Is Objectivism its own school of economic thought?

[Grames]

It is a body of knowledge that is separate from its creators.

It cannot be separate from everyone.

As an individual is performing scientific activities he may have the virtue of reason (if he doesn't at least in a significant degree he most likely isn't doing anything scientific), but you can not say that his published results are virtuous.

Agreed, one says they are valuable or not.

Economics is the study of production and distribution. It notes the consequences of various actions by man. It notes the results in a free society and the consequences of government intervention. It is the job of morality to evaluate those results and decide what political system is most suited for man.

Economics is an application of politics, which is an application of ethics.

Morality is about value maximization, economics is about money maximization. If there is a moral reason not to pursue money maximization, then that should be an input to economic theory.

[C.W.]

It cannot be separate from everyone.

Not true. Science is written down and is objectively identifiable. The current state of a science is what ever it is at the time, independent of even the minds that created it. This applies to the any of the creations of man, e.g., Atlas Shrugged is a completely separate thing that will live on by itself for as long as there is some means of reading it. It is not dependent upon anyone's consciousness. Once it was created, it was. It is, now.

Economics is an application of politics, which is an application of ethics.

Ah, no. Wrong. Economics may study the consequences of certain political actions or government actions of policies, but trade and production occur independent of government, that is, these activities do not depend upon each other. Trade and production occur because man needs certain physical things to survive and prosper. He also needs a government, but that is in part because he needs to be able to produce and trade. He doesn't need to produce and trade because he needs government. Economics applies regardless of the type of government he has.

The kind of government you have will impact trade and production, and it is economics that will tell you how. It is a science, established just like any other science, because there is in reality something that needs to be understood.

[C.W.]

I don't think one can ascribe this intent to most economists. Arguably, economics was "macro" before it was "micro". That is to say, economists were asking questions about the economy as a whole, and about national wealth and so on, before they were asking about the individual's maximization of satisfaction/utility, etc.

It's true that some economists make all sorts of fallacious arguments. On the other hand, when someone like Hazlitt says "don't look only at this individual/firm/market, but look at the others and judge the impact on the entire system", he is using a "macro" argument.

I'm not sure what you mean by a "macro" approach. At best, I see "micro" and "macro" as a division of subject-matter, that must remain integrated. I'm not an advocate of categorizing them that way; however, I don't think the division as a big problem either.

I think there is still a lot to learn about economics, particularly about how various factors interact in a mixed-economy, and how they interact globally across multiple mixed-economies with various mixes of bad politics.

After looking at George Reisman's book, Capitalism, I think that I see where we have our problem. I think that your rejection of the division is correct. I would say that I think that the classical economists up through the Austrians would argue that large scale economics is the sum of the actions of individuals. This is along the line of there not being a "society", just people.

P. 7-8

[...the thoroughly malicious and destructive doctrine of Joan Robinson and Edward Chamberlin] states that with a few, limited exceptins, such as wheat farming, the whole of a capitalist economic system is tainted by an element of monopoly. The solution for this alleged state of affairs is supposed to be a radical antitrust policy, which would fragment all large businesses, or else the nationalization of such businesses and/or government control ofver their prices - and further policies that would force firms inthe same industry to produce identical, indistinguishable products. Since the 1930's, this doctrine and its elaboration have constituted the substance of the theoretical content of most textbooks of "microeconomics." At the same time, little or nothing of the sound price theory developed by the classical and Austrian economists is presented in these textbooks.

The abandonment of classical economics and Marshall's concentration on what later came to be called microeconomics created a temporary intellectual vacuum. In the 1930's, this vacuum was filled by Keynes, by menas of the resurrection of the long-refuted fallacies of the Mercantilists, and Malthus and Sismondi, alleging that capitalism causes depressions and mass unemployment through overproduction and excess saving. On this thoroughly erroneous foundation, Keynes argued for the need for inflation and deficit-financed government spending to conteract or prevent the evils of depressions and mass unemployment. The elaboration of the Keynesian doctrines has constitiuted the theoretical substance of the textbooks on "macroeconomics."

I don't think that either one of us want to be associated with either school.

I am not excited by the prospect of examining the consequences of "how various factors interact in a mixed-economy, and how they interact globally across multiple mixed-economies with various mixes of bad politics." as you put it. How about studying how to wind down mixed-economies and how they fail when having to compete with a free economy?

[Grames]

Not true. Science is written down and is objectively identifiable. The current state of a science is what ever it is at the time, independent of even the minds that created it. This applies to the any of the creations of man, e.g., Atlas Shrugged is a completely separate thing that will live on by itself for as long as there is some means of reading it. It is not dependent upon anyone's consciousness. Once it was created, it was. It is, now.

There is no value without a valuer, no percept without a perceiver, no knowledge without a knower. Books and other media that record information are potentials that require a mind to bring them to life. Knowledge is dependent upon consciousness.

Ah, no. Wrong. Economics may study the consequences of certain political actions or government actions of policies, but trade and production occur independent of government, that is, these activities do not depend upon each other. Trade and production occur because man needs certain physical things to survive and prosper. He also needs a government, but that is in part because he needs to be able to produce and trade. He doesn't need to produce and trade because he needs government. Economics applies regardless of the type of government he has.

The kind of government you have will impact trade and production, and it is economics that will tell you how. It is a science, established just like any other science, because there is in reality something that needs to be understood.

I speculate that you assume the statement "Economics is an application of politics, which is an application of ethics" implies economics is deduced from politics. There is no deduction, and yet the hierarchy is there because economics is about men acting consciously. Logically prior truths about man and consciousness and action form a framework for understanding economic concepts. And politics is ethics in a social context, so it is not reducible to merely government and includes economics as an area for special study.

