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    An Austrian Critique of Mainstream Economics | Walter Block

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    Published on Aug 6, 2015
    Recorded at the Mises Institute in Auburn, Alabama, on 21 July 2015.
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    Well, us political economists love: Government Failure! So its bot true that all economists love market failure :)
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    Ive studied quantitative economics and to me it always looked like that the talking about market failure starts, if reality doesnt work as indicated by models and or / particular assumptions were violated. The term "Irrational Behavior" (or as I call it: "Emotional Behavior") for example simply results from rational models that assume rational behavior by economic agents / humans. That in reality pretty much no human being behaves perfectly rational / unemotional and this also determines market results, is perceived as a failure. Ridiculous.
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    +EraserFS Yup, based on a very rarefied definition of "rational" to begin with, aka "homo oeconomicus".
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    Damn Australian economics!
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    Within the first two minutes of this video Dr. Block confuses logical positivism with Popper's falsificationism.  Most of the neopositivists did indeed have a strict and reductionistic view of the sciences, though that was not necessarily an essential part of the core neopositivist doctrine, which is about the verification of claims as a criteria of a statement's meaningfulness, an approach which takes a different view of the epistemic status of scientific statements than KarlPopper did with his falsification criteria, which he used to demarcate science from other fields and delimit their epistemic status relative to a statement's enduring irrefutability.
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    +Laz Arus Popper admitted that his falsification criteria is just a rule of thumb. He said this in response to the fact that the proposal that falsification can solve the demarcation problem is itself unfalisfiable. Yes, it is a useful rule of thumb, but it is not a "law", and was never intended to be the basis for a metaphysical system. The demarcation problem, as important as it is, obviously cannot be "solved". The reason is that we cannot predict accurately how we might come to know what we do not yet know. Why? Because to believe such would be to believe that X method of discovery will be applicable to all future knowledge... How could this be proven?  Feyerabend, in spite of being (badly) critiqued by Hoppe, did great work on this. Hoppe pointed out that when it comes to practical applications of science, that such issues are unimportant. I agree with him, but why he assumes that practical applications of science are the only important forms of knowledge remains unanswered. That said, when it comes to economics, I'd agree with him.... The demarcation problem being solved or unsolved doesn't seem to impact the practical principles of economics. Of course, not all principles of economics have the level of certainty we can assign to the practical applications of hard science.
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    +Kon Berner I don't believe my original post disputes anything that you've discussed in your reply. Whatever weight Popper wished to give to his falsification criteria, my point was that the logical positivists did not approach scientific claims via Popper's falsificationism, which is what Block confusedly transfers into saying when he begins talking about them. The neopositivists were concerned with *confirmation*, and went to lengths to develop inductive logics they could use to verify scientific claims. Block makes no distinction between the two approaches, he treats them as identical as he introduces logical positivism.
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    +Laz Arus You cannot verify geometric axioms. Yet you can make numerous truthful claims using geometry. It's the same thing with AE.
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    Be that as it may, my point was not about whether or not verificationism is a good theory, my point is simply about what the verification principle actually was to the neopositivists, which Dr. Block seems a bit confused about, since he equates it with Popper's falsificationism in his lecture. Thanks!
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    +Laz Arus Yes, I was agreeing with you and adding my own understanding of how some Austrians have recently addressed this issue.... that is, poorly. 
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    +Kon Berner Do you have a Facebook I might follow? Or some internet medium, blog or whats-it, where you prefer to share your thoughts?
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    +Laz Arus I prefer the anarchic and spontaneous discussion on YouTube. I love philosophy of science and a pet peeve of mine is how great philosophers like Feyerabend have been labeled relativists for pointing out that the scientific method is not as rigid and fixed as some believe it is. I am a big fan of Hoppe, but when he started in on Feryerabend along these lines, it was clear that he is not a philosopher of science. I critiqued Hoppe by quoting Mises saying that there is no apodictic knowledge, but this does not mean that relativism is all that remains. The issue is about selecting the right tool for the right level of analysis, and so the correct response to someone who critiques the action axiom as being uncertain is to point out that their axioms are also uncertain. What evidence is there that humans have an internal scale of values? Simply ask them and you'll get all of the evidence you need. Where did I critique him? In a YouTube upload of one of his excellent speeches... excellent except for him referring to matters he doesn't understand.
