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Source link: http://archive.mises.org/15895/capitalism-and-socialism/

Capitalism and Socialism

March 4, 2011 by

How many people do you know who use variations on “capitalism” to describe pretty much anything they don’t like? It’s a vice that cuts several ways. FULL ARTICLE by Art Carden

{ 90 comments }

Barry Loberfeld March 4, 2011 at 9:35 am

“From March 31 through May 11, I will teach a Mises Academy course called Capitalism and Socialism.”

Best of luck with this class!

RS March 4, 2011 at 10:24 am

This is all well and good, except that there is a presumption here that is taken for granted by many of those of the libertarian persuasion at mises.org which must be addressed but is glaringly absent from most of what I have read here.

“…reasoning founded on the principles of philosophical ethics or of the Christian creed…”

does not necessarily lead one to prefer a

“system [that] “succeeds in improving the material condition of all people”

over one that

“tends to spread poverty and starvation.”

Indeed, if the yardstick by which all values are measured is purely subjective (as many of those at mises.org assert) then it follows that a preference for one material condition over another, rich or poor, starving or sated, is also just another subjective “preference” which just happens to be “chosen” or “desired” by a majority of people. If so, then the concepts of “right” or “wrong” entirely depend on the collective preference, which totally explodes the entire notion of creating a free society of laissez-fair capitalism and any and all preference of liberty over statism, freedom over slavery etc. etc.

Intellectuals who are serious about providing a moral and intellectual base for real freedom and capitalism should focus more of their time on creating courses explaining how mises.org resolves this contradiction.

Stephen Adkins March 4, 2011 at 10:50 am

RS –
There is no contradiction. Austrian economics is completely value-free. It derives from a single, irrefutable axiom (human action), and proceeds through logical deduction to certain conclusions, e.g., that capitalism will increase the material standard of living for the average person, while socialism will only spread misery for most, if not all.

Libertarianism, on the other hand, is not value-free. It is a worldview that holds individual liberty and human happiness as ends to be desired. The reason libertarianism and AE are so often linked is that one bolsters the other. The normative libertarianism stands upon the positive AE.

One may desire to spread misery for all, and if they wanted to do that, a course such as this one may aid them in choosing socialism as the appropriate course of action.

RS March 4, 2011 at 11:03 am

“Austrian economics is completely value-free.”

I beg to differ. The choice to study a science called “economics” as opposed to “astrology” or “mythology” is itself a value as it presupposes some end to be achieved, otherwise, why derive anything at all?

Also, this is not an axiomatic statement: “It derives from a single, irrefutable axiom (human action)” as “human action” is a consequence of human thought and human thought is an attribute of human consciousness so right there Austrian economics does not start out on as axiomatic a foundation as you would like to believe.

Tyrone Dell March 4, 2011 at 3:08 pm

Read more Mises.

Allen Weingarten March 4, 2011 at 7:28 pm

Perhaps what is at issue is the difference between the value-free science of economics and economic policy, which is value-dependent?

RS March 4, 2011 at 8:27 pm

Allen,

I am speaking more broadly when I use the term “values”. As far as I am concerned, nothing that is known to exist can be “value free” in the literal sense of the term. Everything that is know to a person is evaluated against some purpose or some end. Even science, the act of gaining of knowledge, is done for some purpose or other so unless a person is dead or mentally disabled, every act of congnition will necessarily require an estimation and every estimation necessarily presupposes an act of cognition. those are categorical statements, fundamental first principles that are immuatble.

Peter March 4, 2011 at 11:36 pm

Nobody disagrees with this, RS. That’s precisely what we mean by the “action axiom”. But that has nothing do with value-freedom in economics. The fact that you can’t help having values is what gives rise to ethics, but the study of economics per se is value-free, just like the study of, say, mechanics: inanimate objects move (or not) following particular rules, regardless of whatever “values” the person observing them might have, even though the choice to study physics rather than astrology is a reflection of those values.

Allen Weingarten March 5, 2011 at 5:18 am

RS:
the view of ‘Wertfrei’ is precisely that it is value-free in the literal sense that *conclusions follow independent of our different values*. For example, in a chess game that a certain position yields checkmate, independent of whether our purpose is to win, lose, or draw the game. Similarly, in physics, a bullet will have a determined trajectory, regardless of what we would value it to be. When you speak of evaluation, or purpose, that is no longer in the domain of science. Note that von Mises is a utilitarian, who does not hold to an objective standard of right & wrong, but arrives at conclusions that hold for someone who does.

It is true that science, such as economics, is done for a purpose, but that is no longer science. Thus there was no such thing as Jewish science (as claimed by fascists) or bourgeois science (as claimed by scientists) but only science. That is why it is necessary to distinguish between economics as a science, and economic policy which is value-dependent.

Science gains knowledge, but is not the same as other means of obtaining knowledge, such as those which are dependent on values.

Zach Bush March 5, 2011 at 12:14 am

RS,

I would suggest you read Man, Economy, and State by Murray Rothbard. I read Human Action prior to MES but was often frustrated by Mises’ utilitarianism. Rothbard does not assume that all people wish for better living conditions and peaceful society. His analysis is based off the fundamental choice an individual has when he wishes to engage in exchange; voluntary or violence. He then defines a free society as one in which all exchanges are voluntary and proceeds with how this society would operate. I will agree that in Mises’ work there is the contradiction but I believe Rothbard resolves this by clearly separating Economics (or catallactics) from libertarianism. Thus Rothbardian-Austrian Economics is value free.

That being said, both Rothbard and Mises readily admit that human action is derived from human thought, but leaves the thought process up to the psychologists. Economics deals solely with the fact that man chooses to act to maximize his psychic income.

I also disagree with Stephan Adkins that Libertarianism “is a worldview that holds individual liberty and human happiness as ends to be desired”. It is my understanding that the desired end is a free society (or what Rothbard called a contractual society). Libertarianism then sets to seek a legal framework that would need to be established in order to achieve it.

RS March 6, 2011 at 4:04 am

Zach,

Please see my response below.

Thanks

fundamentalist March 4, 2011 at 10:58 am

All you are asking is why should Austrians prefer greater material wealth to less. Many people don’t. Socialists certainly don’t. Look at the praise socialists give poverty stricken Cuba. However, socialists are not following reason; they follow the fake rationality that Hayek describes in “The Fatal Conceit.”

Truly reasonable people prefer less poverty to more for all of the benefits it brings humanity.

RS March 4, 2011 at 11:07 am

why does that make them any more or less reasonable? if preferences are subjective then on what grounds do you claim your preference for material wealth is more rational than thier preference for abject poverty?

this is the issue that is just presumed by many on this web site.

fundamentalist March 4, 2011 at 11:28 am

Preferring less poverty to more is only reasonable based on the unprovable assumptions that 1) existing is better than non-existence and 2) if existence is better than non-existence then flourishing in that existence is better than not flourishing, which leads to death and non-existence.

I can’t prove that existence is better than non-existence. It’s one of those necessary assumptions that we have to make in order to begin our series of syllogisms.

In a sense, Austrian economics is value free in that it doesn’t care whether mankind exists or not. It only answers the question “if mankind wants to flourish, what are the best means?”

But in another sense Austrian econ is not value free in that most of us are human and do care about whether or not humans live or die, flourish or suffer from poverty and disease. In that sense Austrians are just following human nature.

It’s human nature to care about others and want to see others do well. It takes a great deal of brainwashing to convince socialists that it’s wrong for people to do well.

