of paragraphs underlying my presentation, not a paper.

The title of my presentation was "Biophilosophy and Praxeology" in which I made many assertions that I expected would be challenged or at least would produce a request for elaboration in the Q&A period. As there was only 15 minutes for the presentation, you can imagine that many things were glossed over, including the apriorism that is surfacing in biophilosophy and the idea that Ludwig von Mises should have looked to biology rather than philosophy for the source of his apriorism. In fact, when I would wake up in the middle of the night, I spent a lot of time thinking about how I would address the vast array of possible questions that would require deeper explanations of my thinly supported assertions.

At the very end of the paper there is a short example of how an a priori concept in biology, metabolism and the requirement of binding and releasing energy (Mayr), could lead to the creation of goods and the process of evolution that Menger described in development of money. For some reason, this example became the exclusive focus of questioning by the session organizer and then, in open discussion, by other participants. I was corrected from the floor that the definition of money is the generally accepted means of exchange rather than the most liquid commodity.

In addition, there was very little follow-up after the end of the session in which people like to engage in private discussion. Apparently, nobody liked it, and nobody hated it—a non-event. At the SDAE dinner one student said he liked the presentation and found it interesting.

Note that no one told me that I was rehashing old material that was more clearly or rigorously presented in the past or had misinterpreted the material I was citing. Perhaps it was the emphasis that this year seemed much more empirical than in previous years. Maybe there simply is no interest in rescuing the apriorism of the Misesian program of praxeology from the evolutionary empirical emphasis that dominates the Hayekian mind set.

It only remains for me to seek an alternative path, possibly through the biophilosophers. Do I have confidence of a different result in that direction? Who knows—pigs may fly!

The Errors of Galambos

A number of years ago (six and a half, as of this writing) I wrote this article for posting in a Yahoo! forum devoted to Volitional Science.  I post it here, at this time, for historical reasons and to make it available to Galambos's students who may not be members of that forum.

The Errors of Galambos

Introduction

For a number of years I have thought about Galambos's ideas while reading more from other sources - primarily Austrian economics (which Galambos mentioned favorably, except in the context of epistemology).  Some of what I read served to support what Galambos said and some clashed with it.  In re-evaluating Galambos's ideas I came to the conclusion that he had made errors - in fact, significant errors - and that this forum is the place in which to discuss them.

Although I believe that Galambos made significant errors, my understanding of the world has certainly been enhanced by his teachings, and I believe that he may have long-term significance, assuming that his ideas are ever published or referenced in other publications.

Error #1 - The Definition of Property

The definition of property is constrained in that it applies only to "volitional beings," having been modified from applying only to "man" (SIAA, pg. 21).  Galambos was queried a number of times as to the test which could be applied to determine membership in this class, and he answered it simply by suggesting that a being could be blocked in its path and its choice to turn one way or another would indicate that it exhibited "volition."  Interestingly, if one blocks a plant and gives it the time, it will choose another route, but Galambos never discussed the killing of plants as problematic.

My view is that property is an attribute of all life, and that the cell wall is the first fence (it is possible that others will extend the concept into the realm of bio-chemistry or even chemistry, but we shall see that such an extension does not meaningfully impact the ideas I will express).  Each living thing values its own property as its existence and procreation depend on it.  Expanding our view to non-volitional beings makes the definition truly universal.

Why did Galambos not include plants?  I believe it is because the entire food chain then becomes one of property acquisition through destruction (he would have called it plunder) - a conclusion unacceptable to someone building a morality upon property.  Viewing all property in a positive light means that some living things must be excluded from the definition or we will have to admit that our entire existence is based upon the destruction of this positive value.

Error #2 - The Enshrinement of Property as the Central Concept in an Absolute Morality

If the definition of property is to be expanded as suggested above, what happens to an absolute morality based upon property?  My view is that it crumbles, and we must accept the fact that an absolute morality, if it exists, cannot be based upon property.  Von Mises clearly comes down on the negative side of the question - there is no absolute system of values (_Theory and History_, pg. 36) - and I mostly agree.  The only sense in which I may disagree is that there may be an objective (or absolute) system for man, but it is unknowable, just as the objective universe is unknowable.  However, through market action (the employment of the scientific method in daily life), we may approximate an implementation of this morality.  I believe that this implementation would be much as Galambos described.

