Does One Need to Know Economics to Do Political Philosophy?

Recent posts by Pete (here and here) have unleashed a torrent of comments. Before I start, let me state clearly that I respect Jeffrey Friedman’s work. He does an amazing job as the editor of Critical Review. Jeffrey Friedman made a series of claims in the comments to Pete’s posts, among them are four that I find important: (a) Rawls’s difference principle is compatible with laissez-faire, such that there is nothing paradoxical in the idea of “Ralwsian libertarianism,” (b) why would normative libertarian theory have anything to do with Austrian economics positive claims about human action and markets?, (c) all social relationships are coercive to some extent, and (d) definitions are, strictly speaking, stipulative (arbitrary).

A way of looking at these claims is to ask the question: does one need to know economics to do political philosophy? The answer is yes. This is something Pete has emphasized in his replies. Rawls’s economics is wrong and this has a huge impact on his position in political philosophy. The same is true of so many other philosophers that J. Friedman urges libertarians to read. J. Friedman seems to be bothered that Austrians/libertarians have a poor understanding of philosophy but it doesn’t seem to be an issue that most political philosophers have a poor understanding of economics. I was raised in France where as students we learnt about Derrida, Deleuze, Foucault, Lyotard and many others. The truth is that their economics is plainly wrong, is Marxist in its essence, and their political philosophy is largely inspired by it. Political philosophers who have better economic priors arrive at different conclusions, which in large part explain the rift that exists between European philosophers and US ones.

This contrasts with the way Austrian economists venture into political philosophy. It is true that neither Rothbard nor Kirzner are political philosophers but at least they proceeded to discuss those issues using solid economic principles. The work that Kirzner has done on justice and ethics for instance proceeds directly from his economics. He cannot explain the notion of finder-keeper (which justifies initial property rights) without a good understanding of the entrepreneurial process of competition (see his Discovery, Capitalism and Distributive Justice). The same is true with his work on ethics for instance in which he criticizes Frank Knight. As Kirzner puts it: “Knight’s ethical objections to the market economy are in fact in large part… based on a flawed understanding of how that economy works and what it achieves.” So for Kirzner (and many other Austrians such as Rothbard), unless the economic concepts used are correct, the philosophical conclusions will be wrong.

This is why Austrian economics, while a purely positive science, has something to say about libertarian normative theory (and other views). In this respect, I would argue that Austrian economics does not, strictly speaking, support the Rawlsian critierion of maximin. Market process theory argues that the market process is never Pareto optimal. In other words, as entrepreneurs discover new opportunities, the plans of some individuals in society may be frustrated. Some people may become poorer as a result. Overall, capital is accumulated in society through the entrepreneurial process, but at a micro level, there can be losers. This means that a strict application of the Rawlsian principle is not supported by Austrian views.

If Rothbard and Kirzner are right (i.e. we need good economics to do good political philosophy), then the question is really one of the nature of the economic concepts and the possibility of truth in economics (and elsewhere). At this stage, it should be a debate among philosophers rather than economists who pretend to know philosophy (with the risk that a bit of knowledge can be damaging). But J. Friedman has clearly stated his position in his comments: he holds a nominalist view (i.e. definitions are arbitrary, are social constructs, and have no reference to reality). This is the position that many post-modern philosophers take. In this view, the difference between coercion and liberty is purely one of convention.

Austrian economists have traditionally been realist in epistemology following the Aristotelian-Thomist approach. In this view, concepts are neither arbitrary nor socially constructed. They stand for the reality they represent. Science is about establishing and clarifying concepts. This is why Kirzner is an essentialist for instance. I am no philosopher and thus will not pretend to know much on the subject. However, one must be aware of the philosophical issues. Mises, Rothbard, Kirzner, and other Austrians hold the view that the coherence of reasoning and the quality of concepts are the cornerstone of thinking. I take these points as epistemologically valid. They help us make good economics and, by extension, develop good political philosophy.

One cannot do economics without epistemology, and one cannot do political philosophy without economics. If one denounces libertarians as philosophically ignorant, then one cannot ignore the fact that many political philosophers are economically illiterate (especially in Europe).

Comments

[matthew mueller]

This insightful post by Sautet makes an accurate claim: sound political philosophy requires an understanding of economic principles. However, instead of undermining Friedman's points, I think Sautet has simply extended them by arguing that political philosophy and economics exhibit tremendous complementarity such that knowledge of one requires an understanding of the other.

The big problem in Sautet's post is that he identifies Austrian economics with "solid economic principles" and then goes on to write that *IF* Kirzner and Rothbard are right, then

"the question ... of the nature of the economic concepts and the possibility of truth in economics ... should be a debate among philosophers rather than economists who pretend to know philosophy."

But why should we begin by taking for granted the contributions of Kirzner and Rothbard, persuasive as they are? Now I consider myself an Austrian, but I am also aware of the narrowness of the Austrian tradition as well as the possible linkages that can be made between it and other heterodox schools. There is a lot wrong with Austrian economics, and I am afraid that these weaknesses have been resisted because of previous commitments to the libertarian ideology (and this was the point to J. Friedman's several posts).

For example, epistemology does not begin and end with Misesian praxeology. After all, there is a reason why Mises avoided serious conversation with Karl Popper at the Mount Pelerin meetings. A purely deductive approach is problematic if only because the use of language is itself a convention that is arbitrary (a social construct) and which has no *direct* reference to reality. Man interacts with nature through a variety of media all of which are artifacts of man (even if they are unconscious). And these views are not post-modernist. Recognizing the arbitrariness of rules is not the same as throwing out rules altogether. J. Friedman is not a post-modernist.

Dr. Sautet makes a good point. Just because economists are (for the most part) ignorant of political philosophy does not mean that philosophers are innocent of the same charge. Ignorance shoots in both directions. But I do have problems with the way in which Sautet presents Austrian economics in an uncritical way. Just because Rothbard followed Mises does not mean that Rothbard was right!

[Rafe]

It is most unfortunate that Mises did not learn more epistemology from Popper and that Popper did not learn more economics from Mises. We may never know the full story of their interaction or lack of interaction at Mont Pelerin because all the witnesses are gone (as far as I know). However there is a powerful synergy between the best of their ideas, while others can be put aside, notably a priorism (as a justification of praxeology) and the less hepfful formulations of the falsifiability criterion.

