| | Bill,
You wrote:
I prefer the quote-reply format, because most people don't re-read previous posts to check on what was actually said. It also helps to avoid misrepresenting someone's position and to discourage strawman arguments.
Fine. Have it your way. I'll keep posting so long as I profit from the experience. :)
You wrote:
Well, it's difficult for me to believe that someone who had no knowledge of economics could deduce the entire Austrian corpus, including its case against credit expansion, inflation, recession, price controls, etc., solely from the self-evident premise that man acts with purpose.
Is it equally difficult for you to believe that the principles of logic can be deduced from the premise: "A is A?" Or that the principles of arithmetic can be deduced from the premise of counting? Or that all the complex propositions of Euclidean geometry can be deduced from a few simple axioms? Sure it's a lot of deducing for a single individual, but in the case of Austrian economics it was a collaborative effort.
You wrote:
But empiricism is not equivalent to statistical probability. It pertains to any direct awareness, whether extrospective or introspective.
From "Mises Made Easier" by Percy L. Greaves Jr.:
Induction, n. inductive, adj. In logic, assuming the truth of a general (or universal) premise from the knowledge that individual or particular instances of the generality conform to the premise. Example: Assuming that all men speak English because all the men you know speak English.
Perfect induction is when the premise is based on the knowledge of all instances. In such cases, the induction is merely the statement of a known totality or generality.
Imperfect induction is when the premise is based on the knowledge of less than all the individual instances, i.e., on a sample. In the sciences of human action, imperfect induction can never provide scientific certainty. At best, it provides only a probability. However, imperfect induction is an epistemological basis of the natural sciences.
Empiricism. The theory that the only source of human knowledge is experience. Empiricism assumes a regularity in the flow of events and proclaims that experiments and observation are the main instruments for the acquisition of knowledge.
What Mises has to say in "The Ultimate Foundation of Economic Science", Page 8:
Reasoning is necessarily always deductive. This was implicitly admitted by all the attempts to justify ampliative induction by demonstrating or proving its logical legitimacy, i.e., by providing a deductive interpretation of induction. The plight of empiricism consists precisely in its failure to explain satisfactorily how it is possible to infer from observed facts something concerning facts yet unobserved.
All human knowledge concerning the universe presupposes and rests upon the cognition of the regularity in the succession and concatenation of observable events. It would be vain to search for a rule if there were no regularity. Inductive inference is conclusion from premises that invariably include the fundamental proposition of regularity.
The practical problem of ampliative induction must be clearly distinguished from its logical problem. For the men who embark upon inductive inference are faced with the problem of correct sampling. Did we or did we not, out of the innumerable characteristics of the individual case or cases observed, choose those which are relevant for the production of the effect in question? Serious shortcomings of endeavors to learn something about the state of reality, whether in the mundane search for truth in everyday life or in systematic scientific research, are due to mistakes in this choice. No scientist doubts that what is correctly observed in one case must also be observed in all other cases offering the same conditions. The aim of laboratory experiments is to observe the effects of a change in one factor only, all the other factors remaining unchanged. Success or failure of such experiments presupposes, of course, the control of all the conditions that enter into their arrangement.
See below my discussion of the principle of ceteris paribus.
The conclusions derived from experimentation are not based upon the repetition of the same arrangement, but upon the assumption that what happened in one case must necessarily also happen in all other cases of the same type. It would be impossible to infer anything from one case or from an innumerable series of cases without this assumption, which implies the a priori category of regularity. Experience is always the experience of past events and could not teach us anything about future events if the category of regularity were merely a vain assumption.
You wrote:
But the point I've been making ever since the beginning of our discussion is that economics (including Austrian economics) is not free of internal value judgments!
And I've been making the contrary point!
You wrote:
Economics deals with value judgments as a core part of its discipline. It postulates utility or happiness as the end at which people are aiming, and proceeds to describe the best means of attaining that end.
This is where you are mistaken. Indeed, economics (and when I write "economics" I mean Austrian economics) postulates that individuals aim at "happiness," but happiness is an abstract concept. Economics sets no concrete standards for individual "happiness." Mises explains "happiness" thusly in "Human Action" Page 14:
In colloquial speech we call a man "happy" who has succeeded in attaining his ends. A more adequate description of his state would be that he is happier than he was before. There is however no valid objection to a usage that defines human action as the striving for happiness.
