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Capitalism? It’s Cooperative Technology. It’s Not A Religion.

A laugh. From a Galambos Fan. A link to a posting on Dubai’s economy.

“Capitalism is that societal structure whose mechanism is capable of protecting all forms of property completely.” — Galambos
 
Is the new epic-center of capitalism to be the Islamic World?

They already have a religion… 😉

But let’s look at this Islamic world:

  • Low median iq.
  • Poor education.
  • Science-denying biases.
  • Rampant mysticism.
  • Religious schism.
  • No core state

Dubai simply has no oil and wants to be the Switzerland of the Muslim world.

This is not a capitalist strategy per se. It makes no appeal to the social order. 

Instead It is a casino strategy – draw from extended regions whomever you can regardless of how they obtained their money. 

Capitalism is either a social order with incentives for all members, or it is a platonic and absurd personal philosophy that runs counter to the facts.  đŸ˜‰

Curt

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Rereading The Constitution Of Liberty Leads To A Few New Insights On Freedom

I’ve read Hayek’s The Constitution Of Liberty twice again lately while editing it so that I could convert the text to spoken audio. The resulting audio is imperfect — because my editing of the multitude of optically recognized characters is imperfect — but for personal consumption it’s works just fine.

But editing a text forces you to read it more carefully than casual reading does. The first time I read it I did not really appreciate the book’s depth of reasoning. I don’t even remember when I did read it the first time. I was probably in my early thirties? But it’s more than that. Because one needs considerable knowledge of the field, it is not apparent to the casual reader that he is making logically NECESSARY arguments – especially given Hayek’s gentle, advisory, tone. Hayek felt that the writer should show sympathy for his opponents. A technique which is very useful in engaging the reader, but a tone that is also prone to misinterpretation of the underlying purpose of his arguments. I have, and so have others, said, that Hayek’s great failing was in failing to defeat Keynes. He left that task for history because he thought it so obvious. But he did not understand the attractiveness of the positivist methodology when opposed only by the conservative libertarian framework that solves for freedom as an absolute good.

[callout]Freedom is intuitive as an experience, but counter-intuitive as a process.[/callout]

FREEDOM IS INTUITIVE AS AN EXPERIENCE, BUT COUNTER-INTUITIVE AS A PROCESS

Besides being both an [glossary:appropriated term], and an [glossary:expanded term], Freedom is a proscription against the political input of actions for the purpose of obtaining unspecified (and promissory) output actions. And as such Freedom is logically inconsistent to the human mind, whose action orientation finds such systemic solutions all but impossible to believe, and in retrospect finds the relations between cause and effect, deterministic or accidental, rather than the result of a policy of restraint – “not acting”.

While the cause of our tradition of freedom is to be found in the military tactics of western chieftains and their retinue, and their distrust of the concentration of power, and the social status accorded those who rose as leaders by merit in commerce and war, it bears noting that the rarity of Freedom as a sentiment is in no small part due, to the fact that the very idea of unorganized action is illogical to the human mind.

HAYEK SOLVES FOR FREEDOM
Hayek is ‘solving’ for freedom and western civilization. I think the assumption is that by solving for these things, we create great wealth.

But human beings do not solve for freedom, they solve for gaining experience and certainty of gaining them at the lowest cost and risk. While different social classes solve for different TIME frames in which they gain those experience, and how they perceive risk, we all solve for experiences. We call this acquisitiveness, which is a vulgar commercial way of expressing the same series of concepts.

Solving for that which is incomprehensible as an input, and which cannot logically be connected with outputs assumes that the reader agrees with the proposition that freedom is a ‘good’ in the first place.

SOLVING FOR UNEMPLOYMENT
They Keynesian prescription is to solve for unemployment and use monetary policy, despite the fact that doing so exaggerates booms and busts. They Hayekian prescription is to solve for productivity and prices, and then unemployment will maintain natural levels. The social democratic prescription (which is the only option available to smaller states) is to solve for high taxation and high redistribution that pays the unemployed to stay home. The Poor Totalitarian prescription (in china) is to employ everyone in some productive capacity and redistribute via state control of capital. The Poorer Socialist prescription (India) is to pay the private sector to accomplish what the state lacks the resources to do. (Which I’m a fan of.)

