Nightcap

  1. How Communist is China today? Rong Jian, Reading the China Dream
  2. Women in academia and Parisian literary life Ann Smith, Dublin Review of Books
  3. Hayek, international organization, and Covid-19 (video) Edwin van de Haar, Institute of Economic Affairs
  4. Hayekian Spontaneous Order and the International Balance of Power” Edwin van de Haar, Independent Review

Nightcap

  1. Greco-Roman civilisation has dominated ancient history for too long Philip Womack, Spectator
  2. The reaction against the End of History Nick Nielsen, Grand Strategy Annex
  3. Hayek at the hospital; the Use of Knowledge in hospital discharge decisions Irfan Khawaja, Policy of Truth
  4. Don’t mistake the immediate for the important Michael Koplow, Ottomans & Zionists

Hayek, International Organization and Covid-19

Just to inform all NOL-readers out there, if you like the subject, please register and join the IEA webinar I’ll give next wednesday, 13.00 hours, London time.

Institute of Economic Affairs > Events
Time:
10/06/2020
13:00 – 14:00

Although it was never the subject of a book, Friedrich Hayek wrote a lot about international relations during his long career and had rather firm views on international order and how it could be achieved. In this webinar, these Hayekian views are presented in the context of the current COVID-crisis. What was Hayek’s opinion about the existence and the role of international governmental organizations, such as the World Health Organization?

Dr. Edwin van de Haar (www.edwinvandehaar.com) is an independent scholar who specializes in the liberal tradition in international political theory. He has been a (visiting) lecturer at Brown University, Leiden University and Ateneo de Manila University. Van de Haar is the author of Classical Liberalism and International Relations Theory. Hume, Smith, Mises and Hayek (2009), Beloved Yet Unknown. The Political Philosophy of Liberalism (2011, in Dutch) and Degrees of Freedom. Liberal Political Philosophy and Ideology (2015). Among others, he contributed to The Oxford Handbook of Adam Smith (2013) and a forthcoming book on The Liberal International Theory Tradition in Europe, while his articles on liberal ideas and liberal thinkers appeared among others in Review of International Studies, International Relations, International Politics, Independent Review and Economic Affairs.

Van de Haar got his PhD in International Politcial Theory from Maastricht Universit in 2008, and holds master degrees in international relations (London School of Economics and Political Science) and in political science (Leiden University).

Please visit: https://iea.org.uk/events/hayek-international-organization-and-covid-19/

Nightcap (again)

(Ooops, lol. I hope all of NOL‘s American readers had a good Memorial Day, and that everybody else had a good Monday. The Glasner piece is an excellent discussion of the Austrian School of Economics.)

  1. An Austrian (School) tragedy David Glasner, Uneasy Money

Nightcap

  1. An Austrian (School) tragedy David Glasner, Uneasy Money

On growing up in Brazil, political liberty, and religion

Steve Bishop recently interviewed me for his blog and we talked about my personal background, my Christian faith and my interest in Reformational philosophy, a tradition of thought of which Abraham Kuyper was an early proponent and Herman Dooyeweerd, the main exponent.

Here is a personal part of the interview that might be of interest to NOL readers. I answer a question about what influenced my intellectual development:

Another influence I should mention came from people and events that taught me to mistrust the hubris of political authoritarianism. My Italian granddad was a child during World War II and his family never joined the Fascist party. As a result, they had much less access to food and clothes and suffered a lot during the war. This is part of the reason why he later decided to try something new in Brazil. I grew up hearing his stories about the horrors of war. My other grandfather was older and he had been drafted by the Brazilian Army to join the allied forces and fight the axis powers in Italy. But, before shipping to Europe, in the Army base, he decided he shouldn’t go fight the war, so he had to hide for a few years before amnesty was granted for defectors. When I was born, Brazil was still under the rule of a military junta, but later transitioned to a convoluted period of democratic transition. High inflation was destroying people’s livelihoods. I remember running in front of the “price man” at the supermarket to get products for the previous day’s price before the new tags were placed in them. My father got his salary and would have to immediately spend most of it by stocking up groceries for the entire month. This was very early in my childhood, until age nine or so, but I still have vivid memories of the national currency changing name every six months or so. By college time, I was already immune to the idea that politicians are more enlightened than the rest of us.
Then, when I read books such as The Road to Serfdom or, say, Orwell’s 1984, they helped me conceptualize what I had already noticed intuitively. I had already grasped Lord Acton’s maxim that “absolute power corrupts absolutely”. If you have, let’s say, an Augustinian view of the potential damage we can cause to fellow human beings if unhampered by checks and balances, then you can easily identify some of the naivete about human nature both right and left on the political spectrum, and that can lead you to the normative point that civil government should be limited in scope.
Further on, I talk about current projects:
In 2018 I delivered the Calihan Lecture at the Acton Institute and applied the notion of sphere sovereignty to interpret the crisis we are facing in the public square. This lecture has recently been published in the Journal of Markets & Morality. Last year I finished a project on the classical liberal background of the anti-revolutionary movement. An article summarising the main findings will come out in the Journal of Church and State in 2021. I didn’t want it to be too controversial and deliberately toned down the argument after the first peer review, but the main point is that Groen van Prinsterer and Kuyper fall under the category of “anti-rationalist liberals”, together, of course, with figures such as Lord Acton, Edmund Burke, Alexis de Tocqueville, and others who were, together with the anti-revolutionaries, very critical of the “rationalist liberalism” of, say J.S. Mill or the French liberals. As part of this project, I wrote an epilogue to the Portuguese translation of Kuyper’s speech on the social question, a book chapter for a South African publisher on Christian ethics and entrepreneurship in an interventionist economy.

This, of course, alludes to F.A. Hayek’s distinction between two kinds of liberal tradition, one of which he rejected (rationalist liberalism) in order to embrace the other (anti-rationalist liberalism).

On Abraham Kuyper’s Political Liberalism

My article “Abraham Kuyper and Guillaume Groen van Prinsterer as Anti-Rationalist Liberals” has been accepted for publication in the Journal of Church & State and will hopefully be in print in 2021.

In this article, I explore F. A. Hayek’s division of pre-1848 liberalism into two contrasting worldviews — rationalist and anti-rationalist. I argue that both Groen van Prinsterer and Kuyper, two important Dutch Anti-Revolutionary writers, were anti-rationalist liberals.

Both of them are on the record denouncing “liberalism”, but both refer mostly to French liberalism of the rationalist kind. And both admired Edmund Burke and Alexis de Tocqueville, cited by Hayek as great exponents of anti-rationalist liberalism.

I hope this article will lead to an interesting conversation as to why the contemporary Kuyperian movement seems to be much more left-wing than the original anti-revolutionaries.

A pre-print version of the article can be viewed on the Oxford Academic website.

 

Nightcap

  1. Permutations on Ernst Bloch’s “S is not yet P” Nick Nielsen, Grand Strategy Annex
  2. “‘Emergencies’ have always been the pretext …” Peter Boettke, Coordination Problem
  3. The Villager And The F-18 Deep Prasad, Medium
  4. Neill Blomkamp’s experimental film studio is AWESOME Andrew Liptak, Verge

Nightcap

  1. Hayek’s rapid rise to stardom David Glasner, Uneasy Money
  2. Why I am not a natural lawyer FH Buckley, Law & Liberty
  3. British Imperial Federation (pdf) William Smith, Political Science Quarterly
  4. The people who profited from the Trail of Tears Caitlin Fitz, Atlantic

A PPE pandemic reading list

I haven’t written for a while – other duties get in the way – but I’d like to suggest this reading list in Philosophy, Politics, and Economics for the present time of crisis and perplexity. The main reason is that everyone seems to be an expert in Economics, Epidemiology, and Political Philosophy these days, assuming that from “facts” we can easily derive “values” and answer the question, “what is to be done?” I think this is at best a naïve attitude and at worst the same rationalistic hubris we experience everytime a political issue is simplified and reduced to a matter of “science”. Yes, there are facts and they shouldn’t be ignored, but it’s not easy to decide what is to be done, morally and politically, in light of those facts.

