Is Carl Menger a Socialist?
arl Menger is often touted as the savior of Austrian Economics, but assuming all the above is true he is hardly a principled capitalist. In fact he sounds like a standard conservative who is against government intrusion in the economy until he is for it.
My wife says this is why there are so many advice books written on child development. :)
Pseudo-Objectivism allows the moral condemnation of anyone who ever made a mistake.
Myself, I find interesting insights in the works of Karl Marx, and Nikolai Lenin. Truth is where you find it.
For whatever errors he committed -- and he did -- Menger stood against the rising tide of Marxist socialism which claim a "scientific" basis that he refuted.
Isn't that a little like saying "Other than his (Newton) work with physics, I see no real value in his work"?
"However I see many evils, including the subjective theory of value..."
To what other Theory of Value do you subscribe? And, what is "evil" about the subjective theory of value?
The subjectivist theory holds that the good bears no relation to the facts of reality.
The intrinsic theory holds that the good resides in some sort of reality, independent of man’s consciousness.
The objective theory holds that the good is … an evaluation of the facts of reality … according to a rational standard of value. (Ayn Rand Lexicon “What Is Capitalism?” Capitalism: The Unknown Ideal, 21)
So I visit the source and Rand claims "The objective theory holds that the good is an aspect of reality in relation to man—and that it must be discovered, not invented, by man. Fundamental to an objective theory of values is the question: Of value to whom and for what? "
So I guess I will have to read more of Rand's work on Capitalism because I am still confused. Isn't the answer to the question "Of value to whom and for what?" subjective?
I still don't understand what you consider evil about STV?
1) AE rejects Natural Rights
2) AE rejects a rational ethics
3) AE rejects property rights and substitutes government defined and enforceable property privileges.
4) Makes a scientific theory of economics impossible.
I re-read your essay more carefully and I cannot understand your claim that SJT (STV?) as used by Austrians means "not connected to reality" that should be enough for you understand why it is so evil.
So I would like you to explain what you mean by "not connected to reality"?
Did I read the same essay you referred to? Why Austrian Economics Subjectivity is Wrong and Condemns Economics to Being a Pseudo-Science
I couldn't seem to find the four conclusions you list above...perhaps you could copy and paste them here...due to my poor reading ability.
"The subjectivist theory holds that the good bears no relation to the facts of reality, that it is the product of a man’s consciousness, created by his feelings, desires, “intuitions,” or whims, and that it is merely an “arbitrary postulate” or an “emotional commitment.”
The intrinsic theory holds that the good resides in some sort of reality, independent of man’s consciousness; the subjectivist theory holds that the good resides in man’s consciousness, independent of reality.
The objective theory holds that the good is neither an attribute of “things in themselves” nor of man’s emotional states, but an evaluation of the facts of reality by man’s consciousness according to a rational standard of value. (Rational, in this context, means: derived from the facts of reality and validated by a process of reason.) The objective theory holds that the good is an aspect of reality in relation to man—and that it must be discovered, not invented, by man. Fundamental to an objective theory of values is the question: Of value to whom and for what? An objective theory does not permit context-dropping or “concept-stealing”; it does not permit the separation of “value” from “purpose,” of the good from beneficiaries, and of man’s actions from reason."
Capitalism: The Unknown Ideal “What Is Capitalism?”
I'm sorry I never had the misfortune of having studied formal law and since I don't read well, perhaps you can clarify exactly what Rand means by "...an evaluation of the facts of reality by man’s consciousness according to a rational standard of value. (Rational, in this context, means: derived from the facts of reality and validated by a process of reason.)
Exactly how does one determine the value of something as a function of reality and a process of reason for a specific good?
How does this process explain why the car in my example above was worth $45k to the ultimate buyer yet not to the buyer willing to pay only $44k?
I thought I understood Rand pretty well after reading Anthem, We the Living, Atlas Shrugged and The Fountainhead. I thought I understood Austrian economics pretty well after reading Menger's Principles during graduate school.
Finally, are you (or Rand) saying that Marshall's and Von Mises's assumptions that economics is a study of human behavior are wrong and that human behavior and thus, economics, can be studied purely as an objective science? Just trying to understand...
Ayn Rand was always concerned with fundamentals, and keeping those assumptions directly connected to subsequent truths.
An objective value is one that furthers your life. When obtained, an objective value improves you. It is not just any whim. Suppose that you are on your way to work and you see that a theater has an early showing of the new Star Trek movie. Going to the cinema on a whim would be subjectively valid from the viewpoint of standard economics, but, of course, objectively immoral: contrary to your best interests.
Your interests may not be mine. (Rand discusses the fallacy of "conflict of interest" by considering the most basic objective interests that we have. Two people apply for the same job. It is in their interest that the employer choose the better of them based on objective values. Nepotism, racism, etc., are not in their common interest. But it true that their goals are in conflict.
On the other hand, you and I have not even applied for the job: it does not interest us. It is not in either of our best interests. We have different (objective) goals than the other two people.
Modern economics calls all of that "subjective." It may be. You might be applying for the job or not because of what you expect your neighbors will think of you. That is a subjective (irrational) standard. Mainstream economics does not consider motivation. The door to motivation is locked from the inside. For Ayn Rand, it is what is behind Door Number One that was most important.
According to your fantasy land Venezuela is just not being subjectively positive enough. If they just think they are all rich they will quit starving.
Huh? Yes, I read it - twice now. Are you claiming there is an objective, reality-based explanation of why we get up and work? How does that theory explain those who don't?