The worst solution is solving for unemployment because it distorts the economy.

NOTE: While I use the term Freedom here, I use the term “Sovereignty” in my work because Freedom is an appropriated and expanded term that has lost meaning. Liberty likewise, holds a similar problem. These terms too often describe experiences rather than necessary causes. Sovereignty means that you have a monopoly over yourself and your property. Freedom means the absence of coercion. And that is too loose a definition. Monopoly over one’s self and property is much clearer. It means that the individual is the only state.

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Putin: Your Cow Better Be Silent

Putin Slams West for Wikileaks’ Assange Arrest : Putin Suggests U.S. Criticism Is the Pot Calling the Kettle
http://abcnews.go.com/International/putin-slams-west-wikileaks-arrest/story?id=12364345

Putin criticizes supposedly democratic institutions for clamping down on a dissident.

“The villagers say, that if your neighbor’s cow is mooing, yours better be silent”. Which is the Russian equivalent of ‘the pot calling the kettle black’.

[callout] In fact, what’s impressive about the Wikileaks data, is that the USA actually looks like a pretty benevolent, if mildly overstretched and incompetent, empire, whose only material problem is creating a responsible, peaceful, core state for Islam[/callout]

I wrote two days ago that arresting Assange is nonsense unless we have a real property crime. Unless property is transferred (technology secrets) and unless there is material harm ( our people get killed), or a trust is broken on a contract with a foreign government (we are trying to help rescue some government from oppression) there is not really a crime. In fact, what’s impressive about the Wikileaks data, is that the USA actually looks like a pretty benevolent, if mildly overstretched and incompetent, empire, whose only material problems are assisting in the maturity of market-participating states everywhere, and in particular creating a responsible, peaceful, core state for Islam – solving a serious problem for the world by helping modernize a violent, non-market, ignorant, superstitious and primitive expansionist culture so that it can play with the rest of the grownups in the world.

Putin is one of my personal Heroes. I think, for Russia, he’s a perfect leader, and the leader that they need.

Is Russia, and is all of Byzantine Christianity corrupt? Yes. Is the state an oligarchy? Yes. Is that bad for Russia at this point in it’s lifetime? No.

Democracy, or at least, civic republicanism is NOT something that’s intrinsically good. Corruption is bad. Democracy can be a check on corruption. But only when the middle class is fully active, and fully enfranchised. Otherwise, the people will vote themselves into totalitarianism. Russians in particular will do so.

Putin should be Tzar. Russia needs a King. The west needs kings. We all need kings. Not kings that can write laws. Kings that can veto abuses of the law. We may not know what we should do. But we can know what we should not do. And that is a job of a great monarch.

Kings make it impossible to compete for political power, and force people to compete for economic power. That’s the beauty of monarchy.

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A Decidedly Christian Set Of Laws In 1603

I hadn’t read Hugo Grotius’ Commentary before today. It is an interesting attempt to provide a coherent set of legal principles. Even if it is just very simply a recitation of Biblical principles with european legal conventions.

I would never agree to place such faith in Magistrates, or any other officer of the state. They are only human beings, and not exceptional human beings at that.

I give my violence to the state to use justly on my behalf, so that I may spend my time in other activities, in our division of knowledge and labor. That does not mean that it has the ability to act justly on my behalf, or the will to act justly on my behalf, nor has it demonstrated that it has the tendency to act justly on my behalf. I do not believe that any officer of the state is better equipped to make judgements over property than I am. And those are the only judgements a man need know. If he must do other than that, he submits to servitude.

Now, once we possess a significant market, we must have administrators, and regulators of that market, and citizens who adhere to the manners, morals, ethics, taxes and regulations that prevent fraud, theft, and violence within that market, are it’s shareholders. Those shareholders will often seek to escape payment, or to transfer liability and risk onto others, or to draw more than their earnings from the corporation of the market that we call the state. I recognize that such thefts are invisible to men without the adminstration of the state to monitor them. As such, I agree that we must have courts and jurors.