As for economics being a science, it ought to be. Economics that proceeds without a philosophical foundation is like astronomy proceeding without a theory of gravity, a dismal science.

[John McVey]

Ah, no. Wrong. Economics may study the consequences of certain political actions or government actions of policies, but trade and production occur independent of government, that is, these activities do not depend upon each other.

No, you're wrong and Grames is right. Economics is an application of politics.

Firstly, you are equating politics with government, whereas politics is broader than that. It covers the whole of principles of interaction with others beyond one's immediate circle of frequent associates and into the concept of society at large. The proper structure and operation of government is a large part of that, but is only a part. Economics is an application of politics because it deals with the consequences of dealing with others in certain ways (production and exchange) in the context of a broad society where people exchange via the market systems with money, as opposed to family and friends trading favours and being friendly.

Secondly, economics also does depend on the existence of government to set down laws that protect property rights. This will include putting into the common law the local and regional customs that come to be taken for granted by traders and which it is reasonable for traders to expect to be upheld in court. In some jurisdictions, that can go so far as for their to be statutory laws codifying certain trades and arrangements, such as partnership law, laws on cheques or bills of exchange, and so on.

Economics and politics DO depend on each other, both being dependent upon and derivatives of ethical theory in the social context. A man does need to consider the state of society and its customs - including government - when he formulates plans of actions for production and exchange. Once a man is no longer producing all his values directly himself but is instead producing values with intent to trade for other values he needs to consider politics before he does anything remotely economic. The consequences of men's actions in turn influences what other men may think and do in regards to their contribution to the politics of a society, though how they interpret these matters will be dependent on their ethical beliefs.

There is a lot of crosslinking back and forth, but the more primary of the two is the politics because the study of personal or familial self-sufficiency is not economics. One can have political relations without economic relations, but not the other way around.

JJM

[C.W.]

Books and other media that record information are potentials that require a mind to bring them to life.

This is just equivication. A body of knowledge available to you in those books of potential is still independent of the minds that produced them. To acquire the knowledge you still must treat it as an objective thing, independent of yourself, just as you would treat a rock or other thing that you wanted to know about, or a building you wanted to understand.

When you look at your bookshelf and see the works of Ayn Rand, you don't say or think, look at that potential philosophy or potential knowledge. It is the work of AR. When you talk about Atlas Shrugged you don't refer to the content of someone's mind, you refer to something that is a separate existant, not a potential.

I speculate that you assume the statement "Economics is an application of politics, which is an application of ethics" implies economics is deduced from politics. There is no deduction, and yet the hierarchy is there because economics is about men acting consciously. Logically prior truths about man and consciousness and action form a framework for understanding economic concepts. And politics is ethics in a social context, so it is not reducible to merely government and includes economics as an area for "special study".

It is not a good idea to speculate about someone's understanding. It is also not a good idea to write something that has a confused meaning. An "application" is something more than an hierarchy. But that is not important.

No, actually, economics and politics are not in the same hierarchy. Politics is a subject based upon ethics. Economics is the study of trade and production without regard to ethics or political systems per se. They co-exist as subjects and have implications for each other. But economics has things to say about stuff unrelated to politics and politics encompasses lots that have nothing to do with economics. There is an Objectivist politics, but not an Objectivist economics.

There are actually lots of subjects "about men acting consciously", including anthropology, archeology, psychology, etc. Are you saying that they are all applications of politics and areas of special study?

I agree that truths about man form a "framework" for economics. I also agree that "politics is ethics in a social context", except that there are a lot of other things going on in a social context besides politics. Perhaps that is what you are forgetting.

The associations that a man chooses that have productive purposes are not made because of politics but the reality of being human. Being human is a situation that does not lead to only politics. Actually, he wants a government in part because of the productive associations he wants to have, not the other way around.

[C.W.]

No, you're wrong and Grames is right. Economics is an application of politics.

Firstly, you are equating politics with government, whereas politics is broader than that. It covers the whole of principles of interaction with others beyond one's immediate circle of frequent associates and into the concept of society at large. The proper structure and operation of government is a large part of that, but is only a part. Economics is an application of politics because it deals with the consequences of dealing with others in certain ways (production and exchange) in the context of a broad society where people exchange via the market systems with money, as opposed to family and friends trading favours and being friendly.

John, I have been working on a comment on the portions of your book that you posted. It is taking me a while. The thrust of my comments does come close to this issue, namely what I see as your (and Grimes) confusing economic goods with values. (I will leave my expostition to the comments I am working on - I can't promise I will finish them, but I want to.)

Now, the statement "principles of interaction with others beyond one's immediate circle of frequent associates and into the concept of society at large" is amorphus. I think that it will carry you into relationships that you do not want to include in politics.

Politics does deal with "social system" (Lexicon) but in the context of the use of force and laws. The political system you have impacts mightly on how commerce functions. However, the laws of economics apply to all political systems. Supply and demand, prices, choices of goods, and so on, are indifferent to your moral system or the political choices you make. You cannot legislate supply and demand, you can only screw it up. Economics has implications for politics, at least a politics that is reality oriented. Politics has no implications for economics. Economics just studies the consequencs of politial decisions. Just as psychology has implications for politics. Politics has nothing to say about psychology.

Secondly, economics also does depend on the existence of government to set down laws that protect property rights. This will include putting into the common law the local and regional customs that come to be taken for granted by traders and which it is reasonable for traders to expect to be upheld in court. In some jurisdictions, that can go so far as for their to be statutory laws codifying certain trades and arrangements, such as partnership law, laws on cheques or bills of exchange, and so on.