The first item on the list is Leviathan by Thomas Hobbes. A classic, and a reminder that people choose all the time to sacrifice some degree of liberty in the altar of survival (or a chance to survive), but also a reminder that Leviathan may turn from friend to foe, from protector to persecutor – and there is very little we can do about it. The second item is John Locke’s Second Treatise of Government, which then explores this topic in light of the fact that civil government shouldn’t have absolute power. It makes an attempt to show us how that power can, or should, be limited within a certain sphere of responsibility. Though it’s still there to protect us.

In this time of pandemic, people feel tempted to panic. People and politicians are calling for dramatic measures, and one reason is that the use of government coercion – which, according to Locke, ought to be limited – might be necessary to force people to cooperate, for example, by staying home. This is a proposed solution to the dilemmas of collective action posed by the problem that some may “free-ride” on the rest, and, as a result, the disease will keep spreading, frustrating any attempt to slow it down. Against dramatic, desperate and, perhaps, arrogant, use of political power, and in favor of prudence and wisdom, Edmund Burke’s collection of writings from the period of the French Revolution can be a beacon of light. On the other hand, explaining the dilemmas of collective action and suggesting ways of solving them, Mancur Olson offers an insightful look at incentives and group behavior in The Logic of Collective Action.

However, the idea that government coercion is the only solution to dilemmas of collective action (such as imposing a quarantine, for example) doesn’t hold water. In fact, other economists follow Olson in saying the problem is real and challenges a strict individualist way of thinking, but, adding to Olson’s point, they also acknowledge the role of private action and sanctions in fostering cooperation. Elinor Ostrom’s Governing the Commons is a wonderful study that opens up a number of possibilities for private enforcing of collective action to preserve and promote the frugal allocation of common goods. This can be complemented by The Quest for Community, an overlooked work by sociologist Robert Nisbet, where it becomes clear that, between individuals, the state, and the market, there’s room for other associations and communities that strengthen civil society – particularly in this challenging time. Nisbet’s lesson invites liberty-loving people to reflect on whether a hyper-individualistic view of the world ends up pitting helpess individuals against Leviathan instead of offering the buffer zone of community in between. This is something Alexis de Tocqueville discussed in the 19th century.

And just for the sake of dealing with the issue that “is” doesn’t easily lead to “ought”, and that science might have facts and an explanation for them, but does not easily conduce to a proper discussion on values policy, I must finish this PPE pandemic reading list with F. A. Hayek’s The Constitution of Liberty. On Chapter 4, for example, Hayek introduces a constrast between “rationalist liberalism” and “anti-rationalist liberalism”. Rationalist liberals assume too easily that knowledge of the facts on the ground will give them what they need to re-design a society governed by reason. Hayek warns us against this technocratic assumption and offers a defence of “anti-rationalist liberalism”. Anti-rationalist liberals understand the importance of spontaneous order and of constraining power (even at a time of crisis) while prudently balancing the values of liberty and safety in light of past experience and tradition.


Three Additional readings:

Buzan, Waever and De Wilde, Security: A New Framework for Analysis (1997). In a liberal democracy, the state steps in suspending some civil liberties only if it can persuade citizens that there’s a threat that justifies it. This book offers a framework to interpret how such threats are constructed in official and non-official discourse, and to what extent this construction of a threat can be effective.

Robert Higgs, Crisis and Leviathan (2013). 25th anniversary edition. Looks at US history and how government employed crises to its advantage and the advantage of the ruling elites. In particular, security and economy related issues are dealt with.

Sanford Ikeda, Dynamics of the Mixed Economy (2002). Shows that a time of crisis might be a time for further interventionism in the economy, as Higgs (see above) suggests, but might also be a time for disintervention, as seems to be the case with part of the agenda today (FDA deregulation, etc.) This is based on Ludwig von Mises’ view that interventionist economies are not very stable and are always swinging as a pendulum between socialism and capitalism.

 

Discovery Processes

A good friend of mine encouraged me to read this note published by James Jay Carafano, Vice President of The Heritage Foundation.