However, should these men, in the observance of their duties, abridge the laws of property, of theft, of violence, or fraud and deception in the course of their duties — even if it is to pursue just ends, or if such men, in the name of ease, or efficiency, or laziness or stupidity, or most importantly, the fallacy of just democratic law making, then I do not allow them to use my violence on my behalf, to seek reparation from my fellow men. And instead, I must withdraw my violence from the account of the state, and use it at my own discretion.

Commentary on the Law of Prize and Booty [1603]
by Hugo Grotius

Table Of Rules And Laws Compiled From Chapter II Of The Commentary

Rules
rule i. What God has shown to be His Will, that is law.
rule ii. What the common consent of mankind has shown to be the will of all, that is law.
rule iii. What each individual has indicated to be his will, that is law with respect to him.
rule iv. What the commonwealth has indicated to be its will, that is law for the whole body of citizens.
rule v. What the commonwealth has indicated to be its will, that is law for the individual citizens in their mutual relations.
rule vi. What the magistrate has indicated to be his will, that is law in regard to the whole body of citizens.
rule vii. What the magistrate has indicated to be his will, that is law in regard to the citizens as individuals.
rule viii. Whatever all states have indicated to be their will, that is law in regard to all of them.
rule ix. In regard to judicial procedure, precedence shall be given to the state which is the defendant, or whose citizen is the defendant; but if the said state proves remiss in the discharge of its judicial duty, then that state shall be the judge, which is itself the plaintiff, or whose citizen is the plaintiff.

Laws
law i. It shall be permissible to defend [one’s own] life and to shun that which threatens to prove injurious.
law ii. It shall be permissible to acquire for oneself, and to retain, those things which are useful for life.
law iii. Let no one inflict injury upon his fellow.
law iv. Let no one seize possession of that which has been taken into the possession of another.
law v. Evil deeds must be corrected.
law vi. Good deeds must be recompensed.
law vii. Individual citizens should not only refrain from injuring other citizens, but should furthermore protect them, both as a whole and as individuals.
law viii. Citizens should not only refrain from seizing one another’s possessions, whether these be held privately or in common, but should furthermore contribute individually both that which is necessary to [other] individuals and that which is necessary to the whole.
law ix. No citizen shall seek to enforce his own right against a fellow citizen, save by judicial procedure.
law x. The magistrate shall act in all matters for the good of the state.
law xi. The state shall uphold as valid every act of the magistrate.
law xii. Neither the state nor any citizen thereof shall seek to enforce his own right against another state or its citizens, save by judicial procedure.
law xiii. In cases where [the laws] can be observed simultaneously, let them [all] be observed; when this is impossible, the law of superior rank shall prevail.

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Arresting Assange For What? Say Again?

OK. I just dont get arresting Assange for getting women to sleep with him, and not using a condom. We’d need an awful lot of additional jails. Either arrest the guy for the real reason that you want him, or you’re abusing the justice system. I’m not a fan of this guy, and I think public opinion will crowsdsource his guilt or innocence correctly. But this kind of legalism is simply abusive.

I don’t let the state use my violence on my behalf for injustice. I give my violence to the state to use on my behalf in order to prevent and resolve disputes between my fellow citizens over theft, fraud and violence. I do not give my violence to the state to use on my behalf to trump up bad manners into illegal actions for the purpose of political nonsense.

It’s just proving his position that our governments are corrupt.

Arrest him for distributing state secrets (even if they are meaningless so far). Make an example of him if you want. But we’re going to have to legalize prostitution, universally license all women, and men are going to have to ask for receipts in order to have sex and prove it was voluntary.

Ridiculous. Brits should be ashamed.

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The Globalization Of Status and Beauty and The Rise In Rhinoplasty

I read and commented on a piece recently that lamented the rise in rhinoplasty (nose jobs) among Iranian women, seeking smaller more feminine noses. But I am not sure it’s a reason for lament.

SOCIAL AND ECONOMIC STATUS

Self modification is partly popular because it is expensive and demonstrates that you have joined the market-participating (middle) classes. So, partly, this is about status seeking. Status seeking is important because it controls access to mates. It is not as important for men as women. Women are more status conscious of men, and men more beauty conscious of women. In reality this is a pretty successful algorithm for a population to follow. It increases everything good, and causes rotation of elites and genes.

