This post continues to explore the apparent lack of consideration given to context in the basic axioms of Austrian economics; in this case culture and ecology.
Not Recognising ‘Culture’
Discussing purposeful action, which is supposedly basic to the economy, Rothbard goes on to argue that a human must have certain ideas about how to achieve their ends. Without those ideas there is little in the way of complex human purpose.
However, this sidesteps the issue of where does this person get the ideas from, as well as the language to think about those ideas? The ideas are unlikely to be purely self-generated, with no precursors. In reality, ideas arise through interconnection with other people and previously existing ideas. This of course does not mean people never have original ideas, but without interacting with other people it is doubtful they would have complex ideas or language at all. Indeed, the people they interact with may have a massive influence on the ideas, and approaches, available to the person. Ideas are socially transmitted.
Even our individuality is based in the groups we have encountered, the ways we categorise our selves in relationship to others, and the child rearing we experience. It is not as if we are born fully conscious and evaluative, able to deduce everything all by ourselves from first principles….
However, in response to criticism, Rothbard states: “We do not at all assume, as some critics of economics have charged, that individuals are ‘atoms’ isolated from one another.”
- (Note the way that his economics becomes all economics as opposed to ‘my economics’ or ‘our economics’).
Where is the evidence of this recognition in the initial axioms, from which all else is derived? Its certainly not clear to me that this recognition exists, other than to be wheeled in to get rid of objections. “You think people are isolated from each other” “No we don’t. I mention this in a footnote.” This recognition seems an add on – whereas it seems more likely that humans are both individual and collective from birth onwards. To some extent we can even say that humans have the capacity to learn to be individuals, to individuate, but it is not always easy.
I suspect that if we included culture’s (and social organisation’s) effects on exchange and economic action, then we might not be able to perform a supposed universal justification for capitalism, and its exemption from attempts to control it or regulate it to be less harmful. And this justification and protection, seems to be the purposeful action of Austrian economics from its beginning.
Ecologies
All action takes place within a web of actions – which is sometimes known as an ‘interactive network,’ or a ‘set of complex systems’ and sometimes, in Austrian economics, as a catallaxy, or as Hayek says “the order brought about by the mutual adjustment of many individual economies in a market.”
It is possible that, with this term, Hayek is pointing towards what is now known as “emergent order,” which involves far more than just ‘individual economies,’ adjusting in a ‘market’ – as markets cannot be separated from other processes, including social and ecological process which also adjust to each other.
While it is often assumed to be the case, it should be noted that the ‘order’ which emerges from a complex system or ‘catallaxy’, does not have to be hospitable to humans. Historically we can observer that the ecological order is often changed by humans disasterously and, as a result, humans can no longer flourish in those new ecological orders.
Sometimes this ecological collapse occurs because some form of behaviour which once helped survival has been intensified to a level at which it:
- becomes destructive,
- blocks information flow and perception of danger which challenges the behaviour, or
- simply prevents change through entrenched power.
Hayek’s formulation uses the cultural assumption that order is ‘good’ for humans, to imply the market always brings ‘good’ results, when it may not, even if the ‘order’ arises ‘spontaneously’.
Economies occur within general ecologies: they can be said to be context dependent. An impoverished ecology is likely to produce an impoverished economy for most people, even if the wealthy are very wealthy and well provided for.
- [Rothbard uses the term ‘catallactics‘ to refer to the “the analysis of interpersonal exchange”, or “study of money exchanges” which do not seem to be quite the same things as not all interpersonal, or intergroup, exchange involves money, although it is interesting that Libertarian economics tries to reduce all exchange and interaction to money. Neither does this usage seem to refer to the same kind of process as Hayek’s catallaxy].
Rothbard states on page 4: “With reference to any given act, the environment external to the individual may be divided into two parts: those elements which he believes he cannot control and must leave unchanged, and those which he can alter (or rather, thinks he can alter) to arrive at his ends”.
Earlier he talks about rearranging elements of the environment…
All this suggests that Rothbard thinks of the environment as a largely passive backdrop to human action, not a participant in that action, or even likely to react to that action. The environment is portrayed as essentially passive or dead, or humanly controllable, neither of which seem to be the case. Again the aim seems to be to reduce everything to the human individual, who determines what is to be done.
