Liberty

Book Review: Hans-Hermann Hoppe – Economic Science and the Austrian Method

Chhay Lin Lim Books, Economics, Liberty, Philosophy , , , , , , , , , , , , , , , , , ,

I decided to read Hans-Hermann Hoppe’s Economic Science And The Austrian Method (1995) in order to grasp a deeper philosophical understanding of the Austrian School’s methodology of economic inquiry. I was especially interested in Immanuel Kant’s influence on Ludwig von Mises and how Mises had used Kant’s epistemological insights to construct praxeology, the study of human action (economics included) that is purely deductive in nature.

Those who are acquainted with scientific methodologies in the field of economics may have heard of the controversies surrounding praxeology. Living in an empirical age, many people may be inclined to question the validity of a science that claims to arrive at economic laws from pure deduction whose validity can be established independently from observations. Praxeological propositions are indeed much more “like those of logic and mathematics, a priori” (Mises, 1966, p. 32). Such a science may strike the skeptics as being disquietly dogmatic.

In this book review, I will firstly give a brief discussion why it is important at all to discuss the epistemological foundations of economic science. Thereafter, I will discuss Hoppe’s thesis. I will describe the philosophical aspects of praxeology that can be traced back to Kantian epistemology. I will moreover summarize Hoppe’s critique of empiricism and historicism, and why Mises believed that economics is essentially praxeology. Lastly, I will give my personal thoughts on the book.

Why should we discuss the epistemological foundations of economic science?
The most immediate answer to this question is that different epistemological foundations lead to different methodologies and different theories, which can lead to different interpretations of real-life phenomena. Take for example the interpretation of an historical economic event, the Great Depression. Murray Rothbard, because he is working within the context of praxeology makes use of the praxeological Austrian Business Cycle Theory. This theory focuses on the expansion of the money supply as an explanation of the onset of the ‘boom’ in the 1920’s which eventually resulted in the ‘bust’ in 1929. Milton Friedman and Anna Schwartz in A Monetary History Of The United States (1963), while not applying the ABCT, have focused only on the contraction of the money supply and the resulting higher interest rates in 1928 as the main cause of the Great Depression. Their application of different economic methods has led them to look for different possible historical causes of the Great Depression which has effectively resulted in different accounts of the same historical event. It therefore matters what economic methods are employed in economic research.

Now that we have established the importance of inquiring epistemological foundations and methodologies of economic science, I will turn to Hoppe’s thesis.

Kant and synthetic a priori propositions
Working within the rationalist tradition of Leibniz and Kant, Mises attempts to present the proper way through which economic science – a science that according to Mises falls within the broader science of human action, praxeology – should be conducted. He resorts to the Kantian conception of the nature of knowledge and explains praxeology in terms of Kantian terminology. Hence, Hoppe firstly directs the reader to Kantian epistemology.

Kant had developed the idea that all propositions are either analytic or synthetic and either a priori or a posteriori. The difference between analytic and synthetic propositions is that the former is true by virtue of their meaning or as Kant would have phrased it himself, “the predicate B belongs to the subject A as something that is (covertly) contained in this concept A” (Kant, 1781, A:6-7). Take for instance the following proposition: “Bachelors are unmarried.” This proposition is analytic, because the predicate, ‘unmarried’, is part of the concept of a bachelor. Analytic propositions are regarded as tautological propositions; they simply restate the definition or a concept incorporated within a word and therefore they do not tell us anything meaningful about the world. A synthetic proposition on the other hand is a proposition whose predicate concept is not contained in the subject’s concept. It could therefore express something meaningful about the world. An example of a synthetic proposition is: “All bachelors are unhappy.” The concept ‘unhappy’ is not contained within the definition of ‘bachelor’, and expresses something meaningful about ‘bachelors’.

The distinction between a priori and a posteriori is as follows: a priori propositions are propositions whose justification does not rely upon experience, but solely on logical reasoning. The justifications of a posteriori propositions on the other hand, do rely upon experience. Examples of a posteriori propositions are “Some bachelors I have met are unhappy” or “Siddharta Gautama left the palace.”

The big question is: do synthetic a priori propositions exist? Kant certainly believed that they do exist, “and it is because Mises subscribes to this claim that he can be called a Kantian” (Hoppe, 1995, p. 18). In Critique of Pure Reason (1781), Kant contended that synthetic a priori propositions do exist and as an example he took mathematics (Kant, 1781, p. 55). The statement “7 + 5 = 12” is not dependent on experimentation and the concept 12 is not contained in either the definitions of 7 or 5. According to Kant, a priori propositions are derived from self-evident axioms. We can find such axioms by reflecting upon ourselves and understanding ourselves as knowing subjects. However, how can truth claims derived from reflection in our mind have any basis in reality? Is Kant here running into the problem of idealism – a notion that it is the mind that constructs reality and superimposes itself upon reality in such a way that it fits within the mind’s necessary laws?

According to Hoppe, Kant had not given a satisfactory response to this issue and future thinkers would have to take on the challenge of solving this problem. Hoppe believes that Mises had done so successfully when he had averred that action provides the link between mind – body and between mind – external world: “[W]e must recognize that such necessary truths are not simply categories of our mind, but that our mind is one of acting persons. Our mental categories have to be understood as ultimately grounded in categories of action” (Hoppe, 1995, p. 20). It is through action that the mind and reality are related: “[A]cting is a cognitively guided adjustment of a physical body in physical reality” (Hoppe, 1995, p. 70).

Another issue that arises with regards to the possibility of synthetic a priori propositions, and which I have found quite confusing myself is the following: does Hoppe suggest that we can arrive at knowledge without any experience of ourselves or the external world at all? No, according to Hoppe “the truth of a priori synthetic propositions derives ultimately from inner, reflectively produced experience” (Hoppe, 1995, p. 19). This experience is phrased by Stolyarov II as “the mind’s identification of facts about actually existing entities, including the identifier himself” (Stolyarov II, 2007, p. 53). In this sense, the action axiom is experientially-derived, but it is not subjected to the empiricists’ narrow view that all knowledge must be testable, verifiable, or falsifiable.

Empiricism, Historicism, and Praxeology
When Mises systematically constructed the foundations of praxeology, he faced a double-challenge; (A) empiricism which was quickly becoming the main influence in the economics discipline, and (B) historicism which was then a prevailing ideology at German-speaking universities.

(A) Empiricism
Empiricism is the “philosophy which thinks of economics and the social sciences in general as following the same logic of research of that, for instance, of physics” (Hoppe, 1995, p. 28). Hoppe writes that empiricism is governed by the following two related basic propositions:

(1) that empirical knowledge, knowledge about reality, must be subjected to falsifiability and verifiability by observational experience;
(2) and that empiricist research formulates their explanations in terms of causality, i.e. “if A, then B”. (Hoppe, 1995, pp. 28-29)

Hoppe continues to write that the validity of empirical statements

can never be established with certainty… The statement will always be and always remain hypothetical… Should experience confirm a hypothetical causal explanation, this would not prove that the hypothesis was true. Should one observe an instance where B indeed followed A as predicted, it verifies nothing… Later experiences could still possibly falsify it. (Hoppe, 1995, p. 29)

Empirical knowledge is hence contingent on historical facts. Neither confirmation nor falsification by observational experience can prove that a relationship between phenomena does not or does exist. By emphasizing that our knowledge of reality must stem from observational experience, they directly deny a science that avers that a priori knowledge can give us any meaningful explanation of real phenomena. However, as Hoppe and Mises point out, the statement that meaningful synthetic a priori propositions cannot exist is itself a synthetic a priori proposition. Mises has put this empiricist contradiction the following way in The Ultimate Foundation of Economic Science (1962):

