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Is Objectivism its own school of economic thought?

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Obviously, Objectivism doesn't deal with the technical aspects of economics, but given the importance of the field's ideological component, and the fact that the proper ideological foundations aren't found in any other school of economics (that I know of), could Objectivism be considered a school of economic thought in itself?

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Political arguments often draw on "macro" Economic ideas. The primary thrust of political argument is moral. Still, one has to show one is practical, or else be dismissed as an ivory-tower dreamer. Even communists theorize that central planning is efficient. Early work on "macro economics" was mixed in with Politics. It often went by the name "political economics" e.g. Mills and Say.

Nevertheless, one can agree about certain facts on wealth-creation (Economics), and yet have different views about how society should be organized (Politics), given those facts. One can have a Political view that lays down a role for government to enforce altruism, while agreeing that the free-market is the most efficient mechanism of delivery. In that sense, the body of knowledge that is economics is not dependent on one's view of Politics. One can have either an altruistic or an Objectivist ethical view and still agree with almost everything that Adam Smith and many of the classical economists said about government intervention in the economy.

Even if Economics were to be classified as a sixth branch of Philosophy, it would be a branch to which Objectivism has not contributed. Objectivism -- as in "the philosophy of Ayn Rand" -- did not come up with any new economic theories.

Right now Economics is a mess of a subject. Parts of it belong with Ptolemy's earth-centric theory. After the classical Economists, no school of "macro" Economics has really brought out any theoretical development that is both great and broad. Of the good schools, more than half of their good stuff is re-packaged or expanded classical economics. Hopefully, some day an economist -- perhaps even an Objectivist -- will put forward a good way to conceptualize the occurences of "macro" economics, and will lay the foundation for people to build enduring principles in that area. Something like that would truly be a new school of Economics.

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Obviously, Objectivism doesn't deal with the technical aspects of economics, but given the importance of the field's ideological component, and the fact that the proper ideological foundations aren't found in any other school of economics (that I know of), could Objectivism be considered a school of economic thought in itself?

I'd say no. Objectivism is a philosophy; economics is a special science. A given school of economic thought may well have methodological presuppositions which are compatible (or incompatible) with Objectivist philosophy, but that doesn't mean that Objectivism *is* a school of economic thought. It's entirely possible to have multiple schools of economic thought that would be compatible with Objectivism -- methodological presuppositions do not entirely determine content.

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Which foundations in particular?

I see Clive has posted his answer while I was writing mine, but anyway, here are the foundations I consider to be crucial for economics:

  • Man's life qua man as the standard of value
  • The virtue of productivity
  • The role of reason in creating wealth
  • The trader principle
  • Being "materialistic," i.e. concerned with life on Earth
  • The idea that rational men love their work (as opposed to "disutility of labor" theories)

And, needless to say, a proper epistemology is also indispensable.

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The moral foundations. All other schools focus on practical considerations.

Economics, being a science, would not and should not have a moral foundation. Although it does require some sort of epistemological foundation, like the fact that people make choices as an example. Keynes isn't wrong because what he suggests is immoral. He's just factually wrong. That a free market is efficient isn't enough to say something is morally good. A free market being efficient can be discovered without any specific morality. Unfortunately, I think many economists come to factually wrong conclusions because they specifically try to fuse economics and morality.

Edited by Eiuol
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That a free market is efficient isn't enough to say something is morally good. A free market being efficient can be discovered without any specific morality.

Doesn't the definition of "efficient" depend on what goal you want to achieve? Statists don't think the free market is efficient because it doesn't allow them to gain and keep what they want: political power.

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Doesn't the definition of "efficient" depend on what goal you want to achieve? Statists don't think the free market is efficient because it doesn't allow them to gain and keep what they want: political power.

Efficient is usually a pretty objective term, so of course a statist would be factually wrong that a market is not efficient. Due to their moral beliefs, they'd certainly evade anything that suggests that a free market would work well. People operating on self-interest is just too scary. It would be one thing if a statist understood free market economics, but unfortunately they put their morality before reality.