INTERNATIONAL STATUS AND POWER

Aside from local trends, people also adopt status signals based upon which culture has ‘power’. As the west rose, western dress and ‘looks’ increased in status. As the west declines in power, regional preferences are becoming favored. (We see this in the returning preference for paternalism in china for example.) So STATUS properties are plastic and to some degree — they are a ‘fashion’.

[callout]Think of it as part of ‘globalization’: symmetry across all human forms.[/callout]
UNIVERSAL SYMBOLS OF BEAUTY

Conversely, there are certain properties of beauty that are universal, such as health, waist-hip ratio, height weight proportionality, long legs, and hemispheric symmetry. It turns out that, “on the whole” people view large noses as asymmetric now that they have exposure to enough human variety to see them as a asymmetric. Therefore, regional “racial” symbols of attraction are subject to change because of exposure to a large number of different faces, with different status attributes.

THE CONCEPT OF PHYSICAL SYMMETRY UNDER GLOBALIZATION

Think of it as part of ‘globalization’: symmetry across all human forms. Although across all cultures, there appears to be a universally attractive look, and this look is associated with being ‘white’ the truth is that it’s just the greatest symmetry that can be obtained in the human form as we currently undertand it. (This is an interesting area of research.) But it is not whiteness. It’s symmetry on the one hand and ‘feminine fineness’ over masculine mass that determines beauty (in women). So this tendency is a mathematical expression. (I read recently that prettier women have more children so that it’s likely that the process will improve, but then there are gene-pool collisions that simply haven’t worked themselves out in every region.)

COUNTERACTING TRENDS

It might be useful to note that people will not likely adopt asymmetric modifications (enlarged noses) in order to achieve status. People will tend to increase their appreciation for local asymmetry (traits dominant in their local group) if it is associated with greater status – such as nationalistic or racial traits. Therefore the fashionability of nose modification will drop even if the permanent attraction of smaller noses as more attractive doesn’t. In other words, the priority of these different status symbols can change over time. We see racial feature preferences in Jewish, African American, Greek and Italian populations. It has gone out of fashion and become impolitic for white northern europeans to classify themselves racially beautiful examples, and instead they simply refer to more general ‘beauty’. Despite that other racial groups do maintain their preferences.

ITS AFFECTING ‘WHITE’ PEOPLE AS WELL

It may be interesting to note that white women currently envy african buttocks and east asian body weight distribution, rather than traditional fertility-driven ‘curviness” — so feature-envy it works both ways.

It may also be interesting to note that ‘white’ skin color is a fashion, not an absolute. Skin clarity demonstrates health, and lighter appears to be more attractive than darker, no matter what race you’re in. But It appears we like ‘very light coffee colored’ as the ultimate symbol of health, because ‘very white’ that borders on translucent is also now associated with lack of skin plasticity (aging badly). So, we are ‘learning’ some things that are meaningful as well.

BEAUTY IS A COMPLEX NETWORK

So, beauty is determined by a number of properties: International cultural power status. Local Economic Status, symmetry, femininity, healthiness, and “globalization” – exposure to greater choice.

We can all feel equally inadequate. (Spoken as a small nosed, short, northern european.)

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A Response to Gene Callahan: Scientism In The Way Of Science

From Thinkmarkets: Scientism in the way of science by Gene Callahan.

Gene takes critics of economics to task. I misunderstand it at first, (as does Ebeling), and the ensuing commentary is worth reading.

(Originally posted there. Posted here for documentary purposes. -A nod to the few sites like Econlib that seem to think documenting one’s work this way is bad for some reason.)

I repeatedly find attacks on positions in the social sciences made based on extremely limited and, frankly, antiquated views of how the physical sciences proceed. I will give one example from a rightist criticism of a leftist view, and one that is a leftist criticism of a rightist view, to illustrate that my point has nothing to do with ideology — or perhaps, that it has to do with the way ideology can lead one to embrace flimsy criticisms of other’s positions.

The first excerpt is from Hunter Lewis’s book, Where Keynes Went Wrong:

“In chapter 15, we saw how Keynes wrote N = F(D), which means that employment, denoted N, is a function of demand. Demand however is defined as expected sales, not actual sales. We noted that expectations are not a measurable quantity and thus do not belong in an equation.”