Economics, the science, studying human action, has no such dependency. An economy does, a properous economy depends upon a good government. Economics studies the consequences in the economy of the different governments and their actions on economic activity and pricing. What it learns would certainly have implications for the best government and the better laws under a good government, regarding the efficiency of the market and production. Good government is an ethical issue. Studying the nature of the world (requires the virtue of reason) requires that it study trade and production in good governments, bad governments, and (if it is possible or only a momentary aberation) no government.

[Grames]

This is just equivication. A body of knowledge available to you in those books of potential is still independent of the minds that produced them. To acquire the knowledge you still must treat it as an objective thing, independent of yourself, just as you would treat a rock or other thing that you wanted to know about, or a building you wanted to understand.

It is raw unadulterated intrinsicism to not consider the origin of the knowledge in a book, to take it for granted as your starting point. It was created by a mind, it is derivative of that mind. There is no value without a valuer, no percept without a perceiver, no knowledge without a knower. The physical form is independent of consciousness in exactly the way a rock is, but the book is an artifact while the rock is natural. As artifact, it can never be independent ethically or epistemically from the mind that produced it.

There is an Objectivist politics, but not an Objectivist economics.

There is, it is called capitalism. You are hung up on the current pragmatist conceptualization of economics as essentially about counting things, but it is really about people acting ethically in matters of production and trade.

There are actually lots of subjects "about men acting consciously", including anthropology, archeology, psychology, etc. Are you saying that they are all applications of politics and areas of special study?

Not psychology as that is individual. History and anthropology yes. Archeology is cross-disciplinary.

I agree that truths about man form a "framework" for economics. I also agree that "politics is ethics in a social context", except that there are a lot of other things going on in a social context besides politics.

All those other things are also politics. Politics is very broad. "Poli-Sci" is not the whole of politics.

[Plasmatic]

Very simply put,C.W and euiol,one cannot separate fact and value. I suggest reading Peikoffs writing entitled as such. Your entire epistemic framework denies the foundational hierarchy of philosophy and its relation to the special sciences.

[C.W.]

You have to learn how not to jump to conclusions. It does not advance even a conversation to put words into someones mouth. It could even be considered creating a straw man. Stupid thing to say, "Poli-Sci". Nor have I called you names, i.e., pragmatist. Calling someone a name when they don't agree with you isn't helpful either. I would really like to respect people with whom I have a discussion. You are making it difficult.

It is raw unadulterated intrinsicism to not consider the origin of the knowledge in a book, to take it for granted as your starting point. It was created by a mind, it is derivative of that mind. There is no value without a valuer, no percept without a perceiver, no knowledge without a knower. The physical form is independent of consciousness in exactly the way a rock is, but the book is an artifact while the rock is natural. As artifact, it can never be independent ethically or epistemically from the mind that produced it.

Another error. In every statement I "considered" the origin of the book. There was no intrinsicism or evading that the book was created by someone. You use the same mental processes to study a rock or a building or a book.

Artifacts are natural. As is the building. When you study the building or the book you are accessing the results of the mind of man, but not that mind. The book or building has an identity of its own. It can tell you something about that mind. You do not ignore that the book or building was created by that mind. But you study the book or building for what it is. You work to identify the nature of the content of the book. If you are studying physics, you don't care much about the mind behind it, you want physics. This is not particularly controversial.

There is, it is called capitalism. You are hung up on the current pragmatist conceptualization of economics as essentially about counting things, but it is really about people acting ethically in matters of production and trade.

Capitalism, as I am sure you know, is a political system. It has a specific type of government, it has individual rights, it has free markets. It is the complete expression of Objectivist politics. It is the only moral political system. Anyone who does not accept Objectivist politics can actually be fully in favor of capitalism.

Capitalism, however, is not the whole of economics. For example, not all of the people living in a completely capitalist society would be rational or even partly rational, or moral. Even the rational inhabitants would have widely divergent interests and desires. Economics studies the results of their activities regardless of their rationality, wants, or morality. To be valid, it has to study everything going on within an economy, any economy.

You have evidenced no understand what I might be "hung up" over. It is not appropriate to attack someone by declaring what you have decided they believe. I have not suggested anything about "counting". My view, for the record, is that mathematical economics is like any other "scientific modeling", garbage in, garbage out. Keep to the facts, which is what someone actually says.

Not psychology as that is individual. History and anthropology yes. Archeology is cross-disciplinary.

All those other things are also politics. Politics is very broad. "Poli-Sci" is not the whole of politics.

So history and anthropology are politics. So when we look at art in the past we are looking at politics. And the development of science, and cosmology, and sex, and fashion and clothing, and technology, and engineering, and all of the other human activities outside of areas of legal issues.

You know, a definition would be nice. AR said in "Philosophy, Who Needs It" that politics "defines the principles of a proper social system". Can we agree on that? If so, what about the part of history and anthropology that are not about social systems?

[C.W.]

Very simply put,C.W and euiol,one cannot separate fact and value. I suggest reading Peikoffs writing entitled as such. Your entire epistemic framework denies the foundational hierarchy of philosophy and its relation to the special sciences.

Very simply put, Plasmatic, you must be aware of the facts.

We are not discussing values. We are discussing economics. We are talking about economic goods or values.

It is not a moral issue when one prefers bread over iron. It is not a moral issue when one decides that they prefer furniture over a new suit. It is not a moral issue if one prefers a GameBoy over an Ipod.

(You aren't gaining ground to suggest special circumstances. I am talking everyday, normal evaluations. Certainly, there would be bad decisions, including ones that would be immoral for that individual.)

It is these decisions that determine purchases by people and the price structure. It is these decisions that determine what is imported and what is sold. It is the decisions of people that determine what industries should expand and where savings should be spent.

It is the price structure and the allocation of assets among competing wants and interests that economics works to explain. And it is how these decisions, allocations, and markets in general get screw up when the government interferes that economics works to explain.