Their differences have been magnified and the underlying agreements have been left out of sight. Popper regarded himself as a classical liberal (at least by the 1950s) and the more he learned about economics the closer he came to minimum state liberalism. That is pretty clear from his paper to the MPS in Italy circa 1954 and other evidence. Strictly is doesn't matter what he thought, it is the implications of his most rubust ideas that matter and they point clearly to minimum state liberalism.

I would add to Fred's proposition that political philosophers need to know economics, the thought that they also need to know the philosophy of critical rationalism that is associated with Popper, Bill Bartley and David Miller. A book that demonstrates both these propositions is "Escape from Leviathan" by Jan Lester, summarised here
http://www.mises.org/story/648

[Bogdan Enache]

What if economics and political theory are two sides of the same coin? - As the original name of the new discipline, political (polis gr. society/polity) economy (oikos nomos - gr. management of the household) seemd to imply?

Because maybe otherwise, "..without adequate understanding of the structure of reality, including the "condition umana", moral action with rational co-ordination of the means and ends is hardly possible." (Eric Voegelin, "The New Science of Politics" (1952), in "Modernity Without Restreint", University of Missoury Press, 2000, p.226.

And since we're all Aristotelians now, what if positive is not reducible - as in either the Weberian idealtypus version or in the positivist "crude data" variety - to the illumination of cause and effect in the phenomena, but - for such a chain of causality to be outside the suspicion of an arbitrary consistent formality, a mere correlation or an association resulted from ignorance - it must also encompass the very ratio of phenomena, and by this token science has to transcend the narrow Humean dichotomy ?

(By the way, in might be relevant to point out that Menger, Wieser, Bohm-Bawerk, Mises, Hayek and all the "old sages" did not studied in economics departments, but in something whose contemporary equivalent has probably disappear in today's academic world, in that something one studied - essentially - history, law, political philosophy and economics.)

P.S. For the sake of clarity, Jeffrey Friedman stated in one of his comments recently that he defends a "medieval nominalism" against positivist epistemology, which is pretty ambiguous, but in extremis if he's for a version of moderate nominalism (which is not to be confused with Occam's radical nominalism, who intellectually gave birth to Hume..others...until let's say Quinne), so, if he's for moderate nominalism, then that might be Aristotle's position, science he was a moderate nominalism as opposed to the realism of the Eidos of Platon. But we'll have to stop here, otherwise we'll have to go on quarreling about universals like boring people have done for more than 2500 years without a very modest probability of solving the debate :)

P.P.S. My (unscientific) impression regarding French post-modern philosophy is that nobody reads the structuralists/post structuralists/deconstructivists etc in France and in Europe anymore, except for uninteresting academics and "molested" students; in the US however, my indirect knowledge is that there is an actual fascination/obsession with the "French structuralist-deconstructivist corpus" in social studies and cultural studies departments. That's also why Derrida, Foucault and others taught for an important part of their career in the US. There they were and still are stars, while after '68 in France 've become either banal or "annoying".

With so much talk about philosophy, I really hope that the next hot topic on the blog will not be is Austrian economics economics :)

[Grant]

I remember Robin Hanson blogging about his opinion on the role of philosophy in science. If I remember correctly (I can't find the link now), he thought it served to "fill in the gaps" left by more formal sciences. I can't help but agree, and think that when a science and philosophy fight for the same space, science "wins".

Matthew,
"A purely deductive approach is problematic if only because the use of language is itself a convention that is arbitrary (a social construct) and which has no *direct* reference to reality."

How are mathematics or other formal languages different? I admit I don't know what mathematics has been so specularly successful at what it does, but if I had to guess, I'd say that all languages have limits, formal or otherwise.

The symbols in mathematics don't necessarily correspond to reality. An equation says something to the effect of, "If LHS exists, then the RHS must also exist, and vise-versa". Mises' praxeology makes similar claims. Hidden in both languages are non-explicit assumptions that, if examined closely, may have no bearing on reality.

That said, I think it would be interesting if someone expressed praxeology formally.

[Roger Koppl]

The divisions between the disciplines are falling apart these days, which make these exciting times, IMHO. The philosopher Alvin Goldman wrote a book on epistemology in 1992 entitled Liaisons: Philosophy Meets the Cognitive and Social Sciences. Appiah recently published "experiments in ethics." Public choice broke barriers between economics and political science. Today, behavioral economics and evolutionary psychology are (from opposite sides) breaking down the barriers between psychology and economics. Gintis, Henrich, Boyd, etc.

The old stovepiping of disciplines isn't holding up. I like that. Economists should know something about philosophy and philosophers should know something about economics. So I think Frederic is right to say that you need economics to do political philosophy, but that doesn't negate Jeff's point that economists had better know their philosophy, too.

[Ludwig van den Hauwe]

Great post! My own decision to become an economist originated in my studies in philosophy during which I was exposed to Marxist political philosophy and became convinced of the need to spread sound economics.

[Scott Erb]

First of all, as a Political Scientist, I have to agree 100% that political philosophy requires knowledge of economics. I also plan to read through your blog, which I just found today, because I find it intellectually stimulating and perhaps the most interesting blog I've ever run across. One interesting point in the post was the linking of the Austrian school with Aristotilean Thomist thinking, while post-modernism is seen as an extension of nominalism (I would say it's also a modern variant of the traditional school of skepticism). I am a pragmatist, which means I lean towards nominalism and social constructionism, but reject the nihilist skepticism of post-modernism. I am also a philosophical idealist (ideas are the stuff of reality, rather than matter) rather than a realist. As I read through these posts -- which I will be doing now that I discovered this blog -- I'm going to reflect on how much my understanding of economics is affected by my philosophical predisposition, and if pragmatically what this means for my political philosophy. I also agree that the disciplines (which I'd note are social constructs) are breaking down, and the French post-modernists are not the kind of influence they were ten to twenty years ago. I'd say Rorty's approach is gaining, and while philosophically I find him compelling, I have always thought that he needed to show a greater understanding of economics. Anyway, great blog!

[Jeffrey Friedman]

I'm not sure what the point of this is. Am I being scolded for not *blaming* leftists because they haven't read the economics that we have read, or for not agreeing with it? I'm trying to *understand* why they don't read it or agree with it. Blame is not a very useful tool of understanding.

