Democracy. Democracy. We’re All for Democracy!

Communists, socialists, and fascists, as well as the usual American political suspects, Democrats and Republicans, have all advocated, and today still advocate, democracy.
 
The notion of a “soviet,” let me point out, was a locally elected communist council or committee, common in the USSR. Similar “elections” occurred in Maoist China. In World War II, the German people were “advised” to vote for the Nazi Party. And elections were also held in Mussolini’s Italy.*
 
Then, there are the “democratic socialists,” who seek to vote socialism into power. The problem with these “democrats,” as F. A. Hayek pointed out in 1944 (chap. 10), is that coercion, sometimes severe coercion, is required to implement the democrats’ policies, and lacking the will to coerce its unwilling citizens, ruthless dictators step in to put the Garden of Eden called socialism into practice.
 
The amount of blather today spoken and written about democracy approaches infinity. The word “blather,” according to the unabridged dictionary, means “to talk [or write] foolishly or nonsensically.” Somehow that word doesn’t seem accurate, and perhaps it is too kind. How about BS? Which means to talk or write in a way that sounds good to others, while not knowing or caring about the facts. You know, “Facts don’t matter, so I’ll just BS my way through.”
 
In today’s political context, BS is Goebbelsian propaganda. Say it loud and say it a lot, said Josef Goebbels, Hitler’s propaganda chief. After a while, even though there may be no factual basis for the blather—I mean, BS—uncritical readers and listeners will begin to believe it.**
 
I could go on but probably should stop here to talk about the real (accurate, objective) meaning of democracy.
 
Fundamentally, democracy means unlimited majority rule, and entails voting that the king’s subjects in the days of monarchy were not allowed to do. The empowerment that voting gave citizens was a significant appeal to the classical liberals.
 
In ancient Greece and Rome, there was voting, but no concept of rights. Citizens, meaning adult males, did possess certain legal protections. So, in 399 BC, Socrates, as an adult male citizen of Athens, was entitled to a trial after being accused of impiety and corruption of the youth. Conviction and condemnation to death was by majority vote.
 
Women, children, slaves, and resident aliens possessed no such protections.
 
The Greeks and Romans, as well as the founding fathers of the United States, viewed democracy as a form of tyranny—dictatorship of the many, as opposed to a dictatorship of the one or few. The many, as the founding fathers also believed, quickly degenerates into factions vying for power.
 
“Direct democracy,” a term bandied about sometimes today, means everyone votes on every issue and delegate in the government, which is impossible in any sizeable country, though the state of California attempts it every election with its nearly infinite list of propositions that clutter the ballot.
 
The original US form of government was a constitutional republic, a considerably limited authority constrained by a Bill of Rights. The House of Representatives, one from each district, was and still is elected by the citizens of those districts, but the Senate was elected or chosen by the respective state legislatures. This provided a balance of power between the national government and the states.
 
The Seventeenth Amendment to the Constitution, approved in 1913 at the insistence of the early progressives, established the election of senators by statewide plebiscite, making most of the federal government popularly elected. Only the election of president, via the electoral college, retains a small semblance of the original balance of powers.
 
The Bill of Rights prohibits the government (and criminals) from taking certain actions. Most importantly, it prevents the majority from voting away our rights. The problem today is that blather, or rather BS, reigns supreme in discussions of rights. Does anyone in public life know what the concept means? No, they don’t care. They only say what sounds good.
 
Rights are freedoms of action, that is, the freedom to take any action I choose to sustain and enhance my life, which includes the acquisition, use, and disposal of property, without being coerced one way or another by the government (or by a criminal), dealing with others through voluntary cooperation. “One way or another” means the government cannot force me to do what I do not want to do, such as get a vaccine or serve in the military, or force a woman to get an abortion. Nor can it forcibly prevent me from doing what I do want to do, such as raise my prices or increase the water pressure in my shower, or forcibly prevent a woman from getting an abortion.
 
Freedoms of action also especially include speaking and writing as I see fit, such as criticizing the government, providing one understands the presuppositions and complications I discussed last month.
 
Today’s “democracy” is in fact an oligarchy of unelected bureaucrats, many of whom are totalitarians both in spirit and practice. The system has also been described as “government by lobby,” because big businesses spend enormous amounts of money to influence congress and the bureaucrats to pass laws and regulatory rules in favor of the lobbyists.
 
Our de facto system is fascism: nominal—meaning "in name only"—private ownership of business and personal property, as well as of each of our lives, but extensive government regulation and control of it all. The system is a mixture of freedom and dictatorship, ruled by the despotic elites in power. As Ludwig von Mises pointed out (esp. chap. 1 and 2), any mixed system, unless corrected, must move inexorably to full dictatorship, a system we came close to enduring over the past five years.
 
Sometimes, one will hear the words “liberal democracy” or “constitutional democracy,” but the meaning of both depends on what is understood as “liberal” and “constitutional.” If, respectively, classical liberalism and the US Bill of Rights are meant by the adjectives, they are accurate. Voting is then used essentially to select new leaders thus ensuring a peaceful transition of power.
 