The essence of logical positivism [logical empiricism] is to deny the cognitive value of a priori knowledge by pointing out that all a priori propositions are merely analytic. They do not provide new information, but are merely verbal or tautological, asserting what has already been implied in the definitions and premises. Only experience can lead to synthetic propositions. There is an obvious objection against this doctrine, viz., that this proposition that there are no synthetic a priori propositions is in itself a … synthetic a priori proposition, for it can manifestly not be established by experience. (Mises, 1962, p. 5)

Hoppe mentions a second contradiction of empiricism which regards historical events. Empiricists believe that particular events may cause any particular human action. They attempt to find such causal relationships in order to explain historical events. However, in order to do so, empiricists must assume that causality within historical sequences exists through all times. This assumption itself is not based on experiential observations, and must presuppose a priori knowledge that “time-invariantly operating causes with respect to actions exist” (Hoppe, 1995, p. 36). In addition, Hoppe identifies a third contradiction with respect to social phenomena. The empiricists believe that in order to confirm and falsify hypotheses, one must be able to learn from historical and social experience. If one would deny this, then why should one engage in empirical research at all? This however presupposes that “one admittedly cannot know at any given time what one will know at a later time and, accordingly, how one will act on the basis of this knowledge” (Hoppe, 1995, p. 37). Admitting that humans learn from historical and social experience, one cannot deny that empirical causal constants in human action do not exist. “The empiricist-minded social scientists who formulate prediction equations regarding social phenomena are simply doing nonsense” (Hoppe, 1995, p. 38). Predicting human action is not a science according to Hoppe.[1]

The empiricists are mistaken in applying the methodology of the natural sciences into the fields of social science in order to predict human actions. Unlike natural elements, human beings can and do act differently under equal conditions. Thus, social history cannot yield any knowledge that can be employed for predictive purposes. Relating this to the quantity theory of money; if the money supply for instance increases, one can still not predict whether the demand of money will change as this is entirely dependent on human action. Nonetheless, one could assert that if the demand for money stays constant and the money supply increases, then the purchasing power of money will fall (Hoppe, 1995, pp. 44-45).

(B) Historicism
Historicism, the second challenge that Mises had to face, does not take nature as its model but literary texts. Historicists believe that there are no objective laws in economics, and that “historical and economic events are whatever someone expresses or interprets them to be” (Hoppe, 1995, p. 54). Historicism is therefore extremely relativist. However, according to Hoppe also historicism is fundamentally self-contradictory. If there are only interpretations and hence no constant time-invariant relations, then there is also no historicist constant truth about history and economics. If historicism does not give us any reason to believe in its doctrine, why should we adhere to its epistemological philosophy if its proposition implies that they themselves may not be true?

Next to his refutations of empiricism and historicism, Mises had hoped that he could demonstrate the existence of true synthetic a priori propositions. Such propositions would (1) not be derived from experience, and (2) they must yield self-evident axioms so that when one tries to deny it one is involved in self-contradiction. Mises believes that these two requirements are met by the axiom of action – the proposition that human beings act and display intentional behaviour (Hoppe, 1995, pp. 60-61). According to Mises, purposeful human behaviour exhibits a person’s pursuit of an end which he attempts to reach through the employment of particular means (at least time and body). The fact that a person pursues a particular goal with his action reveals that he places a relatively higher value (preference) on the goal than any other goals of action that he could have thought of at the beginning of his action. Human action also happens sequentially, implying that the actor can only pursue one goal at a time in which he has to forego other valuable goals temporally. Action therefore also implies choices and costs. An action furthermore implies loss (and profit), because every action accompanies a certain degree of uncertainty, whether the goal achieved has resulted in the value one has expected can only be known in retrospect. All these categories of action – values, ends, means, choices, preferences, costs, profit, loss, and time – are at the heart of economics (Hoppe, 1995, pp. 61-63). This insight establishes economics as a science of human action. Or as Hoppe asserts more precisely,

all true economic theorems consist of (a) an understanding of the meaning of action, (b) a situation or situational change – assumed to be given or identified as being given – and described in terms of action-categories, and (c) a logical deduction of the consequences – again in terms of such categories – which are to result for an actor from this situation or situational change (Hoppe, 1995, pp. 63-64).

The existence of the categories of action is derived a priori from the axiom of action, and not through observation. Any attempt to disprove it is futile, since “a situation in which the categories of action would cease to have a real existence could itself never be observed or spoken of, since to make an observation and to speak are themselves actions” (Hoppe, 1995, p. 63).

My thoughts on Hoppe’s book
The book serves as an excellent summary of praxeological philosophy and is a must-read for anyone who wants to start learning more about the subject. Reading the book, one feels that it is extremely concise (around 80 pages), but also dense. Hoppe directly discusses the essential philosophical aspects that one must know in order to understand praxeology as developed by Mises, and fortunately he leaves many footnotes for further reading.

I believe that Hoppe has skillfully shown that economics is part of praxeology, and that it indisputably deals with such categories of human action as values, ends, means, choices, preferences, profit, loss, time, and causality. He has furthermore provided a well-reasoned critique of the empiricist and historicist-hermeneutical interpretations of economics by showing that they are necessarily self-contradictory.

Understanding that economics should not be conducted within the methodological framework of the natural sciences has severe implications to the ways we should deal with data of real world phenomena. If, like praxeologists claim, we cannot predict human action then there is also little reason to believe that effective social engineering is possible. The fundamentals of the praxeological methodology are therefore also immediately relevant within discussions on the roles of the state in planning the economy.

Footnotes
[1] Hoppe calls it entrepreneurship.

Bibliography
Friedman, M. & Schwartz, A.J. (1963). A Monetary History of the United States 1867-1960. Princeton: Princeton University Press.
Hoppe, H.H. (1995). Economic Science and the Austrian Method. Auburn: Ludwig von Mises Institute.
Kant, I. (1781). Critique of Pure Reason. (W.S. Pluhar, Trans.) Indianapolis: Hackett Publishing Company, Inc.
Mises von, L. (1942). Social Science and Natural Science. In R.M. Ebeling (Ed.) Money, Methods, and the Market Process (pp. 3-15). Retrieved from http://mises.org
Mises von, L. (1966). The Ultimate Foundation of Economic Science. Retrieved fromhttp://mises.org
Stolyarov II, G. (2007). The Compatibility of Hoppe’s and Rothbard’s Views of the Action Axiom. The Quarterly Journal of Austrian Economics, 10, 2, pp. 45-62.

Gifts for Professors

Michelangelo Landgrave Liberty

I welcome NoL writers to continue the discussion on the attacks in France, the refugee crises (note: plural form), and general mayhem in the middle east.

On an infinitely lighter note – what do NoL readers think is an appropriate gift for students to give to their Professors? Like Brandon I am applying to doctoral study this cycle. I ordinarily have given small gifts (e.g. thank you cards, sweets, etc.) to my teachers at the end of the year, but I’m stumped on what to do for those Professors who have agreed to be my letter of recommendation writers.

Is a nice bottle of wine fine? What’s an equivalent to wine if said professor is a Muslim and/or Mormon? Is it considered rude to give a ‘bigger’ gift to LOR writers than other professors?

All thoughts are welcome.

Small Thought On The Terrorist Attack in Paris, France

Chhay Lin Lim Liberty, Politics , , , , , , , , , ,

What the attack in Paris has made clear to me is that there is a deep hatred amongst people against the west. I believe that much of this hatred stems from the same roots from which my discontents with the west had also grown – western interventionist policies with foreign nations. I also sense such discontents among the few people that I know from Pakistan, Nigeria, Afghanistan, Iraq, Morocco, and Serbia.