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    +Kon Berner Very well, I'll follow your posts on here. PoS is also an interest of mine and I'm grateful for your thoughts on the topic. See ya round!
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    +Kon Berner Would you link me to your Hoppe critique? Preciate ya!
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    Hi, Kon Berner. You wrote, "Of course, not all principles of economics have the level of certainty we can assign to the practical applications of hard science." Actually, economics is based upon propositions which cannot be denied without necessitating their use in the denial. For details on that, see App. B: "Basic A Priori Axioms", pp. 7-9 of my following article: James Redford, "Libertarian Anarchism Is Apodictically Correct", Social Science Research Network (SSRN), Dec. 15, 2011, doi:10.2139/ssrn.1972733, https://archive.org/download/LibertarianAnarchismIsApodicticallyCorrect/Redford-Apodictic-Libertarianism.pdf .
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    +JamesRRedford Yes, I am familiar with Hoppe's work on argumentation ethics. However, the link you posted doesn't go very far into supporting economics. Here are a few quick comments: 1) "Truth, and knowledge of truth, exists" You must first define both truth and knowledge. Attempting to imply that these things are sufficiently defined for this statement to be analyzed, is incorrect. 2) "Conscious humans act." While I don't dispute this personally, what do you mean by consciousness? Last I checked, we have no idea what it is, how it works, and how it can exist at all. I think it is sufficient to say: a) humans select actions from a range of possibilities, 2) human rank their selection based on criteria that can be discovered both by observing their behaviors and also by asking them about their selection criteria. 3) in any case, it seems clear that they have an internal scale of values that is subjective and essential to their choices. I support the action axiom as being self-apparent. However, it is not true that it is sufficient to derive all economics from.... great and brilliant start, however. 3) The big problem I see in this paper is it tries to argue that positive proofs can come out of showing that a false dichotomy is not true on one side... assuming that therefore the remaining side is true. Hoppe makes this same error in this Economics and Ethics of Private Property. He manages to refute Rawls with argumentation ethics, but refuting being able to argue for socialism doesn't prove any positive ethics. Proving positive ethics is much more difficult, if it is possible at all outside of explicit consent. Hume's guillotine seems to prevent us from positing any positive ethics as objective truths. We can, however, refute claims of socialism being ethical with argumentation ethics.
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    Economics and Ethics of Private Property. He manages to refute Rawls with argumentation ethics, but refuting being able to argue for socialism doesn't prove any positive ethics. Proving positive ethics is much more difficult, if it is possible at all outside of explicit consent. Hume's guillotine seems to prevent us from positing any positive ethics as objective truths. We can, however, refute claims of socialism being ethical with argumentation ethics.
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    +Kon Berner I think this piece is quite good in sketching out the beginnings of a positive theory of ethics to complement Hoppe's negative filter for ethical theories: https://mises.org/library/how-we-come-own-ourselves
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    Hi, Kon Berner. You yourself do not believe your own critique of my aforecited article, because you yourself know quite well what is meant by the words you pretend not to know, since you yourself use those words in the normal course of your life as a human being. They have the meanings you have in mind when you normally use those words. If I were using those words as specialized technical terms, then I would have defined my terms. I could just as well turn your present erroneous tactic against this jejune critique of yours and pretend not to know what the meanings are of the words you use in your critique. And if everyone behaved that way, no communication would be possible. Also, I'm not strictly advancing Prof. Hans-Hermann Hoppe's argumentation ethics. My formulation is along similar lines, but more rigorous. By the way, Kon Berner, you ought to be interested in my following article: James Redford, "The Physics of God and the Quantum Gravity Theory of Everything", Social Science Research Network (SSRN), Sept. 10, 2012 (orig. pub. Dec. 19, 2011), doi:10.2139/ssrn.1974708, https://archive.org/download/ThePhysicsOfGodAndTheQuantumGravityTheoryOfEverything/Redford-Physics-of-God.pdf . Said article pertains to physicist and mathematician Prof. Frank J. Tipler's Omega Point cosmology, which has been published and extensively peer-reviewed in leading physics journals. Tipler's Omega Point cosmology is a proof (i.e., mathematical theorem) demonstrating that sapient life (in the form of, e.g., immortal superintelligent human-mind computer-uploads and artificial intelligences) is required by the known laws of physics (viz., the Second Law of Thermodynamics, General Relativity, and Quantum Mechanics) to take control over all matter in the universe, for said life to eventually force the collapse of the universe, and for the computational resources of the universe (in terms of both processor speed and memory space) to diverge to infinity as the universe collapses into a final singularity, termed the Omega Point. The Omega Point cosmology is also an intrinsic component of the Feynman-DeWitt-Weinberg quantum gravity/Standard Model Theory of Everything (TOE) correctly describing and unifying all the forces in physics, of which TOE is itself mathematically forced by the aforesaid known physical laws.