RS March 4, 2011 at 11:56 am

“I can’t prove that existence is better than non-existence”

You just reinforce my original point. Consider what this statement really means. You are saying that a choice between life and death is nothing but a subjective preference that people, naturally, prefer. Just human nature, arbitrary, without reason, thought or logic. Well, if so, then why bother with syllogisms or complex economic theories etc. at all? After all, you cant “prove” that any of these things are necessary or even preferable so therefore you cant “prove” that socialists are wrong either. Do you just want people to follow the austrians on faith? Is Austrian theory nothing more than dogma?

consider, “proof” presuposses something that exists. “better” is a value judgement and presupposes an end or goal to be achieved in the context of an alternative that is open to ones choice so the very fact that you exist and are alive along with the fact that the alternative of death/non-existence IS an alternative that is open to your choice establishes the necessity of evaluating/judeging/estimating the objective fact of your continued existence against the possible objective alternative fact of your non-existence so saying that you cannot “prove” such a preference completely ignores the objective facts that a choice to “not exist” is the same as a choice of “not to value” so it is a contradiction to claim that proving A requires that one proves A is not-A.

fundamentalist March 4, 2011 at 12:11 pm

I won’t argue with you there! If you want to start a philosophy based on the assumption that non-existence is better than existence then knock yourself out!

But since Austrian econ assumes that existence is better than non-existence it is not contradictory at all. It is perfectly consistent with its assumptions.

Please show me a consistent philosophy in which non-existence is better than existence and suffering is preferable to enjoyment.

RS March 4, 2011 at 12:19 pm

Well, like I said, it is not consistent. Not if the assumption is that such a fundamental choice is subjective because then you leave the field open to anyone who wants to say that it is “better” that people be immolated for the sake of some other subjective choice and the only difference between the two subjective choices is not its objective truth but the number of its adherents, which is basically where we are at today so Austrian theory, as it stands, does not advance the cause for freedom.

fundamentalist March 4, 2011 at 12:36 pm

Yes, it is consistent with its assumptions. In logic assumptions are usually not subject to proof or disproof. They are usually self-evident truths. Consistency deals with the reasoning built upon the assumption.

The assumption that existence is better than non-existence is a necessary assumption because of the dead end that the alternative leads us to. The same goes for assuming that suffering in better than pleasure.

Please, try to develop a philosophy based on the value of non-existence and suffering. I would love to see it.

RS March 4, 2011 at 1:01 pm

An assumption is not the same as a self evident truth i.e. an axiomatic concept, it may be mistaken for one but once identified they cannot be equated and furthermore, no assumption can be exempt from the need for proof. the axioms of existence, consciousness and identity are all self evident axiomatic truth, anyone who tries to refute them must necessarily rely on their use.

And, I think you misunderstand me. I am not saying that non-existance can be better than existence. I am saying that existance as such is the prerequisite to any estimation of “better” or “worse”, “good” or “evil”, “right” or “wrong” so stating that one cannot “prove” which choice is “better” is a contradiction because “better” is a derivative concept that depends on a living entity that knows the difference between life or death and has the capacity to effect the outcome, i.e. choice.

fundamentalist March 4, 2011 at 2:07 pm

I think you confuse valuation with arbitrariness. Valuation is rarely arbitrary but based on use. The choice of existence and enjoyment are subjective, but not arbitrary. We find existence useful, at least some of us do.

And human nature is what it is. We can’t choose it to be something different. We can’t make it anything different from what it is. If human nature prefers existence to non-existence and enjoyment to suffering, we have to deal with it. Anything that conforms with those qualities of human nature are therefore deemed good and those that hinder them are considered bad.

Humanity does have a goal – continued existence and the reduction of pain and suffering. Except for socialists, of course. They have managed to convince people to prefer pain and suffering over pleasure, at least for a short while.

There is an old saying that consistency is the hobgoblin of small minds. The author meant apparent inconsistencies because consistency is vital to integrity. However, what appears to inconsistencies to little minds are often nothing but a poor understanding of the ideas.

RS March 4, 2011 at 2:46 pm

“I think you confuse valuation with arbitrariness. ”

no, I was not, that is what I am asserting the miseans implicitly do when they claim that all values are subjective. You said it yourself, values presuppose some purpose i.e. some utility or use to achieve some end. My point is that if you assert that all values are arbitrary then you are implicitly asserting that all “ends” are as well, including the choice to live or not to live. That makes it a first principle, and by your own “deductive” standard it totally negates your own argument that your ideas are more or less preferable to any other (socialism for example), it simply rests on ones faith and your dogma and has nothing to do with fidelity i.e. consistency to reason reality or truth or logic or OBJECTIVITY since all of those things were barred from the act of estimating a choice amongst alternatives.

And, btw, that quote is by Emerson and by all accounts he had a very little mind as would anyone who tries to stand on both sides of every fence. On one hand you try to acknowledge that consistency to ideas is a virtue but then you hedge by attempting preemptively dismiss contrary opinions by smearing anyone who identifies inconsistencies with those ideas as nothing more than ignorance. well done. you really should be an op-ed writer for the New York Times.

RS March 4, 2011 at 2:56 pm

and just to clarify, in this context, subjective is the same as arbitrary. objective, by definition, is not arbitrary.

Peter March 4, 2011 at 11:39 pm

I can’t prove that existence is better than non-existence.

But you don’t need to “prove” it as a general statement, what Rand would call a “free-floating abstraction”. You only need to prove it in relation to a particular person—e.g., RS. If RS believed non-existence was better than existence, he would non-exist, since it’s in his power to make that happen. The fact that RS is here reading this is the proof you need.

RS March 6, 2011 at 4:03 am

Peter,

Please see my respons to your previous post below…

Thanks

Walt D. March 4, 2011 at 12:20 pm

“Socialists certainly don’t. ”
I don’t think this is true. Most socialists want more wealth – the just want to take it away from someone else rather than produce it themselves. Moreover, they have an enormous sense of entitlement. They are also control freaks – they want to dictate to others what they can an can’t do with their own property. As Michael Moore just put it – private wealth is a national resource and should be redistributed.

RS March 4, 2011 at 1:05 pm

“As Michael Moore just put it – private wealth is a national resource and should be redistributed.”

He is of course free to give up everything he has, including the shirt on his back, a personal choice he would of course not choose himself but would deny to others.

Walt D. March 4, 2011 at 4:17 pm

He has a very nice apartment in New York. Perhaps I should just go and use it for free – it is after all a “National Resource”. It would save me from having to spend $250 to stay at the Hilton.

Anon March 4, 2011 at 7:43 pm

RS, don’t bother trying to talk sense into ignorant fundamentalists…

Anthony March 6, 2011 at 11:14 pm

Anon,

don’t bother contributing to the conversation…

Allen Weingarten March 4, 2011 at 10:46 am

Since the terms ‘capitalism’ and ‘socialism’ are used in many different ways, it pays to define what one means by them. Here I submit that ‘capitalism’ means individual liberty (which by definition restrains those who curtail it), while ‘socialism’ means treating government as though society were a family (with government as the parent).

One may disagree with these definitions (which I claim are objective rather than stipulative) but ought then to state alternatives.