My displeasures with the west originate from the personal stories of my parents who, before they became victims of the Khmer Rouge, were also victims of American bombings of Cambodia – a fact that is not widely known. The bombardments that started in 1965 ended in 1973, and had killed hundreds of thousands of Cambodians. Indeed, before the Khmer Rouge took power over Cambodia in 1975 and before they sent all people to the rural areas to grow foodstuffs for ‘Angkar’ (the Organization/the State), there were already widespread famines and scores of displaced people due to the bombings. It had created a chaotic climate in which the anti-western, anti-capitalist, and anti-imperialist propaganda of the Khmer Rouge found their way into people’s minds – mostly into the minds of those poor rural Cambodian people that were suffering most from the secret bombings. Ben Kiernan writes in ‘Bombs over Cambodia’ (2004):

Years after the war ended, journalist Bruce Palling asked Chhit Do, a former Khmer Rouge officer, if his forces had used the bombing as antiAmerican propaganda. Chhit Do replied:

“Every time after there had been bombing, they would take the people to see the craters, to see how big and deep the craters were, to see how the earth had been gouged out and scorched . . . . The ordinary people sometimes literally shit in their pants when the big bombs and shells came. Their minds just froze up and they would wander around mute for three or four days. Terrified and half crazy, the people were ready to believe what they were told. It was because of their dissatisfaction with the bombing that they kept on co-operating with the Khmer Rouge, joining up with the Khmer Rouge, sending their children off to go with them. . . . Sometimes the bombs fell and hit little children, and their fathers would be all for the Khmer Rouge.”

Cambodia, together with Laos, still remains one of the heaviest bombed countries in the history of the world.[1] My parents were just 7-8 years old at the advent of the secret bombings. Imagine that a drone would bomb the school of your child or the hospital in which your loved ones are, would you not feel enraged? Would you not want to take revenge on those that are responsible?

A pre-moral person looks at the consequences of the actions. He sees the attacks, he acknowledges the dead, he becomes emotional and judges firmly. A moral person withholds his judgements and attempts to comprehend the causes of the attackers’ actions. I do not want to justify the killings of the French people, but I would like to emphasize that if we were really to honor the victims, we should reflect on the question why there are people that hate the west so fiercely. Maybe our society itself is part of a larger machine that is the origin of foreign hatred against the west. We must not only realize that religious fundamentalism is a danger to the world, but that there is a more contemptible false idol which is democratic fundamentalism – the uncritical acceptance that democracy is equal to liberty, that it is always superior and that, if necessary, it should be spread with violence.

As long as we, as a society, fail to reflect on ourselves and the political system we participate in, we will never find a fundamentally peaceful solution.

Footnote
[1] See Ben Kiernan’s ‘Bombs Over Cambodia: New Light On US Air War’

Goose Pimples and Hypocrisy

Jacques Delacroix Liberty , , , , , ,

This is a micro alert. Be careful, reading this might make you uncomfortable.

It’s a November afternoon, a rather nice November but November all the same. There is a wedding on the little lawn on the cliff right above Steamer Lane. (Note for my overseas friends in Germany, Turkey, and Illinois: Steamer Lane is a famous cold water surf championship spot in Santa Cruz, California. The whole area, on the Monterey Bay, is exceptionally beautiful.)

The bride is late; surprise! The groom’s buddies are milling around in their comfortable enough tuxedos.* The bridesmaids are sitting and flocking together in their bareback, bare-arms, low-cut long dresses. A cool sea breeze is blowing, of course. Anyone could have predicted it. The ladies are obviously cold, as they should be. Anyone would be. Exemplary social scientist that I am, I make it a point to pass close enough to verify that goose pimples prevail. This goes on for at least an hour. It’s true nippling weather. Maybe that’s the point and I am just missing it.

I don’t know why no one in charge of the women of the bridal party planned for this weather. I don’t know why the bridesmaids’ uniform could not have included a tasteful shawl. Frankly, I don’t know if any of them would have used a shawl in preference to shivering though. (One young woman in my entourage says, “No way!”) At any rate, it’s difficult to take seriously the claim that women are tired of being considered sex objects. Those women, and the women of every American bridal party I have ever seen are bravely and determinedly on display. It’s not an intellectual display; it’s not a talent show; it’s not an IQ contest. I would swear they are disturbed, possibly enraged at the thought of not being considered sex objects on this occasion, after so much effort. The chasm between public discourse and reality has rarely been so wide since the Victorian Age. In the long run, political correctness is sure to induce some sort of collective schizophrenia, it seems to me.

Just to be painfully clear: I am not criticizing the bridesmaids’ behavior – bless their hearts! I hear that young men are ever more reluctant to commit. And you don’t catch flies with vinegar. And there must be a reason why Mother Nature placed women’s breasts on their chests rather than on their backs. (It’s so they can watch men watching them and take it from there.) I am not deriding the women in the bridal party at all. Female exhibitionism has been an attractive part of my worldview ever since I can remember (maybe since three or four years of age). I am just not becoming used to the grossly hypocritical denial that forms today the social context of such displays. It even bothers me worse than ever.

Someone has to shout, “Bullshit!” I wish older women would do it. In their regretted absence, here I am! You can count on me.

* “How gauche,” my snobbish Parisian side is thinking. Tuxedos are evening attire; they should never see the sun.

‘The Bitcoin Gospel’ and its Critiques

Chhay Lin Lim Liberty , , , , , , ,

Last weekend, November 1st 2015, a Dutch television network broadcast a splendid documentary on Bitcoin entitled ‘The Bitcoin Gospel’ (Het Bitcoin Evangelie). It started off with Roger Ver, also known as Bitcoin Jesus in the Bitcoin community for his active promotions of the cryptocurrency, who is standing in his living room in Tokyo sending Bitcoins to the value of 100 Euros into the living rooms of the Dutch. The first person who scans the QR code of the ‘private key’ gets access to a Bitcoin wallet which holds 100 Euros worth of Bitcoins. At the moment of writing, that same amount of Bitcoin has more than doubled to 217.28 Euros. It is a powerful demonstration of how easy currency flows from one side of the planet to the other. If he would have made the transaction through the traditional way, it would have taken several days and it could have cost him up to 30 Euros. Using Bitcoins, he could send the money practically costless, and almost instantly without the need of any intermediaries.

You can watch the full documentary here:

If I could point out my two most favorite scenes, it would be the beginning scene (0:00 – 2:14) in which we can see Roger Ver’s impressive demonstration of Bitcoin transactions and the ending scene (43:43 – 48:24) where the myth making of its founder, Satoshi Nakamoto, is discussed and where an emotional and teary-eyed Roger Ver talks about the subversive nature of Bitcoins against political injustices.

The documentary however, also featured critics of the cryptocurrency – hence providing a balanced perspective of Bitcoins. Its main critic was Izabella Kaminska, a financial blogger at the Financial Times. She has offered several interesting critiques to which I would like to respond in this article.

1) The first critique that Kaminska offers is that Bitcoin prices are too volatile.
Kaminska reminds the viewers of the turbulent swings in Bitcoin prices. Indeed, if one would take a look at the price chart one would see that Bitcoin did rise 800 percent from $129.46 to $1,165.89 in the three month period from September to November 30 in 2013. Within the next four months, the price would plumb to $344.24. The value of Bitcoin is still extremely volatile – it has ranged between $184.32 and $481.51 in the year 2015.