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    +JamesRRedford So you are asserting that I understand what "truth" means... where is your evidence? I am telling you I don't understand what you mean, are you saying that I am lying about this? You might think you have solved all metaphysical problems, but I am not arrogant enough to think that I have. Key laws of physics have been overturned before, and they could well be overturned again. Science is ultimately a tool using Bayesian inference to make predictions.It has no need of apodictic truth to proceed in controlling physical matter to the extent that it can predict within the physical context with reasonable accuracy. I suggest that we simply accept that economics is a sort of sociology, is a soft science, and so while being extremely useful to study and speculate about, forget about the physics envy and accept that humans are messy biological objects that cannot be understood like atoms can be understood.
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    +Moragauth What is weird about this article is that I agree that one's body is one's own possession (and I have my own test for why this is true). The problem is HOW we get from the body to things outside the body. The first use principle is a great proposal, but you can't get from an is to an ought about how given resources ought to come under ownership. This will, to some important extent, have to come down to conventions. Conventions are agreements between humans (also some other higher animals e.g. marking terrain with urine with dogs, etc.): they don't exist objectively in nature outside of the convention in the minds of the creatures who opt in to the conventions (or don't opt in to them). So, body ownership, I endorse as being innate. All resources outside of the body will be a matter of convention and so require consent to a rule set. This said, there are complexities here. If I put 100 hours of the time of my own body into carving a stick into a beautiful sculpture, it is true that stealing this stick amounts to stealing my labor. The question remains if the stick was "really mine" to begin with. I don't see how any ethic can be proven as objective as to why this stick was certainty mine and not yours or the property of nobody... to come to such a conclusion takes an ideology. At this point, the deadly question arises of "whose ideology should be enforced?" Who decides? My answer is that each individual decides by either opting in, or not opting in, to a specific rule set and specific enforcement mechanism. Only in this way can there be a meeting of minds and a manner to resolve conflicts that is consistent and dependable. Consistent and dependable resolution of conflict is important because trade is ultra-efficient compared with the alternatives, and it is a smart move in almost all cases,if abundance and peace are wanted, to set up a system that supports trade.. at least for humans. So, this is a consequentialist argument that solves the is/ought problem by employing an "if" clause. The "if" is the opt in condition.
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    +Kon Berner So you've 100 h of your labour to carve a stick into a sculpture then it's yours. Who else's? At the moment you finish your work nobody knows it exists. You created it's value. It can't be nobody else's but yours. However, if you were given the stick by a capitalist and agreed to carve it for him, then you receive a payment for your labour and the stick is his as per terms of the contract. One thing is certain, the stick is not B. Sander's who claims 90% of ownership.  
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    +macuś kraków I'll rephrase the question. You have a large gold nugget that you mined. I steal it and put 100 hours into sculpting it into a tiny statue. Does putting my labor into something I have taken that is not mine make it mine? To extend this thought experiment, let's say I mined it on land claimed by yet another person, but further assume that I don't accept his land claim (e.g. the land was stolen from my ancestors by a treaty having been broken, which is the factual case in large parts of the U.S.), The question is, "Who decides when something outside of your body becomes yours?" This will come down to a fairly large set of specific conventions. Conventions about initial claims, about on-going claims, and about transfer of claim. These rules are obviously not objective/natural/scientific entities, they are social conventions. When social conventions are the topic, the key issue is always, "Who decides what these are?". As for Sanders, he doesn't want abundance or peace, so he has already opted out of the condition necessary for them. His answer to the question, "who decides?" is "me and my thugs."