The central concept of life is value - the relative subjective attraction to something ("something" is meant to cover the complete range of concepts which Galambos included in property).  Values are not rational (although not irrational, either) - one does not decide to like something or dislike it (Bernard de Mandeville, Fable of the Bees (Liberty Fund, 1988), Introduction, pg. lxxix).  Values alone, without constraint, would produce an unthinkable range of actions.  People would take what they wanted and civilization would be impossible.  It is the cost of achieving values which constrains action, and which brings about rational behavior through the act of choice.  If the apparent costs exceed the expected benefits, the action will not be taken (of course, people make mistakes in their estimations of either or both).  Costs come in at least 2 flavors - psychological, as in doing something which violates one's personal belief system (conscience) or the belief system of respected individuals; and material, as in jail time, shunning, fines or, in a free society, restitution.

If one is able to transfer the cost of achieving values to others, he generally does.  I call this latter behavior "political."  Political behavior exists at all levels of society and can be extremely destructive - no one in this forum needs to be made aware of that fact.  The basic point is that it is merely an avenue that may be chosen to achieve values - more income for the farmer, more hiking destinations for the environmentalists, more countries that have governments like ours that can be identified as great accomplishments.  The groups involved in this behavior generally perceive that they cannot achieve their values through market action or that the cost of doing so would be too great, and choose the lower-cost political approach.  As long as this option is available it will be chosen - by your family, your friends, your customers, your employer, etc.  Calling them "immoral" is more likely to alienate them and label us as "out of touch" or "looney" than to change their behavior.

Note that the killing of animals and plants for food, or the imprisonment of animals as pets, draught animals and food factories produces a net value.  We do these things because the only value the subject being provides is in the use we make of it - even as a "friend."  Our fellow human beings have been shown to produce greater value as friends and workers than as food or slaves.  For that reason and that reason alone cannibalism is non-existent and slavery appears primarily only in cases where immigration law makes it economic.

In the final analysis, the concept of morality is made unnecessary by market action.  Over time market action, acting through a discovery process (Hayek's words), will produce the institutions of property protection.  Whether or not they will match any pre-conceived morality is questionable.  In fact, I believe it is an internal contradiction to proclaim a market-regulated morality as both Galambos and Rothbard did.  What we can predict is that the institutions will reflect the values of their customers.

As a final aside, individuals are free to maintain any morality that they choose - Christian, Islamic, Utilitarian, etc.  However, it is the market where the benefits and costs of adherence to these ideals will be valued.

Error #3 - "There is no such a thing as a small interference with property!"

Sure there is!  If your neighbor's kid uses your pool without permission will civilization fall?  If a close friend is late for lunch or, god forbid, forgets it, do you banish him from the moral island?  If someone who provides you great value - say a customer or a teacher - treats you shabbily, do you end all contact?  Of course not!  You evaluate the situation (not necessarily by putting it in a spreadsheet) as to what you will gain by concealing or denying your displeasure against the loss incurred by speaking out or simply terminating the relationship.  This fact explains why "great" people can do the most horrible things and still retain the loyalty of those around them.  The more value they provide their associates the more they are willing to put up with abuse (Kay Nolte Smith, an objectivist author, wrote Elegy for a Soprano, an interesting novel on the subject).

Error #4 - The Protection of Primary Property is Antecedent to the Protection of Secondary Property

Galambos took what he perceived as an injustice (the lack of credit for his first-stage optimization work) and elevated it to the central problem of mankind.  That primary property protection is of value cannot be denied.  There is hardly a day that goes by in which a major story does not appear (Verizon vs. Vonage comes to mind) concerning intellectual property.  At the same time that the market is pursuing solutions to the problem there are also antagonists on the left (Richard Stallman of the Free Software Foundation for instance) and even within the libertarian community - just look at the diatribes against it by Stephan Kinsella on the Ludwig von Mises Institute blog (http://www.mises.org/blog) or read his paper, "Against Intellectual Property" (http://www.mises.org/journals/jls/15_2/15_2_1.pdf).