George Reisman, in "Revolt Against Affluence: Galbraith's Neo-Feudalism" (Lexicon, p. 135)

In order for a thing to become a good, three conditions must be fulfilled. Not only must it satisfy a human need, but also one must know that it satisfies one's need, and one must have disposal over it.

He doesn't say anything about morality.

I suggest that you read economists. I have read all of Dr. Peikoff. The context is different.

Plasmatic, tell me about the relation of philosophy to physics, please.

For comparison, briefly, my understanding is that, like all knowledge, understanding physics is an important value to man, for many reasons, which I am sure you and I can agree about. So, there is an ethical underpinning for science. How does that ethical underpinning have a consequence on the content of the science?

Then, for the scientist, in the process of research, as in every other part of his life, morally, he should practice the virtues, all of them, most importantly, reason. That is to say, he will want to identify the nature of the entities he is studying, including his process of differentiation, integration, concept formation, definition, and integration with other knowledge, including laws, etc. (I am not trying to be exhaustive here.) The end result of his activities would be a body of knowledge that is fully grounded in reality.

That is my understanding of "the foundational hierarchy of philosophy and its relation to the special sciences" or knowledge in general (are the rules somehow different for the "special sciences"?).

[Grames]

Artifacts are natural.

L. O. L.

I'm not going to debate that.

edit: This is yet another instance of a poster failing to grasp, or grasp fully, the distinction between the metaphysical and the man-made. Perhaps there is a book or lecture series on this I can spotlight after "The Evidence of the Senses"

Edited December 3, 2009 by Grames

[C.W.]

L. O. L.

I'm not going to debate that.

Man is outside nature? Man is unnatural?

You ignore the statement about the distinction between the man-made and the natural?

You are easy to amuse Grames.

[C.W.]

Very simply put,C.W and euiol,one cannot separate fact and value. I suggest reading Peikoffs writing entitled as such. Your entire epistemic framework denies the foundational hierarchy of philosophy and its relation to the special sciences.

Thought that I would add a quotation from George Reisman, Capitalism, p. 39

Economics deals only with those goods which are the object of economic activity, that is, whcih man needs to produce in some sense - goods whose existence or beneficial relationship to his well-being he needs to cause in his capacity as a thinking being, that is on whose behalf he must expend labor or effort. Such goods are economic goods.

Edited December 3, 2009 by C.W.

[softwareNerd]

It is raw unadulterated intrinsicism to not consider the origin of the knowledge in a book, to take it for granted as your starting point. It was created by a mind, it is derivative of that mind. There is no value without a valuer, no percept without a perceiver, no knowledge without a knower.

I'm not sure what you mean in concrete terms? If I have a book describing the working of levers, pulleys and other simple machines, what type of focus do I need to give to the author? When I read a book, I want to understand how reliable the author is when he reports facts (whether he is cherry-picking his experimental results, the historical record, etc.). Do you mean something else?

Nothing that C.W. says is contradictory to the idea that authors write books and scientists discover knowledge. That does not change the fact that the knowledge is independent of the author in a very important sense.

Edited December 3, 2009 by softwareNerd

[Plasmatic]

Very simply put, Plasmatic, you must be aware of the facts.

We are not discussing values.We are discussing economics. We are talking about economic goods or values.

.

It is not a moral issue when one prefers bread over iron. It is not a moral issue when one decides that they prefer furniture over a new suit. It is not a moral issue if one prefers a GameBoy over an Ipod.

(You aren't gaining ground to suggest special circumstances. I am talking everyday, normal evaluations. Certainly, there would be bad decisions, including ones that would be immoral for that individual.)

It is these decisions that determine purchases by people and the price structure. It is these decisions that determine what is imported and what is sold. It is the decisions of people that determine what industries should expand and where savings should be spent.

C.W ,you should compare your words above, with Reismans below, to the CUI quotes, and see if you actually agree with Rand and Reisman.

Thought that I would add a quotation from George Reisman, Capitalism, p. 39

QUOTE

Economics deals only with those goods which are the object of economic activity, that is, whcih man needs to produce in some sense - goods whose existence or beneficial relationship to his well-being he needs to cause in his capacity as a thinking being, that is on whose behalf he must expend labor or effort. Such goods are economic goods.

There are, in essence, three schools of thought on the nature of the good: the intrinsic, the subjective, and the objective. The intrinsic theory holds that the good is inherent in certain things or actions as such, regardless of their context and consequences, regardless of any benefit or injury they may cause to the actors and subjects involved. It is a theory that divorces the concept of "good" from beneficiaries, and the concept of "value" from valuer and purpose—claiming that the good is good in, by, and of itself.

The subjectivist theory holds that the good bears no relation to the facts of reality, that it is the product of a man's <cui_22> consciousness, created by his feelings, desires, "intuitions," or whims, and that it is merely an "arbitrary postulate" or an "emotional commitment."

The intrinsic theory holds that the good resides in some sort of reality, independent of man's consciousness; the subjectivist theory holds that the good resides in man's consciousness, independent of reality.

The objective theory holds that the good is neither an attribute of "things in themselves" nor of man's emotional states, but an evaluation of the facts of reality by man's consciousness according to a rational standard of value. (Rational, in this context, means: derived from the facts of reality and validated by a process of reason.) The objective theory holds that the good is an aspect of reality in relation to man—and that it must be discovered, not invented, by man. Fundamental to an objective theory of values is the question: Of value to whom and for what? An objective theory does not permit context-dropping or "concept-stealing"; it does not permit the separation of "value" from "purpose," of the good from beneficiaries, and of man's actions from reason.

Of all the social systems in mankind's history, capitalism is the only system based on an objective theory of values.