If you want sophisticated leftists such as the ones you name to read economics, your task is to make that economics as plausible as possible. A good start would be to sever it from discredited philosophical doctrines and usages. I wasn't even recommending that economists read philosophy. I was just recommending that they stop pronouncing about philosophy (and for that matter political science).

I can't explain here "what's wrong with libertarianism"--I've already done that in print. (Google it.) So I will restrict myself to purely strategic considerations.

You can be a 100-percent pure Rothbardian, as I used to be, and still recognize that normative philosophy and social science are separate things, and that by linking your brand of social science with your brand of normative philosophy, you are discrediting the former. If you insist on coupling libertarianism with Austrian economics, you have nobody to "blame" but yourself when the left doesn't take you or your economics seriously.

If you were trying to sell someone a car, would you insist that they buy all the options that you like?

I've found that the very brightest Ivy League students become suddenly receptive to Austrian economics if I posit the complexity of the world, and present market mechanisms as making our cognitive task easier. When I point out that there are no equivalent political mechanisms, they are sold--on libertarianism!--but without any invocations of "rights," "liberty," and all the rest. If you start insisting on those concepts, not to mention "universal laws," Homo economicus, etc., all you do is make Austrian economics look like a cog in an ideological contraption. (I can't help but wonder sometimes whether that's all that it is.)

Jeff

[Peter Boettke]

Jeff,

The act of communication of scientific truth is a difficult one; the act of being persuasive against a prevailing set of beliefs is perhaps even more difficult. But the truth or falsehood of economic science does not depend on either communication or persuasion ... it is what it is.

Now does that mean we shouldn't worry about our communication skills, or our persuasive abilities --- of course not, we most definitely have to concern ourselves with these matters. But they are separate from the truth content of the claims.

Economic forces exist whether we (or others) acknowledge them or not --- they are true for pilgrams and for pigmes. The logic of choice, the constraint of scarcity, the interaction between constraints and choice.

All Fred was suggesting is that political philosophy that is done without recognizing economic science is going to be utopian in the bad sense of that term. Economics that is just "technical" and remains ignorant of historical context, philosophical disputes, political/legal nexus, and social and cultural issues is sterile and boring. However, it nevertheless does provide us with important technical information. In short, economics devoid of what we find fascinating nevertheless is a necessary component, though certainly not sufficient, for any serious discussion of workable systems of political philosophy. The opposite doesn't follow --- i.e., that econmics requires political philosophy to be scientific.

This isn't "bad" philosophizing, though it is unpopular, and it is not a cog in an ideological contraption. We live in a world of scracity (there is only 24 hours in a day), we are confronted with the act of choice, in making choices we pursue one path (expected benefits) and set aside another (opportunit costs) --- and we weigh these costs and benefits on the margin. This is true in all walks of life --- as Goethe said "we are all doing it, but none of know we are doing it" --- which was taken as the epigraph of Wicksteed's Common Sense of Political Economy.

Frank Knight once remarked that the problem with economics is that it lacked the immediate impact of the wrecking ball. What he meants was that in the physical world a wrecking ball hitting a building will have an immediate impact and the manifestation of the ball hitting the building will be seen by all. But in the economic realm there is to paraphrase Milton Friedman a long and variable lag between the economic wrecking ball (bad economic policies) and the building coming down (poor economic outcomes). However, the economists insists that the result are the results. Minimum wages do distort labor markets; rent controls do create perverse incentives in the housing market. Economic forces are at work whether we choose to acknowledge them or not.

The discipline of economics in this regard is categorically different from the disciplines you are talking about. Whether a bill becomees a law and whether a law is enforced or not depends on consensus building (minimum winning coalitions, etc.). Whether an "economic law" is believed to be in operation or not is irrelevant to its operation.

Now the world is indeed complex and there are off-setting factors to the laws of economics --- but in this regard what we are talking about is more analogous to the law of gravity and its operation outside of the world of a frictionaless environment. A feather dropped from a building may first float up, but it will fall down. Similarly, demand curves slope downward whether the commodity in question is potatoes, haircuts, honor, or the afterlife.

Constraints and choices. This is not an issue of libertarianism, nor even of outdated and discredited philosophy, it is a matter of scientific truth. As I said before economics has the same ontological status as physics, but different epistemological procedures to get there. The different epistemological procedures throw people off, and thus the reason Mises had to write Epistemological Problems, Theory and History, and Ultimate Foundations, and why Hayek has to write The Counter Revolution, the last chapter of The Sensory Order, and his essays such as The Primacy of the Abstract, and Explanation of the Principle.

I hope my communication skills have enabled this point to get across clearly, whether it is persuasive or not is another challenge ---- but neither of which impact its truth content, which as I have expressed exists independently of our recognition of it. In fact, one of the core lessons of spontaneous order theorizing is that we do not have to know in order to have; and the other side of that is that in the world of politics, intentions do not equal results. If consensus determined whether economic forces were at work, then intentions would equal results. But the intentions of public policy do not necessarily equate with the consequences of public policy. We do confront a refractory reality. No amount of insistence that economics is NOT a science enables us to escape this, and that refractotory reality is governed by the laws of economics which flows from reality of constraints and the necessity of choices.

Pete

[David]

While Jeff Friedmann offers some good advice, his idea that economists and others should be intradisciplinary leaves a bad aftertaste. Surely, we don't have enough people who know nothing about everything compared with the enormous nyumber of economists who know everything about nothing!
Seriously, though, most creative breakthroughs occur when one combines theories and/or hypotheses that were not previously connected (by anyone) to one another.
The problem with Rothbard et al. is that they don't seem to foolow a philosophical argument wherever it leads; the destination is always a foregone conslusion. A couple of years back I forced myself to read some Rothbard (2 books and about 10 paper, including MES), and all his results coincided with my expectations (admittedly, this was after reading Human Action). I like to say that reading Rothbard is the best possible illustration of diminishing marginal utility (read Mises first, and you get a steeper gradient). At the risk of repeating myself, open-minded sequential product differentiation makes it worthwhile to keep reading Hayek, the most inter-disciplinary of the Austrians.