Bitcoin Chart

In my opinion however, Bitcoin’s volatility is not necessarily deplorable. Its volatility is due to its small market and the experimental phase it is still in. The total market capital of Bitcoins currently stands at $5,676,100,709. It effectively means that only a small amount of money flows into or out of the market can already have huge implications for its price movements. It is therefore only natural that its price is still volatile. Volatility also offers prospects of possible gains, hence attracting more capital from investors. Total investments into Bitcoin related projects in 2015 is already more than double that for 2014. (Coindesk, 2015) The more investments are made into Bitcoin related projects, the greater the chance that Bitcoin will be widely accepted so that eventually in the long run products and services can be denominated in Bitcoins. Hopefully, this will make Bitcoins gain the same relatively low-volatility attribute of many fiat currencies.

2) Kaminska’s second critique is that buying Bitcoins does not benefit the economy as it is not loaned out to provide entrepreneurs with investment capital.
Kaminska contends that Bitcoins are simply sitting idly in people’s wallets – it has no interest, it has no yield, and she even claims that the persons who hold them believe that they have “a right to future income flows as if they are investing.” The statement that those who hold Bitcoins think that they have a right to future income flows is quite bold. Bitcoins are like any other investments in that they are always subjected to uncertainties. No serious investor believes that he has a right to profits. The Bitcoin investor is like an entrepreneur – he knows that he can only make a profit if he anticipates future conditions correctly. The notion that one should not hoard Bitcoins or cash or gold corresponds with the false notion that

“Unspent dollars means reduced sales, and as sales decline, profits drop, layoffs increase, and the total social income decreases, making less money available for consumption. Hoarding induces more hoarding as the economy sinks into a downward spiral.” (Smith, 2009)

What this notion does not take into account is that hoarding is an expression of people’s freedom to achieve personal goals or to deal with economic uncertainties. As George Ford Smith (2009) writes in ‘The Case for Hoarding’, the increased demand for money also makes prices fall. Those who are not hoarding are therefore actually benefitting from the decline in prices.

3) Kaminska’s third critique is that Bitcoin has transferred power from the existing elite to the new 1% of the Bitcoin economy, thereby going against the ‘democratization’ effects of Bitcoins that has been preached by its prononents.
In my view, it is only justified that those who have done the research into Bitcoins and who have taken the high risk to invest in new inventions also have a higher rate of return. Similarly, those who were pioneers by investing in Facebook or Microsoft during their inception period also deserve potentially higher rates of return as these companies were running higher risk of failures. If the first adopters of Bitcoins would not have had the opportunity to make enormous amounts of money, they would not have had investment incentives, it would not have got this successful and this critique of Kaminska would not even have been possible.

4) Kaminska had also argued that the Bitcoin community is extremely absolutist and driven by political ideology which is thrusted on everyone else.
She maintains that when she is paying for coffee she just wants the benefits of a working payment network and smooth transactions, not support for a certain political ideology. The idea that payment systems can be apolitical is an illusion. Governments have always had vested interests in the moneys of its citizens as its existence is entirely dependent on taxation and money creation. Any decision to meddle with the government’s schemes of taxation and manipulation of the money supply is hence always politically charged. It seems to me that she is holding an idealized view of our society if she believes that using USD does not support any political-economic system. Her statement that the Bitcoin community is thrusting their political ideology on everyone else is highly arguable as well. The government is an institution that holds the unjust power to determine which currency can serve as legal tender and which goods – including currencies – can be traded or should be outlawed. Unlike governments, the Bitcoin community does not hold the power to initiate force upon the people. It cannot thrust the adoption of the payment network on all citizens. Indeed, Bitcoin is a free market invention that allows, but not forces, anyone to join the payment network voluntarily.

Kaminska is right, when one uses Bitcoins one is supporting the libertarian political ideology. If one pays with Bitcoins, one is supporting a decentralized payment network through which transaction costs have virtually fallen to zero and through which it is much more difficult for governments and banks to track one’s financial transactions. The really relevant question however is not whether you are supporting a political ideology. The question that should be asked is: should we prefer to give our governments, and central banks the power to manipulate the value of our currency or should we prefer the separation of state and money?

References
Coindesk, (2015). State Of Bitcoin. Retrieved from http://www.coindesk.com/research/state-of-bitcoin-q3-2015/
Smith, G.F., (2009). The Case For Hoarding. The Free Market. Retrieved from https://mises.org/library/case-hoarding

The Crypto Anarchist Manifesto (1988)

Chhay Lin Lim Liberty , , , , , ,

Crypto-anarchism is a subversive philosophy that extends anarchism into the world of cyberspace. Crypto-anarchists attempt to protect their privacy and political freedom through the use of information technologies. Timothy May, one of the co-founders of Cypherpunk and writer of the ‘Crypto Anarchist Manifesto’, describes Crypto-anarchism as

“the cyberspatial realization of anarcho-capitalism, transcending national boundaries and freeing individuals to make the economic arrangements they wish to make consensually.”

In this article I would like to post Timothy May’s ‘Crypto Anarchist Manifesto’, which was first spread among like-minded tech-anarchists in mid-1988 at the “Crypto ’88” conference. The Manifesto was also discussed at the first physical Cypherpunk meeting in 1992. Most people have never heard of Cypherpunk, but they might know their most notable member: Julian Assange, founder of Wikileaks.

See here the full Manifesto:

A specter is haunting the modern world, the specter of crypto anarchy.[1]

Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other. Interactions over networks will be untraceable, via extensive re- routing of encrypted packets and tamper-proof boxes which implement cryptographic protocols with nearly perfect assurance against any tampering. Reputations will be of central importance, far more important in dealings than even the credit ratings of today. These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.

The technology for this revolution–and it surely will be both a social and economic revolution–has existed in theory for the past decade. The methods are based upon public-key encryption, zero-knowledge interactive proof systems, and various software protocols for interaction, authentication, and verification. The focus has until now been on academic conferences in Europe and the U.S., conferences monitored closely by the National Security Agency. But only recently have computer networks and personal computers attained sufficient speed to make the ideas practically realizable. And the next ten years will bring enough additional speed to make the ideas economically feasible and essentially unstoppable. High-speed networks, ISDN, tamper-proof boxes, smart cards, satellites, Ku-band transmitters, multi-MIPS personal computers, and encryption chips now under development will be some of the enabling technologies.

The State will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration. Many of these concerns will be valid; crypto anarchy will allow national secrets to be trade freely and will allow illicit and stolen materials to be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion. Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of crypto anarchy.

Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property.

Arise, you have nothing to lose but your barbed wire fences!

Footnote

[1] This is clearly a wordplay on the opening sentence of Karl Marx’ and Friedrich Engels’ The Communist Manifesto which reads: “A spectre is haunting Europe—the spectre of communism.”

Assessing Elections in Poland and Argentina in the Context of Populism and Liberalism in Europe and South America II (liberalism in the classical sense of course).

Barry Stocker Current Events, Liberty, Politics , , , , , , , , ,

The Argentine election was for the state president, who is head of government as well as head of state. An expected first round victory for the Peronist party (formally known as the Justicialist Party) candidate Daniel Scoli disappeared as he failed to clear 45%. He is clearly ahead of Mauricio Macri, Mayor of Buenos Aires, running on behalf of a three party centre-right alliance which contains the less statist, and populist elements of Argentine politics, but at least the hope exists of a second round triumph over the Peronists.

The third candidate is also a Peronist, showing the difficulty of overcoming that legacy and why even just turning the Presidential election into a competition between a Peronist and a non-Peronist is a victory of some kind. The sitting President Christine Kirchner pushed at the limits of the Argentine constitution, which prohibits more than two terms for any President, by alternating in power with her late husband Nestór Kirchner. If he had not died in 2010, we might now be looking forward to a fourth consecutive term in power for team Kirchner.

