Why Capitalism?

[Lilburne]

Krazy Kaju,

The ends of action are necessarily the ends of an individual man. I’m not proposing any ethical theory that transcends the ends of any individual man. I’m saying that it is overwhelmingly evident, based on historical/thymological understanding, that, as Mises claimed, the vast preponderance of individual men (and so, very likely, the individuals who populate this forum too) are principally motivated by a desire for material well-being. Therefore, were they aware of the vast superiority of capitalism over any other social order, in terms of promoting the material well-being of virtually each and all, then they would want whatever legal/rights order that is necessary to produce capitalism.

Insofar as any readers are truly primarily motivated by a rigid devotion to a given moral code based on its perceived intrinsic righteousness, and regardless of what it means with regard to material well-being, I leave you in peace, and only remind you that it is utterly impossible to prove with rational discourse and existential propositions the “objective” superiority of your devotion relative to any contrary devotion of others. I only speak to any readers who, deep down inside, are like most people, and would simply prefer to live amidst (and thus very likely benefit hugely from) general prosperity, health, and longevity, as opposed to living amidst (and thus very likely suffering hugely from) general poverty, sickness, and death.

To the latter group of people, I encourage you to think clearly about what it is you’re trying to accomplish, when you discuss social, legal, economic, and political matters. I point out that to really accomplish what you want, it is necessary to promote whatever legal/moral order that will allow capitalism to flourish; and that to know what that order is, you must understand the market process (thus studying Human Action and MES). Furthermore, I remind you that (1) most are indeed like us, (2) that social orders are ultimately founded on majority opinion regarding what is perceived as efficacy (as la Boetie, Hume, Mises, Rothbard, and Hoppe all agreed), (3) that majority opinion is ultimately guided by a persuasive minority of bright minds, and (4) that truth tends to give doctrines a certain persuasiveness. In other words, there is hope. And it is far more effective to speak to the common interest of our fellow man, rather than to try to impose on him a noble lie or a quasi-religion.

After reading all his major works, it is clear to me that the above was what Mises was trying to get across to the world while he lived, and it is saddening to see how it is so little understood, even among his most well-informed latter-day students. Who knows what might have been accomplished had his immediate successors adopted this clear-thinking, straight-to-purpose approach.

By the way, this is why I think Rasmussen’s doctrine in particular doesn’t make any sense.

[liberty_student]

@AJ

To paraphrase Hazlitt, Ethics were made for man, not man for ethics. Given that, it is perfectly obvious why justice/capitalism/liberty has good consequences: the rules governing each were chosen for precisely that purpose, and stuck as custom because they worked for that purpose.

The sleeper awakes. Nice to see you AJ.

[MJGreen]

Yay, you drew AJ back here. This thread is getting better and better.

@Danny Sanchez

Have we come to think of the property rights order that is associated with capitalism as “just” and “righteous” (and even concocted rationalizations for why it is “objectively” so), because we prefer life to death, health to sickness, and prosperity to destitution both for ourselves and our fellow man, and that we therefore ardently want the legal/moral order that is harmonious with those preferences?

@AJ

Given that, it is perfectly obvious why justice/capitalism/liberty has good consequences: the rules governing each were chosen for precisely that purpose, and stuck as custom because they worked for that purpose.

A good supplement to the above may be James Buchanan’s short piece, Order Defined in the Process of its Emergence. I think, with the way Lilburne Danny phrased it in the OP, ‘capitalism’ sounds like a system imposed on a people, as if it were crafted by philosophers struggling to find the “proper” and “moral” system for mankind to adopt or aspire to. As I see it, the point is not that Capitalism!^TM is the best system to satisfy people’s wants, but that people, in seeking to satisfy their wants, inevitably create a system that we today call capitalism. In seeking to protect their goods, rules for private property emerge. In seeking to trade, rules for contract emerge; in seeking to avoid default, rules and mechanisms to enforce contract emerge. There is no Platonic Order with which to compare the goings-on of our society; rather, the voluntary interaction of our society informs our conception of order. And as Hayek said, “our moral traditions developed concurrently with our reason, not as its product.”

Or have I totally lost the plot? I’m half asleep here.

[Lilburne]

Michael, I think it has been a bit of both, at least in the modern era. For example, it was indeed partially through the interplay of the strivings of regular men that Great Britain edged its way to a theretofore unprecedented degree of capitalism in the 17th and 18th centuries. But, largely stimulated by that fluorescence of capitalism, the founders of scientific political economy made penetrating insights into the workings of capitalism, and the factors that can foster or hamper it. These insights, through the conduits of men like Cobden and Bright, had direct and deliberate effects on policy, which in turn engendered an even brighter fluorescence of capitalism in the 19th century.

