And people have made already the point (to you) that what is cost-effective CANNOT be established outside the market but you insist on the faith based mystical proposition that what emerges out of the social order is efficient without any method of testing it. This is indeed a valid philosophical proposition but it is outside the realm scientific thought.
StrangeLoop, I understand your argument but I think “exists=efficient” reduces “efficient” into redundancy. One doesn’t need to torture “efficient” like this in order to make their point. My OP and replies from this (almost 1yr old – wow has it been this long?) thread (How to make the pin stand?) strike a note similar to your argument. Excerpt:
Theoretically, balancing a pin vertically on the surface of a dinner table is fairly easy and logical: One only needs to place the pin EXACTLY parallel to the forces of gravity so that they pull the pin STRAIGHT down and without ANY sideways components. On paper it looks perfect, but I have yet to see a pin standing for longer than one second before falling flat on the table. This is the “sensitivity to initial conditions” that I refered to above. It characterizes every complex system of acting/moving agents. The more productive and vibrant the system, the closer it is to the chaotic edge of sustainability. The ONLY thing that would make this “standing needle” system sustainable is limiting the system’s degrees of freedom in some way. For example, placing the pin in a pot of honey. At the minimum, in this “freedom-limited” system the pin would stand longer before it falls. I see anarchy as a needle trying to “stand” on the table unsupported – sensitivity to initial conditions inevitably pulling it down on the table. Minarchy: needle standing in a pot of honey. Communism/fascism/dictatorship: needle in a block of ice/concrete.
The question being: Acknowledging the benefits of BOTH liberty AND sustainability/prosperity, what’s the minimum freedom/liberty – at this stage of human evolutionary development – that each agent MUST give up for sustainability and prosperity of the social structures in which he/she participates? How much MINIMAL “goo” (limitation of liberty) does the pin need to stay straight?
Z.
If you choose to park in an illegal spot because its convenient location is a desired benefit and the risk of punishment is low, do you believe you are choosing a cost-effective choice?
I do not believe I need the price mechanism to decide which woman I should marry, but I do believe my actions reveal cost-benefit calculation.
How many times have you been accused here of making strawman accusations? Don’t answer that.
Nobody is talking about potential personal gains for private property violators. Nobody here is disputing this.
“efficient” in this context refers to net gain of welfare. For that you have nothing.
Quite. As you point out, his definition of “efficiency” is such that everything that exists must be efficient. That’s useful for explaining why certain things have existed in the past and why certain things exist now. However, the point behind Austrian Economics is that people have some degree of future orientation (otherwise known as time preference). Indeed, the Misesian concept of acting man necessarily implies this, as actions necessarily must be realized in the future. StrangeLoop’s treament of “efficiency” cannot have any ex ante explanatory power, only ex post. Any attempt to claim “because X has existed in the past and exists now, it must therefore exist forever and ever” will fail because of this.
But I’ll go out on a limb and say that StrangeLoop is also committing the fallacy of equivocation, at least implicitly. He takes his concept of “efficiency” and seems to imply that, somehow, what is efficient must therefore be good or desired. By that reasoning, someone who is mugged must therefore (because the mugging happened and is therefore “efficient”) have desired it to happen or see it as a good thing. While he certainly saw handing over his wallet as preferable to being beaten or killed (and still without his wallet), that in no way means he wanted to be mugged to begin with or thinks it’s okay or even good that mugging happens to anyone.
The fact of the matter is, some things happen to people regardless of whether they want them to happen in the first place. And their occurrences doesn’t necessarily lead to any change in people’s preferences or views about them.
z1235, if you don’t believe it is an efficient social arrangement, then you’ll have to revise certain basic assumptions in economics, especially the Austrian sort. Mises asserted that “rational action” is pleonastic–all action is rational insofar as it relies upon a means-end analysis wherein ends are subjective values. If we accept these conditions, then we must presume that people do and will continue to act for the sake of greater satisfaction. If the ex post utility did not mach the ex ante expectation, then rational individuals will surely learn and revise their actions (e.g., if hitting your head didn’t relieve dissatisfaction, it is incredibly unlikely you’ll keep hitting your head throughout the day). Hence, over time, only efficient institutions can persist.
Because the costs of not revising their action exceed those of revising it. Thus it is efficient. This holds in a market context where non-consumption is possible, not where continued consumption is mandated by force.
It’s only as redundant (or perhaps tautologous) as the theory of natural selection: what is adaptive survives, what survives is adaptive.
There was no strawman: you stated quite clearly that “what is cost-effective CANNOT be established outside the market,” and that is simply ludicrous, as I demonstrated.