But we must avoid current misunderstandings. The ultimate goal of human action is always the satisfaction of the acting man's desire. There is no standard of greater or lesser satisfaction other than individual judgments of value, different for various people and for the same people at various times. What makes a man feel uneasy and less uneasy is established by him from the standard of his own will and judgment, from his personal and subjective valuation. Nobody is in a position to decree what should make a fellow man happier.
To establish this fact does not refer in any way to the antitheses of egoism and altruism, of materialism and idealism, of individualism and collectivism, of atheism and religion. There are people whose only aim is to improve the condition of their own ego. There are other people with whom awareness of the troubles of their fellow men causes as much uneasiness as or even more uneasiness than their own wants. There are people who desire nothing else than the satisfaction of their appetites for sexual intercourse, food, drinks, fine homes, and other material things. But other men care more for the satisfactions commonly called "higher" and "ideal." There are individuals eager to adjust their actions to the requirements of social cooperation; there are, on the other hand, refractory people who defy the rules of social life. There are people for whom the ultimate goal of the earthly pilgrimage is the preparation for a life of bliss. There are other people who do not believe in the teachings of any religion and do not allow their actions to be influenced by them.
Praxeology is indifferent to the ultimate goals of action. Its findings are valid for all kinds of action irrespective of the ends aimed at. It is a science of means, not of ends. It applies the term happiness in a purely formal sense. In the praxeological terminology the proposition: man's unique aim is to attain happiness, is tautological. It does not imply any statement about the state of affairs from which man expects happiness.
You wrote:
It argues, for example, that certain economic policies have unintended and undesirable consequences (e.g., unemployment, inflation, recession, housing shortages, farm surpluses, etc.) and that better economic policies should be employed in order to avoid these consequences.)
Here again economics, as a science, merely deduces conclusions from premises. Individual actors who follow the logic of economics and learn from it decide for themselves how this knowledge should best be applied in their own lives and in their own society.
By using terms such as "economic policies" you imply that economics prescribes social or political policies for some social or institutional entity. This is not the case. Austrian economics is individualistic in its concept and method. On this Mises writes (from The Ultimate Foundation of Economic Science, Page 3):
The authors who think that they have substituted, in the analysis of the market economy, a holistic or social or universalistic or institutional or macroeconomic approach for what they disdain as the spurious individualistic approach delude themselves and their public... ...But if one deals with a system in which more than one man's striving after definite ends directs or affects actions, one cannot avoid tracing back the effects produced by action to the point beyond which no analysis of actions can proceed, i.e., to the value judgments of the individuals and the ends they are aiming at.
The macroeconomic approach looks upon an arbitrarily selected segment of the market economy (as a rule: upon one nation) as if it were an integrated unit. All that happens in this segment is actions of individuals and groups of individuals acting in concert. But macroeconomics proceeds as if all these individual actions were in fact the outcome of the mutual operation of one macroeconomic magnitude upon another such magnitude.
You wrote:
I'm not saying that it "should" be a normative science; I'm saying that it is a normative science. What I'm saying "should" be done is for economists to make their value judgments known to policy makers instead or remaining in their economic ivory towers and claiming that their discipline is "value-free," when it obviously is not.
Your point here is contradictory. Why is it necessary "for economists to make their value judgments known to policy makers" (if, indeed, economists do make value judgments) if economics is in fact "obviously" not "value-free?" If it is obvious, then these "value judgments" of which you speak must be obvious as well. And, if these are obvious, then they must be obvious to policy makers. What purpose is served by economists making "their value judgments known to policy makers?"
I still don't understand your refusal to accept the reality that economics as a science can be objective and value-free while at the same time those who do economics can have social and political opinions and can use the knowledge gleaned from their science to buttress their social and political arguments? For instance, to use my earlier example, the value-free science of physics says nothing about whether a nuclear reaction is good or bad but physicists themselves, like Einstein and Oppenheimer, can hold strong opinions one way or the other.