To expand on the libertarian intellectual property issue, they largely have a problem with it because a) intellectual property is not scarce in the economic - that is "rivalrous" (more than one person may use it at a time) - sense and b) property has moral implications which include the "right" to destroy someone in defense of it (they feel uneasy about the idea of killing someone who has, for example, recited a poem without permission of the author).  My response to "a" is that economics might be better served by orienting itself to value - a well-established Austrian concept - rather than scarcity.  To "b" I say that defense may incur costs and that killing with impunity is not part of any market system I expect to exist.

In any case it is clearly more difficult to protect primary property than secondary or primordial property, and it will only be protected when its protection can be supported by the institutions which are already successful in more mundane spheres (for instance a company which registers land titles may expand to register innovation titles).

Error #5 - Intellectuals Do Not Like Capitalism Because It Does Not Make Them Millionaires

This item is not a 100% error, as I believe it is half right (but maybe not the more important half).  Einstein described the "economic anarchy of capitalist society" as "the real source of the evil" ("Why Socialism?" in Ideas and Opinions, Albert Einstein (Bonanza Books, 1954), pg. 156).  F.A. Hayek wrote extensively on the idea that the spontaneous order we find ourselves in is the "result of human action but not of human design" (The Fatal Conceit: The Errors of Socialism, The Collected Works of F.A. Hayek - Volume I, W.W. Bartley, Editor (University of Chicago, 1989)).  Einstein's complaint is one that is shared by many intellectuals - that without specific design the market will not reflect the values they cherish (which may include things like income equality and free health care) and that human intervention will provide superior results.  These complaints are voiced primarily as declarations of "market failure" (the "digital divide" and the lack of "universal" health care come to mind) and generally lead to political pressure to rectify the "problem."  Possibly, making them millionaires would undermine these views, but my guess is that they would just be a new class of movie stars, and we all know their views, with a few exceptions, on markets.

I have learned in discussing the free society with people of, shall we say, "interventionist" leanings that the one thing that must be made clear is that market outcomes are not predictable and could be distasteful to them.  I believe that it has been a mistake of "capitalists" to claim that any specific reduction in state intervention (like California's "de-regulation" of the utilities) will produce lower prices.  It is entirely possible that the intervention has previously created a below-market price (as in flood insurance) and the reduction will produce higher prices which will impact the consumer negatively.  What I do believe is that the more free the market, the more prices will reflect the values of consumers.

Conclusion

There are other errors that are implied by those listed above, but the readers of this forum are certainly able to work them out for themselves.  I will be happy to respond to questions as time permits.

There is a history to all of this, and a lot of it consists of observing Galambos and arguing or discussing ideas with other FEI students.  What a shock it was to find out that other well-intentioned and intelligent people who heard what I heard disagreed with me on points that I thought were made so perfectly clear.  Agreement even on what was coercive seemed to be beyond possibility with some individuals, and it made me wonder if there was any hope of planet-wide agreement - in a generation or ever.  That led me to completely embrace Galambos's statements about self-interest - that primary property and freedom would never be embraced other than if it was in the self-interest of its consumers.  Such a market system could not be governed by a higher morality as that would imply a priesthood exempt from market forces.  So, in that process Galambos's strategy for success eliminated his concept of morality - or any extra-market value system - from my mind.

Galambos's contributions, if ever recognized outside the diminishing circle of his students, will be primarily in his strategy of building the free society as opposed to fighting for it, and in the independency tests that could provide a foundation for a primary property industry.  In the context of building such a society credit and insurance (possibly to be credited to Piet Bos) will certainly play major roles.  The connection between credit and cooperation may be made by the astute (FEI-educated) reader in Robert Axelrod's The Evolution of Cooperation which Dr. Thomas J. McQuade gave to me many years ago.