Peronists or the army have run Argentina almost constantly since the 1940s. The periods of army rule give a good indication of how successful Juan Perón and his widow Isabel (the third wife) were in stabilising Argentine society and political institutions. Nevertheless the Peronists have been the only party with a record of electoral success in Argentina and have improved from the chaos that Juan and Isabel instigated in more recent appearances in government.

As such a dominant party they have relatively centrist technocratic elements (most notably ex-president Carlos Menem) as well as the hard core statist populist nationalists. The Kirchner years have tended increasingly towards the more populist end, stoking nationalist sentiment over the islands in the south Atlantic known in Argentina as the Malvinas and in the UK, which has sovereignty over the islands, as the Falklands.

There has been economic growth under the Kirchners, but it has now very much slowed as policy has tended towards high inflation, currency controls, confrontation on debt owed to foreign creditors and increasing budget deficits. There has been social liberalism, most obviously, on attitudes to the LGBT communities, but in a context of nationalist sovereigntist politics. At least we can hope that if Scoli wins, he will feel obliged to shift towards genuine economic sustainability and a less populist politics.

In general, this adds to a feeling that South America has passed the peak of leftist populism which has influenced most countries outside Colombia in the last two decades. The more respectable end of that spectrum in Brazil’s Workers’ Party, which had been fairly successful economically, appears to be declining under the weight of corruption scandals, economic recession and incapacity in delivering on the more populist side. On the less respectable side, Venezuela has lost its status as model for the world’s radical left as corruption, economic decay, state brutality, election rigging and persecution of the opposition has become too extreme to ignore, particularly since the state socialist hegemony no longer has Hugo Chavez as a charismatic frontman.

Brazil and Venezuela were the models of the left, reformist and revolutionary respectively, and no longer have that status. If there is a model now it is the Evo Morales Presidency in Bolivia, which in some respects is radical left, but not consistently enough to get the kind of model status previously accorded to ‘Lula’ (now caught up in corruption scandals as his successor Dilma Rousseff) in Brazil and Chavez in Venezuela (whose successor Nicolás Maduro is a blatant and charmless neo-Stalinist thug-apparatchik). The Morales regime has received some cautious support from those inclined towards liberty on the grounds that he has pursued an overdue reduction of the power of traditional rent seeking elites in Bolivia and engaged in an economic pragmatism certainly distasteful to former Chavez admirers, and not even entirely comfortable for former admirers of Lula.

The leftist populist tide in south America has not entirely receded, but is now discussed with increasing nostalgia and an increasingly elegiac tone by left socialist observers, and as it has receded has tended to leave only embarrassments for the socialist left or reformist pragmatist examples of at least some interest to the liberty community. We are not looking at a strong shift towards liberty in all its forms in that region, but at least we see some shifts opening the possibilities of new movements towards liberty in markets, rule of law, individual rights, and social openness.

Assessing Elections in Poland and Argentina in the Context of Populism and Liberalism in Europe and South America I (liberalism in the classical sense of course).

Barry Stocker Current Events, Liberty, Politics , , , , , ,

Election results I’ve seen today from weekend elections in Argentina and Poland and the more general thoughts they have inspired. Rather longer than I anticipated so posted in two parts, though not separated in time given that I am articulating immediate reactions.

The Polish parliamentary election has been bad news for those who share the perspective of Notes on Liberty in that Law and Justice, a social-national-religious sort of conservative party with strongly statist and populist inclinations, has taken over from the more open market/open society inclined Civic Platform. However, a new party, Modern (strictly speaking ‘.Modern’, but I’ll ignore that in the future as too likely to be mistaken for a typo, it is at least worth noting as suggesting a technocratic commitment to a digital age, reminiscent of the development of the e-state in post-Communist Estonia) which leans towards liberty in economic and social spheres, in comparison with most of Civic Platform and even more in comparison with Law and Justice, has entered the National Assembly, compensating for some of the votes lost by Civic Platform to the populist right.

We might at least hope that the next election in Poland produces a coalition government between Modern and Civic Platform, and hope that Law and Justice does not do too much harm during the coming years in which it will control the government and the (non-executive) presidency on its own.

The Polish political party structure has been confusingly variable since the end of Communism, with names of politicians reappearing from now extinct parties in new parties gathering a different if overlapping spectrum, and with different international partners. Modern’s leader, Ryszard Petru, is at least connected with the early phase of post-Communist politics as a disciple of Leszek Balcerowicz, who played a leading role in the transition to market capitalism and the earlier phase of liberal-centrist politics. Both Petru and Balcerowicz are ‘Europeanist’ in the sense of taking a positive attitude to the European Union, which is also the outlook of Civic Platform. Balcerowicz is even director of the College of Europe, a postgraduate institution in Bruges, Belgium, which educates many of those working in European institutions and in their general atmosphere.

This illustrates a major claim I put forward here about European politics, that is of a drift of market liberals, classical liberals and libertarians towards advocacy of the European Union, and an increasing tendency of the ‘Eurosceptic‘ right, even those with some libertarian-conservative history, to be caught up with hardcore populists even if some of the Eurosceptic right has pro-liberty inclinations. That part of the European right has always been more libertarian-conservative than libertarian-cosmopolitan.

The leading ideologue of libertarian-conservative Eurosceptics in Britain, Conservative Party Member of the European Parliament, Dan Hannan is very touchy about suggestions of backward looking nationalism and chauvinism, emphasising a cosmopolitan family background. However, despite these protestations, Hannan is a great believer in the superiority of British (and Anglosphere) ways, and in addition has always been for ‘democratic controls on immigration’, i.e. populist limitations on the market in labour and individual rights to mobility. The second leading British ideologue in that spectrum, and previously a close associate of Hannan, Douglas Carswell has joined the the United Kingdom Independence Party (UKIP), which has unmistakably populist inclinations in economic and social policy beyond restrictions on immigration. Hannan prefers to praise UKIP as ‘patriots’ rather than confront this.

Hannan engineered the formation of a eurosceptic right group in the European Parliament after David Cameron was persuaded that leaving the main centre-right group (European People’s Party) was a necessary price for keeping Tory Eurosceptics acquiescent with his leadership. Hannan’s European Conservative and Reformists Group does not include Modern or Civic Platform, but it does include Law and Justice, which gives a good idea of what part of the European political spectrum it appeals to, i.e. not those inclined to social and cosmopolitan liberty. Most disturbingly associate members include the Justice and Development Party in Turkey, i.e. the AKP of Recep Tayyıp Erdoğan associated with corruption, police brutality, politicisation of the judiciary, social media blocks, attacks on the media and all free speech, along with the demonisation of anyone not part of the more conservative parts of majority Turkish culture.

The idea that liberty can be combined with Eurosceptic discourse is declining, though it has been influential in some libertarian circles, particularly in the UK and Slovakia to be the best of my knowledge. There has been a recovery of pro-EU views (if highly qualified by the wish for reform) amongst the Greek liberty community, even after the recent Euro currency disasters. The Slovak eurosceptic libertarians seem to have collapsed. The Czech hero of European right wingers of that tendency, Vacláv Klaus, has turned out to be a harsh social conservative and Putin fellow traveler of a type obnoxious to the anyone of genuinely pro-liberty tendencies, leading to his exclusion from polite libertarian circles as seen in the loss of his Cato fellowship. A warning there surely about the perils of regarding the sovereigntist eurosceptic right as natural allies of liberty. Personally I believe the same applies to the Republican right in the US. That is of course another story, but just look at Donald Trump’s ascendancy and think about that. The German Free Democrats are making a come back after a period it seemed they might lose the most economically free market part of the electorate to AfD.