[Rafe]

Taking up Frank Knight's point about the delayed impact of policies, this can have a very unfortunate effect in politics, given the electoral cycle. A government that puts in place bad but unpopular policies will probably lose the next election and the other party will get the credit if the policies work. That happened to the conservatives in New Zealand during the Depression. That is probably why the reforming Roger Douglas in New Zealand during the 1980s moved fast on a wide front to get benefits in time for the next election.

On David's point about interdisciplinary work, political economy is inherently interdisciplinary which does not mean that you have to be an original scholar in several fields, you just need to keep up with the main developments by reading the right literature (this blog and Critical Review) and keep in touch with the right people in the fields that are relevant to your current projects.

[Frederic Sautet]

In response to Matthew Mueller:

If I didn’t think that Austrian economics represented “solid economic principles,” I would not be doing work in this field. The rise of economics in the 18th and 19th c. was associated with the view that there are laws, regularities, and other inescapable phenomena that human beings should take into account when they deal with social affairs. The regularities are of the same nature as the inescapable fall when one jumps of the top of a cliff (less visible though and longer lags). Economists understood this very well during that period which is why they were despised by many of their contemporaries (e.g. Thomas Carlyle). The hypothetico-deductive method is the core of Austrian methodology (but also of economics in general until the 1930s) because one cannot ever “prove” those regularities by “testing” them in the real world. The main reason is that they are phenomena of the mind that cannot be observed (until perhaps CT allows us to do that, some are working on it). The proposition that voluntary exchange creates value for all parties involved is untestable, yet it is true, in the same way that 2+2=4 is true. One can do all the testing to refute 2+2=4... without success. Does this mean that empirics have no place in economics (as some who caricature Austrian economics like to say)? No, empirical work is extremely important to understand what the local circumstances are and to bring the facts to bear. However, without the logic of action, historical events mean nothing because we cannot interpret them.

In response to Jeffrey Friedman:

I may have misunderstood your position, but it seemed to me that you were one-sided in your comments about the lack of philosophical knowledge on the part of “atrocious” philosophers such as Rothbard but you didn’t seem to mind that there were also “atrocious” economists among political philosophers. I was not blaming you, I just wanted to make the point that there is plenty of ignorance on both sides AND that it is more dangerous in my view to write about political philosophy without knowing economics than to pretend to do political philosophy without being a philosopher (but with a good knowledge of economics). This said, as many have remarked in the comments, it shows the limits of the compartmentalization of knowledge and why multidisciplinary approaches can be fruitful.

I am not sure that Austrians or libertarians “link their brand of social science with their brand of normative philosophy.” This may be the interpretation of the left, but it is not necessarily the way Austrians or libertarians see their own position. Here at GMU, there are plenty of good economists who are Austrian in name or in practice and do not link their economics with their normative philosophy. Now, this is may be the way they are perceived, and that’s a valid thing to know. Your experience of teaching students at top US universities is very enlightening. It seems like a good strategy to make students think about society as a complex system first. At some point however, you still have to defend the idea of social regularities, otherwise you end up with no economics and just historicism.

[Jeffrey Friedman]

I truly appreciate the new, kind words from Frederic. I have tried, perhaps with too little effort, to incorporate them into the following attempt to summarize the course of the last week of discussions.

NB: I am no writer, and my wife, who is, and whom some of you know, is not home—so blame me, not her!
----------------------------------------------
PROFESSIONAL POLITICAL PHILOSOPHER WHO ADMIRES AUSTRIAN ECONOMICS: I think that because of the economic complexity to which Mises and Hayek pointed when they targeted “the knowledge problem,” “laissez faire” might be a good idea, normatively speaking—from the perspective of raising up the poor and improving the lives of the rest of us—because capitalism makes (relatively) minimal demands on ignorant human minds.

So Austrian economics may have very important Rawlsian implications—implications of the very sort that presumably made you, my interlocutor, decide to become a professional Austrian economist in the first place.

By the same token, I think Austrian economics has very important implications in my field, political philosophy, where my students and I are making a case against social democratic politics based on the public’s ignorance of economics, and therefore its ignorance of the costs of nice-sounding public policies aimed at achieving Rawlsian ends through non-capitalist means.

However, I wish I could point out to my peers in political science (and other disciplines) the public’s ignorance of Austrian economics, because, despite doubts about its validity that have been raised by perceptive critics like Matt Mueller, I still cherish the hope that Austrians can provide compelling, ignorance-centric analyses about some of the great historical myths that persuade intellectuals, and thus the public, that “laissez-faire” would be a disaster.

For example: wouldn’t it be great if there were careful, scholarly, non-ideological Austrian monographs on the “immiseration” of the workers during the Industrial Revolution in Britain; the problem of “monopoly” during the Gilded Age in the United States (the “Robber Barons”); the Great Depression, viewed through free-banking lenses; not to mention the current economic crisis? (I recall that it was Friedman and Schwartz’s careful, non-ideological monograph on the Great Depression that got Chicago-school economics taken seriously.) All that “we’ve got” on such topics right now is Capitalism and the Historians, The Incredible Bread Machine, America’s Great Depression, The Forgotten Man, and journalism. Surely a vibrant and insightful branch of economics can do better.

PROFESSIONAL “AUSTRIAN” ECONOMIST: Our lives as economists are short, and economics is a science consisting of universal laws, applicable everywhere and always. So we think it is a much better marginal investment of our limited time to extend these laws to the study of pirates and politics. And in writing about politics, we think the best approach is aprioristic, because that’s what science is all about: universal laws, which are, being universal, applicable to fields we happen not to have studied. So we prefer to ignore empirical findings gathered by political scientists, who have studied these things, in favor of bland assertions about "the findings of public-choice research." Political actors *must be* weighing costs and benefits, regardless of empirical studies of public ignorance produced by political scientists (which we have not read), because that is what the universal laws tell us must be happening everywhere and always. Moreover, they must be selfish, not sociotropic. Therefore, we are entitled to conclude that bad public policy must usually (or always?) be the deliberate result of self-interested manipulations.

As for your suggested economics research agenda, dear colleague, thanks for the unsolicited advice, but we already know that laws against child labor and unsafe factories; compulsory unionization; antitrust laws; central banking, and so on are coercive and therefore constitute the ultimate evil. That is common sense, after all, as revealed by the nature of man and the distinction between my fist and your nose. So why should we bother investigating the condition of factory workers; or the existence, or effects, of monopolies; or the causes of specific business cycles, or the effects of interventions therein? The consequences of laissez faire and of intervention don’t really matter: laissez faire is intrinsically just, because it embodies liberty; and intervention is intrinsically wrong, because it is coercive.