The approach not only does not recognise the importance of groups but appears to be anti-ecological, or anti the recognition of the necessity, and force, of ecological processes. This could be accidental, but perhaps it occurs because neoliberalism grew up to be anti-ecological in the roots of its thinking (thinking that humans are detached from each other and the world), perhaps because social movements recognising the importance of ecologies were seen as a threat to corporate profit and liberty, or perhaps it is just their overconfidence in the culturally backed idea of human specialness and isolation.
Rothbards adds that acts involve means, and this involve technological ideas. Both true, but forms of government and organisation can also be thought of as technologies. It is easier to hunt with hand weapons if we organise to hunt together, and use strategy and planning in that hunt.
“In the external environment, the general conditions cannot be the objects of any human action; only the means can be employed in action.”
I’m not sure what this means, but it seems to be suggesting that we cannot work with environments….
However, economies are enmeshed in environments. Economies do not exist without ecologies and, at the moment, without naturally livable ecologies. (Possibly in the future large numbers of humans may be able to live in purely constructed environments, but not now).
We have to grow food, we have to survive climate, we have to survive in the atmosphere, we need drinkable water, we need ‘raw materials’, we need energy supplies (more than just food and water if we are going to survive with any technological complexity). We need functional waste recycling systems and pollution processing, and so on.
If ecologies are destroyed then economies are highly likely to collapse, and in any case the aim of the economy becomes reduced to survival, and radically simplifies. Social support and social action is still vitally important.
Economies are also enmeshed in environments of social and political life, as people attempt to use rhetoric and persuasion and sometimes violence to protect their markets, regulate and structure the markets and so on. Wealth, earned on markets, gives power and that power is used to ensconce and intensify the position of the wealthy. At the least, all economies are political economies, in the sense that economic action involves politics and vice versa.
It seems to be the case, that extracting something called an economy from both social and ecological life, is a massive and probably dangerous over-simplification.
More Accurate Foundations
In these last two posts on praxeology, I have implied you cannot ignore history or social studies to formulate a study of economics, because that forms the conscious (or unconscious) data you draw your a prioris from. I’m not asserting that a prioris of any kind do not exist, they may, but it seems unlikely that social science a prioris exist, and that the a prioris of Austrian economics are inadequate and dependent upon unacknowledged (or unconscious) cultural foundations.
Let us reformulate the initial propositions as simply as possible, from the discussion above.
- Human action is defined simply as purposeful behavior.
- Purposeful action almost always involves humans acting with or against other humans, human groups, and environments – often several at the same time.
- Most human motives and means are learnt from, with, or against, other humans and the environment (often through trial and error).
- Purposeful action often involves trying to influence, or sway, other people’s action and/or gain approval in some other humans’ eyes.
- People are not always aware of the origins of their purposeful action – they can be unaware of their true purpose.
- Human action normally results in unintended consequences.
- What we interpret as disorder is as normal as what we interpret as order, and vice versa
- Human being is social. People act in groups all the time, and belong to groups. Without some group backing, most humans would die when young. It may be easy to say people are individuals but it is not entirely correct, and so will take us to incorrect conclusions.
- A group acting together is not just the sum of the individuals acting – this is one reason why humans act together.
- Human groups tend to regulate, or govern, themselves, so as to act together. They team up to achieve individual and group objectives – which may just include company and conversation, or it may include world conquest, acquiring new resources through violence, teaming up to get governmental policy which favours the group, overthrowing the state or the lack of a State and so on.
- Government is normal. Corporations and business involve forms of government both ‘internally’ (in relation to themselves) and ‘externally’ (in relation to the government of others). Like other forms of government, they can use threats and violence.
- Corporations and businesses may attempt to influence the government of others.
- Market action involves politics, persuasion and building of trust – it is based in social life.
- Markets involve interaction with ecologies for food and resources. They can destroy the ecologies they require to function. The orders which arise from market/ecology interaction can be hostile to humans. That is, markets can suffer from unintended consequences. It is magic to expect that the order which emerges will always be ‘good’.
- Interpretations of other people’s actions and ideas, can be false, but are generally based on cultural expectations. Economics is a tool of interpretation
- Economics cannot be isolated from social, political, ethical, and ecological life.
- Economic functioning depends on social and ecological functioning.
Climate, technology and chaos Blog 