CUI

The free market represents the social application of an objective theory of values. Since values are to be discovered by man's mind, men must be free to discover them-to think, to study, to translate their knowledge into physical form, to offer their products for trade, to judge them, and to choose, be it material goods or ideas, a loaf of bread or a philosophical treatise. Since values are established contextually, every man must judge for himself, in the context of his own knowledge, goals, and interests. Since values are determined by the nature of reality, it is reality that serves as men's ultimate arbiter: if a man's judgment is right, the rewards are his; if it is wrong, he is his only victim.

It is in regard to a free market that the distinction between an intrinsic, subjective, and objective view of values is particularly important to understand. The market value of a product is not an intrinsic value, not a "value in itself" hanging in a vacuum. A free market never loses sight of the question: Of value to whom? And, within the broad field of objectivity,the market value of a product does not reflect its philosophically objective value, but only its socially objective value.

By "philosophically objective," I mean a value estimated from the standpoint of the best possible to man, i.e.., by the criterion of the most rational mind possessing the greatest knowledge, in a given category, in a given period, and in a defined context (nothing can be estimated in an undefined context). For instance, it can be rationally proved that the airplane is objectively of immeasurably greater value to man (to man at his best) than the bicycle—and that the works of Victor Hugo are objectively of immeasurably greater value than true-confession magazines. But if given man's intellectual potential can barely manage to enjoy true confessions,

there is no reason why his meager earnings, the product of his effort, should be spent on books he cannot read—or on subsidizing the airplane industry, if his own transportation needs do not extend beyond the range of a bicycle. (Nor is there any reason why the rest of mankind should be held down to the level of his literary taste, his engineering capacity, and his income. Values are not determined by fiat nor by majority vote.)

Just as the number of its adherents is not a proof of an Idea's truth or falsehood, of an art work's merit or demerit, of a product's efficacy or inefficacy—so the free-market value of goods or services does not necessarily represent their philosophically objective value, but only their socially objective value, i.e., the sum of the individual judgments of an the <cui_25> men involved in trade at a given time, the sum of what they valued, each in the context of his own life.

CUI

Edited December 3, 2009 by Plasmatic

[John McVey]

John, I have been working on a comment on the portions of your book that you posted. It is taking me a while. The thrust of my comments does come close to this issue, namely what I see as your (and Grimes) confusing economic goods with values. (I will leave my expostition to the comments I am working on - I can't promise I will finish them, but I want to.)

That's fine. I will note here, though, that I am not confusing goods with values. In those chapters am dealing with the concept of value as such, whether economic or otherwise. How the principles of value apply to goods comes later, after I do make a solid distinction between economic and non-economic values.

"the statement "principles of interaction with others beyond one's immediate circle of frequent associates and into the concept of society at large" is amorphus. I think that it will carry you into relationships that you do not want to include in politics." ... Politics does deal with "social system" (Lexicon) but in the context of the use of force and laws.

It means taking ethical theory and looking at derivative principles that do not presume intimate knowledge but only the general knowledge one can have of generic others. It's taking the virtues and figuring out applications at a more concrete level, and drawing in concretes of shared values and histories, and inferring further principles. It's not just the discovery of the concept of rights as means of subordinating society to ethics, but also of theory of social structure and social institutions, and how to judge them. This includes due consideration with what objectively ought and ought not be a part of social structures and institutions (examples of which are colour-blindness versus racism and rejection of notions of inborn class), and also what is an optional value commonly held as a social institution (an example of which is Veterans' Day in the US versus ANZAC Day in Australia and New Zealand). That's politics, not just rights and government.

I presume you've heard of the idea of "office politics"? There's no issue of government there, at least not overtly, yet it qualifies as politics in a microcosm.

I am also curious as to what other relationships you have in mind.

The political system you have impacts mightly on how commerce functions. However, the laws of economics apply to all political systems.

Neither Grames nor I have denied this.

Supply and demand, prices, choices of goods, and so on, are indifferent to your moral system or the political choices you make. You cannot legislate supply and demand, you can only screw it up. Economics has implications for politics, at least a politics that is reality oriented. Politics has no implications for economics. Economics just studies the consequencs of politial decisions. Just as psychology has implications for politics. Politics has nothing to say about psychology.

Now I see what the issue is - you're taking the idea of "economics as application of politics" to mean "economic theory is derived from political theory." I certainly don't mean that. One can no more rationalistically derive economics straight from politics any more than one can derive politics straight from ethics. For instance, you'll never derive the propriety of the rule against double jeopardy or the virtue of a jury trial just from analysis of the virtues. Likewise, you'll never derive the law of supply and demand or the virtue of gold as money just from analysis of rights. You're focussing on the latter while forgetting the former, and misunderstanding what is meant by "application." In both cases, it means that you have to apply the principles of a prior field (ethics or politics) to additional facts, collate and integrate a wide variety of facts with principles in the prior field, and identify principles in the later field (politics and economics, respectively). Economics as an application of politics means that you wont be able to do that successfully without full consideration for politics from very early on. The furthest you can get without doing so is, as I noted, study of production by oneself or with family and friends, and that isn't economics. One needs politics, ie an understanding of social systems and structures, to comprehend how people pursue production and trade beyond that level.

Edit: I just noticed that Grames already said all that. Still true anyway.