PROFESSIONAL POLITICAL PHILOSOPHER WHO ADMIRES AUSTRIAN ECONOMICS: Well, you’ve made several extremely dubious methodological, political, and philosophical claims there.

Methodologically, you are confusing (a) universal propensities given the presence of a certain set of empirical conditions (such as self-interested instrumental rationality), and given that these propensities are not counteracted by other factors, with (b) universal laws such as those of physics—although even in physics, the laws apply only where the initial conditions hold; the difference is that thus far, they seem to hold everywhere. (But maybe they don’t hold out there in the "gamma quadrant.") All a priori “laws” about empirical realities are in fact hypotheticals, dependent for their soundness (albeit not for their logical validity) on the existence, in a given time and place, of certain initial conditions. And “man acts” doesn’t cover those conditions, because there are several different types of human action, not all of them instrumentally rational, contrary to Mises; and several different motives for instrumentally rational action, contrary to Buchanan and Tullock.

This is why Weber—who argued that the initial conditions of “economic” action are, in fact, nearly unique to the modern West—considered all social science to be historical. We cannot know in advance (given our ignorance of a complex world) when, or whether, the given initial conditions of a certain theory (an ideal type) will be present and not counteracted; we can only investigate this ex post. (Other relevant methodologists here are John Stuart Mill, Bruce Caldwell’s first book, and Daniel Hausman.)

For example, the ex post evidence gathered by political scientists suggests that in advanced social democracies like ours, most political actors are sociotropic, not selfish, meaning that the initial conditions of “universal economic laws,” interpreted narrowly, are not present in the polity. And while most political actors are, in most advanced social democracies, instrumentally rational in trying to achieve the common good (making the broader interpretation of “universal economic laws” potentially relevant), marginal-utility analysis has not proved to be important in predicting or understanding their behavior. Although you may wish to describe a sociotropic voter, activist, journalist, politician, bureaucrat, or judge as engaging in marginal-utility calculations, putting your hard-won investment in calculus to work, this will probably not be very illuminating if the actor in question is ignorant of economics (including Austrian economics), because in that case, he probably isn’t aware of the potential costs of the policies he favors, in the form of unintended consequences-—rendering his demand for those policies effectively infinite.

Ideally, politics would be a matter of *disagreement* about how to *interpret* reality, in which claims such as Austrians might like to make about unintended consequences would be taken seriously. And such disagreement is what's going on under the surface, at the elite level, to some extent. But at the mass level and even the ideological-elite level, most people don't think unintended consequences are very important--because they are ignorant of Austrian economics, and all other kinds of economics. So they come to see themselves and their opponents as pursuing different "values," e.g., Democrats as favoring the interests of the worst off, and Republicans as favoring the "right" of the rich to keep what they've "earned." (Of course, like libertarians, a lot of Republicans are confused about this: they wouldn't really defend such "rights" if they thought that the result would be mass starvation.) Since the defense of such "rights" isn't a very viable populist line, Republicans try to change the subject to foreign policy and "character" issues, where their "values" tend to be more in line with public intuitions.

Understanding the politics of advanced social democracies is therefore complicated, and is likely to require studying political psychology and culture, which determine what people believe about “social problems” and their solutions, and which "values" they find compelling--and how they define those values (just look at all the emphasis libertarians put on the "correct definition" of freedom!). In effect, such cultural and psychological studies are about the determinants of political actors’ “preferences,” which are properly beyond the scope of economics.

Finally, even accepting for the sake of argument libertarian beliefs about the (normative) nature of man, the fact is that your main intellectual opponents, on the left, who dominate every discipline except economics, and who *agree* with libertarians about the supreme value of liberty, long ago pointed out that the equal “liberty” of the rich and the poor to sleep under the bridges of Paris is not a “liberty” worth the name. This has been the leftist charge for nearly two centuries, and has been explicitly applied to libertarianism by the likes of G. A. Cohen.

The whole history of the intellectual left could be written as a series of expansions of the concept of coercion (a k a “power”) to cover types of coercion that, leftists have not-spuriously pointed out, violate "liberty" in the very same sense that motivates libertarian philosophy, i.e., these types of coercion force people to do things they don't want to do. That is, the left has argued that there are many more forms of *normatively relevant* “force” than the "physical coercion" that so preoccupies libertarian normative theorists, in line with their half-baked ordinary-language philosophy. For example, there are human conditions (such as poverty) that “force” people to do things they otherwise would not do.

I gave the example of the alteration in behavior caused by a job offer to a starving potential worker.*IF* liberty is important, then it surely is not because we like the sound of the word l-i-b-e-r-t-y. It is because we respect something like the free will of the "free" agent, and therefore want to oppose restrictions on that will. The source of such restrictions cannot be settled by recourse to the "L" chapter of Webster's, or by other versions of definitional essentialism.

If you want to find out if you have grounds to disagree with these leftist arguments, then you are well advised to read them.

However, given that the left takes this position, you are making a tactical mistake if you clothe your economics in libertarian philosophical garb, even if you continue to believe in libertarian philosophy after having read its critics.

Similarly, I think you’re making a strategic mistake if you let libertarian philosophy "handle" the big things, such as the research topics I listed above, while you concentrate on other things. Even from the perspective of libertarian normative conclusions, the world would be a far better (more libertarian) place if we had good Austrian monographs on the Industrial Revolution, the Gilded Age, the Great Depression, and more recent events. These might be widely read if they rigorously eschewed all libertarian claims about the inherent injustice of “government intervention.” And, if read, they would be daggers to the heart of the modern “state” that libertarians find so oppressive.

I am very glad to hear that there are people at GMU who do not throw around words like “liberty” and “coercion” in their empirical work, and it would be even better to hear that they do not needlessly insist on the universal applicability of their findings.

PROFESSIONAL “AUSTRIAN” ECONOMIST: But in denying that there are universally applicable laws of human behavior, you are denying that economics is a science; and in denying that my commonsensical understanding of "liberty" and "coercion" is definitive of those terms, you are denying the existence of reality. I would like to see you or any other postmodernist try walking off a bridge to see if reality is socially constructed and science a mere convention.