Small indications in some cases, but it all adds up to an overall and increasingly dominant picture (though course with exceptions) in which consistently pro-liberty forces support the European Union, which is very much the case in Turkey, even if desiring considerable reform. The strengthening of the populist right (Northern League in Italy, National Front in France, Swedish Democrats, Golden Dawn in Greece, Freedom Party in the Netherlands etc as well as those already mentioned) together with a populist-socialist surge has pushed those engaged with a consistent politics of individual rights and cosmopolitan openness towards a pro-EU centre.

The left populist surge has already receded in Greece where Syriza is in transition to standard social democracy while still using a more radical rhetoric, but has some energy elsewhere in Europe: Podemos in Spain, two left of social democracy parties in Portugal, Sinn Fein in Ireland, Jeremy Corbyn’s election as Labour leader in Britain. The left populist surge is less strong than its right wing equivalent and despite what the socialist intelligentsia in the UK believe the socialist surge within the Labour Party does not reflect a broader shift in British public opinion. Anyway, we are in a period where pro-liberty forces are coalescing with centrist forces in defence of a continuing EU of some kind, with some limitations on national sovereignty, not completely closed to refugees, not in thrall to an enclosed defensive traditionalist, legacy Christian identity politics.

Chuang Tzu: The natural disposition of man is Political Anarchism

Chhay Lin Lim Liberty, Philosophy , , ,

Chuang Tzu

I just read this great article on ‘Anarchism and Taoism’. I find the Taoist case for anarchism extremely compelling. They sought after the harmonious nature of spontaneous order, the Tao, and internalized it into a tremendously rich personal philosophy of life. It makes me wonder: can a person ‘live’ a Libertarian life? Libertarianism is mostly regarded as a political philosophy in the west, but can it, like the Taoists believe, be regarded as a way of life that is most fulfilling on a personal level as well? These are questions that I still have to find out for myself.

After reading the article on Anarcho-Taoism, I’d like to share a small part of Chuang Tzu’s thoughts on the natural disposition of man here:

Horses live on dry land, eat grass and drink water. When pleased, they rub their necks together. When angry, they turn round and kick up their heels at each other. Thus far only do their natural dispositions carry them. But bridled and bitted, with a plate of metal on their foreheads, they learn to cast vicious looks, to turn the head to bite, to resist, to get the bit out of the mouth or the bridle into it. And thus their natures become depraved.

As with horses, so it is with human beings. Left to themselves they live in natural harmony and spontaneous order. But when they are coerced and ruled, their natures become vicious. It follows that princes and rulers should not coerce their people into obeying artificial laws, but should leave them to follow their natural dispositions. To attempt to govern people with manmade laws and regulations is absurd and impossible: ‘as well try to wade through the sea, to hew a passage through a river, or make a mosquito fly away with a mountain!’. In reality, the natural conditions of our existence require no artificial aids. People left to themselves will follow peaceful and productive activities and live in harmony with each other and nature.

In an essay ‘On Letting Alone’, Chuang Tzu asserted three hundred years BC the fundamental proposition of anarchist thought:

There has been such a thing as letting mankind alone; there has never been such a thing as governing mankind. Letting alone springs from fear lest men’s natural dispositions be perverted and their virtue left aside. But if their natural dispositions be not perverted nor their virtue laid aside, what room is there left for government?

What makes it science?

Rick Weber Liberty , , ,

When I hear the phrase “I experimented with drugs/diet/habit/whatever [on myself],” I tend to call bullshit. (A good exception is the author at Gwern.net who does blind, randomized trials on himself sometimes.) Without a control group you aren’t doing an experiment.

But I heard some interesting phrasing that is making me reconsider. Scott Adams was talking about experimenting with changes to his diet by isolating one thing and seeing if he can observe a change after a week. It’s clear that he understands the limitations of this approach. And that clarity makes me think that he’s really properly experimenting. He’s not going so far as running a double-blind study, he’s just taking a serious look at imperfect evidence and being epistemically honest.

Like any good scientific thinker of our time, Adams knows that the outcomes he observes can be affected by any number of variables he’s failed to account for. He knows that his estimates need an error term. He almost certainly knows that time isn’t on his side and ever so slightly affects his results. He almost certainly also knows that path-dependency plays a role. But he corrects for all that in his interpretation. It’s this considered approach to the evidence that makes me view him as operating on a scientific basis. So even if his trials do not provide powerful evidence, his interpretation and application of the evidence is what makes it science.

I suppose this would mean that an experiment can’t be considered scientific until the data is interpreted.

And of course all of this is to say that he’s definitely right about Donald Trump.

Lao Tze, The First Libertarian

Chhay Lin Lim Liberty, Philosophy , , , , ,

Lao TzeFrom the very first moment I read into Taoist philosophy, 5 years ago, I had grown extremely fond of Taoism. It also bears many similarities with the political philosophy of libertarianism. In this post I would like to trace the libertarian concept of Spontaneous Order to the Tao.

Lao Tze (~6th century BC) is regarded as the founder of Taoism. He is also the writer of the Tao Te Ching, one of the most translated books in history, which consists of 81 short chapters about leadership, modesty, and how to live in accordance with your own nature.

From the perspective of a personal philosophy of life, the Tao Te Ching teaches you to flow with life and to be in touch with your inner self so that your actions never contradict your personal being, and so that you can live a truly authentic and enriched life. This may sound too lofty to some, but reading the book one will realize how practical the philosophy actually is. To illustrate the practicality of Taoism, I have written about an interesting application of Taoism in Bruce Lee’s Jeet Kune Do – the martial arts that Bruce Lee had developed – in this post of mine.

One can also read the Tao Te Ching from the perspective of political philosophy. Taoism proposes a society in which there is little or even no central authority (government), since the government is counterproductive and the grand source of social misery. Taoism is therefore libertarian, and stands very much in contrast with Confucianism with its multifarious laws and regulations. Mr. Libertarian, Murray Rothbard, had recognized that Lao Tze was the first libertarian intellectual who saw the government as “a vicious oppressor of the individual, and ‘more to be feared than fierce tigers’” (Rothbard, 1995, p. 23). Taoists and Libertarians believe that society functions most efficient and most just when the government does not meddle and regulate the people.

The skeptics may ask: how can there be order without a central authority? Some modern philosophers, like for example Hobbes, have referred to this anarchistic state as the ‘state of nature’; a state of “a mere war of all against all; and in that war all men have equal right unto all things” (Hobbes, 1651, p. 34). Taoists and Libertarians however, believe that this view is wrong. They believe that it is in the nature or instinct of individuals to be collectivist, because the person who lives in solitude is hardly able to survive in nature. In order to survive, human beings will naturally develop collective customs and laws to work out their disputes. The collective coordination of human beings has therefore always “depended decisively on instincts of solidarity and altruism” (Hayek, 1988, p. 12).

What, according to the Taoist and the Libertarian encourages society to become well-functioning? The Taoist calls it the ‘Tao’, and the libertarian calls it ‘Spontaneous Order’.

Tao and Spontaneous Order

The two concepts, Tao and Spontaneous Order, are similar to one another. Spontaneous Order is a spontaneous emergence of self-organized order out of seeming chaos. One can find such examples in language, the internet, the free market etc. Without any central authority we have realized language, internet, and productive orders that are so complex that not a single person would have been able to create by himself. No one can predict how the order will look like, because it is forever in flux. It can therefore only be experienced and observed. From our observation we can find that the Spontaneous Order is better than any artificial human construct.