I reiterate my example about a man's willingness to follow one path of production and trade versus another, depending on his view of the state of a society. Even leaving aside the question of respect for rights and the actual security of his property against fraud and theft, his view of how men in a given society view reason, what kind of range of consideration they have timewise, how they spend, how they negotiate, will affect his willingness to trade and the kinds of negotiations he will be prepared to enter. That much, for instance, will have a direct effect on how he calculates risk premiums (because others' irrationality will impact on his debtor's ability to repay debts via how sensible or irrational his debtor's customers' spending habits are, say because of rising racism or religious fanaticism), what kind of covenants he may include in a debt agreement, and so on. I am not saying this at the level of forecasting individuals' preferred rates, I am talking about the concept of interest rates as such and the principles behind them, how they relate to economic growth (because it affects willingness to invest), how capital will be structured, and so on. Here's some principles we can figure out so far:

the more irrational that a given society is then

- the less inclined men will be to invest resources in it

- the higher the risk premiums men will demand as compensation for both the increased risks and also any extra grief incurred when negotiating

- the stronger the tendency for financial capital to be invested in the form of debt rather than equity

- the greater the reliance on concrete rules and covenants to enhance credit quality rather than just the use of collateral

- the shorter that maturities on debts tend to be, and

- the more that physical capital will be structured around shorter periods of production.

I could probably work up more with more thought and drawing in more concretes, but that's more than enough to demonstrate the point. These principles are a direct application of politics (in the sense of the study of broad social systems and principles of right and wrong in that context) to various facts of elements of how men go about producing and exchanging, integrating it with valuation of risk and returns, and so identifying principles of economics. Economics has to include some consideration for political theory, of right and wrong therein and the consequences thereof, right in the heart of many of its own principles.

Economics, the science, studying human action, has no such dependency.

Again, that is dependent on the idea that application = rationalist derivation. The very fact that the form of government influences not just the path of economic activity but whose analysis is presupposed by the determination of principles of economics shows a very strong dependency indeed.

FWIW, chapter 4 of what I have written deals with societies and social institutions, including implications for economics (for instance, the ideas of 'money' and a 'sale' are social insitutions as well as conceptual abstractions, as likewise are other institutionalised protocols of trade) - but, no, I am not publishing it in the near future.

JJM

Edited December 3, 2009 by John McVey

[John McVey]

It is not a moral issue when one prefers bread over iron. It is not a moral issue when one decides that they prefer furniture over a new suit. It is not a moral issue if one prefers a GameBoy over an Ipod.

(You aren't gaining ground to suggest special circumstances. I am talking everyday, normal evaluations. Certainly, there would be bad decisions, including ones that would be immoral for that individual.)

Yes it is, on all three counts. Every single decision you ever make is by its nature a moral matter - the point of morality is to be a guide for decision-making. There are no decisions in which morality has no importance. A given level of importance may be incredibly small in any case, but it is always there.

In the three examples given, morality tells us that we should pick the one that has the greatest value to us, and that we should take great care and consider the whole context when making that decision. A proper moral code also includes consideration for legitimate options, and will state that when faced with them and after vetting them by reason to find that they are equally valid choices we are morally entitled (indeed, obliged) to pick the one that has the better emotional impact on us.

And it is how these decisions, allocations, and markets in general get screw up when the government interferes that economics works to explain.

The interferences and screw-ups are properly understood as departures from morality and their consequences respectively - ie cause and effect. What economics does in this regard is show how this comes about by how men will react to the interferences, then to other men's reactions to the interferences, both of which sets of actions in turn will depend on their own moral codes and value hierarchies (plus other things such as how much they know and their methodologies of interpretation). There's no escaping morality. In turn, the economist with a poor moral code of his own is apt to get his understanding of cause and effect wrong because his judgement of the causing-men will be off. It is vain to require that economics (or any science in the humanities) be value-free - even dry-as-dust accounting has controversies in its content that are inherently moral in nature (eg look up kerfuffles regarding capitalisation versus expensing of advertising expenditures, or expensing of options given to executives). The content must include at least some moral judgement.

He doesn't say anything about morality.

I'm not going into a study of Reisman's work, but I will note that morality is intimately bound up with all three of those criteria. The pursuit of that which satisfies a human need is a moral issue. The identification of what satisfies a human need is a moral issue. And the trade of it with others is also a moral issue. A given economic actor's view of morality is necessarily going to colour all three of these, where good morality versus bad has implications for consquences of that actor's actions. Likewise, analysis of this versus the lack thereof is likewise going to influence an observing economist's thoughts, where a good understanding of morality (and of what makes a good morality) would strongly lend itself to better identification and understanding of economic principles regarding actors' actions. It is a poor economist who does not include consideration for that in the content of his thought in his science.

So, there is an ethical underpinning for science. How does that ethical underpinning have a consequence on the content of the science?

You're comparing apples and oranges. The subject-matters of study in physics are not themselves subject to moral judgement, but the subject-matters of study in economics are. Morality or immorality has no meaning for protons or star systems, but it does for men and societies. That moral or immoral action has consequences, a subset of which consequences is the bread and butter of economic analysis and which pricinples of (ie, identification of causes and effects) it is economics' responsibility to identify. Thus morality has no content to impart to physics but has quite a bit to impart to economics (to all humanities sciences, in fact), and that a humanities scientist (including the economist) has to include consideration for morality when formulating content whereas the physical scientist does not.

JJM

[Grames]

what type of focus do I need to give to the author?

The words did not self-assemble on the page, nor did the page or the book self-assemble. The whole is the product of a volitional conceptual consciousness. As Rand pointed out when she distinguished between the metaphysical and the man-made, the man-made is not to accepted as the given. The book's words can be wrong, they can contradict nature while a rock's attributes cannot contradict anything in nature. The book can be true or false and right or wrong while the rock simply is. The book must be judged critically, the rock accepted.

Ideas in a book are no more independent of the author (and reader) than spoken words are independent of the speaker (and listener). Reading and listening both complete a process of mind-to-mind communication. The medium is not-mind and therefore not-knowledge. Knowledge only exists in minds. Symbols are meaningless until interpreted.

"The Metaphysical Versus The Man-Made" appears in Philosophy: Who Needs It.