Besides, the left should read Austrian economics just as much as Austrians should read philosophy. Otherwise they are just being utopians.

PROFESSIONAL POLITICAL PHILOSOPHER WHO ADMIRES AUSTRIAN ECONOMICS: I have repeatedly given specific methodological arguments and cited specific leftist philosophers and some of their normative arguments, and you have not responded. That is not good philosophizing, nor is your equation of science with laws, nor your equation of nominalism about words with “postmodernism” about reality.

But please remember that I did not ask you to be a good philosopher, or even to respond to my philosophical arguments.

Being a good philosopher is not something you can pick up on the side, or even through intensive study, any more than being a good economist or political scientist or physicist. You have to have certain talents, dispositions, and background. This is why we have a division of labor, however imperfectly it works in “the human sciences.” I would not presume to tell you about IS-LM curves, and I’m sure that you find that many of your own colleagues don’t have what you consider to be a good mind for, or “feel” for, economics. I certainly don’t.

Besides, even if political philosophy, or the philosophy of the social sciences, or political science were easier than economics, you have made your career choice.

All I was trying to do is alert you to ways in which you professional Austrian economists, collectively, often seem to be chasing will-‘o-the-wisps rather than (what I perhaps arrogantly consider to be) important economic topics that could benefit, in principle (I hope), from serious Austrian treatment.

In trying to understand why you are doing that, I hypothesized that bad philosophizing—methodological and normative—might be responsible. I suggested that you pursue that hypothesis, by devoting considerable attention to political and social-science philosophy, only if, for some reason, you insist on using libertarian terminology in your research, or making assertions (of universal regularities, e.g., public-choice assertions) that are unsubstantiated by the research itself. But devoting considerable attention to political and social-science philosophy is *not* what I recommend, because you are an economist, not a philosopher; and because I *don't* think you should insist on using libertarian terminology or public-choice assertions. Even if you changed fields, and the result of your philosophical studies of normative philosophy or social-science methodology were to confirm your libertarian or universalist views, what have these views got to do with your economic research agenda, or its presentation?

So, far from recommending that economists read more philosophy, I suggested that they make fewer philosophical assumptions, at least in print. Why not bracket the universalist social-science claims and the libertarian asides, and just produce solid historical research (of the type that Matt doubts you can produce)? Such research, *if the universalism and the libertarianism were expunged,* could actually help bring about outcomes that are good from a libertarian normative perspective—by getting the left to take your economic claims seriously.

PROFESSIONAL “AUSTRIAN” ECONOMIST: But the left won’t take our economic claims seriously! They don't read our work!

PROFESSIONAL POLITICAL PHILOSOPHER WHO ADMIRES AUSTRIAN ECONOMICS: Hmm, I thought I just said that!

Why do you think they don't read your work?

PROFESSIONAL “AUSTRIAN” ECONOMIST: Maybe the left does read it, or has heard of it, but prefers to remain willfully ignorant of our brilliant insights. Or perhaps they dismiss these insights out of hand because the left is “constructivist rationalist.” Or “hubristic.” Or “envious.” Or dependent on government grants. Or . . . or . . . or . . .

PROFESSIONAL POLITICAL PHILOSOPHER WHO ADMIRES AUSTRIAN ECONOMICS, WAXING A BIT DOGMATIC, BUT BASED ON CONSIDERABLE RESEARCH OVER THE YEARS (meaning that he has spent the last three decades reading, and talking to people on, “the left”):

No, no, and no! The left is utopian for basically one reason: your anti-utopian claims have not been presented persuasively—in the rare cases in which they have been presented at all.

And your recent move toward mainstream neoclassical economics won’t help, because that approach, which unlike Austrian economics is widely known about on the left, has been dismssed there because of the unrealistic nature of mainstream neoclassical assumptions.

So, yes indeed, there is plenty of ignorance on the left—just like in social democracies generally—about economics. My question is: What are you, my friend and colleague, going to do about it?

You could lecture the left about Thomism; or about the laws that can be derived from “the action axiom”; or about the "symmetry thesis," and thus the universal self-interestedness that must, as a matter of necessity, doom all political action; or about the “true definition of liberty."

Or you could fault them for having heard about the imperialistic pretensions of economists, or the unrealistic assumptions of economists’ models, and for therefore feeling entitled to ignore economics (given that their time, too, is short).

Or you could show them, with rigorous investigations of specific and major instances (not blanket assertions, like what I am going to put after these parentheses), that capitalism has improved the lot of the poor more than every social program and communist experiment ever attempted, and that specific, major interventions have produced terrible counterproductive consequences.

---------------------------------------------

Thus ends my life in literature, and my contribution to this discussion (I have work to do!). Please, though, any young people out there interested in these ideas (“iliberty”? “fundamentalist”?), send me an email.

Jeff
critrev@gmail.com

[Rafe]

Jeff you don't need to be self-deprecatory about your writing!

And don't rubbish work on pirates, it sheds light on more recent phenomena like the simultaneously robust and funloving way the West Indians approach the game of cricket. When an Australian fast bowler named Lindwall was regularly sticking the ball in the ears of West Indian batsmen the crowd invented this refrain:

Bowl Lindwall bowl
Don't be afraid
Dem dat can't bat
Break dere shoulderblade!

The cricket ball is a very hard object and modern quiche eating batsmen wear helmets like the knights of old.

[Steve Horwitz]

A few comments Jeff:

1. I agree with about 80% or more of what you wrote above. Having spent the last 20 years surrounded by leftist colleagues with whom I both talk and socialize, I think your analysis of their failure to grapple with good economic arguments is largely right - we haven't been persuasive enough, especially with respect to telling better/different historical stories.

Part of the problem is that to the extent they know any economics, they reject it and do so for many of the same reasons as Austrians do. Then the challenge is even trickier: get them to think about economics differently (and try to convince them we're not kooks) AND then indicate why it leads to non-left policy conclusions. It's a lot to ask, esp. if one is more interested in talking to other economists.

2. To be honest, the caricature of the Austrian economist who is constantly prattling on about liberty and coercion is just that - a caricature. At least it is of the Austrians with academic appointments who have gained those in the last 20 years. There are exceptions of course, but I think Pete's and my generation forward are a different beast.