RS March 4, 2011 at 10:54 am

Actually, I would say that capitalism is more of a consequence of individual liberty rather than a definition of it because, conceptually, it refers to the free flow of capital as directed by individual thought and judgment. That is why

“a free mind and a free market are corollaries.” (Ayn Rand)

Allen Weingarten March 4, 2011 at 7:24 pm

RS, you are correct, capitalism is a consequence of individual liberty, or perhaps the application of liberty to the area of economics. I flubbed.

fundamentalist March 4, 2011 at 11:01 am

Good luck defining socialism. As de Soto points out in his review of the debate, socialists are very chameleon-like. They constantly redefine socialism in order to define away criticisms. I doubt you could get two socialists together and come up with less than 10 definitions of socialism.

However, at the core of every definition of socialism lies the idea that everyone else in the world has a right to your wealth.

RS March 4, 2011 at 11:19 am

“However, at the core of every definition of socialism lies the idea that everyone else in the world has a right to your wealth.”

I would say that the core of socialism is the idea that values, all values as such, are not objectively real. This view of values is not unique to only socialists of course but any other theory of values (intrinsic or subjective) will necessarily lead to a contradiction. That is why I say that the misean notion of subjective values contradicts the goal of a free society.

fundamentalist March 4, 2011 at 11:32 am

That’s not true. Socialist place objective value on material things while declaring truth and moral values to be totally subjective.

And no, subjective value does not contradict a free society because as Mises pointed out freedom does not mean the absence of rules, but the rule of principle.

And Mises never argued that everything is subjective. He taught objective truth and some objective morality, such as murder is evil. He believed the world exists objectively and we can understand it. He emphasized that value in the marketplace is subjective, not that reality is.

RS March 4, 2011 at 12:03 pm

what is the objective/subjetive difference between a value “in” the marketplace vs. one “out” of the marketplace? is objectivity as such something that is soley determined by whether something can be traded between two people? no. of course not. so then what is?

fundamentalist March 4, 2011 at 12:19 pm

Austrian econ only deals with valuation in the marketplace, no where else. And it deals with valuation in the market because for some odd reason it’s called economics, which a few people think has to do with the market.

The determination of what is objective and what is subjective depends on consistency of experience. It’s not too difficult to tell what is objective and what is subjective by simply applying the principles of logic to observation.

Of course, that brings up other assumptions on the part of those crazy Austrians: 1) people are rational and 2) logic is the same for all people. Of course Marx denied the truth of both, which is why his system was such a mess. But try to devise any kind of system of understanding history without those two assumptions. I happen to think it’s impossible but I would love to see you give it a shot.

RS March 4, 2011 at 12:25 pm

“He emphasized that value in the marketplace is subjective, not that reality is.”

I thought it obvious that a marketplace is something that exists in reality so if objective values exist outside the marketplace (i.e. do not murder) then they must also exist within the marketplace, both of them being “real”. If so, then what prevents one from applying those same principles of logic to observations of what people value? I will go ahead and answer my own question. nothing, except that we use a different word for it. its called justice.

fundamentalist March 4, 2011 at 12:33 pm

No, the marketplace doesn’t exist in reality. It exists only in the minds of people as an abstract concept that speeds communication. The market is a euphemism of all the people buying and selling.

RS March 4, 2011 at 12:39 pm

all of human knowledge “exists only in the minds of people as an abstract concept that speeds communication”.

how does the objective status of knowledge of values differ because of a market?

RS March 4, 2011 at 9:01 pm

fundamentalist,

I am still waiting for you to respond and tell me how the presence or absence of a market determines the objective/subjective status of a person’s identification i.e. knowledge of values.

I await your elucidation….

Jill Harrison March 4, 2011 at 11:15 am

There was a significant shift in the social order when society changed from individuals producing goods to the mass production of the products we are now dependent on. It’s no longer possible for a single person to make most of the things required to survive in an urban environment.

Now economists are quite clear about the value of this ‘specialization of skills & knowledge’ on the increased wealth in our economy. But what hasn’t been fully considered is whether a fair bargain has been made when people forfeit their self sufficiency to live in this interdependent culture. We need more discussion about how to structure the monetary system in a more just and humane way. Is it possible to create a sustainable market based on a currency that depreciates over time and is spent into existence by the government supplying the infrastructure & services we need to maintain society?

The divide between the rich and poor widens because the escalating interest flows reallocate capital from those who pay more interest than they receive to those who receive more interest than they pay. This interest income is made possible because currency is designed to be hoard able. Placing a holding fee on currencies (demurrage fee) increases the velocity of currency and frees material goods, which are subject to natural cyclic processes of renewal and decay, from their linkage with money that only grows, exponentially, over time. To store demurrage currency and protect it from depreciation, the money can be invested into businesses that need capital, and the borrower will pay the depreciation while they are using it. This encourages actual wealth building rather than the phantom wealth of the Wall Street bubbles created in our current interest bearing growth based economy. Demurrage money would be spent into the economy by the government for the infrastructure and services needed (e.g. in Worgl during the depression years http://www.youtube.com/watch?v=hxdPIOUTd2k)

Silvio Gesell believed currency has a privileged position relative to labor and real assets because money does not depreciate in the same way that other consumables do, which is at the root of the usury problems. Allowing dollars to become hoard-able and thus non-neutral instrument of exchange creates more demand for the currency than for the human infrastructure it’s meant to facilitate our creation of. Mr. Gesell proposed a “free” currency (free from its privileged bias in the market) that ‘depreciates’ in value in the same way that real assets do, which has been shown to encourage investment in human infrastructure over hoarding of currency.

There are systemic reasons for our inflationary growth based economy (e.g. The year I was born my father earned less than $4,000 while I was the fourth of five children and he held a mortgage; this was a middle class family in 1952). While our growth model appeared sustainable as we exploited the resources of the ‘new world’ (even if morally questionable), it is now rapidly destroying the planet. Isn’t it time to recognize that allowing currency to act as a ‘store of value’ has cost the environment & society great harm? Our best ‘store of value’ is in healthy living systems – both physically and spiritually. I believe Silivio Gesell has a great model for how to get there within a competitive market system – are other models available?

It seems we’ve only begun to understand the ‘free market’ – and haven’t yet learned to balance the forces within it well. It took nature eons to evolve ecosystems & we are basically attempting something similar. Currency flows thru the market like biomass does in an ecosystem – and when we see that 90% of the currency flows into the hands of less than 5% of the population – that’s an indication that something is out of balance.

RS March 4, 2011 at 11:24 am

there is just too much “wrong” here for me to even begin…. my head is spinning….

fundamentalist March 4, 2011 at 11:53 am

“But what hasn’t been fully considered is whether a fair bargain has been made when people forfeit their self sufficiency to live in this interdependent culture.”

Yes, it has been considered. Beginning with the Church Scholars in 1200 AD, the Church has always insisted that the division of labor is good. The Late Scholastics of the 16th century identified the division of labor as the key to society and progress. Adam Smith identified it as the path to national wealth. Modern economics promotes it as the path to greater wealth through trade based on comparative advantage. People have known for a millenium and a half that self-sufficiency causes war and poverty and misery while the division of labor leading to interdependency leads to peace and prosperity.

“The divide between the rich and poor widens…”

No, it fluctuates, but the Gini coefficient today is within 2 standard deviations of the mean for the past 200 years. That means that variations are pretty much random.

“This interest income is made possible because currency is designed to be hoard able.”

No. Interest is necessary because of time preference: people prefer income now to income in the future. No one has to borrow. No one puts a gun to someone’s head and says borrow money or die! People choose to borrow. And the lender must be compensated for the loss of the use of his property, whether the property is a car or money. Using someone’s money or goods without compensation is theft, unless they agree.

