Saturday, May 8, 2010

Assault of Thoughts - 5/8/2010

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" -JMK

- Paul Krugman argues that one of the problems Europe is facing is that it doesn't have a unified fiscal policy regime to match its unified monetary regime. Greg Mankiw offers the case of early America, which had a unified monetary regime but no unified fiscal authority. Paul Krugman responds that that didn't always work out so well. While they weren't in on this particular exchange, the folks over at Coordination Problem recently suggested that you don't want either.

- Scary thought about the prospect of authoritarian regimes making headway in Europe as a result of the debt crisis. For those of you not familiar with the "PIIGS" nomenclature, it stands for "Portugal, Ireland, Italy, Greece, and Spain", the five most troubled countries in Europe right now.

- Jonathan Finegold Catalan offers a primer on Praxeology.

- Matthew Yglesias offers a primer on the European Central Bank.

- Not an enormous story, but this really struck me this morning. I recently finished reading Bertrand Russell's Freedom vs. Organization, and one of the things he highlights when he covers the period immediately following the Napoleonic Wars is how powerful the Catholic Church was in Europe, and what enormous sway it held over monarchs and emperors, even into the 19th century. Simply restricting ourselves to the secular role that the Church used to play, it's amazing to see the transformation wrought by Liberalism. Not two centuries ago the Church was one of the prime movers behind the greatest regime in Europe. Not to trivialize the issue, but would a bishop resign over having slapped around a few kids decades prior? It's an incredible change. Not too long ago, the Pope was a major influence on the movement of armies that shaped the face of Europe. Now, officials are resigning essentially over past administration of corporal punishment. It's easy to turn that hierarchy into something monstrous given the recent sex abuse scandals. But when I look at it from another angle, all I can think is "oh how the mighy have fallen".

- Neat pictures from Europe's new deep-space telescope.


  1. The axioms of human action are not necessarily true. That is, the universe could exist so that no acting being (as defined by Mises) could exist. Perhaps the axioms of human action were untrue of our universe until such acting beings evolved. In any case, they are not necessary truths in the same way that tautologies are. Austrians seem to get confused on this matter.

    The axioms of human action are unfalsifiable because such a falsification would be paradoxical. A falsification presupposes the existence of an acting being, and so no experience can falsify the existence of an acting being. Or in other words, no particular experience can test the axioms, because the existence of experiece itself falsifies their negation.

    Like basic logic, the axioms of praxeology are very uninformative, i.e. they rule out very few possibilities. All that should be asked of an economic theory (or any other theory, for that matter), is that it does not directly contradict the axioms.

  2. The U.S. has a unified fiscal policy? Since when?

  3. Lee Kelly - those are good thoughts. I directed Jonathan here to view them. I'm wondering, though, if that insight is too basic to be of interest to Austrians. I don't think they'd especially be concerned that the assertion that humans act is unfalsifiable. The meat of the question is in how humans are alleged to act and what that implies. A rehashing of a "cogito ergo sum" insight probably isn't going to be as interesting or important to them.

    This is the comment that I left on his blog about what he has up of the primer so far:

    Jonathan –
    I can’t comment too much substantively, but here are a few thoughts. Also, you might be interested in a comment that Lee Kelly left on my blog about your piece (I linked to you on Saturday – Lee’s comment is the first one):

    1. Your first couple sentences were illuminated a great deal by the first and second footnotes. I would move that material up into the paragraph itself. You never define praxeology itself, you just call it a “unique methodology”. It was also confusing to say that praxeology is something under which political economy is classified, immediately after you make the claim that it is a methodology that is unique to the Austrian school. It immediately leaves the reader wondering whether you’re implying that anyone that doesn’t buy into praxeology simply isn’t doing political economy. And maybe you’re making that claim (I think it’s unfortunate if you are), but if you are moving the second footnote into the text itself would help to explain why that is. All economics – Austrian or otherwise – is grounded on some sort of choice theory, which is ultimately what praxeology is. Explaining that more explicitly will help butress your claim that political economy is classified under praxeology.

    2. This is a substantive question – if human action is not the same as instinct, then how can one ever claim that any valid economic theory can be built up from the science of human action? Certainly instinct influences our economic decision making as well, right? If it does, then deductions from axioms about purposive human action alone should not be a sufficient basis for economics.

    3. In general, I would move more of the material from your footnotes into the body of your text.

    4. Maybe explain more why cardinal utility is rejected. It seems to just be asserted right now. Indeed, you call it a “belief”. What is the basis for this belief? I don’t think the average reader will come to this and simply accept an assertion of ordinal utility. I would look a little more into the justification for that.

    5. Speaking as an empiricist that has a lot of skepticism when it comes to the limits of rationalism and deduction, I would note that what empiricists or pragmatists hesitate on is not the logic of a priorism itself. They accept that if A is true and A implies B then B is true. What they have a problem with is (1.) is a REALLY true in the first place, and (2.) does A imply B the way you’re suggesting it does. Unfortunately, those two things are what you spend the least time talking about. You don’t justify your segregation of instinct from purposive action. You don’t justify cardinal over ordinal utility. You just assert these building blocks of the Austrian school. So someone like me hasn’t gotten past the “if A is true” part yet. I also often fault the Austrian school for claiming “A implies B” statements where such implications are largely invalid. So I would spend less time explaining the logic of a priorism – this is not going to be new or controversial material for most readers – and more time defending the axioms and explaining the method by which you deduce implications from those axioms. I know this is just the very beginning – I just want to caution against continuing with the emphases that you’ve started with here.

  4. Hi Daniel,

    The word "instinct" is misleading. I prefer to think about reflexive vs. reflective action. A reflexive action is just a automatic response to some stimuli, while a reflective action is a conscious trade-off between imagined alternatives. Praxeology concerns reflective action, though many of its basic insights also appear to hold for reflexive action.

    I get what Mises likes about praxeology. What I dislike is the notion (whether it has its origin in Mises or not) that economic theories not derived praxeologically are somehow illegitimate, i.e. not acceptable into the body of economic knowledge. Though, certainly, an economic theory that contradicts basic assumptions of human action has a little wrong with it.


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