2a. Yes, you can find plenty of Rothbardians who do what you're talking about. And it's a problem. But they, for the most part, not deeply involved in the discipline or publishing in more visible places. That said, I still think you've created a mostly straw man there.

3. As for empirical/historical work of the sort you mention... you threw out a list that included the Great Depression but seem ignorant (uh, yeah) of Gene Smiley's recent "Rethinking the Great Depression" which is very much just what you're talking about. And if I can pout for a minute - my first book contained a revisionist history of the National Banking System and Fed. I'd also like to think my current work on the family, esp. the book project, are doing the same sort of thing for that institution.

I've also just finished a policy study for Mercatus that takes a new look at the most vivid social scientific event of the last five years: Katrina. Using empirical/historical evidence, I argue for the supremacy of private responses and the failures of FEMA precisely on issues of local knowledge (and incentives too, btw). Peter Leeson and Russ Sobel have done similar work. (And the reaction from the left has been very sympathetic to my arguments.) Yes, we do use public choice type approaches as well, but hardly the overly rationalistic type. Rather, let's see whether government failure can be explained by *both* ignorance and self-interest.

To be honest, I wonder whether you know the work of the younger Austrians much at all. Pete B's former students have done all kinds of good empirical/historical work from an ignorance perspective (Chris's book for one) or using spontaneous order/unintended consequences approaches. To suggest Austrians aren't doing this work just rings wrong to me. Austrians 15 or 20 years ago, maybe. But today? I think you're just wrong.

If you're wondering why the younger Austrians don't think of CR as an outlet, maybe part of the answer is that they are busy publishing the stuff you'd like to see but in economics journals and you've just missed it.

You know I agree in large part with your vision Jeff. I have for a long time. I'm on board. But if you want other folks on board too, I think you're going to have to be more persuasive to folks around here that you really do know what's going on in Austrian economics these days. Otherwise, you're going to come off as ignorant or worse, and that's not going to get them to sign on.

The work you want to see is already being done to a real degree. And unlike schlubs like Pete and me, these guys have the skill to get it published in really good places. You might want to look more closely for it.

[anonymous]

Why not just do solid historical work?

Historical work is very, very, hard and takes immense amounts of time, and with the chance that it will just be ignored it is safer to just write easy op-ed-like pieces and comment on these from within a safe community.

An Adam Smith or a Hayek were so good precisely because they did not focus on narrowly defined "economics" but were knowledgeable about an extremely broad range of fields shaping human conduct (law, psychology, history) which they combined to shape convincing arguments. However, this is precisely the reason why we are not able to make a fast impact on the left-wing consensus: we need polymaths that are skeptical of state action. Only they are able to make a truly cogent case that goes beyond mathematical tricks. Of course, polymaths are in very short supply. And you don't know whether you will be a successful polymath until you have tried to become one. And that's quite an investment, because someone who thinks he might be smart enough to become one has a lot of other, more lucrative options with guaranteed pay-off.

For those who think they are not quite ready to make the bet to try out for polymath status, there is another mainstream academic option that is a lot easier: just come up with some fancy abstract models that have no relation to reality but give you the status of "expert", power, respect, and, of course, the moral high ground because you are defending the poor and downtrodden from the evil capitalists. After that you can then spend your time writing op-eds like the libertarians do on blogs, but yours are printed in the mainstream media. You can also work for various government agencies, the world bank, and perhaps be awarded the most nobel prize of all: the role of head-monkey in charge of the printing presses.

Oh those opportunity costs..

[David]

Anonymous,

You and some others stereotype mainstream economists as being actively "left wing". That is not at all the experience I've had with mainstream neoclassical colleagues, most of whom consider popularizing economists of the Krugman type with some contempt. Mainstream economists (at least the ones I know) are primarily interested in "rigor" and the attainment of hard-science status and are extremely dismissive of anything that reeks of sociology. They are more interested in "elegant" mathematical formulas than words or policies (except when it comes to the need for more research money). Off duty, so to speak, they tend to be pro-market center-right [i.e. they like free trade and dislike regulated wages and labor unions] when it comes to economic policies and center-left on cultural issues (since they tend not to be religious fundamentalists). The end result is that their main weakness is also their main strength. Physics/math envy often produces irrelevant models (as Austrians point out), but it also makes it difficult to dismiss mainstream economists as ideologically motivated cranks.

[Peter Boettke]

Jeff,

Like Steve, I am on the board of CR, and am on board with the epistemic turn in the social sciences (in particular political science). But we have often talked past each other on the role that economic theory plays in this vision.

Your dialogue reflects a certain failure in our communication effort on this round. And also a failure to appreciate the different goals we are purusing.

To put it bluntly, my primary professional responsibilities are to write for my colleagues in econoimcs and political economy, and to train PhD students so they can pursue their own research and prepare them for their own teaching careers.

Pete

[Brian Pitt]

This is an excellent post. However, I believe that Dr. Sautet, here, is undertaking a selective reading of Kirzner. Kirzner frequently relies upon neo-classical Pareto criteria to inform his "non-market" writings.

Dr. Sautet, call to memory Kirzner (1987: 31) where he chides Hayek for applying the emergent approach outside of the "market." He states, "The demonstration that widely accepted social conventions will emerge without central direction does not necessarily point to any optimality. Averring that Kirzner remained faithful to the spontaneously-emergent approach to social phenomena does not mean that he was.

[David]

"But the intentions of public policy do not necessarily equate with the consequences of public policy"

True, but this runs both ways: a minimum wage implies either no effect on unemployment or more unemployment, other things being equal. But other things are not always equal. If the "symbolic utility" - to borrow a concept and an example from Nozick - of minimum wage legislation is substantial, the effect of its abolition may actually be riots and even death. And then it may still be - on balance - a good idea to keep a minimum wage, even though it is worse than the best-case scenario. It also points to the spatio-temporal specificity of sound policy advice: what is a good policy in Hong Kong is not necessarily a good policy in France.

It seems as if Peter Boettke does not always remember the distinction between ceteris paribus-based theory and messy reality (judging from several of his blog posts). Now, he does have a case for teaching students sound economic theory, but policy advice (in the direction of less distorted price signals) usually offers greater net benefits if it deals with areas that are not (yet) politically controversial, because there is not yet any "symbolic content". (e.g. real markets are often easier to establish in new industries than in old ones). Words like "libertarian", "free market" and "government coercion" in conjunction with policy advocacy may also be counter-productive, since these terms could trigger negative emotional responses among people who would otherwise be responsive to an economic argument using ideology-neutral terms (this seems to be Jeff Friedmann's arguments as well).