Despite being as compelling as it is well intentioned, the article misses to mention one of the main arguments for free markets: what once Friedrich Hayek described as “the competition as a discovery process.”

Indeed, the concept is insinuated in Carafano’s piece of writing: “He decided to make a splash in the sports car market by jumping into the race car racket. Initially, he planned to do it by buying the world’s premier race car manufacturer, Ferrari. But that plan fell flat. So Ford moved to Plan B: to field his own, all-American team.”

Businessmen, like any other kind of people, are rational: initially, they try to maximize their profits by avoiding competition. They are not heroes and nobody can ask them to be so. People, businessmen included, respond to incentives.

When there is not any other choice than competition, then innovation, ingenuity, and creativity arise. Not because of a change in the mind of certain businessmen, but for new innovative entrepreneurs outperform the non competitive ones.

The free market capitalist system James Jay Carafano praises is mostly an institutional arrangement named -once  again- by Hayek as “competitive order.” Nevertheless, the most interesting question for our times is not about the virtues of the said free market capitalist system -which seem to be out of discussion- but whether competition under the rule of law deserves to have a Kantian “Cosmopolitan Purpose.”

Nightcap

  1. Why Hayek was wrong about American and European conservatism, I Barry Stocker, NOL
  2. Why Hayek was wrong about American and European conservatism, II Barry Stocker, NOL
  3. Why Hayek was wrong about American and European conservatism, III Barry Stocker, NOL
  4. Why Hayek was wrong about American and European conservatism, IV Barry Stocker, NOL

There is no such thing as a sunk cost fallacy

The advocates of the sunk cost fallacy state that, since an agent ponders in his decisions marginal costs against marginal incomes, any consideration upon sunk costs would be irrational. Notwithstanding, as soon as we accept the arguments of the said sunk cost fallacy and try to put its recommendations into practice, we discover that we have just become an easy prey of a more severe kind of irrationality: the one that concerns with intransitive preferences.

Jon Elster exemplifies the sunk cost fallacy with the case of a huge snowfall that pours onto the city the very same day we were planning to attend a theatre play whose tickets we had bought the previous days and are not refundable. Elster points out that, since our attendance to the play will not bring the money we had paid for the tickets back, there is no reason to make the decision on whether or not to attend the play on the basis of the sunk costs of the tickets. The correct reasoning should take into account only the cost of enduring the heavy snowfall in order to reach to the theatre where the play would be performed. Nevertheless, the same Jon Elster makes the disclaimer that a zealous observance of avoiding the sunk cost fallacy could lead to make choices following non transitive preferences.

If we change our mind every day, discarding previous decisions and assuming a new direction just because a new opportunity has arisen, we risk to end up in the ruin. Transitive preferences tend to assure the agent of a certain profit and non transitive ones exposes him to losses. In evolutionary games simulations, agents who act according to transitive preferences outshine agents who do not. It seems, then, that the rational agents walks on the edge of the razor, between sunk cost fallacies and non transitive preferences.

That is why there is not such a thing as a sunk cost fallacy. The rational agent, to be such, must ponder a whole plan against an alternative plan in a whole as well, which in some cases, both of them last several periods of time. It is true that in the “very short term” all past costs are sunk and that it only matters the opportunity costs, but most decisions are made in the short term, which lasts more than just a moment. Otherwise, the very concept of transitive preferences would lack any meaning.

Of course certain costs are sunk: if the flux of earnings that a good of capital produces just covers the variable costs of putting it to work (for example, a truck whose earnings just pay for the gas and the salary of the driver), the more rational choice is to use it until it becomes full obsolete and do not replace it with a brand new unit.

But the sunk cost fallacy does not provide a criterion to distinguish sunk costs from just mere costs of a single plan. What a rational agent with transitive preferences discards in his considerations will be named sunk costs, and what he does not, will not. A pure tautology.

Even the snowfall case does not explain satisfactorily the said fallacy: when the agent bought the tickets, their cost were inferior to the income of watching the play, but a heavy snowfall adds not a marginal cost but increases the marginal cost of the plan composed by the cost of the tickets plus the cost of enduring the snowfall.