“This interest income is made possible because currency is designed to be hoard able.”

No one hoards money today. That’s medieval economics when most wealth was gold stored in a dusty warehouse. People hold money today only in small amounts to meet current expenses. All other wealth is invested in wealth producing business.

“Mr. Gesell proposed a “free” currency (free from its privileged bias in the market) that ‘depreciates’ in value in the same way that real assets do,”

Then he must love the Fed. It has depreciated the dollar to less than 5% of its value from 50 years ago.

“While our growth model appeared sustainable as we exploited the resources of the ‘new world’ ”

Our wealth is not built on “exploiting resources” whatever that means. It is built on capital accumulation. Economics knows no other way to increase wealth. If what you call “exploitation” means converting natural resources to economic goods that improve human welfare, then I agree.

“when we see that 90% of the currency flows into the hands of less than 5% of the population – that’s an indication that something is out of balance”

Yes, it says that most of the world is stupid for not adopting capitalism and we’re stupid for destroying it!

Jill Harrison March 4, 2011 at 12:24 pm

“No. Interest is necessary because of time preference: people prefer income now to income in the future. No one has to borrow. No one puts a gun to someone’s head and says borrow money or die!”

Have you ever owned a business? Credit is the life-blood of businesses. The ‘time value of money’ you speak of is precisely the increased value of a quantity of money now – to that same money later because of the interest that could be gained in that time period. We have an assumed exponential increase in the value of currency built into the ‘time value of money’. There is no such exponential growth in the value of real assets (except in the sense that the currency is debased – either by the Fed, or the central bank or whatever institution injects currency into the system as credit)

“No one hoards money today. That’s medieval economics when most wealth was gold stored in a dusty warehouse.”

Nearly all of our currency is credit – we issue money as credit & only a tiny fraction of the money supply is actually minted. The cause of this economic collapse was precisely that the large banks were hoarding money. Credit froze because of the inevitable collapse of yet another phantom wealth scheme (the bubble in this case was bad debt foisted on the public & repackaged to other banks & investors).

I would argue that the bubbles occur precisely because we assume the value of the currency must grow by some percentage. This is irrational & unsustainable – but wrapping our heads around the flaws in the current paradigm is not going to be easy.

This paper gives a pretty good description & critique of depreciating money:
http://www.wiwi.uni-muenster.de/cawm/forschen/Download/Diskbeitraege/DP-23-CAWM-Ilgmann.pdf

fundamentalist March 4, 2011 at 1:54 pm

“Credit is the life-blood of businesses.”

No. It is a useful tool. That’s all. The best business have low levels of debt and survive for at least 6 months without any borrowing at all.

“The ‘time value of money’ you speak of is precisely the increased value of a quantity of money now..”

No. That would be deflation, or a shrinking volume of money. The value of money increases or decreases according to the quantity. Interest is merely and exchange of money for the use of something, even money.

“The cause of this economic collapse was precisely that the large banks were hoarding money.”

Not even close to the truth. Read some of the explanations of the crisis on this web site.

“I would argue that the bubbles occur precisely because we assume the value of the currency must grow by some percentage.”

I don’t know anyone who assumes that. Mainstream economics assumes the value of money should shrink every year and they have done a darn good job of just that. Austrians don’t assume anything about money, but know that its value changes with its quantity.

BuckeyeChuck March 4, 2011 at 4:01 pm

“Have you ever owned a business? Credit is the life-blood of businesses.”

Owning a business is irrelevant to the merit of your assertions, as are all appeals to authority. One need not own a business to understand the concepts you offer, or to agree/disagree with them.

Many businesses (like mine) used no credit at all to begin, and it still uses no credit despite providing my primary income. Perhaps YOU chose to use credit to start and run a business, but your statement is not true for many businesses and it is certainly not axiomatic.

In addition to businesses that require no credit to begin, many businesses are fully capitalized by investors. These investors become owners of the concern and as stakeholders, share in the profits and loss of the venture. This capitalization is not credit.

” The ‘time value of money’ you speak of is precisely the increased value of a quantity of money now – to that same money later because of the interest that could be gained in that time period.”

No. Your definition is unidirectional. It is not “precisely” the increased value of a quantity of money now because it could also be a decreased value of a quantity of money. That is, NPV is not necessarily positive, as you assert; it may also be negative, or zero. My objection to your definition is not merely semantic; correct comprehension of interest rates is both qualitative and quantitative, and if the definition fails on one of the two, it is incorrect.

In the Austrian school of economics, the term “capital” means something specific. So does “interest rate”. If you are clear on your own definitions (which I doubt), you certainly have different definitions than AE. Most of us here have accepted AE’s definitions as fundamentally correct, with derivation provided by Mises, Rothbard, and the like.

Walt D. March 4, 2011 at 8:06 pm

Jill said:
“The cause of this economic collapse was precisely that the large banks were hoarding money.”
I assume you mean:
“The cause of this economic collapse is precisely that the large banks are hoarding money.”
I give you credit (no pun intended) for actually noticing that an economic crash is actually taking place while mainstream economists are claiming a recovery. However, while it is true that banks are not lending out money, I think the main reason is that few businesses are applying for it – business owners are not like the government – when they borrow money, they expect to pay it back. They do not borrow money to cover current expenses. The same reason that private businesses are not hiring – they do not hire people as a part of a public service – they do so because they need extra labor because they are expanding. If they are not expanding they do not need extra labor.

Rob Mandel March 4, 2011 at 11:21 am

I’ve been involved in many a discussion where the terms, especially capitalism, are used without any knowledge or understanding. I sum up capitalism this way (to the critics):

Capitalism is basic human nature. People, left alone, naturally act towards their betterment, and will seek out and exchange with others. Capitalism is simply the use of goods in making other goods by people left alone, acting towards their betterment, seeking and exchanging with others. Capitalism isn’t something you choose, only something you can restrain. It is rather like gravity, something that exists always and everywhere. The only difference is a gun to the head will never stop gravitational attraction.

Paramount to that is private property, for without that nobody would willingly improve what they do not own, what they cannot gain from. As John Locke wrote in his second treatise, liberty IS property. They aren’t two separate and complementary components, but rather, one in the same. All liberty starts from the foundation of self ownership, and from there, that which one creates and improves.

For example, satellite imagery has shown us trade routes from Europe to China and back, all over the vast expanse of the Eurasian steppes, over vast mountain ranges, and through horrible deserts. Gold (of course!!) coins from various empires have been found scattered about all over those trade routes, the mark of the potentate of no concern, only the content. In Herodotus’ time, vast trade routes and exchange went throughout the Persian empire, much from non-Persian merchants, the king only too happy to permit it as it proved a massive source of tax revenue.

You can’t impose capitalism, you can only forcibly stop it. That’s why socialism is the bloodiest of all systems, as it defies human nature.

As for Obama, I’ve not heard this applied to him anywhere, but I describe him as a maxilmalist.

Barry Loberfeld March 4, 2011 at 11:54 am

Indeed, economic demonstration may not command ethical assent …

From Norman 0. Brown, Life Against Death, 238-39:

The great economist von Mises tried to refute socialism by demonstrating that, in abolishing exchange, socialism made economic calculation, and hence economic rationality, impossible … But if von Mises is right, then what he discovered is not a refutation but a psychoanalytical justification of socialism … It is one of the sad ironies of contemporary intellectual life that the reply of socialist economists to von Mises’ arguments was to attempt to show that socialism was not incompatible with “rational economic calculation” — that is to say, that it could retain the inhuman principle of economizing.