[Rafe]

David, you may have noticed that Pete cited Bill Hutt's views on the responsibility of economists in advising on policy. The responsible economist will advise on good policy and also on the best that is possible given the brute realities of the situation. One would hope that the responsible politician will see the impediments to good policy as a problem to be addressed.

So the economist will advise that that minimum wages make it very hard to employ the slow, the unskilled and the inexperienced. If it is sacrosanct then at least it should not be increased.

He could even argue for inflationary policies to reduce the real value of the wage:)

[Peter Boettke]

David,

Do you read people's statements or just assume what they have said? I used explicitly the analogy with the laws of physics and the frictionless vacuum.

So NO I don't forget the difference between theory and messy reality. But I do insist that theory is relevant for making sense of the reality we live in --- in fact necessary (though not sufficient). Nothing is as dangerous as an economists who just does economics, except perhaps a political philosopher who attempts to offer public policy advice in complete ignorance of economics.

Pete

[David]

Pete,

We seem to be in agreement here, and it is obvious that you are aware of the distinction. I was referring to any kind of policy advice (not economic theory!) that is general and does not take specific structures of historically evolved values/institutions into account. Both fortunately and unfortunately (depending on their economic fitness and their compatibility with one's subjective preferences), these are seriously resistant to change.

David

[Jeffrey Friedman]

Steve Horwitz has pointed out to me that Gene Smiley has a recent book, Rethinking the Great Depression--good!--and that Steve covered the Depression in his own Monetary Evolution, Free Banking, and Economic Order--good!

But I am still waiting, and have been waiting for 30 years, for something from Austrians on the other Big Economic Issues in history: the Industrial Revolution, the Robber Barons, and, we might now add, the myth of economic imperialism--in the 19th c., and in the 20th c.

Steve has persuaded me that young Austrians are doing competent historical work. But is it *important* work--work on important dependent variables--or is it work whose only interest lies in its application of economic independent variables (whether incentives or ignorance) to non-economic areas (pirates, foreign policy)--i.e., work of interest to other (tenure-granting) economists, rather than work of importance to the wider world?

If so, I continue to wonder whether the young Austrians do this work because they assume that no hard work on the big economic issues needs to be done, because libertarian philosophy renders those issues moot. If antitrust laws and Factory Acts are "wrong," then Austrians can concentrate on economic imperialism of a different sort--economistic imperialism--i.e., the extension of economic "laws" to new fields.

(Or is it simply that one can't get tenure in economics writing big monographs on traditionally "economic" topics in history--in which case, young Austrians interested in doing such things ought to consider the political economy subfield of political science.)
-------------------------------------------------

In my haste to condemn Hayek and Kirzner's *normative* philosophizing in the other string (on the "two liberalisms"), I neglected to say that Hayek was the greatest *social-science* philosopher of them all, with the possible exception of Mill.

Contrast, against the recent equations of "law" with "science" on this blog, the following passages from "The Facts of the Social Sciences" and "The Theory of Complex Phenomena," drawn from my "Popper, Weber, and Hayek," downloadable from my Wikipedia page:

The complexity of social phenomena means that a posited force may not be present in a given time and place or that even if it is, its effects may be too small to be visible upon gross inspection, because the posited force is counteracted by other forces. Thus, a social-science theory can "never be verified or falsified by reference to facts. All that we can and must verify is the presence of our assumptions in the particular case" (Hayek 1942, 73). Hayek’s remarkable dictum is justified by the fact that our theory may prove to “be irrelevant because the conditions to which it refers never occur; or it may prove inadequate because it does not take account of a sufficient number of conditions” (ibid.). Since (a) the applicability and (b) the magnitude of a given ideal type cannot be known in advance by human beings who are ignorant of most of the particular “data” of the social universe, and who would be overwhelmed if they tried to assimilate all of it, social science has to be historical, not predictive (except in a hypothetical way), if it is to avoid dogmatism.

That is, if we cannot know a priori and therefore ex ante whether a particular causal force will be present and potent in a given case, we must discover this ex post. "It would seem ... that the conception of law in the usual sense has little application to the theory of complex phenomena [such as biology and economics]....Though we possess theories of social structures, I rather doubt whether we know of any 'laws' which social phenomena obey. It would then appear that the search for the discovery of laws is not an appropriate hallmark of scientific procedure but merely a characteristic of the theories of simple phenomena [such as physics]" (Hayek 1964, 41-42).

--Jeff

[Steve Horwitz]

Jeff writes:

"If so, I continue to wonder whether the young Austrians do this work because they assume that no hard work on the big economic issues needs to be done, because libertarian philosophy renders those issues moot. If antitrust laws and Factory Acts are "wrong," then Austrians can concentrate on economic imperialism of a different sort--economistic imperialism--i.e., the extension of economic "laws" to new fields."

Jeff - I think this is SO unfair to the "young Austrians" as well as the older ones. I have NEVER heard one of the under 35 Austrian crowd EVER suggest that rights theory/libertarian philosophy trumps economic analysis. Never. Now they may have and I didn't hear it, but to suggest that they have avoided the "Big Questions" you think are important because they're secretly all Rothbardian rights theorists is really unfair and just flat wrong.

Your second hypothesis is better though: I do think tenure at schools with graduate programs is very difficult if all you write pre-tenure are big monographs of the sort you're talking about.

But there's a third explanation (out comes Occam's Razor): maybe, just maybe, the younger Austrians really like what they are doing and enjoy writing on those topics and for the audience of fellow economists. Maybe, just maybe, they don't share your vision of what they "should" be doing to forward libertarianism. And maybe they find it presumptuous of you to tell them they're not doing what they "should" be doing.

It is extraordinarily ironic that you, the scholar who continually reminds us of our ignorance and our inability to plan, seem so certain that you have the right plan for what other people "should" be doing to forward liberty.

Again, I agree much of what you think needs to be done, but I don't see how it's either fair or productive to suggest that people aren't following the path you've laid out because they've secretly bought into bad political philosophy to get them off the hook from doing that work.