Galambos was an important person to everyone who knew him - however slightly.  His personality was so powerful and overwhelming that it made clear thinking difficult and opposition unthinkable.  I would not give up those years (1975-1982) for anything and count as friends a number of people I met at FEI.  My intent is certainly not to destroy Galambos, but to attempt to rectify error and suggest new ways of thinking which can lead to a society which is close, if not identical, to the one he described.

Brian J. Gladish
2007 April 22
Carlsbad, California

In Support of Methodological Monism

The appeal of methodological monism – as Popper put it, "the view that all theoretical or generalizing sciences make use of the same method, whether they are natural or social sciences" (1957, 130) – seems undeniable (think Occam's Razor), and it has a number of supporters.¹ On the other hand, some in the social sciences – notably members of the Austrian school of economics – suggest methodological dualism or, in the case of Bruce Caldwell (Caldwell, 1982), even methodological pluralism. It appears that these different camps are difficult to reconcile, and to this point no resolution has been found.

English: Karl Popper in 1990. (Photo credit: Wikipedia)

When difficulties of this sort arise – where there exist multiple views, all seemingly reasonable, yet
irreconcilable – it is possible that a solution may be found in appealing to a higher level of abstraction. In this case we look to Karl R. Popper's formalization of the scientific method in the following schema (Popper, 1972, 119):

P₁ → TT → EE → P₂

Where P₁ is the initial problem state, TT is a tentative solution or theory, EE is the error-elimination process applied to the theory, and P₂ represents the new problem state that has been generated by the process. This concise representation is simply that of a Darwinian or evolutionary approach to knowledge.

In this discussion our focus is on the error-elimination step. If one thinks of Popper's formulation as "the method", the error-elimination step may be modified as circumstances warrant without altering that method. Popper also referred to this step as "attempted elimination through critical discussion" (1999, 13-4). To acquire new knowledge, we always use this method, substituting the appropriate critical component.² With this understanding we may actually suggest that Bruce Caldwell is a methodological monist, as he specifically states that his reason for supporting methodological pluralism is that theories require different forms of criticism (Caldwell, 1982, 1-2).

English: Ludwig von Mises in his library (Photo credit: Wikipedia)

Ludwig von Mises, a strong advocate of methodological dualism (1969, 1-2),³ presents a slightly more difficult case. His dualism differentiated the method in the social sciences from that of the physical sciences by asserting that its axioms were a priori true,⁴ and that criticisms of the logic used to deduce its theorems were the best method of refuting them. A clarification of Mises's approach (Smith, 1996),
 explicity identifying and defending its axioms as synthetic rather than analytic, has tied it more closely to the real world. This clarification has increased the credibility of the approach even though tentative theories, in Popper's view, need no justification. To illustrate Mises's emphasis on criticism we offer the following quote:

Man is not infallible. He searches for truth – that is, for the most adequate comprehension of reality as far as the structure of his mind and reason makes it accessible to him. Man can never become omniscient. He can never be absolutely certain that his inquiries were not misled and that what he considers as certain truth is not error. All that man can do is submit all his theories again and again to the most critical reexamination. This means for the economist to trace back all theorems to their unquestionable and certain ultimate basis, the category of human action, and to test by the most careful scrutiny all assumptions and inferences leading from this bases to the theorem under examination. It cannot be contended that this procedure is a guarantee against error. But it is undoubtedly the most effective method of avoiding error. (Mises, 1966, 68)

The critical component in the method is composed of the examination of premises and validation of logic.

When viewed in this more abstract light, Mises's method fits Popper's formulation and does not contradict methodological monism. This fact is comforting as we suspect that the idea that there is only one fundamental method of obtaining knowledge is itself an a priori truth.

In a previous post we suggested that Mises was incorrect in claiming that economics was a subject unconnected with any other science, linking the action axiom with Popper's suggestion that "all life is problem solving" and to the science of biology. Here we have claimed that Mises's method fully complies with the scientific method as formulated by Popper, and that it is only the use of an appropriately different approach to error elimination or criticism that differentiates it from the physical sciences. If we have succeeded in our project it seems clear that economic methodology, as described and practiced by Ludwig von Mises, is scientific, and that the resulting discipline of economics is science.