According to your fantasy land Venezuela is just not being subjectively positive enough. If they just think they are all rich they will quit starving.
I haven't put forth any theories or fantasies here. All I have done is ask for clarification and explanation of your critique of Austrian Theory.
From your essay:
"If we take the STV seriously, then I can be rich if I just subjectively believe that my slum house in a decaying part of Detroit is worth $200 million. Value is all subjective, so as long as I firmly hold to this belief then I will suddenly be wealthy. Pointing out to me that the market value of my house is only $15,000 is founding your opinion “upon an arbitrary judgment of value.”
I don't agree. You are perfectly within your right to value your slum house in Detroit at $200 million dollars. I am perfectly within my rights to value your slum house at $15k. Both our opinions of the value of your slum house are subjective. The "true" value of the house is its value in exchange. There is no one reality-based value that can be determined objectively without it being the opinion of someone. That opinion is also necessarily subjective.
Economic theory claims that when you trade away a dollar for a soda, it implies you value the soda more than the dollar and the vendor values the dollar more than the soda. Otherwise, neither would trade or would be indifferent to trading.
It is not my purpose here to lecture you on basic economics (I'm hardly qualified), I am only trying to understand how one goes about establishing an objective reality-based value arrived at through a rational process.
Giving price and Getting price. One is correct the other is not. Facts first and ethics follows. If government sets the price on my car and then taxes me on some other number that's evil. Ethically, I do the deal under the table and take a quick flight to the Caymans. KISS principle. Also read Hazlitt.
A is A
That's some confusing logic there Michael. Please explain what makes one price valid and the other not. If he buys it at $45k that's the price. On the other hand, if he sells it for $60k, that's the price. On still another hand, if he sells or doesn't sell it for $23k, that's the price. So, it sounds like what you are saying is that at whatever price an actual exchange takes place, that is the "objective" price, and thus, the "objective" value?
But, arriving at that objective value and price involves an awful lot of subjective decisions and values about the good, doesn't it? The apparent reason for my confusion is that dbhalling and you (and Rand?) appears to be claiming that there is some value for a good that is determined by some mechanism or method other than the subjective opinions of each individual person.
Subjective Theory of Value is "determined by the importance an acting individual places on a good for the achievement of his desired ends" [Wikipedia]. This is not true. Essential to life items, e.g. water, over a period of time, is worth how much to a man? It sustains his life. Life is the standard of value. His desired ends are to live. To "place" a value on something is arbitrary and arbitrary desires are simply those that are not understood in the scope of an Objective standard of value: Life. The acting individual may well place a rational desire above an irrational desire, but the quoted description does not make that necessary. To a rational person, arbitrary desires are not valid. Yet this is precisely what the word "places" connotes to mean in the above. Why?
As far as public infrastructure goes, it would seem that Rand could support that infrastructure necessary to the immediate satisfaction of the imperative to military, police, and courts. How does public transportation meet these criteria?
Enter the STV. A government officer subscribing to this view is able to meet any desire for public transport as "determined by the importance [he or she] places on a good [or service] for the achievement of his desired ends". It does not seem a mistake that the founder of Austrian school thus also manifests his own STV in his preferences for a government model.
Substitute the word "assigns" or "values" for the word "places" and the statement is still valid and possibly easier to understand.
"Essential to life items, e.g. water, over a period of time, is worth how much to a man? It sustains his life. Life is the standard of value. His desired ends are to live. To "place" a value on something is arbitrary and arbitrary desires are simply those that are not understood in the scope of an Objective standard of value: Life."
I'm not sure I understand exactly what point you are making. We place (or assign) arbitrary values on absolutes like Life all the time. Think life insurance. Think of medical catastrophes where health care professionals have to make decisions over which lives they can reasonably expect to save and which they probably won't be able to save. In that case they must make an arbitrary decision as to which persons to treat first in order to maximize the number of lives saved.
"The acting individual may well place a rational desire above an irrational desire, but the quoted description does not make that necessary. To a rational person, arbitrary desires are not valid. Yet this is precisely what the word "places" connotes to mean in the above. Why?"
In economics, according to my best understanding, rational and irrational do not have the same relationship as in psychology. In economics, rational behavior is defined as: A rational behavior decision-making process is based on making choices that result in the most optimal level of benefit or utility for the individual. Most conventional economic theories are created and used under the assumption all individuals taking part in an action/activity are behaving rationally.
Some decision makers (all of us) sometimes do not make optimal decisions (make bad decisions) at one time or another, but these are bad decisions, not irrational decisions. At the time we make a decision we generally think it is going to be a good decision else why would we make it. (This should not be confused with rational irrationality - see Bryan Caplan).
"Enter the STV. A government officer subscribing to this view is able to meet any desire for public transport as "determined by the importance [he or she] places on a good [or service] for the achievement of his desired ends". It does not seem a mistake that the founder of Austrian school thus also manifests his own STV in his preferences for a government model. "
A government officer will be making decisions and implementing them based on their STV only if they are in a dictatorial role or position in the society and can exercise the force necessary to accomplish their goals or ambitions regardless of what the other citizens desire. In a democratic environment the government minister is meeting the desire for public transportation as a result of the value of the public transportation subjectively determined by the citizens who have authorized the minister to complete it. The subjective determination is made by the citizens after comparing the value of the transportation system with its opportunity cost - the next best alternative available to the citizens in lieu of the public transportation.