Austrian Utilitarianism

Economics Economics Questions
1

Hi everyone,

I was wondering what is the proper perspective regarding utiliarianism that austrians take? Let me clarify a bit- I am writing an essay for a Computer Ethics class and i have to apply the “act utilitarianism” to evaluate the moral ethics of a given scenario.

I had noted that value is marginal not objective. And it is ordinal not cardinal. It is impossible to really sensibly and meaningfully measure value. Thus it is really impossible to make any sort of interpersonal value comparisons.

But i am not sure what the proper application of the Austrian view of utilitarianism is. I think Mises was utilitarian- but not of the notion that one could somehow measure and compare interpersonal units of happiness. And Rothbard was flat out against utilitarianism. But i don’t know exactly how should one apply the knowledge of economic thought to utilitarianism- or if one could even make sense of utilitarianism at all.

http://mises.org/daily/5683 After reading this article i can’t exactly make sense of what Mises’ utilitarian position was and how does one apply such utilitarianism in evaluating scenarios or moral ethics

Any help would be much appreciated. Thank you

2

Now the thing is that you’re going to have a hard time finding a real “Austrian”, not “libertarian” view of utilitarianism. The ethical work and economic work of the Austrians are distinctly different, and the only Austrian Economist I know of who really seems to have provided anywhere near a praxeological interpretation of utilitarianism is Mises, who is in favor of a basic type of utilitarianism, although I’d deem it more “societalism”. The most in depth look into this I found was scattered around Mises’ own book Theory and History, which I would also reccomend as a simply excellent read.

You’ll have a hard time finding anything really “Austrian” about most modern looks at utilitarianism beyond the fact that one cannot measure interpersonal utility. Indeed, I’d argue that Rothbard’s ethics fail upon praxeological grounds which he seemed to abandon.

Also, to correct something:

“I had noted that value is marginal not objective.”

Value is Subjective, not Objective, and additional means are judged Marginally, not Holistically

3

Do you mean to say that in TaH, Mises explains what he means by “utilitarianism?” From what I’ve read, he defines the term differently.

4

^

Sorry about the stupid typo.

I thought that I addressed that within my post. Mises isn’t strictly speaking a utilitarian, but he defines himself as one, and he certainly is in the same vein as the utilitarians, even if he got there in a vaugely different way than most do.

5

Nedoxy,

Thank you for the reply.

From my understanding of “marginal values”, i was always under the impression that “marginal values” refers to the axiom that value is relative to person, space and time.

And marginal value also merely means that value is applied to finite sets of goods at a definite time and space by very specific individuals. That is, value changes person to person. And value can also change given different contexts of time and space. And that no one ever values or acts on “classes” of goods. Ie. you never trade entire classes of water for entire classes of diamonds. You always trade or act on very finite sets of diamonds or water (ie 1 oz diamond for 1 oz water).

And i think i was under the impression that subjective value at least implicitly implies that value is merely subject to each person- not necessarily subject to time or space.

i may have missed something in my econ/praxeological studies…

I am trying to figure out how to apply praxeological methods to ethics in order to make an evaluation of a given scenario. Its quite difficult to do- and very frustrating since most literature regarding the subject of utilitarianism and praxeology seems rifted, sparse, or hard to find. Most of the proponents and applicators of “utilitarianism” tend to just ignore minority in place of majority preferences. i point out this fallacy and even show mathematically(well using simple mathematical precepts) that the cost/benefit to the minority can just as easily outweigh the cost/benefit to the majority regardless of how many people the majority may be.

i will check out the book Theory and History- hopefully that could give me some pointers. but the essay is due in like 2 weeks so i hope i can understand this stuff quickly. Thank you very much

6

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7

I imagined you were eating peanut butter and it affected your typing to type as such …

I know that he is a different sort of utilitarian- but he does define what he means in TaH?

8

hmmm… i kind of skimmed through the book and it seems to be more of a critique on historians and historian thinking. He does mention the utilitarianism- but he doesn’t really explain how its applied or anything… and its more of a collectivist vs individualist context… doesn’t help me much.

I suppose i am looking for some kind of libertarian/classical liberal explanation of how to properly apply utilitarian thinking with knowledge of the praxeological nature of values…

gah- im in such a dilemna… The essay says i have to apply act utilitarianism to evaluate whether each of the actors actions are moral or immoral. But

i know that any such evaluation is at best arbitrary and fallacious- since all values are “subjective” to person, place, and time. And values can’t be compared amongst people in any meaningful manner.

so i really have no idea what to do- i guess ill try to talk with my professor a bit… But i think i should at least have some idea of how to properly apply utiliarianism if possible…

Thank you

9

"From my understanding of “marginal values”, i was always under the impression that “marginal values” refers to the axiom that value is relative to person, space and time. "

No. I’m sorry but you’re confusing the terms “marginal” and “subjective”.