Moreover, you imply that economists secure in their "economic ivory towers" somehow inhibit the knowledge produced by their science from being disseminated among the public in general and policy makers in particular, that this isolation somehow inhibits economic findings from influencing the course of history.
I don't believe economics is a normative science. Neither do I believe that it is necessary for economics to be a normative science in order for its "value-free" findings to be known to "policy makers" or any other persons of influence and intelligence. Mises comments on this in his introductory comments to his seminal work "Human Action", Page 9:
Then there are people who assert that something must be wrong with the social sciences because social conditions are unsatisfactory. The natural sciences have achieved amazing results in the last two or three hundred years, and the practical utilization of these results has succeeded in improving the general standard of living to an unprecedented extent. But, say these critics, the social sciences have utterly failed in the task of rendering social conditions more satisfactory. They have not stamped out misery and starvation, economic crises and unemployment, war and tyranny. They are sterile and have contributed nothing to the promotion of happiness and human welfare.
These grumblers do not realize that the tremendous progress of technological methods of production and the resulting increase in wealth and welfare were feasible only through the pursuit of those liberal policies which were the practical application of the teachings of economics. It was the ideas of the classical economists that removed the checks imposed by age-old laws, customs, and prejudices upon technological improvement and freed the genius of reformers and innovators from the straitjackets of the guilds, government tutelage, and social pressure of various kinds. It was they that reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity. None of the great modern inventions would have been put to use if the mentality of the precapitalistic era had not been thoroughly demolished by the economists. What is commonly called the "industrial revolution" was an offspring of the ideological revolution brought about by the doctrines of the economists. The economists exploded the old tenets: that it is unfair and unjust to outdo a competitor by producing better and cheaper goods; that it is iniquitous to deviate from the traditional methods of production; that machines are an evil because they bring about unemployment; that it is one of the tasks of civil government to prevent efficient businessmen from getting rich and to protect the less efficient against the competition of the more efficient; that to restrict the freedom of entrepreneurs by government compulsion or by coercion on the part of other social powers is an appropriate means to promote a nation's well-being. British political economy and French Physiocracy were the pacemakers of modern capitalism. It is they that made possible the progress of the applied natural sciences that has heaped benefits upon the masses....
...It is true that economics is a theoretical science and as such abstains from any judgment of value. It is not its task to tell people what ends they should aim at. It is a science of the means to be applied for the attainment of ends chosen, not, to be sure, a science of the choosing of ends. Ultimate decisions, the valuations and the choosing of ends, are beyond the scope of any science. Science never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends.
It seems to many people that this is very little indeed and that a science limited to the investigation of the is and unable to express a judgment value about the highest and ultimate ends is of no importance for life and action. This too is a mistake. However, the exposure of this mistake is not a task of these introductory remarks. It is one of the ends of the treatise itself.
You wrote:
I disagree with this. What about those who sacrifice their values for the sake of others? And please don't tell me that they value the self-sacrifice and therefore that it's really a selfish act. They value it only in the sense that they believe it is their moral obligation, but they don't view the expected outcome as more "satisfactory"; they view it as less satisfactory. That's what "self-sacrifice" is. It's the surrender of a greater value for a lesser one.
Good grief! Are you denying that some people put more value in the promise of life here after than in the actual life they are living here and now? Are you denying that a critically depressed or despondent person or a person dying in severe pain might seriously long for the peace of death? Are you seriously suggesting that you know without doubt what's in the mind of a person who sacrifices his life for friends or for principle? How do you know this for certain? Supply me with the evidence of the postmortem interviews you've conducted that verify your opinions.
You wrote:
Not true. People sometimes engage in acts of self-sacrifice. It is true that a person's action must be motivated, but the motivation needn't be a more satisfactory state of affairs; it could be one that, for the actor, is less satisfactory. Now, if you simply mean that every action aims at a certain end or goal and that the actor is more "satisfied" to achieve that goal than not to achieve it, then I would agree.
Then we agree.
You wrote:
The altruist "wants" to achieve the end of self-sacrifice, so in that sense, he is more "satisfied" to achieve it than not to achieve it.
Great. You're on the verge of becoming an Austrian economist! :)
You wrote:
But his utility or happiness is less, because his goal was to sacrifice it for the sake of others.