RS March 4, 2011 at 12:12 pm

so, does this mean that the very act of long range self preservation i.e. economizing is an “inhuman principle”? so then a “human principle” would have to be one where immediate self immolation i.e. suicide would be the proper choice. so then this statement is completely compatible with the practical results of all socialist theories.

Peter March 5, 2011 at 3:56 am

Except that Norman Brown wrote it down. If he truly believed it, he would have committed suicide, and been unable to write anything. It therefore follows that Norman Brown didn’t actually believe what he was writing.

Bullseye March 4, 2011 at 12:27 pm

‎”The evaluation of any economic system must be made by careful analysis of its effects upon the welfare of people….”

Here’s where Mises and I part company. The fundamental question of Capitalism vs Socialism is moral, not utility maximization. If you own your life, you own the fruits of your labor regardless of the “welfare of the the people”.

RS March 4, 2011 at 12:37 pm

I agree. Von Mises has a very bad epistemology when it comes to concepts referring to normative abstractions.

Charlie Virgo March 4, 2011 at 3:17 pm

I agree with your point about capitalism vs socialism being a moral issue and not a question of utility maximation. However, I don’t see Mise’s quote the same as you. At the heart of the moral issue is whether a person is allowed freedom to their own goods when someone else can benefit from them. Although Mises, and most of us here, believe that this freedom will also lead us to better economies, it is still a question of morals. I see this in his “welfare of people” quote. In other words, his reference to the “welfare of people” is a reference to freedom, not utility. I’d be interested in hearing your thoughts on this.

RS March 4, 2011 at 3:48 pm

@ Charlie,

The moral issue goes deeper than that. Morality, in its widest and broadest sense, is primarily a code of values to guide persons choices and actions. ALL thier choices and actions, not just those that deal with other people. The first question to answer is, does man need such a code and why? Not which code, but any code period. Anyone who just simply assumes that man needs a code or worse, adopts any code without rational consideration will have no idea what their actions are meant to accomplish and will be forever driven by guilt or fear or both for having not lived up to some expectation that they never knew they chose and whats worse is that they turn a blind eye to the very real horrors that practicing such a code causes.

Charlie Virgo March 4, 2011 at 4:55 pm

Sure, but only part of that is relevant here. The sticking point in the quote is where he says that an economic system must take the “welfare of the people” into consideration, which some are suggesting means that Mises wasn’t looking at the moral issue whatsoever, but simply what yields maximum utility. What are morals and whether they are necessary is only important if we acknowledge that Mises’ quote considers them.

RS March 4, 2011 at 5:13 pm

But of course he was considering them, that is my point. All of these value estimations i.e. moral evaluations are being smuggled into the arugments as if they are fundamental primaries when they are not. What does it mean to consider “the welfare of the people”? What do you “consider” them against? That is a moral evaluation, it requires a moral yardstick to measure against. So does “utility”. Utility presuposes some end or purpose otherwise you could not know if any given concrete instance advanced or frustrated the presupposed goal(s).

Charlie Virgo March 4, 2011 at 7:48 pm

I don’t agree that things are being smuggled into arguments. While it’s true that Mises makes the assumption that freedom is valued, you have already been shown why this is appropriate (go back and re-read fundamentalist’s posts). You can spend your life trying to prove or disprove the assumption that people prefer pleasure over pain, but I’m just fine with basing important decisions on it.

RS March 4, 2011 at 8:48 pm

and, I have already explained how the theory of subjective valueation totally contradicts mises assumption that freedom is a value or even that people prefer pleasure over pain so I wont rewrite it all over again, you should go back and re-read my posts.

Ill just add one more point to illustrate my position. If it were a true statement that people prefer pleasure over pain then no one would ever go to the dentist to have thier cavities fixed and yet people value healthy gums and teeth. On the other hand people would always choose to eat sweet sugary things all of the time and yet many people choose to moderate these things because they value healthy teeth and bodies.

The pleasure/pain mechanism is only an indication of where values are they do not by themselves determine it. Many values require considerable pain and not much pleasure but people choose them anyway because they value the result more than the cost in pain of struggle they had to endure. Saving up to send a child to colledge would be a good example of this. Most people would consider that altruistic yet for it to truly be altruistic they would have to give that money to some strangers child while leaving thier own child to go without. that is the essence of altruism…but I digress…

Integral March 7, 2011 at 9:31 am

RS, in no case you mention is pain being sought for it’s own sake.
In every example you list there is a simple pleasure/pain evaluation taking place, and in every example the actor chooses to compromise in order to maximize perceived pleasure. (If I get my tooth fixed now the procedure will hurt right now, but my tooth will stop hurting constantly, if I don’t eat this treat it will help me look the way I want to look, if I save this money I can care for my family).

Amanojack March 5, 2011 at 7:56 am

Where did all you muddle-headed moralists suddenly come from? Morality was made for man, not man for morality. The only reason we see some things as moral and others as immoral is that those things promoted prosperity and life, rather than poverty and death. If you get it backwards you are going to be very confused.

You would have it that the whole of humanity die out if this were what you morally pontificated as being “right.” Idiocy. Dangerous, ugly idiocy.

Thomas the Norwegian March 4, 2011 at 5:56 pm

Please read quickly through the sections of economy and education:
http://en.wikipedia.org/wiki/Norway#Economy
http://en.wikipedia.org/wiki/Norway#Education

We have 25% VAT in stores, services and products. (14% on food.) We have a progressive income-tax about aproxx. 36% for the common man. Private schools are not allowed to make money, and earlier this week it was suggested that private health institutions should get the same cap. The policies to regulate the mixed economy is highly influenced by socialism, and even more after the Labour Party-led coalition’s administration took offices in 2005 and won the election again in 2009.

Pointing at Cuba as “what socialism could lead to” is low..There’s plenty of causes to why countries have become places where their governments “tend to spread poverty and starvation.” In a lot of the cases it’s been a generation-lasting ruler, dictatorship/totalitarian rule, corruption or a bias government towards a majority/minority. The reasons Cuba, North Korea, Soviet Union…etc. have become a bad example to some is because of their rulers – not because of the idea of socialism, egalitarianism and welfare.

How well is the free (low-regulated) market helping getting the poor, homeless and needy back on track in the US? Have New Orleans been cleaned up? Should a college-degree be a hard earned (or easy bought) privilege and not an option? Will polarizations of wealth, health-issues and general opportunities improve? Is the idea of the “American dream” – which ever so often is cried out whenever a blue-collar becomes successful – really a dream of today?

Politics is about the people, and should be about all the people – or at least most of the people. Financial tools and a governmental regulated markets are the boogeymonsters of the aforementioned dream, so how will the uneducated and unregistered have hope for their families?

Socialism isn’t any worse than capitalism – and even as the words themselves are misused in a day-to-day argument – won’t the attitudes nor challenges be changed by giving definitions. Please don’t misunderstand – I’d like to attend these classes myself, as I’m a true believer of that information and education is the key to any civilizations survival and required be able to evolve healthy.

My point is that a dictatorial socialistic nation are doomed from that it’s a dictatorship, but a civilization with an ideology of democratic socialism can thrive to success as the Scandinavian countries are good examples of.