Well, one way to measure these expectations would be to walk around and ask the entrepreneurs “How much do you expect to sell this year?” then total up those amounts. Why in the world this would not be a fine measurable quantity is unclear.

But perhaps even worse is Lewis’s contention that only a “measurable quantity” belongs in a mathematical equation. So, let us strike pi from all of our equations, and e, and, most certainly, i! All complex numbers must be banished, and negative numbers are fairly suspect as well.

Furthermore, most of the entities dealt with by modern physics are not directly measurable. Instead, what we measure is a dial reading or a trail on a photographic plate, things which require a great deal of theory to connect them to entities like electrical fields or positrons. As the philosopher Susanne Langer wrote:

The sense-data on which the propositions of modern science rest are, for the most part, little photographic spots and blurs, or inky curved lines on paper. These data are empirical enough, but of course they are not themselves the phenomena in question; the actual phenomena stand behind them as their supposed causes
 we see only the fluctuations of a tiny arrow, the trailing path of a stylus, or the appearance of a speck of light, and calculate to the “facts” of our science. What is directly observable is only a sign of the “physical fact”; it requires interpretation to yield scientific propositions
 and [realizing this,] all at once, the edifice of human knowledge stands before us, not as a vast collection of sense reports, but as a structure of facts that are symbols and laws that are their meanings.

(Philosophy in a New Key)

And surely this was what Keynes thought: aggregate demand may not be directly observable, but we can formulate laws by which itseffects are observable, for instance, in a recession. Now, whether he was correct or not is not my topic, but there is certainly nothing unscientific about his hypothesis.

The second excerpt is from a history of marginalism at The New School for Social Research:

“However, [marginalism’s] Achilles’ heel was the very notion of ‘marginal utility’. Marginal utility, let us be frank, is hardly a scientific concept: unobservable, unmeasurable and untestable, marginal utility is a notion with very dubious scientific standing.”

Unobservable, unmeasurable and untestable — like, say, infinitesimals in calculus! (And people like Berkeley directed just such criticism at infinitesimals and other mathematical notions.) Once again, we have some unfounded belief that scientific entities must be directly observable, rather than observed by their hypothesized effects. (And certainly the theory of marginal utility predicts many observable phenomena, such as the lack of a price for air in normal circumstances.)

[callout] … probabilism in the social sciences as we understand it … is unscientific. Not simply beause the methods are logically false and because the predictive capacity of our methods are false, but because NOT USING THEM appears to produce better results than using them.[/callout]

Update:

I think that  Gene’s argument is a bit clearer now that I have read comments by others.   And perhaps I’m adding additional vectors of inquiry rather than debating his position.

Gene’s argument is that people from the physical sciences argue that economics is not a science and counters the grounds on which their criticisms are based.  I interpreted his posting that people from the psychological school were forming the criticism against positivism in economics.  Gene’s criticisms are correct, in that mathematics relies upon incomplete approximations that are convenient contrivances, and that economic science relies upon similar assumptions, so he is attacking the physical sciences on their methods – saying their criticisms of social sciences are hypocritical.

I would argue that since the velocity of the transfer and transformation of energy in time and space is knowable, and that the same velocity of knowledge is not yet knowable, that probabilism in the social sciences as we understand it – and as I have stated below,  is unscientific. Not simply beause the methods are logically false, and because the predictive capacity of our methods are false, but because NOT USING THEM appears to produce better results than using them. And that while results in the physical sciences have neutral consequences (or perhaps do not have moral consequences – those that affect others without their consent) that consequences of failure necessary for testing in the physical sciences creates negative externalities, as well as being simply counter-productive in the social sciences.

(I believe I understand how to discover the formula for that velocity, and how to know it, but not what it is, and that someone more intelligent, and most likely younger than I am will be required to solve it. But at least google is accumulating the data needed to determine it.)

Original Reply:

Gene,

Well, I think the argument against the use of models is different from that which you’re stating.  There are three or four major lines of argument in your posting all making assumptions about ‘science’ and the scientific method.