Now there you go again putting yourself in the private minds of other individuals. (You're not really The Amazing Kreskin in disguise, are you?) Why is "sacrifice for the sake of others" automatically verboten on your list of all possible ends? Again how do you know that an individual who sacrifices his life for the sake of others must necessarily be unsatisfied and unhappy ex ante.
You wrote:
Why couldn't the person's action be objectively evaluated according to how well it achieves the end for which it is chosen? For instance, suppose that a legislator chooses to vote for a rent-control law, on the premise that it will improve the lot of tenants. Economics could criticize his choice on the grounds that it will worsen the lot of tenants by creating a shortage of apartments.
Well, maybe you're not on your way to becoming an Austrian economist! :)
An Austrian knows that rent-control is simply a means to an end. An Austrian could not criticize rent control on the basis that it "will worsen the lot of tenants." An Austrian knows that rent control will prevent some tenants from achieving their goal of having housing. But he also knows that rent control will allow some tenants to achieve their goal of having cheap housing into perpetuity. The only certainty from the point of view of economics is that rent control will reduce the market supply of housing available to all (ceteris paribus!). Voters are smart enough to decide for themselves what is in their own best interests. They don't need some sanctimonious economic "scientist" preaching to them about what is best for all.
The principle of "ceteris paribus," i.e., all else being equal, is extremely critical to this discussion. Your harping claim that economics is a normative science assumes that economics as a science can exactly determine the real world outcomes of policies it recommends, that what policies or means (or value judgments, as you call them) are best suited for accomplishing virtually every social or political goal. Economics doesn't work that way.
The economist deduces economic principles in the abstract, drawing conclusions from premises. He can mentally isolate one economic phenomenon from another by making a simple, abstract assumption: ceteris paribus. This allows him to study the theoretical causes and effects of any particular economic action separate from the causes and effects of other simultaneous and competitive economic actions.
However the real world does not operate this way. In the real world causes and effects from many simultaneous economic actions are inextricably tied together in a jumble making economic prognosticaion and prescription inexact and conditional. As a result, if your normative economic scientist prescribes policy for any specific, real world circumstance, he should be aware that he cannot predict with absolute certainty the consequences of his prescribed policy. Mises comments on this in "Human Action", Page 31:
There are two main branches of the sciences of human action: praxeology and history. History is the collection and systematic arrangement of all the data of experience concerning human action. It deals with the concrete content of human action. It studies all human endeavors in their infinite multiplicity and variety and all individual actions with all their accidental, special, and particular implications. It scrutinizes the ideas guiding acting men and the outcome of the actions performed. It embraces every aspect of human activities. It is on the one hand general history and on the other hand the history of various narrower fields. There is the history of political and military action, of ideas and philosophy, of economic activities, of technology, of literature, art, and science, of religion, of mores and customs, and of many other realms of human life. There is ethnology and anthropology, as far as they are not a part of biology, and there is psychology as far as it is neither physiology nor epistemology nor philosophy. There is linguistics as far as it is neither logic nor the physiology of speech.
The subject matter of all historical sciences is the past. They cannot teach us anything which would be valid for all human actions, that is, for the future too. The study of history makes a man wise and judicious. But it does not by itself provide any knowledge and skill which could be utilized for handling concrete tasks.
The natural sciences too deal with past events. Every experience is an experience of something passed away; there is no experience of future happenings. But the experience to which the natural sciences owe all their success is the experience of the experiment in which the individual elements of change can be observed in isolation. The facts amassed in this way can be used for induction, a peculiar procedure of inference which has given pragmatic evidence of its expediency, although its satisfactory epistemological characterization is still an unsolved problem.
The experience with which the sciences of human action have to deal is always an experience of complex phenomena. No laboratory experiments can be performed with regard to human action. We are never in a position to observe the change in one element only, all other conditions of the event remaining unchanged. Historical experience as an experience of complex phenomena does not provide us with facts in the sense in which the natural sciences employ this term to signify isolated events tested in experiments. The information conveyed by historical experience cannot be used as building material for the construction of theories and the prediction of future events. Every historical experience is open to various interpretations, and is in fact interpreted in different ways.
