In price-theory, an externality is any benefit or loss not included in the price of the exchange.
But we can debate whether economics is the study of investment, production, distribution, trade, and consumption, or whether economics is the model under which all social science, from metaphysics, to psychology, to epistemology, to ethics, sociology, law, politics, group evolutionary strategy, and conflict – the entire model for the entire philosophical spectrum.
There remains a conflict between the pseudoscientific(postmodern epistemology, freudian psychology, boazian sociology, marxist political science,) and the scientific social sciences all operating within the single branch of inquiry we call “economics”. (the study of information, incentives, and cooperation).
Since I do understand that economics as a discipline of social science functions as the scientific competitor to the pseudoscientific social sciences, I work with INFORMATION in total, not with PRICES alone. And I extend economic models to include INFORMATION of all kinds, and the consequences of changes in information.
I am fairly certain that this is the CORRECT (meaning true) framing for the general rules which we work to discover in that discipline we ‘archaically’ call economics.
Information is the model in the physical sciences, and information is likewise the model in the social sciences. The fact that Mises, Popper and Hayek did not quite bring this idea to fruition, and why, is one of the great intellectual failings of history – if only because it allowed the competing pseudosciences to gain predominance in our academy and as a consequence, policy.
IN CONTEXT: EXTERNALITIES
In the context of my talk, and in the context of my arguments, there is no difference between the increases or decreases in capital, and the voluntary or involuntary transfers of that capital, by INFORMATION rather than that SUBSET of information that we call PRICES.
In other words, the general rule describing the externalities of prices is but a subset of the general rule describing the externalities of all information.
And unintended consequences are a question of scope of INTENTION, not a question of the scope of the consequences of INFORMATION.
(if you understand this I don’t really require an apology because I realize this is non-trivial material. I make very few errors. But I am always constrained by the limits of time and circumstance and I cannot explain every concept that I rely upon in every utterance I make. It’s just not possible. )
NOW ONTO KEYNESIANISM
Just as I rely on information to produce conditions of DECIDABILITY, I also explain the differences between the natural law (mengerian/austrian), rule of law (friedmanite/chicago), and discretionary rule (keynesian/freshwater) branches of economic theory. In each of these theoretical systems the originators relied upon a method of decidability (or what in math is called ‘axiom of choice’) in order to justify the use of their model over the competing models.
The Natural Law group takes the position of do no harm (do not ‘lie’ using the pricing system).
The Rule of Law group takes the position of do as little harm as possible, so that we are not lying but ‘correcting’ information problems under rule of law. So that there is a trade between the disinformation we provide and the information system we call prices and incentives. It seeks to restore a condition of natural law.
The Discretionary Rule group (Keynesians) take the position that any disinformation we produce now, produces such profound gains, that it’s not only immoral to resist using disinformation, but that its unlikely that any negative consequences we produce would be outweighed by intertemporal gains, that we can fix those problems we cause later on with the proceeds.
Under this model of economics, decidability in economic theory that is not provided by the axiomatic model is provided by an axiom of choice: ie: subjective valuation.
This issue of decidability is not solved yet although the general austrian prescription that we cannot in fact ‘cheat’, seems to be correct given the increasing duration and severity of depressions. This is why the debate has calmed so significantly since 2008’s crisis. The mainstream relies upon keyensian decidability to justify increased rates of consumption at the expense of genetic, normative, and institutional capital degradation, under the assumption of genetic, normative, and (possible) institutional equality.
(which if stated this way, is clearly false).
It has only been since the worldwide abandonment of marxist economics, and the worldwide adoption of consumer capitalism, and fiat credit, that the west’s asymmetrical technological advantage let us assume that the trend of constant growth was available to us without intertemporal consequences.
KEYNESIAN IN THE CONTEXT OF DECIDABILITY
So, when I spoke of Keynesianism it is the method of decidability that I was referring to.
Again, I tend not to make mistakes. I make many mistakes of brevity, and there are many unintended consequences of my brevity. But all common communication requires information loss or the burden would silence us.
The Philosophy of Aristocracy
The Propertarian Institute