Likewise, the Tao is an underlying natural order of the universe whose essence cannot be described in words, but which can only be experienced and observed in nature. In the first verse of the Tao Te Ching, Lao Tze writes:

The Tao that can be told is not the eternal Tao.
The name that can be named is not the eternal name. (Tao Te Ching, Chapter 1).

The Tao is neither a thing nor a substance. It is a universal trend that flows in the natural world. According to the Taoist, one can be in touch with the Tao and achieve most when one does not act against the nature of things (‘wu wei’). Lao Tze therefore writes:

Whenever you advise a ruler in the way of Tao,
Counsil him not to use force to conquer the universe.
For this would only cause resistance.
Thorn bushes spring up wherever the army has passed.
Lean years follow in the wake of a great war. (Tao Te Ching, Chapter 30)

Tao abides in non-action,
Yet nothing is left undone.
If kings and lords observed this,
The ten thousand things [world] would develop naturally. (Tao Te Ching, Chapter 37)

The more laws and restrictions there are,
The poorer people become.
The sharper men’s weapons,
The more trouble in the land.
The more ingenious and clever men are,
The more strange things happen.
The more rules and regulations,
The more thieves and robbers.

Therefore the sage says:
I take no action and people are reformed.
I enjoy peace and people become honest.
I do nothing and people become rich.
I have no desires and people return to the good and simple life. (Tao Te Ching, Chapter 57)

Why are the people starving?
Because the rulers eat up the money in taxes.
Therefore the people are starving.
Why are the people rebellious?
Because the rulers interfere too much.
Therefore they are rebellious.
Why do the people think so little of death?
Because the rulers demand too much of life.
Therefore the people take death lightly.
Having little to live on, one knows better than to value life too much. (Tao Te Ching, Chapter 75)

The Taoists have this concept called ‘mutual arising’, which means that order comes into being through a harmonious interplay of different forces. This is expressed as follows by Lao Tze:

The Tao begot one. One begot two. Two begot three.
And three begot the ten thousand things.
The ten thousand things carry yin and embrace yang.
They achieve harmony by combining these forces. (Tao Te Ching, Chapter 42)

We, human beings, are incapable of understanding how these forces play out against each other. Every time we interfere with the Tao, unintended consequences will happen. Since we cannot apprehend what forces have led to the unintended consequences, we will create more unintended consequences by trying to offset the previous unintended consequences. Man can therefore fall into a state of perpetual interference with nature and become evermore unnatural. Is that not the state we are in right now; the state of unnaturalness due to our thousandfold petty laws that attempt to regulate our conduct, relationships, and ethics?

Is it realistic to have no central government and expect spontaneous orders to emerge?

It certainly is realistic. Bruce Benson has written an insightful book called The Enterprise Of Law: Justice Without The State (2011) in which he discusses historic examples of how law and order emerged spontaneously. Many scholars are currently acknowledging that during the time of the expansion of the American frontier, those areas where people moved faster westward than the central government was not wild or lawless. It was actually more peaceful than modern day America. For an interesting read into this issue, see Anderson & Hill’s ‘An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West’ (1979).

See also this talk of Thomas Woods on the ‘not so wild, wild west’:

Bibliography

Anderson, T.L. & Hill, P.J. (1979). An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West. Journal of Libertarian Studies, 3, 1, 9-29.

Benson, B. (2011). The Enterprise Of Law: Justice Without The State. San Francisco: Independent Institute.

Hayek, F.A. (1988). The Fatal Conceit: the errors of socialism. London: Routledge.

Hobbes, T. (1651). De Cive. (H. Warrender, Ed.) New York: Oxford University Press.

Lao Tze. Tao Te Ching. Retrieved from http://www.schrades.com/tao/taotext.cfm?TaoID=1

Rothbard, M.N. (1995). Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought Volume I. Retrieved from http://mises.org

L’Anarchisme et la recherche de la liberté: recommendations des Déserts du Nouveau Monde.

Jacques Delacroix Liberty

Je suis vieux mais j’ai quand même un copain lycéen à Paris. Je l’ai rencontré un Quatorze Juillet justement, en Californie où je vis depuis déjà longtemps. Ugo a quinze ou seize ans. Il me dit par courriel qu’il lit Bakounine et Kropotkine. Cela me fait plaisir à deux titres. D’abord, cela signifie qu’il aéchappé à la malédiction du relent de totalitarisme collectiviste qui habite toujours de nombreux Français comme une croûte en Octobre colle encore aux lèvres des revenus de la colonie de vacances du mois d’Août.

La deuxième raison de ma réjouissance c’est que de telles lectures ne peuvent qu’allonger l’aune à laquelle Ugo mesurera la liberté. (J’allais dire la “liberté individuelle” mais, il n’y en a pas d’autre, c’est une mauvaise manie verbale.) Il me semble en effet que quand on vit dans le brouillard d’une societe étatique comme la France il doitêtre difficile seulement de reconnaitre le simple fait de liberté. Dans une telle société, on doit être menéinconsciemment à une mesure de la liberté étriquée pour la simple raison que les nombreux “droits” des autres ne peuvent que limiter naturellement, automatiquement les siens propres.

L’un de ces soi-disant droits est le droit de vivre correctement sans avoir jamais à s’efforcer, c’est-à-dire aux crochets d’Ugo et d’autres qui ne rechignent pas à travailler ou à inventer.

Mais, je souhaiterais qu’Ugo complète son éducation d’une manière spécifique. Il n’y a pas de vraie liberté là oúl’existence même dépend du bon vouloir d’un seul employeur, soit-il une grosse entreprise minière (comme dans Zola) ou l’Etat lui-même, ou encore, une entreprise formellement de statut privé mais menottée pas la réglementation.

En fin de compte, la liberté est garantiee par la possibilitéd’entrer librement dans des contrats entre égaux. Pour ce faire, il faut commencer par comprendre ce qu’est un marché. Or, mon observation des media français et mes conversations assez fréquentes avec des membres de la classe hexagonale instruite me font soupçonner qu’il est pratiquement impossible à un jeune Français d’aujourd’hui de se familiariser avec le concept de marché à travers uneéducation normale.

Je prescrirais donc bien à Ugo le grand document d’origine:La Richesse des nations, du philosophe moral Adam Smith mais je crains qu’un ouvrage publié en 1776 lui soit un peu rebuttant par son language. Je lui préconise, à la place, de lire n’importe quoi de l’économiste Autrichien et lauréat du Nobel (1976), Friedrich Hayek. .Cela pourrait etre La Route de la servitude ou presque n’importe quoi. (“La Route….” est le livre que tous les totalitarismes on hai et interdit.) Ceci,après, peut-être, une courte introduction par le Français Fréderic Bastiat (que les idéologues bêtes et méchants ont réussi à pratiquement éliminer des programmes scolaires français.)

Bien sur, j’attends qu’en retour, Ugo m’envoie ses propres conseils de lecture, qu’il contribue à m’ éviter d’être trop ringard, par exemple.

Is the European Union Collapsing?

Edwin van de Haar Economics, Liberty, Philosophy, Politics , , , , , , , , ,

Lately, the European Union (EU) stumbles from crisis to crisis. After a long hot spring dominated by the financial crisis in Greece, we now see the collapse of the system based on the Schengen Treaty, which secures the free movement of people within most countries of the EU. The upheaval is the result of the huge numbers of refugees entering the EU, mostly from Syria, Eritrea and Sudan. It is expected that Germany alone will offer asylum to approximately 1 million people this year. With no end of the refugee wave in sight more and more countries are either closing their borders, building fences, or reintroducing border patrols. The situation in Hungary seems worst, especially in the temporary refugee camps. This weekend we saw footage of guards throwing food into the hungry crowds, just like zoo keepers do when feeding the wild beasts. An absurd lack of civilization.