Obviously, however, it makes no sense to simply trust that we, in our lifetimes, will have the happy chance to witness (and be part of) the former kind of progress. In a broken system, established by broken ideas, it is rather more likely that the interplay of the strivings of regular men will lead us away from effective social cooperation and prosperity. We at least need to get the fundamentals right through discursive reasoning, and perhaps, once those fundamentals are embodied in practice, leave the minor and tricky legal/moral problems to emergent order.

[liberty_student]

@Danny Sanchez

Obviously, however, it makes no sense to simply trust that we, in our lifetimes, will have the happy chance to witness (and be part of) the former kind of progress.

My friend, we’re living it.

[Lilburne]

My friend, I have no doubt that those of us operating in the private sphere are contributing positively in that fashion. But at present, unfortunately, we are only thus slowing the retrogression, for it seems to me that the world is currently sliding away from capitalism. That is why I believe science and education are so particularly crucial right now.

[liberty_student]

I wish I could show you what I see. There is enormous progress being made. It defies description.

We live in much more liberal times than Mises did. While it is not assured, it is most certainly not by accident.

The “end is nigh” sort of stuff starts to lose its punch after awhile.

[AdrianHealey]

@AJ

@AdrianHealey

Because that is the only alternative: natural law or logical positivism. Tertium non datur.

You must have quite a precise definition of logical positivism for you to make such a tight logical claim, so what is it? I see no unified or easy-to-pin-down definition here: http://en.wikipedia.org/wiki/Logical_positivism

I’m sorry, obviously, that should have been ‘legal positvism’.

[Lilburne]

@AdrianHealey

@Danny Sanchez

I didn’t make this thread only for the left-libertarians. A large proportion of just about every libertarian camp has largely abandoned the approach I’m advocating (which was the approach of the historical liberal tradition as Mises defined it). Even many who DO understand the market process often seem to make many of their socio-political arguments and positions with very little reference to it, and seem to just treat it as one implement among many in their “libertarian toolkit”.

Although I respect Mises with my entire hart and soul, Mises was entirely wrong with stating that ‘the’ classical tradition of liberalism was a utilitarian tradition. There are only a few classical liberals with a utilitarian perspective and even than; the ones most famous (mill, bentham) were actually quite statist and the others (hume, Smith) weren’t exactly utilitarians pur sang.

How do you see this relation?

While an interesting question, I’d rather not go into what the most useful definition of the liberal tradition is right now, as I think it would distract from the topic of the thread.

[Autolykos]

@Danny Sanchez

Again, see my debate with Neoclassical/StrangeLoop. I spell it all out in there.

I take it you’re talking about the debate linked to here?

@Danny Sanchez

I know the reality of purpose, because I live it with every passing moment. I recognize in other beings a likeness to me in behavior, and so I infer in them purpose too. If I infer correctly regarding you, and you are indeed like me, then you know the reality of purpose too. If I infer wrong, and you are not in fact like me (perhaps you are a simple computer program), then you may not know the reality of purpose. As Mises wrote, I cannot hope to demonstrate what the reality of purpose is to a being who does not live the reality of purpose.

I agree with all of this. To me, however, it’s not a question of whether purpose, it’s a question of which purpose. For example, the fact that humans generally seek self-interest doesn’t mean that social cooperation will be in their self-interest – as they see it, of course.

@Danny Sanchez

Again, I went over this in the above mentioned debate, and it shouldn’t be hard to find. This is more elementary than I wish to go, because most Austrians here already agree with me regarding methodological dualism, but disagree with me regarding my fundamental point. So I don’t want to have to repeat everything I wrote in that other thread, only to distract from the purpose of this one with a tangential topic that generally goes on and on.

How is it tangential, exactly? Since the thesis of your OP seems to depend upon certain philosophical underpinnings, discussing those underpinnings would be on-topic. Either way, I don’t see how I was bringing up methodological dualism at all.

[Lilburne]

@AdrianHealey

@Danny Sanchez

Why capitalism? Because it is the “most libertarian” system of social production? Because it happens to be merely a fortuitous adjunct to adherence to the non-aggression principle and man’s natural right to property?

For those of you who still think that, ask yourself this. If you were convinced that (A) complete adherence to the natural right of property happened to necessarily engender untold poverty, suffering, and death, but (B) the tiniest imaginable abrogation of the non-aggression principle, undertaken on a very infrequent basis necessarily engendered prosperity, happiness, and long life for virtually everybody, which would you choose, (A) or (B)?

Why the dichotomy? Why excluded the possibility of an interconnection, as Roderik Long argues.

What is the nature of this interconnection? Can you summarize Long’s argument (of which AJ doesn’t think much) for me?

@AdrianHealey

“There can be no purposes other than individual human purposes. There can be no ends, other than individual human ends. There is no conceivable human standard by which to choose ends that would not by definition be an individual human end in itself.”