Footnotes

¹ See (Blaug, 1992, 42-47), (Wilson, 1998), and (Cziko, 1995).
² I am grateful to Rafe Champion for bringing this point home.
³ For Mises's discussion of his method see (2003), (1966, 1-142), (1969) and (2006). For discussions by others, see (Boettke, 1998), (Boettke, 2012), (Kirzner, 2001, 69-92), and (Selgin, 1990, 11-18),
⁴ Mises recognized the observational, i.e. synthetic, component of his axiom (Kirzner, 2001, 88-9).

Bibliography

Blaug, M. (1992). The Methodology of Economics: Or how economists explain (2nd ed.). Cambridge: Cambridge University Press.

Boettke, P. J. (1998). Ludwig von Mises. In J. Davis, D. W. Hands, & U. Mäki (Eds.), The Handbook of Economic Methodology (pp. 534-40). Aldershot: Edward Elgar Publishing. Retrieved October 24, 2013, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531088

Boettke, P. J. (2012). Was Mises Right? In P. J. Boettke, Living Economics: Yesterday, today, and tomorrow (pp. 192-212). Oakland, California: The Independent Institute.

Caldwell, B. (1982). Beyond Positivism: Economic Methodology in the Twentieth Century. London: George Allen & Unwin.

Cziko, G. (1995). Without Miracles: Universal Selection Theory and the Second Darwinian Revolution. Cambridge, MA: The MIT Press.

Kirzner, I. M. (2001). Ludwig von Mises. Wilmington, Delaware: ISI Books.

Mises, L. v. (1966). Human Action: A treatise on economics (3rd ed.). Chicago: Henry Regnery.

Mises, L. v. (1969). Theory and History: An interpretation of social and economic evolution. New Rochelle, New York: Arlington House.

Mises, L. v. (2003). Epistemological Problems of Economics (3rd ed.). Auburn, Alabama: Ludwig von Mises Institute.

Mises, L. v. (2006). The Ultimate Foundation of Economic Science: An essay on method (2nd ed.). Indianapolis, Indiana: Liberty Fund.

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

Popper, K. R. (1972). Epistemology Without a Knowing Subject. In K. R. Popper, Objective Knowledge: An Evolutionary Approach (pp. 106-52). Oxford: Oxford University Press.

Popper, K. R. (1999). The logic and evolution of scientific theory. In K. R. Popper, All Life is Problem Solving (pp. 3-22). London: Routledge.

Selgin, G. A. (1990). Praxeology and Understanding: An analysis of the controversy in Austrian economics. Auburn, Alabama: Ludwig von Mises Institute.

Smith, B. (1996, Spring). In Defense of Extreme (Fallibilistic) Apriorism. Journal of Libertarian Studies, 12(1), 179-192.

Wilson, E. O. (1998). Consilience: The Unity of Knowledge. New York: Alfred A. Knopf.

Article in Liberty Magazine

Liberty has published the issue online that contains an article I wrote called "Laissez Faire Justice" on the cover and "Marketing Morality" in the table of contents. It is an expanded and edited (by Liberty editors) version of my previous post "Competition as a Discovery Procedure for Ethics."

2021/10/15 Edit: Replace heading link and dead article link to reflect live URLs.

Anarchism

In the book The Socialist Tradition, Alexander Gray states (pg 3):

An anarchist society is conceivable only if all concerned are the embodiment of reason and restraint. Not merely therefore should an anarchist be a man of reason; he should also combine with his own reason a wholly unreasonable belief that all others are equally reasonable.

I would agree with this quote in the context of an anarchism that expects certain values, like abstract concepts of justice or equality, to be universally held. However, as a free-market anarchist I suggest that a society in which people hold many different values is possible, just as we live in a society in which Fords, Chevrolets and Toyotas, among others, address the values of a wide spectrum of car buyers. See my blog entry, "Competition as a Discovery Procedure or Ethics" for thoughts on that subject.