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    Hi, Kon Berner. Your comments violate the "A Priori of Argumentation" of item No. 4 in App. B of my priorly-cited article "Libertarian Anarchism Is Apodictically Correct". By asserting that you do not know what "truth" means you are claiming that it is true that you do not know what it means, and hence you are claiming to know what "truth" means. Bear in mind that physicist and mathematician Prof. Frank J. Tipler's Omega Point cosmology has been published and extensively peer-reviewed in leading physics journals. Further, the Omega Point cosmology is a mathematical theorem per the known laws of physics (viz., the Second Law of Thermodynamics, General Relativity, and Quantum Mechanics). These aforesaid known laws of physics have been confirmed by every experiment to date. Thus, the only way to avoid the Omega Point cosmology is to reject empirical science. As Prof. Stephen Hawking wrote, "one cannot really argue with a mathematical theorem." (From p. 67 of Stephen Hawking, The Illustrated A Brief History of Time [New York, NY: Bantam Books, 1996; 1st ed., 1988].) Further, one can derive the known laws of physics a priori. The only reason they were not derived a priori historically is because no one had been smart enough to do so. So empiricism was used as a necessary crutch for human minds in discovering the known laws of physics. But now that we do have these known physical laws, we can see mathematically how there was no contingency in regards to them, i.e., in order to have a three-dimensional space in which beings complex enough to be self-aware can exist, the physical laws have to mathematically be the ones we actually observe. And so these known laws of physics are not going to start being disconfirmed, unless we already exist in a computer simulation and the beings running that simulation decide to alter the simulated environment (however, those beings themselves, or beings on an even lower level of implementation, would have to exist in a universe where the aforesaid known laws of physics are in operation). For the details on how the known laws of physics are actually mathematically unavoidable if one is to have a three-dimensional world with self-aware beings in it, see the following resource: James Redford, "Video of Profs. Frank Tipler and Lawrence Krauss's Debate at Caltech: Can Physics Prove God and Christianity?", alt.sci.astro, Message-ID: jghev8tcbv02b6vn3uiq8jmelp7jijluqk[at sign]4ax[period]com , July 30, 2013, https://groups.google.com/forum/#!topic/alt.sci.astro/KQWt4KcpMVo .
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    +JamesRRedford Ok, fine, maybe I do know it but I don't know that I know it? Is lack of proof, proof? I am not asserting anything, you are the one making the assertions. I pointed out that when you say, "truth exists" that you have not defined your terms. You responded by asserting that I already know what truth means. I responded by denying your assertion. The burden of proof is still on you, and you still have not defined your terms. Human language is, by the way, not mathematics. A quick read through Philosophical Investigations might be in order. Reification, and similar fallacies are common in those who cannot differentiate between objects that are subject to empirical verification and abstract concepts that exist only in human minds. Words are not physical objects that can be externally verified, so their entire meaning (if any) is dependent on definition. Abstractions such as "truth" do not "exist", unless they are defined in such a way as to be objectively verifiable by the parties engaging in the discussion. I say again that science does not need "truth" to be useful, it simply needs to be good at predicting physical mechanics and dynamics.
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    +Kon Berner Mathematics is based on axioms. You don't prove axioms, either. Does it follow that mathematics is phony? 
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    +Kon Berner You're correct in the sense that, the ethic is directed at individuals who desire peace (reduction of conflict) and its consequent, prosperity. Because the next question that immediately suggests itself after self-ownership is that, given that man will seek out resources to survive and fulfil his wants, and given the fact of scarcity, conflict is likely to arise. Therefore, you're quite right that it would be a consequentialist ethic in nature and Hoppe explicitly builds it off an hypothetical imperative. As you highlighted "if abundance and peace are wanted"; I think that goes quite some way to grounding an ethic, because these are things desired by the majority of humans. Those who revel in aggression cannot, then, complain when met with it. So whilst I don't think the positive theory is on as strong ground as the negative theory (arg ethics), I believe Hoppe etc. have already gone some way to advancing a pretty compelling reason why one should favour a libertarian ethic. Conventions obviously play a big part, particularly with respect to appropriation, which Hoppe acknowledges.
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    +macuś kraków Do numbers exist? This is one of the many difficult questions in philosophy. If pi exists, then where is it? Or if I add 1 apple to 1 apple, do I get 2 apples, or do I get a set of somewhat similar objects that are not identical? Or if I add 1 raindrop to 1 raindrop do I not get 1 raindrop? Physical reality is not mathematics, but mathematics can be used to help us understand some things about physical reality. Note that mathematics does not have to derive absolute truth to be useful. It simply needs to be used within the domain where it applies and not thought to be metaphysically complete. Context is much more difficult to overcome than is sometimes believed by those who seek easy answers and rush to hasty generalizations.
