While I spend a little time reading making notes on Kropotkin’s The Conquest of Bread for my next series of videos, I figured I’d make a random fun video about an idea that’s been bouncing around in my head for a while.
You can just watch the video if you want, but I’ll put a text summary below if you prefer that.
I was inspired by part of a Lew Rockwell speech that was posted at the Mises Institute website last week!
Today, I’m talking about the dangers of positivism in economics. Basically, in complex systems like the economy, you need a logical, causal framework to evaluate ideas. A purely positivist (i.e., each idea must be tested empirically) approach can be disastrous.
Why? Because empirical testing of uncontrolled systems can lead to counterintuitive and non-generalizable results!
The temptation to fiddle endlessly becomes a source of wealth for the fiddler and a source of poverty for everybody else.
Not only are there unlimited legions of bad ideas to “test,” there are an equally unlimited number of statistical tests to apply to the subsequent data, and a finite confidence interval means some of those statistical tests will give you false positives!
Anyway, check out the video up top, and the show notes here.
Section 4 of Chapter 15 of Mises’s Human Action is called “The Sovereignty of the Consumers.” Mises talks about the unhampered market economy and how that democracy, in which “every penny gives a right to cast a ballot,” might be more democratic than any government could ever hope to be. This passage got me thinking about these concepts, and how the state impedes them.
Some fun recently over on Twitter where someone was totally missing the fact that Mises was mocking Louis XIV, Mussolini, etc. when he called them “the most peace-loving of all men” in the face of their paper-thin justifications for their aggression.
It’s worth noting that this sort of very subtle sarcasm is common in Mises’s writing. Sometimes the sarcasm would go on for several sentences with no sign of it except a nagging feeling in your gut that Mises has suddenly changed his position radically and without warning.
I’m going through Human Action again, and this section just jumped out at me. It’s the most succinct, clear, and beautiful takedown of the anti-market mentality, and how democracy is inferior to markets, that I’ve read in a long time.
The corresponding bit of Human Action is here, for your own reading pleasure.
A video version of part 1 (of 3) of my short essay series on money.
For the text version with links and citations, visit here.
Why did the market choose gold as an international standard for money? In his classic book The Theory of Money and Credit, Ludwig von Mises developed a beautiful and comprehensive philosophy of what money is and how it comes about, starting from barter and working all the way through the international gold standard. One of the valuable insights from the book is Mises’s concept of what characteristics are vital to the money function. He focused on five aspects in particular, and understanding them is still valuable today, even in a world of pure fiat money.