Norway maintains a Scandinavian welfare model with universal health-care, subsidized higher education, and a comprehensive social security system. After Switzerland, Norway has the second highest per citizen wealth of any country. The Norwegian welfare model is widely regarded as the most generous in the world. Norway was ranked highest of all countries in human development from 2001 to 2007, and then again in 2009 and 2010.

In 2010, the World Economic Forum ranked Norway as the 14th most competitive country in the world, placing behind most Western European countries. In 2010, Norway was also rated the fifth most peaceful country in the world in a 2010 survey by Global Peace Index, and the world’s most democratic country according to the Democracy Index.

Currently, Norway has the lowest homicide rate in the world.

Norway has a very low unemployment rate, currently 3.1%.
30% of the labour force are employeed by the government, 22% are on welfare and 13% are too disabled to work, the highest proportions in the world. The hourly productivity levels, as well as average hourly wages in Norway are among the highest in the world.

The egalitarian values of the Norwegian society ensure that the wage difference between the lowest paid worker and the CEO of most companies is much smaller than in comparable western economies. This is also evident in Norway’s low Gini coefficient.

Welfare is different from having more money.

Barry Loberfeld March 4, 2011 at 7:48 pm
RS March 4, 2011 at 9:21 pm

Democratic Socialism is just a slower means of achieving the same basic end. The only reason those scandanavian countries have not collapsed yet is because A. they are living off of other countries already accumilated capital so their welfare entitlements are subsidized by richer nations and B. they are only moderately hostile to the individual, by neglect or accident not on principle.

some good quotes on Socialism…

Socialism is the doctrine that man has no right to exist for his own sake, that his life and his work do not belong to him, but belong to society, that the only justification of his existence is his service to society, and that society may dispose of him in any way it pleases for the sake of whatever it deems to be its own tribal, collective good. – Ayn Rand

There is no difference between the principles, policies and practical results of socialism—and those of any historical or prehistorical tyranny. Socialism is merely democratic absolute monarchy—that is, a system of absolutism without a fixed head, open to seizure of power by all corners, by any ruthless climber, opportunist, adventurer, demagogue or thug. Ayn Rand

Socialism may be established by force, as in the Union of Soviet Socialist Republics—or by vote, as in Nazi (National Socialist) Germany. The degree of socialization may be total, as in Russia—or partial, as in England. Theoretically, the differences are superficial; practically, they are only a matter of time. The basic principle, in all cases, is the same.

The alleged goals of socialism were: the abolition of poverty, the achievement of general prosperity, progress, peace and human brotherhood. The results have been a terrifying failure—terrifying, that is, if one’s motive is men’s welfare.

There is no difference between communism and socialism, except in the means of achieving the same ultimate end: communism proposes to enslave men by force, socialism—by vote. It is merely the difference between murder and suicide. -Ayn Rand

for more on socialism, go here…

http://aynrandlexicon.com/lexicon/socialism.html

Integral March 7, 2011 at 9:37 am

I have no idea how Norway could be living on the accumulated capital of any other country. Are we talking viking raids here?

RS March 7, 2011 at 11:07 am

If they live off of deficit financing they are. If they tax their rich and appropriate private property then they are living off of the accumilated capital of the previous generation. If they dont spend their own money on their military and rely on ours to protect them then they are living off of our capital. If they import their drugs or technology or health care services or knowledge from others then they are.

Thomas the Norwegian March 7, 2011 at 6:04 pm

Sure, the reason of the Norwegian wealth comes from trade with foreigners. What I want to show is what happens with the ressources after they’ve come into the Norwegian economy. All countries are connected through the international market, and I must say that
– A: we’ve accumulated our wealth from richer countries AND less richer coutries (than ourself). The day no country can afford to trade with us any more, we’re standing above a global crisis and the issue of socialism vs. capitalism would get a new context. So as long as the world can trade the scandinavian model would work fine.
– B. “they are only moderately hostile to the individual, by neglect or accident not on principle.” Not entirely sure what you meant. Sorry.

My argument was only to point out that democratic socialism has worked out very well, and if there has been external reasons for that so may it be – I still see it hard to find a better alternative. As to the allegation that socialism is no more different from communism than suicide from murder.. Really? Norwegians live in a democratic nation, quote “the world’s most democratic country according to the Democracy Index.” Constitution, parliament, free media.. Communism is hard to defend, and I won’t, but the fall of the communistic nations through history has in most cases been blamed on the ruler. The people of Scandinavia wouldn’t accept a dicatorships we’ve seen in communist nations. Therefore, democratic socialism won’t compare to communism as your mild quote does.

Norway does import drugs, medicine, weapons, technologies and skilled labour. And we contibute to and rely on international peace-keepers. Norway is one of the biggest financial contributors to the UN, and the 6th biggest exporter of weapon and weapon-technology in the world. We do create new technology and make money out of it too. Of course we live of the accumulated riches of the world, but who doesn’t? We contribute to it as well. “According to the CIA World Factbook, Norway is a net external creditor of debt.”

My initial post was not to advertise for Norway; but to show that democratic socialism is a working, existing alternative to the cold capitalism. And it’s a good alternative because: A: it’s democratic and self-regulating. B: it allows private ownership and corporate freedom up to a certain degree. C: that freedom is regulated in a healthy manner with regards to both economical and human interestst.

Integral March 8, 2011 at 1:40 am

Well, according to the CIA factbook norway is a net creditor, so they lend out more than they borrow. If they rely on the taxation of their “rich” (ie, everyone in norway) they’re still only relying on internal resources. Last time I checked norway doesn’t have any enemies that they require protection from, so they don’t need the american military for protection, and finally importing drugs, technology, healthcare or knowledge sounds a lot like trade. How does trade make you live off the accumulated capital of others?

Thomas the Norwegian March 8, 2011 at 1:57 pm

Might have misunderstood the use of “live off,” but what I meant is that those countries trading with Norway have in some way a market liquidity that pays for the goods we sell, so therefore I tried to denote the term “living off” to what any regular seller in a market does with his earnings.. I didn’t mean that Norway has leaned back and leeching off the rest of the international marked – I was rather trying to say that we’re an active participant in it.

Norway doesn’t have any natinal enemies we’re immediately require protection from, no, but we DO have a military. Which western countries DO have enemies that they require protection from?

In what ways will an external enemy limit the success/functionality of the democratic socialistic system as to a liberal capitalistic one?

Greg Ransom March 4, 2011 at 8:28 pm

Cohen — obviously — had never been on a camping trip in his life.

Walt D. March 5, 2011 at 1:29 am

“how often have you heard people denounce President Obama as a socialist?”
Strictly speaking, President Obama is a fascist. However, the word fascist has been used so often as a term of contempt, that it has lost its original meaning. Nevertheless, President Obama shares the obsession with railways and bullet trains. He hopes history will remember him with the epitaph “at least he made the trains run on time.”

Robert T March 5, 2011 at 1:45 am

The Cartoon is great!

RS March 6, 2011 at 3:59 am

@ Peter
@Allen Weingarten
@Zach Bush

Dichotomizing ideas as “value-less” and actions as “value-full” is totally ludicrous.

Contrary to the misean idea of the action axiom, every material value requires first an act of cognition and then an act of production, there are no exceptions. Moreover, every “value” must necessarily (as in categorically) include both material and spiritual values (by “spiritual” I mean thought or knowledge or consciousness) the former only being possible because of the latter.

