Hoppe's Theory of Industrial Revolution by Natural Selection

Miscellaneous History
21

How could we have capitalism without having figured out that capitalism works?

Because we did, for a long time and in many places. You don’t need to understand a single thing about economics, other than that scarcity exists, in order to have a legal system; and the logic of law is not dependent (nor did it depend upon) any praxeological formulations or understanding of marginal utility. An understanding of capitalism post-dates capitalism by centuries.

It wasn’t until half a century ago that humanity figured out that price controls don’t work.

So what? It’s made no different and they do it anyways. And most of ‘humanity’ doesn’t understand this for piss. If we had the actual historic legal norms in place instead of fiat law this would be irrelevant, and with fiat law in place it is still irrelevant. You don’t need any understanding of the business cycle to prevent business cycles. You just need to understand that fiat law is nonsense and government is a myth. None of that requires you to read one page of Menger.

And Mises figured out that socialism can’t work in 1919.

And if it wasn’t for the BS statist system that had overtaken people there would have been no need for him to develop the theory of economic calculation; and after he did it made…no difference. States don’t care, and voluntary socialists discover damn quickly that it doesn’t work.

If economics, as a science, hadn’t figured these things out, we wouldn’t even know what policies to implement.

‘Policy’ is crap, and useless; and the government couldn’t give a damn what economics, as a science, has figured out. They care about status, power and money.

And economic policy matters more than anything else, it’s the difference between Nigeria and Manhattan.

No, a customary legal tradition is the difference between Nigeria and Manhattan; and Manhattan is about two steps away from a socialist police state anyways. A knowledge economics has nothing to do with it, a historical accident does. Every time the government passes a law or makes a decision it gets it wrong. The only good ‘policy’ is no policy, the only good number of police is zero, the only good ruling is one that doesn’t get made in government courts.

I agree that macroeconomics as a subject is pretty useless. You can work for the state or a think tank, but that’s about it.

Macroeconomics, for the most part, is just baloney the econ-priests come up with to glorify their Great God Leviathan.

22

People live so much longer now that kid’s are much more profitable in that sense. Longer life cycle means better return on education and such.

23

RJM: “Then what they’re doing isn’t economics. Economics is the science of human action, not number jockeying or foresight.”

But mechanism design is quite compatible with praxeology, read about it if you haven’t already. True, most of MD research is performed by left-oriented people (so they think it’s ok that the collected money does not cover the project cost), but if you graft MD onto sound assumptions it may provide interesting insights into markets.

24

Uh, after some thought - mechanism design generally assumes interpersonal utility comparison, so I take back my assertion that it is compatible with praxeology.

Anyways, MD’s existence was useful for me as it was a vector through which I learned about Austrian school :slight_smile:

25

Re: the lack of need for intellectuals.

In terms of a full-paid position I agree with Ricky, but if you’re engaged in intellectual warfare with people who think that taxation is the same as charity then having an intellectual class on your side does serve a purpose.

26

It might be useful for political propagandistic purposes, as I said earlier, but I kind of doubt our efficacy except through rare accidents. I think all this intellectual stuff is pretty much a hobby. This is not to denigrate intellectuals, of which I would assent to a categorization as, but just to point out that it’s basically people using their brain power for things that will never be of any use or interest to anyone but other intellectuals. Like stamp collecting, it’s just something you do because it’s interesting. I think intellectuals tend to assume that just because we are smart we are some paragons of the human race. Usually we’re just weirdoes and genetic flukes whose main productivity has absolutely nothing to do with our actual interests. The hubris of intellectuals is one of the things that has bred the managerial state as we know it.

Mises was more self-aware than most intellectuals. Paraphrasing, he told his wife Margit that if she wanted money he was the wrong man to marry. He would write about money but never make any.

27

Although economics, properly speaking, isn’t ‘productive’ as such, it is, just as philosophy and anything else, something that people could appreciate in knowing just for the sake of knowing. So it’s true that in a free society, there would be less economists, but there would be some. (Some) people actually like knowing this stuff. It’s not ‘useless’ if people valuate it - but the knowledge of economics would be, more or less, a consumption good. (And there would have to be some and fewer than there are today economists to provide it.)

The practical relevance of economists would or could be to explain that there is such a thing as an anarchical order in the market economy - if people are willing to listen, that is, which seems to be a minority position.

28

Although economics, properly speaking, isn’t ‘productive’ as such, it is, just as philosophy and anything else, something that people could appreciate in knowing just for the sake of knowing.

Sure; but in that role it’s not any more important than comic books, etc. It’s entertainment. Mathematics is the only branch of higher philosophy with many serious applications.

So it’s true that in a free society, there would be less economists, but there would be some.

Yeah, but I think most of them would have other jobs. There would probably be some economics teachers, since undoubtedly some people are interested and will pay for it, but I think you will see it revert to the classical and middle ages model where economists and philosophers are bankers and stone masons by trade.

29

Which where, in a very meaningful way, the good old (intellectual) days.