Back to the passage that set off this digression:

Virtues, e.g., reason, is a property of an individual. To the extent that science is the result of the work of many individuals and is independent of them all, it does not have virtues. It does have consistency with reality. A science is something that anyone can check himself. It is a body of knowledge that is separate from its creators.

Knowledge is the product of virtues and has value to someone. The only independence here is objectivity, the only method of gaining and validating knowledge. The only value knowledge has is due to its objectivity. Objectivity is an epistemological method, it cannot be independent of an author (or reader) in any sense.

[softwareNerd]

I am not excited by the prospect of examining the consequences of "how various factors interact in a mixed-economy, and how they interact globally across multiple mixed-economies with various mixes of bad politics." as you put it. How about studying how to wind down mixed-economies and how they fail when having to compete with a free economy?

That's good to study too, for someone who finds it of value (BTW: My list was "top of mind" and far from exhaustive.)

Economists can study both the "ought" and the "is". Since economics is about human behavior, these two are analogous to the study of what factors make for good mental health and the study of various types of actual psychological behavior. In psychology, perhaps there has been too much focus on the pathological cases; however, in economics, it seems to be the opposite. To the extent that one must deal with cases of pathology, it would be a value to understand those cases.

[C.W.]

Plasmatic, I agree with all of those quotations. I agree with the derivation of value in ethics and I obviously agree with George Reisman's statement on economic goods, since I am the one who introduced it.

What I do not see is how you have intended to connect the two. I had hoped that you would notice that George did not include any standard with regard to the economic good. Yes, it does say that “goods whose existence or beneficial relationship to his well-being he needs to cause in his capacity as a thinking being”, but any altruist or irrational person will say that statement is true of their purchases. George was not laying out a moral statement regarding economic value. See also his entry in the Ayn Rand Lexicon under “Economic Value”. Remember that ethics is concerned with what a person should do, while economics is concerned with what people as economic actors do.

Economics as a science does not consider how the buyer decided to buy, or the producer decided to produce. Any actor in an economy can make good or bad decisions.

On the level of personal consequence, the decisions that have the most significant impact are the investment decisions, i.e., what goods to produce, how, or what career to pursue. When we act as buyers nearly all of our decisions are not moral decisions. Go over your last month's spending and point out the ones in which you needed to consider the moral consequences. Certainly when a person makes large purchases he had to analyze how that purchase would fit into his value hierarchy, and that might have included moral issues, e.g., buying a car vs. other goods he might need. Yet, even there, after he decided that he would buy the car, the rest of his considerations are primarily expressions of taste.

The economist recognizes that the individual has to go through these considerations, but he is only concerned with the consequences on the market, prices, and resulting effects on production, or vise versa, when the changes relate to production issues.

One of the consequences of the market is that we generally do not know the person we are trading with. We do not know if the producer is generally rational or the buyer uses reason. In a free society, we can conclude that in so far as the business activity is concerned, the producer we buy from was rational in regard to his production activities and the buyer in regard to his having the money to buy, but that is it. We know no more about their values and their legitimacy. Nor do we care. Besides, a rational man can fail in business, just as a stupid or irrational man. The consequences as far as the economist is concerned are the same.

Capitalism, since it is a reality based political system, does require its inhabitants to face reality. They cannot force someone to face it for them. They must face the reality of making a living and competing with others who wish to enjoy life. Capitalism, you can say, supports objective values, absolutely.

Yet, unfortunately, there will be plenty of self-destructive, or at least, less than rational people within a capitalist social system. They will get alone as best they can. Some in Objectivism have suggested that the number of "second-hander" will be very large, perhaps a majority. I don't know. I do know that an economist cannot ignore these people. They will be actors in the markets, and their activities accounted for within economics. Supposing that all actors are rational and make life-affirming choices all of the time would be scientific folly, and unnecessary.

[C.W.]

That's fine. I will note here, though, that I am not confusing goods with values. In those chapters am dealing with the concept of value as such, whether economic or otherwise. How the principles of value apply to goods comes later, after I do make a solid distinction between economic and non-economic values.

Sorry, I jumped the gun. That is something that I am critical of others for doing, so my "sorry" is a big one. I look forward to reading that section.

It means taking ethical theory and looking at derivative principles that do not presume intimate knowledge but only the general knowledge one can have of generic others. It's taking the virtues and figuring out applications at a more concrete level, and drawing in concretes of shared values and histories, and inferring further principles. It's not just the discovery of the concept of rights as means of subordinating society to ethics, but also of theory of social structure and social institutions, and how to judge them. This includes due consideration with what objectively ought and ought not be a part of social structures and institutions (examples of which are colour-blindness versus racism and rejection of notions of inborn class), and also what is an optional value commonly held as a social institution (an example of which is Veterans' Day in the US versus ANZAC Day in Australia and New Zealand). That's politics, not just rights and government.

I presume you've heard of the idea of "office politics"? There's no issue of government there, at least not overtly, yet it qualifies as politics in a microcosm.

I am also curious as to what other relationships you have in mind.

Neither Grames nor I have denied this.

Now I see what the issue is - you're taking the idea of "economics as application of politics" to mean "economic theory is derived from political theory." I certainly don't mean that. One can no more rationalistically derive economics straight from politics any more than one can derive politics straight from ethics. For instance, you'll never derive the propriety of the rule against double jeopardy or the virtue of a jury trial just from analysis of the virtues. Likewise, you'll never derive the law of supply and demand or the virtue of gold as money just from analysis of rights. You're focussing on the latter while forgetting the former, and misunderstanding what is meant by "application." In both cases, it means that you have to apply the principles of a prior field (ethics or politics) to additional facts, collate and integrate a wide variety of facts with principles in the prior field, and identify principles in the later field (politics and economics, respectively). Economics as an application of politics means that you wont be able to do that successfully without full consideration for politics from very early on. The furthest you can get without doing so is, as I noted, study of production by oneself or with family and friends, and that isn't economics. One needs politics, ie an understanding of social systems and structures, to comprehend how people pursue production and trade beyond that level.