Acting to acquire a wealth of knowledge and acting to acquire a wealth of material both require a choice and if so then they both include values. The two cannot be separated. The first requires a choice to observe and infer and the second a choice to act and produce. “Action” does not just mean merely physical action; it must necessarily include the action of thought as well as no physical action is possible without it. One cannot separate the act of cognition from the act of evaluation.

“Cognition apart from evaluation is purposeless; it becomes the arbitrary desire for “pure knowledge” as an end in itself. Evaluation apart from cognition is non-objective; it becomes the whim of pursuing an “I wish” not based on any “It is.”” – Leonard Piekoff

Therefore, if it is going to be categorically asserted that values are subjective then that can only have one meaning: that man’s mind has nothing to do with reality, that his mind is “detached” from his body. That any value, spiritual or material, is not the result of his knowledge of reality (the object), but is the result of his inner self (the subject), of his feelings, desires, whims, “intuitions”, “arbitrary postulates” or “emotional commitments”.

If so, then this is directly at odds with the Austrian conclusion that freedom and liberty are the best means to achieve material prosperity and human happiness because it is PRECISELY those ends that are presumed to be objectively chosen as desirable but which are at the same time being categorically asserted as purely subjective in nature (see above).

The presumption that all people will somehow “subjectively” choose an allegedly “objective” end is being smuggled into the argument without acknowledgement. It is impossible to derive an objective conclusion from a subjective premise.

Once this point is acknowledged then the implication is obvious. “Freedom” and “Liberty”, on the subjectivist premise, can only be a gift from society to be withdrawn at any moment on the majority’s whim.

The whole concept of individual inalienable rights becomes absolutely meaningless and libertarians like Rothbard and many at mises.org are perpetuating the confusion and actually helping its enemies.

Zach Bush March 6, 2011 at 2:32 pm

RS,

Again, I would strongly advise you to read the first volume of Man, Economy, and State. There is nothing contradictory about the action axiom. It is impossible to know an individuals value scales prior to physically acting therefore they are not subject to economic analysis. Saying that Austrian economics is “value-free” is not saying that ideas are valueless. It means simply that the economist himself, acting as strictly an economist, can not make any judgments of someones value scale. An economist can not know the reasons or beliefs that shape an individuals value scale.

RS March 7, 2011 at 3:05 pm

I admit that I have not read the book but I will put it on my reading list however, given the libertarian literature that I have read thus far, I don’t see how it would really change anything.

While I can agree with the fact that each person’s value scale is unique in the same way that each individual is unique, I disagree that such scales are necessarily subjective. They can be, and often are, but they do not have to be, it is a matter of choice.

Objectivity is the recognition of the fact that an observer (man) must acquire knowledge of reality by certain means (reason) and by certain rules (logic), even if that knowledge is about themselves and the personal actions they can and must choose to take.

Subjectivity in the realm of personal actions and values does not mean that each person has individual tastes and desires. It means that all actions and all desires as such are cutoff from reality, including the desires to be prosperous, be happy, stay alive, have a family, study science, study economics, commit suicide, robbery or murder, establish a dictatorship, enslave a race, commit genocide etc. etc.

If, in the eyes of the “strict economist”, all of these desires and actions are subjective then all of these things are equivalent, equally desirable or undesirable, so then on what grounds can the allegedly dispassionate economist recommend that freedom and liberty are more desirable than any other? Only on the grounds of a majority vote or an already established power willing to grant such freedom as gift, or not. If 51% of the population voted to feed the other 49% hemlock then that too would establish a desirable “end” to be achieved every bit as legitimate as laissez-fair capitalism.

Moreover, the notion that a strict economist would not share the values of those he studies is vastly misleading. We all have fundamental similarities that unite us and make us what we are (e.g. volition, being alive etc.), that is our identity as a group, which is not open to our choice (you have no choice about having to choose), but it is also those very same physical similarities that exist in nature that determine the types of values we share as a group, only they must be conceptually identified and acted upon by choice.

In other words, you can choose to act against your nature but the nature of your nature is outside of your control, even as an economist. The minor differences of personal preferences between individuals are not essential to our nature and thus are not relevant to the broader concepts of morality or objectivity. Note that I am not saying that nature demands one like vanilla ice cream over chocolate, I am saying that nature demands that you make a choice of one, both, or neither based on some value scale that is itself chosen. If that value scale is objective then the choice based upon it will be so as well, even if I choose vanilla and you choose chocolate.

That being said, I have to take your statements literally so “value-free” to me means “purposeless”. As an economist your “purpose” is to study the actions of production and trade which are themselves actions with a purpose. If that is your end, as an economist, then you must necessarily “value” all of the things that make such actions possible, as well as the actions themselves.

In other words, even though you may refrain from imposing your own personal “value scale” onto those you study, you still must share some of the same values that they do (e.g. freedom) just as those actors must share some of those values with each other and likewise refrain from imposing their individual “value scales” onto each other (i.e. free trade), otherwise production and trade between them would be impossible as would your study of it. That is why there could be not be a true economists in a truly communist country.

Allen Weingarten March 7, 2011 at 3:22 am

RS, you claim that “It is impossible to derive an objective conclusion from a subjective premise.” Perhaps I have not understood what you have in mind, but given that I want to live (which is known subjectively) I conclude that I will act so as to preserve my life (which is an objective conclusion). Conversely, if I felt the opposite (or knew someone who felt the opposite) I would form a different objective conclusion.

Again, I am unclear as to whether this captures what you have in mind. It seems to me (to use Ayn Rand’s language) that the objective and subjective are metaphysically inseparable, but epistemologically distinct. To repeat, one will play a game of chess for a purpose, whether to win, lose, or draw, but the logic of a game can be Wertfrei, as when a computer determines that a given position can guarantee mate. Similarly, Wertfrei economics can show that an increase in supply will (under normal conditions) reduce the cost of a good or service.

Here I haven’t presumed ‘that all people will somehow “subjectively” choose an allegedly “objective” end’.

RS March 7, 2011 at 3:24 pm

I think your confusing logical with objective. one can deduce “logically” from any given premise but that does not make the premise or the conclusion objective. objectivity is a combination of rational inference and logic.

a persons desire to live is an objective goal, the logical conclusion is that you should act to remain so. the premise and the conclusion are both logical and objective. if you were to choose suicide as as a goal then the logical conclusion is to take poison, but that would not be objective or rational, under normal circumstances.

Allen Weingarten March 7, 2011 at 8:05 pm

RS, the statement that ‘I will act to preserve my life’ is an objective statement. It is synthetic, not analytical. You believe it is true, and know that facing an oncoming car I will get out of its way. Can you possibly argue that this is merely an analytic statement that need not have any bearing on what occurs in the world? Conversely, were I suicidal, you would conclude that I would step in front of that car.

Are you denying that I know subjectively that I want to live, or denying that the statement ‘I will act to preserve my life’ is objective? I will never be convinced that I do not know what I want subjectively; nor is it plausible that you would not bet that I will get out of the way of an oncoming car.

RS March 7, 2011 at 10:01 pm

I dont make any distinction between analytic or synthetic statements. A statement is true if it corresponds to reality, if it does not then it is false.