Notwithstanding, the sunk cost fallacy derives into a philosophical puzzle: what is the subject? How are relations between time and being and between being and becoming. It seems that our permanence as rational agents depends mostly upon not to put into practice the opportunistic approach of the sunk cost fallacy ad libidum.

Moreover, the matter has a political strand: constitutional constraints demand from the authorities to take into account the weight of certain principles in their decisions and those principles could be disregarded if the decisions are purely made on the basis of expediency. If it is the same authority the one who decides whether certain constitutional principle should be followed or not, then all the citizens would be left exposed to arbitrariness.

The considerations about the length of the period a plan should last, the responsibility upon the consequences of our past choices, and the weight of the constitutional principles on the legitimacy of political decisions, become rational if they are not pondered by an isolated agent but in the framework of the interplay among several agents.

This framework of human interaction upon which the agent’s choices take place had been characterised by Friedrich A.Hayek as a spontaneous, or abstract or extended order. He proposed to leave the term “economics” to the explanation of the choices made by an isolated agent and to establish the science of “catallaxy” as the study of the complex phenomena involved in the said structure of interactions. In the same line, James M.Buchanan labelled the interplay of individual agents as “symbiosis” and proposed to redefine the task of the political economy to its study.  More recently, in 2009, Douglass C. North, John Joseph Wallis and Barry R. Weingast, in Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History, coined the term “open access orders” to analyse the same set of events. To this stream of thought, it also belongs Vernon L. Smith’s own account of the concept of ecological rationality.

Catallaxy, Symbiosis, Complex Phenomena, and Open Access Order or Ecological Rationality are some of the aspects of what Karl Popper once called “critical rationalism” and supersedes old problems such as those of the instrumental or subjective reason. An authentic “toolbox,” ready to be used.

Atomistic? Moi?

I have written a brief paper entitled ‘Hayek: Postatomic Liberal’ intended for a collection on anti-rationalist thinkers. For the time being, the draft is available from SSRN and academia.edu. Here are a couple of snippets:

Hayek offers a way of fighting the monster of Rationalism while avoiding becoming an inscrutable monster oneself. The crucial move, and in this he follows Hume, is to recognize the non-rational origins of most social institutions, but treating this neither as grounds for dismissal of those institutions as unsound, nor an excuse to retreat from reason altogether. Indeed, reason itself has non-rational, emergent origins but is nevertheless a marvelous feature of humanity. Anti-rationalist themes that appear throughout Hayek’s work include: an emphasis on learning by processes of discovery, trial and error, feedback and adaptation rather than knowing by abstract theorizing; and the notion that the internal processes by which we come to a particular belief or decision is more complex than either a scientific experimenter or our own selves in introspection can know. We are always, on some level, a mystery even to ourselves…

Departing from Cartesian assumptions of atomistic individualism, this account can seem solipsistic. When we are in the mode of thinking of ourselves essentially as separate minds that relate to others through interactions in a material world, then it feels important that we share that world and are capable of clear communication about it and ourselves in order to share a genuine connection with others. Otherwise, we are each in our separate worlds of illusion. From a Hayekian skeptical standpoint, the mind’s eye can seem to be a narrow slit through which shadows of an external world make shallow, distorted impressions on a remote psyche. Fortunately, this is not the implication once we dispose of the supposedly foundational subject/object distinction. We can recognize subjecthood as an abstract category, a product of a philosophy laden with abstruse theological baggage… During most of our everyday experience, when we are not primed to be so self-conscious and self-centered, the phenomenal experience of ourselves and the environment is more continuous, flowing and irreducibly social in the sense that the categories that we use for interacting with the world are constituted and remade through interactions with many other minds.

Nightcap

  1. Why do Ron Paul’s racist newsletters from the 80s and 90s still matter? Steve Horwitz, Bleeding Heart Libertarians
  2. A great profile of Pakistan’s Prime Minister Christopher Sandford, Modern Age
  3. Hayek’s tragic capitalism Edward Feser, Claremont Review of Books
  4. An observation on semiotics in national dialogue Mary Lucia Darst, NOL