<= Well, it’s awesome to argue with Mises, but that is not what natural law thinkers claim. Nobody is saying ‘well, natural law is an end outside the realm of human action’. Mises is correct in saying that there can’t be an economic analysis of what ought to be. If you want social cooperation - which is an economic concept - than let’s see what economic system fits it. But where did the impossibility to apply the logic of action to a science of law come from? Is there actually an argument, or is it an assertion by lack of knowledge of any possibility? ‘Proving that something is impossible’ is not the same as ‘I can’t proof that it is possible’. I belief you are doing the second, not the first in this post. Could you actually give an argument, or is it a proof out of lack of knowledge of any real possibility of doing so?

Do you accept logical positivism? If not, why? If so, why?

Because that is the only alternative: natural law or logical positivism. Tertium non datur.

From your later post, it is clear that you meant “legal positivism”. You present a false choice.

Mises, from Theory and History:

"Many manifestly spurious theses have been advanced under the label of natural law. It was not difficult to explode the fallacies common to most of these lines of thought. And it is no wonder that many thinkers become suspicious as soon as natural law is referred to. (…)

The chief accomplishment of the natural law idea was its rejection of the doctrine (sometimes called legal positivism) according to which the ultimate source of statute law is to be seen in the superior military power of the legislator who is in a position to beat into submission all those defying his ordinances. (…)

Yet all these deficiencies and contradictions of the doctrine of natural law must not prevent us from recognizing its sound nucleus. Hidden in a heap of illusions and quite arbitrary prepossessions was the idea that every valid law of a country was open to critical examination by reason. About the standard to be applied in such an examination the older representatives of the school had only vague notions. They referred to nature and Were reluctant to admit that the ultimate standard of good and bad must be found in the effects produced by a law. Utilitarianism finally completed the intellectual evolution inaugurated by the Greek Sophists.

To sum up the above, the natural rights thinkers were right to reject the legal positivists who claimed that a law could not be held up to any standard other than itself or the standard of power. However the standards which the natural rights thinkers tried to hold laws up to were either ill-defined, illusory, arbitrary, or some combination of those things. The utilitarian tradition then picked up the thread by also recognizing that laws were subject to an extralegal standard, but understood that the only possible coherent standard against which to judge laws is that of human utility.

In Human Action, Mises characterized utilitarianism as the spiritual emancipation of man from mystical and/or heteronomous ethics. Here in Theory and History he traces its intellectual heritage back to the Greek Sophists (Protagoras said “Man is the measure of all things”). In Human Action he recognized Epicureanism, eudaimonism, and hedonism also as its forebears. He noted that the early utilitarians (Bentham, Mill, etc) had imperfect formulations, but that it was the modern economists who finally perfected the doctrine (actually it was Mises himself who did). On a side note, Hazlitt was right to recognize Hume as the founder of rule utilitarianism, and as having, not only an earlier, but also a much more sound formulation of utilitarianism (although he didn’t use the term) than Bentham.

To understand what utilitarianism evolved to be in the mind of Mises (it is one of the most misunderstood aspects of Mises’ thought), and to see how for him, as Mises himself wrote, “Utilitarianism, on the other hand, does not deal at all with ultimate ends and judgments of value. It invariably refers only to means.” please read my reply to Krazy Kaju.

Yet it would be a serious blunder to ignore the fact that all the varieties of the doctrine contained a sound idea which could neither be compromised by connection with untenable vagaries nor discredited by any criticism. Long before the Classical economists discovered

@AdrianHealey

Edit: as far as I see it. ‘Natural law’ doesn’t necessarily mean ‘libertarian law’, though. But still: either differences between humans can be decided - and the human relevant for law is the praxeological man - based upon an analysis of the world or differences ought to be created by an agency.

Sorry, I can’t parse that. Can you rephrase?

[Autolykos]

@Danny Sanchez

Economics can only show that socialism means discoordination and capital consumption to an extreme degree. Add what we know about physiology, and we can know it also means mass famine and starvation. Add what we any semi-competent student of his fellow man know thymologically about him (meaning our informed judgment regarding his ends) and we know that most men prefer not to sicken and die. Thus we can conclude that people would be worse off. We can take the same approach to the caste society, with simply somewhat less extreme results.

D’oh, I’d forgotten about thymology. Could it be said that thymology is a study of human nature as it relates to purposeful behavior, otherwise known as action? If so, why hasn’t more effort apparently gone into this subject?

Otherwise, I think your statements here are spot-on. Capital accumulation is necessary to satisfy one’s ends. The more capital that is accumulated, ceteris paribus, the more efficiently one’s ends can be satisfied. When capital is consumed, ceteris paribus, one’s ends are met less efficiently.