The term marginal, in an economic sense, refers to the fact that things are valued based upon the use value derived from the addition of one additional unit of a homogeneous good. For instance I will value ice cream based upon my use value for each additional unit of ice cream. The significance of marginal utility analysis is that this reflects itself within price, as units of goods are based upon each additional unit of the good, its marginal utility, as opposed to the total utility. Originally this solved the infamous “water and diamonds paradox”, which asked “If water is more useful than diamonds, why is it that diamonds are much more valuable than water?” The answer is, of course, that water is valued based upon its total supply, and you will value one more gallon of water based upon its utility alone, not the utility that you will derive from all the water you own.

Subjectivity implies that it depends entirely upon a single actor’s state of mind. This will then mean that he will have different values than everyone else, and that these values will change based upon a large number of different factors. Because value is merely internal, it changes with the actor’s state of mind and understanding of his universe.

"I am trying to figure out how to apply praxeological methods to ethics in order to make an evaluation of a given scenario. "

I’d be happy to try to help you out as much as possible. Now Theory and History can give you a somewhat good idea of what Mises’ believed, but it might not be much help other than that. Other books that I’d look into are Mises’ Human Action. Just the first 50 pages or so should tell you just about everything you need to know about the praxeological method. If you need reinforcement on the matter there’s this short essay by Rothbard, the first chapter of Man, Economy, and State, Menger’s treatise which covers almost exclusively the matter of subjective valuation (although it’s not strictly speaking praxeology) especially in chapter 3, and Hoppe’s whole book devoted to the topic of reinforcing subjectivist ideals in the realm of the social sciences. Once again, your problem is going to be on finding any work done to evaluate ethics with the science. I’m not sure that you’ll find it here in this book, I’ve never read it but you might find some relevant work in Rothbard’s The Ethics of Liberty, especially on chapter 26 which seems to be a critique of Misesian utilitarianism, and in MES above, the final section of which is entitled “Anti-Market Ethics: A praxeological critique” which should at least give you an idea of how praxeology can be used within the ethical realm. Finally, for a better understanding of exactly what Austrian Economics is and how its methods are used, I’d look at this essay.

The only users around here who I think could help you are Vive and Dave, both of whom might be willing to help out.

A major thing for you to remember:

Praxeology is supposed to be value-free. This means that ends cannot be critiqued, we cannot say that the fact that someone wants X is stupid, it can only judge the means, I.E that choice Y is a stupid way to get there.

That’s about all the advice that I can give you. I really hope that helps you, and I hope I didn’t utterly overwhelm you with sources

10

"The essay says i have to apply act utilitarianism to evaluate whether each of the actors actions are moral or immoral. "

Hmm… Yeah I’m sorry but that can’t really be told by praxeology as such. You can contest the utilitarian concept, or utilitarianism as a meaningful concept using praxeology for both of them (no one seems to understand what a magnificent tool praxeology is for contesting most ethical systems, especially utilitarianism). You can also use praxeology to evaluate the specific behaviors of individuals with the utilitarian assumptions in place. If through the actions of individuals their happiness is maximized, then you could say that this is a praxeological case of morality, but only by throwing in a non-praxeological assumption, and evaluating your own values as the area for praxeological judgment (mind f***, I know).

Does any of that help?

11

I wouldn’t worry too much about the Austro-libertarian view of utilitarianism as much as being sure that you differentiate act utilitarianism from rule utilitarianism – this is probably what your professor is looking for. But if you are interested in including the austrian perspective, heres how I would do it.

  1. Go over act vs. rule utilitarianism in general. The key here is that act util. says “do whatever act increases maximum utility” while rule util. says “follow rules that, when followed by others, will increase maximum utility.” Rule utilitarianism is generally seen as superior because it manages to avoid those wierd cases where murder or rape could be justified if they save 1 million people, etc. because rules such as “don’t murder” by and large increase general well being. The downside of rule utilitarianism, however, is that it may collapse into act utilitarianism. That is, when breaking the rule maximizes utility, exception rules are made, and exceptions for those exceptions, until you reach the point that each act is judged on its own.

  2. Introduce the Austrian-subjectivist criticism of traditional utilitarianism. Since interpersonal utility comparisons are impossible, any hope of maximizing total utility is guesswork at best, and at worst, elevates the observers value scale over all others. What Hitler thinks best isn’t the same as what you or I think, etc. The subjectivist tradition in utilitarianism, then, says that we measure “right and wrong” by how it increases satisfaction (utility) of the individual by that individuals own standard.