30

Yeah, philosophy has largely sucked horribly from the Enlightenment onward. Every decent 20th century philosopher I know of was basically an Aristotilian.

31

I wasn’t even talking about content, but the style and place of intellectual investigations.

32

Then what they’re doing isn’t economics. Economics is the science of human action, not number jockeying or foresight

You clearly don’t know what you’re talking about and you’re attempting to define yourself as being correct, otherwise you’d know that defining economics as “the science of human action” doesn’t exclude mechanism design.

Working 10 hours a day 7 days a week reading books about a subject almost no one cares about and which 90% only exists because of State-grants. Most higher education is utterly useless, as are most higher educators; and most people drawn to art, bureaucracy and academics are basically people who lack the talent or drive for real jobs like brick-laying or stock-jobbing.

Once again you’re trying to sound authorative whilst talking out of your ass. The vast majority of academic research is done via journals and papers, not through book, and reading journal papers comes alongside writing code, looking for data, thinking about ones one research (and putting it into word), refereeing, teaching, advising etc.

But let me guess, you’re going to tell me that according to your personal definition of working, these activities aren’t included?

33

I didn’t hear any mention of intelligence in his discussion. He says there are three components of getting richer:

  • Capital accumulation (low time-preference)

  • Participation in the division of labor

  • Population control

This is an excerpt from a longer lecture available on his Property & Freedom Society website. I recommend listening to the whole lecture.

I think Hoppe is spot-on in his analysis and I think this is an area ripe for study. How has industrialization impacted human time preference? Has it driven it downward (I’m betting it has)… and, more interestingly, how could we go about affirming/denying such a speculation? How has industrialization affected human participation in the division of labor (the propensity to exchange rather than self-produce)? How has industrialization affected the incentives to population control? None of these directly bear on the Mensa conception of intelligence (puzzle-solving ability).

Clayton -

34

Sounds like someone is short of money and thinks he is highly intelligent.

Bingo.

35

Clayton, I listened to the longer lecture which clarified a lot of points. I also had a look at Farewell to Alms. The ideas you raise are interesting but this wasn’t the point I was contesting. The question is whether the points you mentioned are sufficient for growth akin to that which ocurred during the Industrial Revolution - Hoppe says that they not, but rather that low-time preference man had to evolve and reach a certain percentage of the population in order for this to happen. He says that because primitive man essentially had no institutional barriers and because medieval man had few institutional barriers (this is debatable), there must be an explanation beyond institutions.

I saw the solution to this as the build-up of technological knowledge over time, in addition to the existing capital accumulation and division of labour. This allowed certain individuals to see the possible advantages of saving and investment, lowering their time-preference, and in turn spurred further innovation and entrepreneurship. I suppose this is similar to what you were suggesting, but the question is whether it stems from sociobiological changes or an accumulation of recipes and capital.

36

Why not both? Especially if they feed eachother. A combination of human popualations more inclined toward investment and rationalism with the dropping of certain trade barriers at a propitious moment.

37

Yes, certainly - but my question is whether or not the institutional and technological elements are sufficient, e.g. if China were to become an ancap society in today’s world, while remaining sociobiologically the same, would the result be massive growth? I think Hoppe would indeed answer yes, but he also said in that lecture that these factors were not sufficient in the pre-industrial world. I suppose I’m trying to ask whether or not it’s true that it was only in 18th century England that enough people sociobiologically came to have time-preference low enough for the capital accumulation required for the kind of growth that ocurred. I guess I just want to hear more thoughts on this.

38

Well, his thesis ignores that there was massive industrial growth in China hundreds of years before the Industrial Revolution; and the Emperor shut it down because it was making cheap iron weapons available to his subordinate warlords and invoking rebellions. Likewise, there was significant economic growth in Rome and Greece during parts of the classical era; it was all just monopolized by the upper crust.

I think sociobiology has more to do with why people don’t widely implement/demand market oriented societies. While taxes and regulatory powers were quite low in the middle ages, violence was rampant in the countryside and tended to reduce areas to some self-sufficiency. The major people able to do large scale trade up until the early modern era were big bankers, who could count on some protection by the warlords who needed their money and could afford to hire well equipped mercenaries to protect their convoys.

I think there is something to Clark’s thesis in that there was something to the annihilation of the underclass and spendthrift that helps explain why the industrial revolution exploded, but it was built on the backs of centuries of gradually expanding trade networks which could be taken serious advantage of by the newly acquisitive masses.

More than anything I think the Industrial Revolution, like most advances in human freedom, was just the biggest frickin’ accident in the history of mankind. Rome fell, didn’t get replaced, major power blocs on the continent fell apart, a liberalizing and highly independent Germanic culture took root in England and the Norman coasts and all of a sudden bang.

39

Thanks for the response. I was thinking along the same lines.

40

Ricky, you refer a lot to ‘libertarian Germanic culture’. What specifically do you mean by that? I have trouble finding any information about it. When hearing ‘Germany’, a particularly libertarian culture is usually not the first thing that comes to mind. Also, you said that libertarians are committed to liberty in a particular Germanic sense, which I don’ quite get.