If you know that you want to live then that is a fact and given that premise it is logical that certain actions will follow and others will not however the objective/subjective status of that statement depends on how you arrived at the decision to live. Objectivity comes from observation, inference, reason and logic. The conclusion that you would prefer life over death can come from such a process or it can not. The former being objective and the latter, subjective. It is certainly possible to objectively conclude that death is preferable to life, given certain circumstances (e.g. terminal cancer), which would logically call for an entirely different set of actions, depending on ones individual circumstances.

Allen Weingarten March 8, 2011 at 5:37 am

Kindly answer the question “Are you denying that I know subjectively that I want to live, or denying that the statement ‘I will act to preserve my life’ is objective?”

I was not asking about your philosophy, but your ‘yes’ or ‘no’ conclusion.

RS March 8, 2011 at 9:24 am

I must first understand what you are asking before I can come to a yes/no conclusion and given the various philisophical assumptions that are being arbitrarily “packaged” into the two questions it is impossible to answer with a simple yes/no.

The only way that I could know if you know something or not is if you tell me explicitly that you know it or you conclusively demonstrate it through your actions. In the first case I must take you at your word and treat it as fact until you demonstrate otherwise. In the second case I must use your actions as facts and logically deduce your intetions from them. In either case my “confirm or deny” conclusion comes from my own observations of your words and/or deeds.

The designation of “subjective” to your wants or desires, whatever they are, also depends on how you acquired such knowledge. If you just “feel” you want something and act to obtain it then both the ends and the means is subjective, like any “whim” would be. Its epistemological status is one of emotion not of reason or logic. Simply stating that you want something, like an emotional teenager, and then acting logically to get it does not magically grant objectivity to such a whim, no matter what it is.

On the other hand if you rationally infered from the facts that life is desireable over the alternative and have therefore decided to live then that conclusion would be objective.

Allen Weingarten March 8, 2011 at 10:40 am

RS, you have all the pertinent information. I want to live, and consequently will get out of the way of an oncoming car.

If you cannot understand it, it is not because it is complicated, for it is common knowledge that *a child who likes cookies will want to take one*.

RS March 8, 2011 at 10:50 am

Really? Just that simple huh?

If you had terminal cancer with a 6-12 moths life expectance of nearly constant agonizing pain, would you still want to live?

If you were imprisioned in N. Korea or Iran with no hope of escape, ever, and subjected to daily psycological and physical torture, would you still want to live?

If you were imprisioned in a small stone room, with no window, no door and no one to talk to with only bland bread and water to sustain you for the rest of your life, would you still want to live?

Want more? Imagine that you could become immortal and indestructable, impervious to hunger or pain or hurt forever. What would you do and why? What reason would you have to move or be still? Act or not act?

Do all of these situations necessarily result in subjective choices or can they be objective?

If you cannot understand that purpose preceeds action then nothing I can say will open your eyes.

J Strok March 6, 2011 at 2:23 pm

About the class, if you’re going to talk about existing systems, and how the concepts apply to reality; perhaps you should discuss how merchantilism fits into the capitalist vs socialist discussion. After all this is the fundamental system by which we have organized the economy.

Allen Weingarten March 8, 2011 at 1:01 pm

RS, do you really not know that I started with the statement that I want to live, and stated that if I didn’t I would go in front of the oncoming car? So it was clear that I held that purpose precedes action.

RS March 8, 2011 at 2:04 pm

Oh, I know how you started but that is not the start I am referring to.

What did your “I want” proceed from? Is your “I want” to be taken as a fundamental primary, an axiom, as in “I want it because I want it and for no other reason” and therefore these are the actions that necessarily follow or did your “I want” proceed from the “it is” as in “I want it because of facts A, B, C” and therefore these are the actions that necessarily follow?

The answer you give determines the ojbective status of your conclusion.

From what I have read, the libertarian/misean position is that the “I want” is to be taken as a fundamental primary, a tautology, which is subjective for each individual (i.e. values are subjective, austrian theory is “value-free”), cutoff and irrespective of facts A, B, C. My contention then is that if this is so, then there are absolutely zero grounds for any rational cooperation between men since it is rationality that has been excluded from the equation and if that is so then all that is left to make people cooperate is by the use of brute force and NOT thier rational choice which is contrary to the messages of freedom and liberty they proclaim to uphold.

RS March 8, 2011 at 2:15 pm

And, by the way. If you acknowledge explicitly that purpose preceeds action then how do you hold “action” as an axiom, since something else preceeds it?

Sglasgow March 22, 2011 at 1:06 am

RS
Assuming your introductory comments aren’t simply a fishing expedition, the fact is that the function of the price mechanism in a free society eliminates the need for a collective determination of values.
Indeed, in the AE construct the ability of each individual to determine “values” for themselves ultimately requires a free society that is dependent on private property rights and free exchange. In this way you or I can determine what is of value to us as individuals. Should you determine poverty is a virtue then by all means pursue that course without interruption.
On the other hand, should we both decide that the amassing of some commodity is of use to us, then the demand of multiple consumers for such will impact it’s price…in effect it’s “value” is determined by the collection of individual decisions reflected in the demand (price) for that commodity or service.
Viewed in this way, no common or collective values are reflected with the exception of the need for the individual to be protected from violence, and the right of self determination.
Ultimately, there is simply no contradiction there. The whole point of the Austrian and libertarian school is that ALL value(s) is/are ultimately determined by the individual. The hueristic assumption is that in general terms prosperity is a preference to poverty, although not necessarily axiomatic. Empirically, one would find the desire for more material wealth is commonplace. In fact, most courses in early economics begin with a definition of the term as the study of the allocation of limited means vs. Unlimited desires ( or something to that effect.)
AE simply provides a framework for the most efficient way possible to allocate resources to the individual constituent. A necessary byproduct of that efficiency is greater wealth among those for whom that is a preference.

RS March 22, 2011 at 9:27 am

@Sglasgow,

I do understand all of this, truly. I agree that the condition of freedom is the prerequisite for an individual to value and in that sense, it is as you say, freedom is the only root value or “public good” or “social utility” that is common to every man categorically, as a universal truth or principle. It is at this point that AE diverges from this principle and contradicts itself for if freedom is a value that is subjective in nature then it cannot be called a universal truth or treated as a principle and if so then, neither can any of its consequences or corollaries.

Ultimately I think the confusion is due to an epistemologically invalid use of the concept “subjective” and/or “objective”, the idea that just because a person “chose” a value does not necessarily make it subjective. This does not mean that I think values are not chosen or are not determined by the individual, I agree that they are however, the designation of such a value as “subjective” or “objective” requires the application of a standard.

The AE subjective value theory asserts that the subjective/objective standard is the ability to choose itself i.e. that if “it” is chosen then “it” is subjective but if this is so, given free wil, then this standard must apply to every conception inferred from our perceptions without exception thus any alleged “preference” for one condition over another (poverty/prosperity, freedom/slavery etc.) is nothing more than a collective imperative, neither desirable or undesirable per se except on the whim of the majority or a minority clique with the power to “impose” either condition.

In my view, the Objectivist view, values can be objective, not because they were chosen by an individual, but because they were validated by an individual through a process of reason i.e. they are evaluated against a standard not “of choice” but by choice to whether or not they correspond to or contradict the facts of reality. Correspondence to reality (like any law of physics) is the standard by which values are estimated to be either objective or subjective. In this view, values will logically fall into either category and those that are subjective are irrational/harmful/evil and those that are objective are rational/beneficial/good.

It is only in this way that freedom and liberty can be held as an objective “good” that is rational and desirable for every individual as a valid timeless principle, past, present and future.

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