Marginal utility is an expression of the relativity and subjectivity of value, and the plasticity of utility, and the dynamic variability of value in real time.  This creates a set of variables that lead to the effective uniqueness of each object in time for many (if not all) objects, which in turn leads to the categorical error of aggregation when applied to quantities, each of which includes necessary errors due to aggregation.  And this error of aggregation is the reason for non-prediction. And therefore non-prediction is caused by the very reasons austrians stated.  That in the aggregate much of this can be modeled, is true, at least for many commodities.

Objects in physical space have a prior course.  So do human events.  We can measure the delta in the course of physical events, but CANNOT measure the delta in the course of social events. That is the simplest statement of the problem.  It is that social events CANNOT be measured because they are temporally unique.

And further, Marginal utility is absolutely testable (and has been.) So I don’t understand, or rather, you could be making any number of points, and its unclear which.

Marginal utility is a categorical description of a visible, measurable process, whenever that process results in an exchange (at least.)  True, we cannot know the opportunity costs paid by individuals, but we can measure whenever they do act to exchange goods or services.

Instead, the criticism of models is not on grounds of material measurement of transactions, but that :

a) empirical models in the social sciences are not predictive and are even inversely predictive in relation to their utility in time.

b) that they are consistently not predictive (although they are descriptive of the past) and therefore false, and

c) that as demonstrably false, they are unscientific.  That due to subjectivity and innovation, plasticity of utility, and the resulting heterogeneity of capital, and asymmetry of information, shocks and the vicissitudes of time, they are logically destined to be false. (ie: it is not the use of measurement, it is the use of measurement to determine causality – not correlation but causality – that is scientific.)

d) that the use of false, non-predictive, arguments are used to justify implementing dangerous risk-accelerating unscientific policy.

e) that we cannot  model what might have been, had we not used false models to enact policy, and therefore calculate the real cost of policy. (ie: we cannot compare what might have been with what has come to pass, and sum our costs plus our profits.)

f) that by implementing such policies we expose ourselves to  and indeed, encourage greater risk. Ie: the austrian business cycle of booms and busts.

g) that it appears, that in history, whenever the commercial sector grows faster than the state can regulate it or redistribute the capital from it, and form a predatory bureaucracy upon it, the results for the entire society, at least narratively if not certainly empirically, seem to be better than those where state intervention has occurred.

Meaning that the Austrian criticism is that the use of the calculus of measurement in heuristic social processes will result in non-prediction and exacerbation of risk — or at least, such models will be limited to prediction based on the asymmetry of information discovered by the act of building the model, but not of the asymmetry of information yet to be developed by innovation or shocks, and therefore undiscoverable by the process of building a model.

I would argue that Keynes covered these problems in A.T.O.P. Although I am not a scholar of his work.  And that austrians agreed with him on many of those positions.  But the PRACTICAL matter is that the profession is heavily invested in a technology that demonstrably does not work, yet is relied upon for policy decisions every day.

Models are a superior means of describing causal processes where language and human limits to conception fail. However, tehy rely upon a mathematics derived from the much more simplistic physical sciences.  And until we can measure the ‘natural forces’ of men’s mental capacity, which are largely the properties of memory in time when in the presence of vast information, we have no formulae by which we can call our efforts sufficiently scientific rather than simply a convenient means of toying with economies against the will of those struggling with knowledge and capital to avoid and circumvent all that toying.

So either I don’t understand, or I do not think your criticism is founded. The people that criticize empiricism may not be using a substantive foundation either, and may justify sentiments and intuitions with false appeals to reason that they do not fully understand. But I do not see how your criticism is logical in the context.

Looking forward, solving the problem of induction instead of relying on (false) equilibria relies that we understand, and develop a formulae what might best be called ‘velocity’, which is the rate of innovation given the limited ability of the human mind to make ‘jumps’.  Therein is a formula of greater importance than E=mC^2.  And because that velocity can be known, probabilism will have a rational boundary, rather than the irrational boundary we have conveniently constructed out of historicist necessity.

I hope I have been sufficiently cogent on a subject of complexity that has admittedly exhausted many of our best minds.  And apologize in advance for my failures.

Cheers.