Edit: I just noticed that Grames already said all that. Still true anyway.

I reiterate my example about a man's willingness to follow one path of production and trade versus another, depending on his view of the state of a society. Even leaving aside the question of respect for rights and the actual security of his property against fraud and theft, his view of how men in a given society view reason, what kind of range of consideration they have timewise, how they spend, how they negotiate, will affect his willingness to trade and the kinds of negotiations he will be prepared to enter. That much, for instance, will have a direct effect on how he calculates risk premiums (because others' irrationality will impact on his debtor's ability to repay debts via how sensible or irrational his debtor's customers' spending habits are, say because of rising racism or religious fanaticism), what kind of covenants he may include in a debt agreement, and so on. I am not saying this at the level of forecasting individuals' preferred rates, I am talking about the concept of interest rates as such and the principles behind them, how they relate to economic growth (because it affects willingness to invest), how capital will be structured, and so on. Here's some principles we can figure out so far:

the more irrational that a given society is then

- the less inclined men will be to invest resources in it

- the higher the risk premiums men will demand as compensation for both the increased risks and also any extra grief incurred when negotiating

- the stronger the tendency for financial capital to be invested in the form of debt rather than equity

- the greater the reliance on concrete rules and covenants to enhance credit quality rather than just the use of collateral

- the shorter that maturities on debts tend to be, and

- the more that physical capital will be structured around shorter periods of production.

I could probably work up more with more thought and drawing in more concretes, but that's more than enough to demonstrate the point. These principles are a direct application of politics (in the sense of the study of broad social systems and principles of right and wrong in that context) to various facts of elements of how men go about producing and exchanging, integrating it with valuation of risk and returns, and so identifying principles of economics. Economics has to include some consideration for political theory, of right and wrong therein and the consequences thereof, right in the heart of many of its own principles.

Again, that is dependent on the idea that application = rationalist derivation. The very fact that the form of government influences not just the path of economic activity but whose analysis is presupposed by the determination of principles of economics shows a very strong dependency indeed.

FWIW, chapter 4 of what I have written deals with societies and social institutions, including implications for economics (for instance, the ideas of 'money' and a 'sale' are social insitutions as well as conceptual abstractions, as likewise are other institutionalised protocols of trade) - but, no, I am not publishing it in the near future.

JJM

From this I don't think that we have any significant issues to carry on about. The interplay of politics and economics (and other disiplines) is complex. I am not trying to set up some rationalistic limit. I just wanted to make the distinction between the vital, personal task of understanding what one's values should be and the scientific task of learning the economic consequences of the choices that people do make. Which is to say that there is a difference between politics and economics. I wasn't sure that the others who were arguing with me agreed. Maybe I should have asked them that.

C.W.

[C.W.]

Yes it is, on all three counts. Every single decision you ever make is by its nature a moral matter - the point of morality is to be a guide for decision-making. There are no decisions in which morality has no importance. A given level of importance may be incredibly small in any case, but it is always there.

In the three examples given, morality tells us that we should pick the one that has the greatest value to us, and that we should take great care and consider the whole context when making that decision. A proper moral code also includes consideration for legitimate options, and will state that when faced with them and after vetting them by reason to find that they are equally valid choices we are morally entitled (indeed, obliged) to pick the one that has the better emotional impact on us.

John, I don't want to go to dinner with you, or at least, I want to get you a copy of the menu prior to my arrival so that I don't have to watch your moralizing over your dinner selection.

No, I am not trying to trivialize morality, and yes, the general pricipal for a rational man is as you mention.

By your answer, however, you are projecting that moral view over the entire population. Now it should be. Is it? As an economist, are you assuming that every decision each actor in the economy is making every decision on the dictates of his own morality? And, even if that were true, what difference does it made to the economic consequences, not the political ones?

[C.W.]

That's good to study too, for someone who finds it of value (BTW: My list was "top of mind" and far from exhaustive.)

Economists can study both the "ought" and the "is". Since economics is about human behavior, these two are analogous to the study of what factors make for good mental health and the study of various types of actual psychological behavior. In psychology, perhaps there has been too much focus on the pathological cases; however, in economics, it seems to be the opposite. To the extent that one must deal with cases of pathology, it would be a value to understand those cases.

Agreed

[C.W.]

The words did not self-assemble on the page, nor did the page or the book self-assemble. The whole is the product of a volitional conceptual consciousness. As Rand pointed out when she distinguished between the metaphysical and the man-made, the man-made is not to accepted as the given. The book's words can be wrong, they can contradict nature while a rock's attributes cannot contradict anything in nature. The book can be true or false and right or wrong while the rock simply is. The book must be judged critically, the rock accepted.

The one thing you said that you hadn't said before was that "the book's words can be wrong...." And we all agree on that, well, maybe. I mean that the words are what the author had to say, they aren't wrong that way. They may be wrong in regards to their description of reality (which you meant). But when considering the truthfulness of the words, we are not considering the author. We don't care who the author was. We know there was an author, but who it was adds nothing to the truthfulness of the words, i.e., no appeal to authority, even Ayn Rand does not get a free pass. The truthfulness of the words is independent of the author (which is not to deny that it is the author that has either been correct or has made a mistake, we don't consider the author in our own process of evaluation). The truthfulness of the words depends solely on their connection to reality. That is why I say that it is independent of the author.

This is sort of like the process of conceptualizing, in which measurement is omitted. We know a book has an author, we know that the author is responsible for the content of the book, we just do not regard who that was as important when analyzing the truthfulness or value of the book.