However, I have two criticisms of the above. One is that a person’s self-interest and well-being are not necessarily defined by him in strictly material terms. Another, perhaps more important, is that capital accumulation does not seem to necessarily require social cooperation.

[Autolykos]

Danny, to address your OP from a different angle, by “capitalism” do you mean “private ownership of the means of production”, or “individual ownership of the means of production”? Since you are, from all appearances, a staunch Misesian, I’m guessing you mean the former. If that’s the case, then any stateless society could be said to be “capitalistic” by that definition, which implicitly contrasts state ownership with non-state ownership.

On another note, the very word “ownership” seems to presuppose some concept of legitimacy. Do you agree with this? Maybe you prefer to define “capitalism” as “private (or individual) control of the means of production” instead?

[I_Ryan]

@Autolykos

Danny, to address your OP from a different angle, by “capitalism” do you mean “private ownership of the means of production”, or “individual ownership of the means of production”? Since you are, from all appearances, a staunch Misesian, I’m guessing you mean the former. If that’s the case, then any stateless society could be said to be “capitalistic” by that definition, which implicitly contrasts state ownership with non-state ownership.

On another note, the very word “ownership” seems to presuppose some concept of legitimacy. Do you agree with this? Maybe you prefer to define “capitalism” as “private (or individual) control of the means of production” instead?

That’s all just static.

The point of the OP didn’t have anything to do with capitalism; it was about Misesian utilitarianism. The fact that his understanding is that Misesian utilitarianism leads to “capitalism” is all just by-play. Substitute “socialism” for “capitalism” and vice versa; and nothing changes about the import. In other words, using capitalism as the example was just an example.

[Autolykos]

Then why didn’t he name this thread “Why Misesian Utilitarianism?”

[I_Ryan]

@Autolyko

Then why didn’t he name this thread “Why Misesian Utilitarianism?”

Probably because he needed to use an example to make his point possible to understand.

[AdrianHealey]

@Danny Sanchez

@AdrianHealey

@Danny Sanchez

I didn’t make this thread only for the left-libertarians. A large proportion of just about every libertarian camp has largely abandoned the approach I’m advocating (which was the approach of the historical liberal tradition as Mises defined it). Even many who DO understand the market process often seem to make many of their socio-political arguments and positions with very little reference to it, and seem to just treat it as one implement among many in their “libertarian toolkit”.

Although I respect Mises with my entire hart and soul, Mises was entirely wrong with stating that ‘the’ classical tradition of liberalism was a utilitarian tradition. There are only a few classical liberals with a utilitarian perspective and even than; the ones most famous (mill, bentham) were actually quite statist and the others (hume, Smith) weren’t exactly utilitarians pur sang.

How do you see this relation?

While an interesting question, I’d rather not go into what the most useful definition of the liberal tradition is right now, as I think it would distract from the topic of the thread.

You are correct.

[Lilburne]

It’s actually about both. But I won’t be able to respond to Adrian’s questions until late tonight.

[I_Ryan]

@Danny Sanchez

It’s actually about both.

Well, of course it’s about both.

But wouldn’t spending a bunch of posts trying to explain what the word “capitalism” means simply distract from the point of the OP?

@Danny Sanchez

But I won’t be able to respond to Adrian’s questions until late tonight.

Autolykos, you mean?

[Autolykos]

I’m not trying to pile-drive on you, Danny, but I’d like to respond to a part of this post:

@Danny Sanchez

To the latter group of people, I encourage you to think clearly about what it is you’re trying to accomplish, when you discuss social, legal, economic, and political matters. I point out that to really accomplish what you want, it is necessary to promote whatever legal/moral order that will allow capitalism to flourish; and that to know what that order is, you must understand the market process (thus studying Human Action and MES). Furthermore, I remind you that (1) most are indeed like us, (2) that social orders are ultimately founded on majority opinion regarding what is perceived as efficacy (as la Boetie, Hume, Mises, Rothbard, and Hoppe all agreed), (3) that majority opinion is ultimately guided by a persuasive minority of bright minds, and (4) that truth tends to give doctrines a certain persuasiveness. In other words, there is hope. And it is far more effective to speak to the common interest of our fellow man, rather than to try to impose on him a noble lie or a quasi-religion.

As I’m sure you recognize, the persuasive minority of bright minds that exists today is largely statist in nature. Furthermore, their own self-interest seems to be benefitted by extolling the alleged virtues of statism. Why should they change their minds? Who can hope to change them while they profit so handsomely in defense of the status quo?

Regarding noble lies and quasi-religions, I think maybe you underestimate the human capacity for denial. For example, people seem to be repeatedly sold, time and again, on the idea that the inherently uncertain future can somehow be made certain. Although I think this is exacerbated by systematic suppression of critical-thinking skills, I think it also speaks to an innate desire for (more) certainty.