Both crises have at least two factors in common, namely issues of sovereignty and property rights. Sovereignty is claimed back by European politicians, who previously made arrangements at the European level, yet are now confronted by their electorates who want to end the infringements of their property rights. In the case of Greece it was about (mostly) Northern European leaders who were pressed by public opinion to stop paying for the support of what was seen as an almost bankrupt country. Certainly in Germany and The Netherlands it was seen that Greece made a mess of things which itself needed to sort out (this was the dominant perception, I underline that I do not say this is also the right presentation of all relevant facts). In the current refugee crisis public opinion also welcomes large numbers of people who –again as it is widely perceived- are seen a poor sods fleeing from a terrible war. Yet at the same time the people understand that the refugees, no matter how well educated some of them are, also need to receive all kinds of welfare arrangements and will go through an often hard process of integration into society. This against the background of more than a decade of heated debate about immigration and integration in most (Western) EU countries.

In both questions the politicians eventually tend to back out, by reclaiming national sovereignty. Not directly, as this would be embarrassing. So Greece got its third support package, and in the refugees crisis it is underlined that ‘temporary border patrols’ and even ‘border closings’ are still within the letter of the Schengen Treaty. There is also talk of centralizing the intake of refugees at the European level, instead of the current principle of ‘first country of entry is the country where asylum should be requested. This may well be a good idea given the fact that refugees will  arrive (as the US experience also makes clear). Yet it is hard to predict how the negotiations will end, because there are large objections against the European Commission spreading refugees among the EU member states at its own peril.

The bigger picture however could well reveal that both events mark the end of the movement towards ‘ever closing union’, the old purpose mentioned in the Treaty Of Rome (1957), the most important founding treaty of European integration. That is significant, because if I am right in my assessment it means we are experiencing a real turning point. There are a number of contributing factors, most of which have been identified before, but that does not make them less significant, such as a lack of European identity among the European people, and the desire to accept only a minimum amount of European policy, due to the much stronger desire to make national decisions, which are easier to correct by the electorates. This, by the way, is fully in line with classical liberal thinkers such as Hayek, Hume or Smith.

Does this mean the EU is about to collapse? Hardly likely. The economic basis is still strong and while large the current problems can be paid for and sorted out eventually. Yet if integration stops here it will also mean that the EU will never get a serious common foreign policy or a common defense policy either, both of which have been tried –and failed- over the past decades. So the EU will then only be a ‘super free trade zone’, with a common trade policy, and strong legal apparatus also spreading out over many non-economic issues.  This raises many more issues, but that goes beyond the purpose of this contribution. For one thing: these are once again exciting times in Europe!

The Poverty Of Democracy

Chhay Lin Lim Economics, Liberty, Philosophy, Politics , , , , , , , , , ,

I have been a strong proponent of democracy until the Spring of 2012 when I picked up Hans-Hermann Hoppe’s Democracy: The God That Failed. Since then, I have never looked at democracy with the same warm feelings again. Now, in this post, I would like to explore why democratic political representation is an impossibility and why it deals poorly with value pluralism – the fact that society holds various fundamental values that are in conflict with each other. In addition, I would like to urge that we should look for other political possibilities and stop maintaining that democracy is the end of all forms of social organization.

What most people find attractive about democracy is its underlying idea that the electorate is an embodiment of the general will of the public as if the public has reached some kind of general agreement on public policies and legislation. It is believed that with regular elections, the rulers are in power for a limited time and they “will be compelled by the threat of dismissal to do what public opinion wants them to do” (Popper, 1963, p. 345). Gerard Casey writes in Libertarian Anarchy (2012) that “[T]he central characteristic of representation by agency is that the agent is responsible to his principal and is bound to act in the principal’s interest” (Casey, 2012, p. 125). It is however questionable to what extent the electorate can truly represent the constituency and to what extent the public voice can be considered univocal. We must also beware of attributing “to the voice of the people a kind of final authority and unlimited wisdom” (Popper, 1963, p. 347). When society holds a vox populi vox dei attitude, it can easily slip into a tyranny of the majority. A society ruled by public opinion by no means guarantees social justice.

It is important to realize that the notion of representation is highly questionable. According to public choice theory, political agents cannot possibly truly represent their constituencies when members of a society have different comprehensive doctrines, hold different values, and have different interests. Public choice theory applies economic methods in the field of political theory and provides some interesting insights that are relevant for political philosophy. It maintains that politics is ruled by clashing opinions among policy makers and clashing opinions among members of the constituency. One may for example desire to build new roads with public funds, another may want to use public funds for the modernization of the military and defense, a third may desire to spend more on social welfare, a fourth on education etc.

Given that we live in a world of value pluralism, it is difficult for policy makers to pursue and represent the ‘public interest’. Furthermore, special minority interest groups may have incentives to organize themselves in order to influence public policies through lobbying. When the expected gain of lobbying of such minority interest groups is greater than the cost of lobbying efforts, they have greater incentive to influence legislators. Large interest groups, such as taxpayers in general, have fewer incentives to campaign for particular legislations, because the benefits of their actions, if they are successful, are spread much more widely among each individual taxpayer.

When the principal believes that the cost of being politically active – keeping oneself up-to-date with political actualities and being involved with political campaigns – is not worth the benefits, the principal may become ‘rationally ignorant’ of politics. This gives representatives more incentives not to pay attention to the public interests. Rationally ignorant principals do not know who their representatives are or what they do. This consequently discourages the politicians’ feeling of accountability for their actions and it encourages the politicians to sell themselves to donors and to pursue personal agendas. Different interests, incentives, and ideologies among principals and political agents therefore result in unequal representation.

I believe that Casey is right when he asserts that there is

“no interest common to the constituency as a whole, or, if there is, it is so rare as to be practically non-existent. That being the case, there is nothing that can be represented” (Casey, 2012, p. 125).

Imagine that there is a piece of legislation that our representatives can either pass or not with 35 per cent of the public in favour of the legislation and 65 per cent who oppose it. If our representatives pass the legislation, they will represent the 35 per cent and ignore the interests of the 65 per cent. If they do not pass the legislation, they will represent the 65 per cent and cease to represent the interests of the 35 per cent.

“In this very normal political scenario, it is not that it is difficult to represent a constituency – it is rather that it is impossible” (Casey, 2012, p. 125).

A representative democracy is therefore actually quite inadequate in dealing with a pluralistic society as it cannot fulfill its promise: representing the will of the peoples. Democracy is moreover a system that is inherently violent, because it divides people along the lines of their comprehensive doctrines. People with similar political thoughts organize themselves into groups to campaign against people who hold conflicting ideas. In a democracy, these people then vote for their preferred ruler to rule over people who may have contrasting views or who may be indifferent to political issues at all. It has never happened that the turnout at elections is 100 per cent. According to Eurostat.com, the average turnout rate in Europe is around 43 per cent. Nonetheless, the 43 per cent are choosing political agents who are expected to represent the 57 per cent of the non-voting constituency. The violent nature of democracy is that with every vote the voter attempts to enforce their preferred rulers or legislation unto others. This basically makes it a system in which people lose their political autonomy to other voters.

I believe that in order to deal more adequately with value pluralism we have to look for political possibilities that lie beyond a representative democracy. Instead of considering democracy as the end of all forms of social organization, we should ask ourselves how we could discover better forms of social organization.

References
Popper, K. (1963). Conjectures and Refutations. London: Routledge.

Casey, G. (2012). Libertarian Anarchy: against the state. London: Continuum International Publishing Group.

Something I’m sure we can all relate to

Rick Weber Liberty