When I say a moral foundation should not be part of economics, I just consider them to be separate things. Whether or not productivity is good has nothing to do with a free market being able to achieve it.

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The argument from economic efficiency has a few problems. Here are two:

- it is impossible to prove that the free market is more efficient than any other arrangement

- it is possible that your opponent could not care less about efficiency, as many socialist and environmentalist now claim

The only defensible argument for the free market is the one which stresses that:

- one defends freedom and individual rights - on ethical grounds - and the free market is but one of the consequences of freedom and rights, namely in the economic realm

- and to stress that even if the economic freedom would not result in the maximum economic efficiency (whatever this could mean), one would still defend it - on ethical grounds;

- it is also important to stress that freedom and rights imply the absolute ban on initiation of force and perpetration of fraud, from whatever quarters it may come, including government.

In this contextually embedded form the pro-free market argument is logically and ethically tight.

Alex

Edited by AlexL
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I'll begin a response to the titular question, namely, that Objectivism isn't it's own branch of economics, and it's economic theory is more or less built off of the work done by those in the Austrian School of Economics (Mises, Hayek, etc. See Capitalism: The Unknown ideal). As for your post AlexL, most socialist governments DO in fact promise economic prosperity via the implementation of their systems (I would think that is fairly synonomous with efficiency in this context). From an economic standpoint, both Mises and Hayek of the Austrian school characterizes any attempt by central planners to simply "know" where and how resources are best allocated futile. Further, it often leads to central planners substituting their value judgements for the value judgements of the governed (For more info here, Hayek wrote a book titled "Socialism: The fatal conceit"

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When I say a moral foundation should not be part of economics, I just consider them to be separate things. Whether or not productivity is good has nothing to do with a free market being able to achieve it.

Morality and economics are separate ideas, but no two truths are unrelated included these two. Productivity is an ethical concept, ethics is a prerequisite to understand politics, politics is a prerequisite for economics.

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The argument from economic efficiency has a few problems. Here are two:

- it is impossible to prove that the free market is more efficient than any other arrangement

- it is possible that your opponent could not care less about efficiency, as many socialist and environmentalist now claim

I think you can actually prove a free market is absolutely the most efficient. Of course to say if a free market is good, that requires a moral foundation. But does being a Keynesian or Moneterist or Austrian require a particular morality? Not at all. Keynes isn't wrong because he's morally wrong. He's just plain wrong.

I also disagree that politics is a prerequisite of economics, just like psychology doesn't require a basis of politics. The study of economics, anyway. But still, why study something you don't think is actually a good thing? So a solid moral foundation is still useful and important.

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Psychology requires ethics, not politics. So does medicine and every other science based on productivity.

Anyway, what is at stake is not the trivial matter of studying something good in preference to something bad, but knowing which principles constrain possible economic conclusions because they are hierarchically prior. Nobody who accepts the moral commandments of religion can take human rights seriously, especially when they conflict with religion. And if one doesn't regard human rights as an important political principle then capitalism has nothing to offer.

edit: delete requote

Edited by Grames
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As for your post AlexL, most socialist governments DO in fact promise economic prosperity via the implementation of their systems (I would think that is fairly synonomous with efficiency in this context). ...

And what does this imply with respect to the validity of my arguments?

Alex

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I? No, I can't. Can you?

Fine, drop the "you" and change it to "one" and it's fine. I am not an economist. I have not done extensive research on free market economics to tell you WHAT objectively proves a free market to be most efficient. But given what I know, it is true. A government (intervening in a market) cannot run efficiently. It's limit is not based on cost. The social benefit comes first. So it has no means of determining a price that is not arbitrary. This makes it impossible to judge value in any good. Taxation also drains resources that may have been spent at some other company, so a government can acquire resources when it would not otherwise. Notice that I have not made any moral statement.

(I can perfect this statement with research, but I think you understand what I'm saying)

And what about the case when your opponent could not care less about efficiency?