  3. Solve the problems using an act utilitarian approach, but compare and contrast both the traditional “most hapiness for the most people” with the individual-subjectivist. You can even show how the interests of the individual tend to align with the interests of society because of laws and social conventions which create incentives / disincentives leading the individual to play nice instead of cheat and lie.

12

Thank you everyone,

Mikachusetts, thank you for the help in solving my dilemna. I will try to “apply” the act utilitarianism. well i really can’t apply it. i can only really “guess” at it and impose my own will on it which makes the whole notion of analysis flaky at best.

like i can say, “The lawyer in this scenario doing X creates happiness for person D but unhappiness for person E. and according to my happiness scale- such an action X outweighs the happiness/unhappiness of D and E”. I really do despise such flaky and superluous statements as i can’t really use it to make any sort of in depth analysis to prove or disprove any proposition.

Coming from a math and computer science background, this is the worst- being forced to use a flawed system that is incapable of proof or disproof or any sort of in depth query

Thank you though for all your help.

13

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14

Well, you don’t even need to address the happiness issue too directly for most of these. For example, you can just point out the consequences of a certain act, and then analyze the results from the point of view of the average joe.

So since this is computer ethics, take something like patenting a specific piece of code or whatever. Now this will clearly benefit the company who holds the patent, as well as the lawyers they hire etc. It would have a negative effect on the firms competition, because they would no longer be able to freely utilize this piece of code. At the same time though, you could show how patenting this code harms the consumer by restricting competition which leads to higher costs. Now while you can’t exactly calculate the net utility after gains and losses by all the players, you can make a strong case that the long term harm to the consumers and the stifling effect it has on the market generally outwieghs the short term financially benefits reaped by the the firm and lawyers.

15

I would still have to preface such a statement with- “according to my own value and preference scale”. That is “according to my own current value and preference scale, valuing peaceful voluntary competition in the marketplace as my highest value, patent X decreases innovation and imposes unimbued costs, thus it is immoral”

Also, i got back my rough draft essay today. It was pretty bad- red marks all over. My professor said i needed to include references to support the marginalism and the ordinal value stuff. (now im not sure that marginalism was a proper critique for utilitarianism). But i also need some references on the Subjectivity of Value and the Revealed Value Theory.

And Im not sure if i should bring up like opportunity costs. My teacher seems to be a stickler for “citing sources”.

I think i have a clearer idea of what i will do this time around… I will try to first qualify my essay a bit more clearly. I will first discuss the Subjectivity of value and how its impossible to measure and compare utility in any meaningful sense because of three things:

  1. If we were to make any attempt to survey a person of his own preferences, the person’s preferences can change several hundred times during the survey process, such that the answers the survey no longer reflects the surveyee’s set of preferences or degree of those preferences. This is merely the axiom that a person’s preferences can and do change relative to time and space (whether the change be minor or major)

  2. Even assuming that the surveyee’s preferences never change at all during the span of the entire survey and the span between surveys, the accuracy of the data entered can never be verified in a meaningful sense. If for example Bob was surveyed on the question of “how much happiness/utility does 1 apple generate for him”, and he were to reply with “1 util”, his actual value of the apple may be either greater or less than the answered “1 util”. No one can ever verify the truth and accuracy of his answers unless they could first objectively and statically define a unit of 1 util, and second, measure his actual values using some other objective and universal method

  3. I think i remember that Bentham, i think the founder of utilitarianism, in his “Rationale of reward” said something about, “Prejudice aside, push pin is of equal value with the sciences and poetry…”. How then can anyone prove or disprove such a statement unless he is protruding his own set of values on the scenario? I for one, find push pin to be somewhat higher in value sometimes than that of poetry, and other times less than poetry. And any man may hold similar contentions. Thus it is insufficient to make any sense or evaluation of the ends of push pin, sciences or poetry unless one imposes his own subjective value judgment.

Then finally i want to discuss the revealed value theory and just show how value can only be revealed through actions of actor and not really measured.

Then in order to do a very rough and crude analysis using act utilitarianism, i will set up some arbitrary value scale of ends with an arbitrary cardinal value. ie. Free speech = 1002 utils, Privacy = 1000 utils, Protection by FBI from alleged danger= 5 utils, More people eating apples = 100 utils, Respect for and the execution of voluntary contracts = 10,000 utils. etc

Then i would just like say something like, "According to my set value scale, the obtainment of information by the FBI to indicte person A for public danger violated person A’s privacy and thus is a net negative. 5 utils - 1000 utils = -995. And thus the act is unethical. "

I dont want to ramble too much. Thank you for the help. I hope this will make the essay a bit more sound. What do you think of this approach?

16

Also i would much appreciate any good references for the Revealed Value Theory, Subjective Value theory- why value is subjective not objective, and possibly opportunity costs. I think i might be able to dig up something on the opportunity costs. Thank you