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    +Moragauth Yes, I think you have presented a good summary here. In order to have peace and prosperity, in most cases (aren't necessary qualifications a drag? ;)), the best approach will be to opt in to a rule set with a group of others who share your values, and as private property is a key aspect of trade, and trade is ultra-efficient compared with the alternatives (see Ricardo's law), a rule set around private property is critical to peace and prosperity. Upon opting in, it is rational to also opt in to rules for paying for enforcement of the rule set. When ideal rule sets vary among people, voluntary segregation is suggested as a smart move towards the goal. The real key is to get the plunder and imposition of ideology out, and the trade and consent in as much as possible. This is my main problem with many ancap proposals, the idea that the rules can be decided after the fact by competing legal systems in the same region: this sounds like a poor basis for trade compared with consistent and simple rules in a region that everyone has agreed to. How people opt to go about this within a group is less important than the fact that they have explicitly agreed to the rules and support them being enforced, and are willing to voluntarily segregate as needed when values are incompatible. The really nasty problem here is what group gets what area to live in? Who decides? This sort of thought is where David Friedman starts talking about animals marking territory and Hoppe starts talking about the fact that you cannot be alive at all without somewhere to live and some resources that can be consumed. So I think here of my case, and would gladly trade liberty for having to live in a smaller space with less than ideal resources. There is a certain sort of good faith that one must have to get along with others, and the lack of this good faith: the willingness to get short term gains at the cost of long term destruction, is the real root of the problem. This then reminds me of how Richard Dawkins, even in his highly skeptical and scientific outlook, does talk about growth of consciousness being important to human happiness. It seems as long as we have destructive thugs running around, saying things like "in the long run we are all dead", this is a problem for everyone, and not one that we should expect to be easy to solve. Being aware of the problem is a good start. Some people want to play a zero or negative sum game, it is a good move towards peace and prosperity to insist as much as possible on positive sum games, and opt out of zero and negative sum games. The main problem with initiation of force is that it is a negative sum game.
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    Hi, Kon Berner. You wrote, "I am not asserting anything ...". You are asserting that it is true that you do not know what truth is, and therefore you are asserting that you do know what truth is. This is the A Priori of Argumentation of item No. 4 in App. B of my priorly-cited article "Libertarian Anarchism Is Apodictically Correct". You further write that "Human language is, by the way, not mathematics." In actuality, everything is mathematics: see Sec. 7.2: "The Aseity of God", pp. 37 ff. of my article "The Physics of God and the Quantum Gravity Theory of Everything", Social Science Research Network (SSRN), Sept. 10, 2012 (orig. pub. Dec. 19, 2011), doi:10.2139/ssrn.1974708, https://archive.org/download/ThePhysicsOfGodAndTheQuantumGravityTheoryOfEverything/Redford-Physics-of-God.pdf . And within spacetime, the mathematical description of everything is finite, per the Bekenstein Bound: see App. A: "The Bekenstein Bound", pp. 121 ff. of my aforecited article. Said article pertains to physicist and mathematician Prof. Frank J. Tipler's Omega Point cosmology, which has been published and extensively peer-reviewed in leading physics journals. Tipler's Omega Point cosmology is a proof (i.e., mathematical theorem) demonstrating that sapient life (in the form of, e.g., immortal superintelligent human-mind computer-uploads and artificial intelligences) is required by the known laws of physics (viz., the Second Law of Thermodynamics, General Relativity, and Quantum Mechanics) to take control over all matter in the universe, for said life to eventually force the collapse of the universe, and for the computational resources of the universe (in terms of both processor speed and memory space) to diverge to infinity as the universe collapses into a final singularity, termed the Omega Point. The Omega Point cosmology is also an intrinsic component of the Feynman-DeWitt-Weinberg quantum gravity/Standard Model Theory of Everything (TOE) correctly describing and unifying all the forces in physics, of which TOE is itself mathematically forced by the aforesaid known physical laws. The rest of your statements are the self-refuting logical fallacy of epistemological relativism. See my first paragraph of this post for the details.
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    I don't know if it's just me but Walter looks like he is sick.
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    +Giovanni Rosado Nah the dude is 73, he looks pretty decent considering this.
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    That mic has a mind of its own.
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