Then they probably just think it is immoral for you to strive for the highest profit. They could say "Since the free market is efficient, it encourages people to act in their self-interest. This is a bad way to achieve a just society, where everyone cares for one another." But many people DO care about efficiency, but for some reason, they don't realize what produces efficiency. And out of all the people in the world, even fewer realize what a free market really is. So you probably will never find a person that both understands free market economics AND opposes it on moral grounds.

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Science does not and should not have a moral foundation? I disagree, no human activity can lack a moral foundation. It is moral to be logical and to accept the evidence of the senses.

edit: deleted requote

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.

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.

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.

The arguments in the U.S. today are really about the morality, not the economics. It is true that our opponents do try to obsuficate what the economics of a free market are, but I think that many people who are altruists would still reject it if the understood it perfectly.

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Political arguments often draw on "macro" Economic ideas. The primary thrust of political argument is moral. Still, one has to show one is practical, or else be dismissed as an ivory-tower dreamer. Even communists theorize that central planning is efficient. Early work on "macro economics" was mixed in with Politics. It often went by the name "political economics" e.g. Mills and Say.

Nevertheless, one can agree about certain facts on wealth-creation (Economics), and yet have different views about how society should be organized (Politics), given those facts. One can have a Political view that lays down a role for government to enforce altruism, while agreeing that the free-market is the most efficient mechanism of delivery. In that sense, the body of knowledge that is economics is not dependent on one's view of Politics. One can have either an altruistic or an Objectivist ethical view and still agree with almost everything that Adam Smith and many of the classical economists said about government intervention in the economy.

Even if Economics were to be classified as a sixth branch of Philosophy, it would be a branch to which Objectivism has not contributed. Objectivism -- as in "the philosophy of Ayn Rand" -- did not come up with any new economic theories.

Right now Economics is a mess of a subject. Parts of it belong with Ptolemy's earth-centric theory. After the classical Economists, no school of "macro" Economics has really brought out any theoretical development that is both great and broad. Of the good schools, more than half of their good stuff is re-packaged or expanded classical economics. Hopefully, some day an economist -- perhaps even an Objectivist -- will put forward a good way to conceptualize the occurences of "macro" economics, and will lay the foundation for people to build enduring principles in that area. Something like that would truly be a new school of Economics.

My experience in economics was that the "macro" was created to smuggle in government intervention. The pro-statist "economists" could not provide any justifications in a "micro" economic structure where the focus was on the individual. So I would be interested in a justification in having a "macro" approach. Don't we already know all we need to know about "marco"?

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I see Clive has posted his answer while I was writing mine, but anyway, here are the foundations I consider to be crucial for economics:

  • Man's life qua man as the standard of value
  • The virtue of productivity
  • The role of reason in creating wealth
  • The trader principle
  • Being "materialistic," i.e. concerned with life on Earth
  • The idea that rational men love their work (as opposed to "disutility of labor" theories)

And, needless to say, a proper epistemology is also indispensable.

These are all ethical qualities and are the basics for a free society/government. I agree entirely that they are important.

But that does not make them important for a science. The science of economics wants to know what happens when men produce and trade. It doesn't really care what attitude they have or what their values are. It will note that they have attitudes and values, but the science must work regardless what they are.

Thus the consequences of trade and production will be the same in a society of altrutists and people who are rationally selfish. Of course, the rationally selfish will be more productive and tolerate no government intervention. A philosophy would explain why that is so. It is that the laws of economics apply to all, regardless of their understanding and philosophy. Just as a science of psychology would explain what is happening in a human's brain, and would be true regardless of the intelligence or rationality of the subject. (It would certainly note the consequences of irrationality, but would do so on grounds derived from induction from the world, and not from a philosoply. That is why there isn't an Objectivist phychology.)

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My experience in economics was that the "macro" was created to smuggle in government intervention.
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.

The pro-statist "economists" could not provide any justifications in a "micro" economic structure where the focus was on the individual.
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.

So I would be interested in a justification in having a "macro" approach.
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.

Don't we already know all we need to know about "macro"?
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. Edited by softwareNerd
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