I don’t think the primary criticism that Austrian economics makes of government is that it is inefficient. That’s more of a paleo-conservative thing (yes, some Austrians are paleo but not all).
No. What I claim is that the Prince has no more omniscience than I have and that, failing omniscience, he has no more access to “greater good” arguments than I have, since he has no better knowledge of what actions actually serve the greater good than I have. Since almost all arguments for State action are based on a greater-good argument (“You have to pay the taxes because, even though it’s a small loss for you, it’s a great gain for all of society”), the moral/legal/rational case for overriding an individual’s natural property rights is dead in the water.
Let’s say I begin operating my own courts in competition with the State’s courts, for example. The State comes to me and says “Your courts are illegal, close them down immediately or our courts will have you hauled up on charges.” I ignore their threat and land up in a State’s court. The State’s counsel argues that I have violated “the law.” When I point out that the State which employs this court wrote the law and that this is a conflict of interests, the State’s counsel will give some sort of argument based on the Constitution (implicitly, social-contract theory) or some other resopnse that can inevitably be reduced to “your interests must be sacrificed to the greater interests of Society.” But who is he to speak for the “greater good” of Society? Is he omniscient? I think not!
As has been noted, your notion of efficiency breaks the assumptions on which economic efficiency is built. Without voluntary exchange, there can be no revealed preference and without revealed preference we don’t have any basis to evaluate whether the state of affairs reflects people’s actual desires.
I agree with that entirely! We can’t, don’t and should not pretend to know what sort of “outcome” is indicative of a natural social order. That said, that doesn’t mean there is nothing which can be improved and no rational, scientific basis on which to make recommendations for improvements. Your very interest in this subject indicates to me that you agree.
Yes, and we have frontal lobes that permit us to pry apart at least some of the reasons why evolution has selected this or that social arrangement and then feed that new understanding back into our evaluations of the present social order, permitting us to construct useful, reasoned critiques of the modern social order.
Clayton -
Great, you understand my argument and we’re saying essentially the same thing. I look forward to your response to the rest of my post. 
One caveat, however: what is adaptive now may not necessarily be so in the future.
And this is coming from somebody who constantly inserts terms like “Hayekian” and “spontaneous order” in his argument, and as is quite evident by your above statement, you have absolutely NO clue to what makes this Hayekian order even possible.
Let’s be quite clear: Hayek endorsed a State, so it seems that I have more in common with him in this argument than you do.
NO that is just one thing you have in common with him.
I totally agree; essentially, my argument against the libertarian utopia is such that it has not been the efficient social arrangement so far, not that the libertarian dream forever remains an impossibility.
Of course, the Stigler critique does make use of a less ideological understanding of the government (e.g., the optimal level of regulation might not be zero).
I do personally value wealth-maximization, and that is how I judge policy; however, I don’t believe this particular arguments rests on normative criteria. Rather, efficiency is simply what happens when we first assume that individuals are purposive agents seeking to maximize their bests (and minimize their costs).
“If we presume that individuals acting in their own self-interest (i.e., in a manner where benefits outweigh costs) produces coordination that generates spontaneous orders (à la Adam Smith and F.A. Hayek), then I don’t believe a clear demarcation between public and private sectors is warranted…”
The essential characteristic of a spontaneous order is that it occurs unwittingly. It is an institution which serves the interests of individuals, but without them intending for it to do so. This characteristic is not a feature of government.
Edit: That is to say, the individuals act to serve their interests, and the institution which arises is an unwitting byproduct of these actions.
A core feature of my philosophy, in general, is that interest trumps mere words: ideologies are costumes to our interest, nothing more; that is, one can concoct a sophisticated, rationalist philosophy for why one should love one’s own children, but I believe the root of such belief is simply biological instinct and interest.
Thus, arguments advocating “the greater good” are merely post-hoc rationalizions for social processes that are practiced, more fundamentally, as an efficient outcome of competing interests. I consider aggression one feature of the natural world to be used; the amount we now see can be considered the efficient amount.
bcyclwutztht, would you discount the Roman Catholic Church?
I have no clear procedure to demarcate what is spontaneously-generated or not; I believe all social interaction is a continuum, and what has been produced cannot be so easily disentangled as you assert.
Wholly crap! Here’s another straw man.
It is simply impossible to have an argument with you. Like the big debate over ABCT, you are too lazy to do any serious study and examination of the issues you are attacking. At least too lazy for me.
I agree entirely, and if you believe in such informed feedback loops, then you will see why Stigler believes we must have the most efficient social arrangement we can achieve; if we didn’t, then that same feedback loop would have corrected the inefficiencies.
You can, perhaps, make predictions about where society will go, but that seems to be easily trapped by wishful thinking and “the pretence of knowledge” (as Hayek called it).