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The Dismal Science

| David Gordon |

Everyone knows that Thomas Carlyle called economics the “dismal science”, but the context in which he did so is surprising. Sandra Peart and David Levy point out in The “Vanity of the Philosopher”: From Equality to Hierarchy in Postclassical Economics (University of Michigan Press, 2005), that Carlyle thought economics was “dismal” because the classical economists opposed slavery. Adam Smith and his successors supported a broadly utilitarian philosophy in which everyone was taken to be equally capable of happiness. Carlyle and other defenders of hierarchy condemned the economists for what they regarded as dangerous nonsense.

The supporters of hierarchy appealed to the new science of evolutionary biology to support their position. Darwin himself favored the perfection of the race rather than happiness as the standard of ethics; and although he did not reject sympathy for the unfortunate, he feared its malign effects. (Peart and Levy do not mention, though, that Darwin was on the opposite side from Carlyle in the controversy over Governor Eyre’s brutal suppression of a black revolt in Jamaica.) Francis Galton and other supporters of eugenics criticized the classical economists for ignoring the differences in quality among people: the state, in their view, should make efforts to obtain a “better” population. (more…)

6 October 2006 at 10:52 am Leave a comment

Tolerance and Subjectivism

| David Gordon |

Many people argue that because all value judgments are subjective, we shouldn’t impose our preferences on other people. Someone, e.g., who thinks that abortion is morally wrong should not try to prevent those who disagree with this view from having abortions. This argument strikes me as incoherent. The incoherence emerges clearly if we restate the argument in this way: Because all value judgments are subjective, here is a value judgment that isn’t subjective, namely, the value judgment that we shouldn’t impose our preferences on other people.

A defender of the argument might respond that he isn’t claiming that it is objectively true that we shouldn’t impose our preferences on others: he is rather stating, as a value judgment of his own, the view that we shouldn’t impose our preferences on others. A consequence of this way of taking the conclusion of the argument is that we shouldn’t impose this preference on others either. We shouldn’t forcibly interefere with those who are attempting to impose their value judgments on others, because to do this is to impose our value judgment, namely that one shouldn’t do such things, on them. But this is only a consequence of this subjectivist response that is probably unwelcome, not a refutation of it. (more…)

28 September 2006 at 11:46 am 3 comments

The Pareto Criterion and Ethics

| David Gordon |

Some economists defend use of the Pareto criterion in welfare economics in this way: Value judgments are subjective, so it would be unscientific for an economist to use them in recommending policy. But the Pareto criterion is a value-free statement. All it says is that if one person in society is made better off by a change, and no one is made worse off, then social welfare has increased. Of course, there is a problem with exclusive reliance on the criterion. Very few changes count as Pareto improvements, and thus situations that intuitively are unjust, such as a regime of slavery, count as Pareto optimal. Nevertheless, it is alleged, in the few cases where a Pareto superior change is possible, we have a value-free reason to support such changes.

This contention seems to me incorrect. The criterion is neutral about the preferences of people in society: it doesn’t say that only certain preferences, and not others, count as increases in social welfare. But preference-neutrality does not make the criterion value-free. The claim that people’s preferences, other things being equal, should be satisfied, is itself a value judgment. Someone could consistently deny it; suppose, e.g., that one thinks it bad that people get what they want, or bad that certain classes of people get what they want. Some people might think it obvious that these opinions are mistaken, but their truth is not here at issue. The point rather is that they, and their denials, are value judgments. If so, the Pareto criterion is a value judgment as well.

22 September 2006 at 7:31 pm 1 comment

Kuhn and Scientific Realism

| David Gordon |

As Peter noted, Thomas Kuhn made an important point about the history of science. Established scientists often reject revolutionary theories, and these theories become dominant only when a new generation of scientists replaces the old guard. The new theories, Kuhn also thought, were not necessarily better in all respects than the ones they replaced; rather, they asked different questions.

Kuhn’s views influenced Murray Rothbard’s An Austrian Perspective on the History of Economic Thought. (Incidentally, this is my favorite of Rothbard’s books — it’s enormously learned and insightful.) Like Kuhn, Rothbard rejected the Whig view of science as continually progressing by small advances. Rather, he thought that knowledge could be lost. In his view, this is exactly what happened in the nineteenth century when Ricardian economics eclipsed the discoveries of the Spanish Scholastics and other subjectivists. (more…)

18 September 2006 at 11:07 am 4 comments

A Mistaken Argument for Relativism

| David Gordon |

A very popular argument among postmodernists and other inhabitants of the Kingdom of Epistemological Darkness goes like this: We see things only from our own perspective, and we can never grasp the truth as it is in itself. All observation is “theory-laden”.

Of course we see things from a point of view, but it doesn’t follow from this that we are not making an objectively true judgment about what we see. I’m now, for example, looking at a computer screen in normal light. Is there any reason to think that the computer screen isn’t really there, or that my view of the screen is distorted? In the absence of reason to think otherwise, it is entirely rational for me to accept my common sense belief that I am viewing a real screen. The argument from perspective mistakenly assumes that the “real” object exists at no point of view at all. As Jim Sadowsky puts it, the claim is that because we have eyes, we can’t see.

In like fashion, the argument that  observation is theory-laden assumes that our theories block access to the world as it really exists. But some of our theories, at least, are true, and known to be true. The argument for relativism relies on an equivocation in the meaning of “theory”. In one sense, a theory is a speculative belief that is not known to be true. We can, in this sense, speak of the theory that intelligent life exists on other planets than Earth in our galaxy. Maybe it does, and maybe it doesn’t; we don’t know. In another sense of the word, a theory is a statement that goes beyond a “pure observation statement”, if such a thing exists. In this sense, perfectly obvious claims, e.g., elephants weigh more than sociologists, count as theoretical statements. To say that a statement is theory-laden, in this second sense, gives us no reason whatever to doubt its truth.

14 September 2006 at 9:03 am 2 comments

Mises’s Bureaucracy

| David Gordon |

Mises’s Bureaucracy (1944) is seldom cited, at least by comparison with Human Action and Socialism; but it presents some of his key insights better than anywhere else. Mises contrasts profit-and-loss management with bureaucratic management.

A businessman can always tell how well a section of his enterprise is doing by looking at the profit-and-loss accounts. If a section shows a loss, this fact doesn’t by itself enable him to locate the problem; but at least he is aware that something needs to be done.

Government bureaucracies, by contrast, do not produce goods or services for profit. Lacking the tool of profit-and-loss accounts, they instead must operate according to fixed rules. The well-known failings of bureaucracies, according to Mises, do not primarily stem from deficiencies of character in the government personnel. Rather, resort to fixed rules makes bureaucracies much less flexible than profit-seeking businesses. (Mises’s views on bureaucracy were influenced by his friend Max Weber.)

Mises does not think that attempts to introduce business methods into government can succeed, and he deplores the bad effects of government regulations on private enterprise. These regulations interfere with profit-and-loss accounting.

Bureaucracy is available at the Mises Institute website.

12 September 2006 at 10:10 am 5 comments


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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
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