The postulates of positivism and kindred schools of metaphysics are therefore illusory. It is impossible to reform the sciences of human action according to the pattern of physics and the other natural sciences. There is no means to establish an a posteriori theory of human conduct and social events. History can neither prove nor disprove any general statement in the manner in which the natural sciences accept or reject a hypothesis on the ground of laboratory experiments. Neither experimental verification nor experimental falsification of a general proposition is possible in its field.
Complex phenomena in the production of which various causal chains are interlaced cannot test any theory. Such phenomena, on the contrary, become intelligible only through an interpretation in terms of theories previously developed from other sources. In the case of natural phenomena the interpretation of an event must not be at variance with the theories satisfactorily verified by experiments. In the case of historical events there is no such restriction. Commentators would be free to resort to quite arbitrary explanations. Where there is something to explain, the human mind has never been at a loss to invent ad hoc some imaginary theories, lacking any logical justification.
In the field of human history a limitation similar to that which the experimentally tested theories enjoin upon the attempts to interpret and elucidate individual physical, chemical, and physiological events is provided by praxeology. Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences.
[Ceteris paribus.]
Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events. Without them we should not be able to see in the course of events anything else than kaleidoscopic change and chaotic muddle.
You wrote:
I didn't say "infallible"; nor did I say that "my economics has no limits to its knowledge of good and bad," whatever that's supposed to mean
No, you did not say "infallible." I concluded your normative economics is infallible "because it can judge (ex post in all cases and ex ante in some) that a good or bad choice has been made by the actor even if the actor himself isn't aware of the goodness or badness of his act."
Do you disagree with my conclusion? I drew that conclusion from your comments in earlier posts. Are you going to make me go back and scour them for specific quotations?
You wrote:
Again, I was not talking about economic value judgments when I made that observation. I was talking about value-judgments in a much broader sense. E.g., a student should have known that if he didn't do his homework, he would do poorly on the test.
But we are arguing about economics! Why bring up a broader sense of the word? Why cloud the discussion by bringing in senses of terms which can have "broader" definitions than the ones we are using, unless your goal is to muddy the waters.
You wrote:
I wouldn't say that people err "on purpose." They can, however, be morally responsible for their errors, if they fail to take adequate precautions. If, for example, a person drives while intoxicated and gets into an accident killing someone, he didn't cause the death or the accident on purpose, but he was nevertheless morally responsible for it. However, this has nothing to do with economic theory.
Agreed, this has nothing to do with my economics. It's your call as to whether or not it has something to do with your normative version. It is hair-splitting in its essence.
You wrote:
What?? Where have I said anything resembling this? How you could have arrived at that conclusion from my previous statements, I have no idea. It is certainly not something I believe or would ever say.
Again, you didn't say that. I clearly stated it was my presumption based on the logic of your normative economics. Do you agree or disagree that the "the logic of a mathematical calculation can always be properly deduced before the commencement of action."
You wrote:
No. That too is not something I would ever say. Ethics does not "sort out" economic problems. But it is the foundation for a proper politico-economic system. If an economist recommends that the Justice Department invoke the antitrust laws against Microsoft, say, the science of ethics would condemn such an action as a violation of Microsoft's property rights. But a proper economic theory would, presumably, find no economic downside to a monopoly that is not the result of coercive intervention by the government.
I respect that you would never say it. On the other hand, if "the foundation for a proper politico-economic [emphasis mine] system" is ethics, and if ethics is a science, and if economics is a normative science, then what other conclusion can be drawn? Moreover, your example proves my case.
Your example speaks of an economist who fails to advance a "proper" economic theory, i.e., his normative prescription for action is improper considered from the normative prospective of his science. However, economists are only human. Who determines what is the "proper" prescription for the normative science of economics? Two armchair economists slugging it out in a RoR Forum? A majority vote? More importantly, how is such a determination made? Purely by logic? Purely by observation of the prescription's consequences? Or some combination of the two? Ah, but then one runs up against the problem of ceteris paribus!
Just as society needs an ultimate arbiter to settle social conflict, your normative economics needs an ultimate arbiter to settle conflicts of economic propriety -- and that arbiter can only be your ultimate normative science of ethics.
Regards, Sherman
(Edited by Sherman Broder on 12/01, 10:05am)
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