“Democratic republic” is also heard. When used and understood as Thomas Jefferson understood it—voting under a constitution and bill of rights to select leaders—it is accurate. If not, it is likely more BS.
 
Today, the blather and BS are so common in political discussions that the concept of democracy becomes whatever the speaker wants it to mean, which makes it a buzzword to scare the ignorant and unthinking into going along with the speaker and to disparage his or her opponents.
 
Democracy in fact is a form of dictatorship.
 
 
* Aristotle tells us (1295a11–12) that barbarians even elected their despotic monarchs.
 
** On BS, think of your local used car sales rep, no offense intended to those reps who shoot straight and are honest. There are many.

The Concept of “Getting At”

When my wife, philosopher Linda Reardan, and I read a new writer whose ideas do not quite fit our established notions, we ask ourselves “what is this person getting at?” The ideas are not ridiculous, to be dismissed out of hand, nor do they strike us as correct identifications of the facts of reality. “Getting at” means these writers are attempting, in their own way and depending on their historical context, to make what they believe to be correct identifications.
 
A major error, of those who have swallowed positivist premises, is to dismiss new (or different) ideas as not “verifiable” or not “falsifiable”—terms that are red herrings from post-Kantian philosophy and especially from Karl Popper’s philosophy of science. Another error, of many who follow Ayn Rand, is to dismiss such ideas because they do not agree with her philosophy, therefore they are not worthy of further consideration.
 
For the past several months (May 2023–February 2024) I have written posts about two scholars and what they were getting at: economist Ludwig von Mises and psychologist Sigmund Freud. Despite accepting some Kantian ideas, Mises produced outstanding works based on defending the epistemological foundation of economics against the positivist premise that all science must be quantitative. In addition, I address the issue of “subjective value” in economics (see also this post) as being essentially the same concept as what Ayn Rand calls socially objective value, which means, consistent with her theory of concepts, that value is not metaphysical, in the thing. Rather, it is psychological or epistemological (both words used by her).
 
Freud, who is far more Aristotelian than Kantian even though he lived in a neo-Kantian culture, focused on reality to help distressed patients discover un- (or sub-) conscious thoughts and experiences that made them unhappy in the present and then proceeded to help them achieve happier lives. He was not a “pan-sexualist,” as critics have said of him. As a result of his accomplishments, Freud must be considered the father of modern psychology.
 
Let us now go back to Aristotle and look at one issue he was “getting at,” though many Greek philosophers could be used here as examples of the “getting at” premise, including Plato. Indeed, Aristotle was developing further the discoveries of Socrates and Plato on universals, reason, and definitions when he came up with his theory of universals known as moderate realism.* Aristotle, in contrast to Plato, believed that the universal essence or form of a thing is intrinsic or embedded in the individual thing, and we abstract it using nous—reason—to arrive at rational knowledge.
 
Aristotle’s theory today is a layperson’s common-sense epistemology that says, “We just see tableness in the tables out there in reality.” But that is not correct, as critics of the theory for centuries have shown. Essences are not out there, in the thing. Ayn Rand, aware that the mental process is more complicated than Aristotle believed, improves his theory by demonstrating that abstraction is a mental process of omitting precise measurement of the many similar tables we have observed. That is what gives us the universal. The process, she goes on to discuss, is even more complicated, requiring volitional effort to form abstractions from abstractions (Introduction to Objectivist Epistemology, chap. 1–3).
 
Aristotle was “getting at” the right thing, but did not quite get there.
 
Moving along chronologically, let us look at Christianity. St. Augustine, according to Professor E in the Appendix to Ayn Rand’s Epistemology (262–63), was the first in history to give us the concept of consciousness (though the Stoics anticipated it). The Greeks had identified several important processes of our minds, such as perception, imagination, emotion, and reason, but did not put them together into one concept. Augustine’s human consciousness was a reflection of the monotheistic Christian God, who, in effect, is the “giant consciousness in the sky” that causes events on earth and may or may not grant us our wishes through prayers (Independent Judgment and Introspection, 38–40). Augustine’s concept of consciousness nevertheless was a step forward.
 
Descartes, more than any of the previous religious thinkers, in a confused manner, brought the consciousness in the sky down to earth and put it in our bodies, making it personal to each one of us (likely influenced by Protestantism). He attempted to integrate mind and body as a naturalistic entity, but is remembered, though the dichotomy goes back to the Greeks, as the one who gave us mind-body dualism. Descartes’ fundamental error was to assert that consciousness is the first thing we know, not existence. This is his prior-certainty-of-consciousness premise that continues to plague philosophy today. Or, as Linda has observed, modern philosophers, ever since Descartes’ cogito (I think, therefore I am), have been stuck in their own minds trying to find a way out to reality.
 
When we get to Immanuel Kant, we do have to acknowledge that he is the first to solidify the notion that consciousness is not a mirror of nature, as critics of moderate realism say to disparage the doctrine, but has its own identity. Unfortunately, he concluded, or rationalized—philosopher Walter Kaufmann (116) describes him as a “virtuoso of rationalization”—that because consciousness has a nature we can never know true, noumenal reality, only a phenomenal world.
 
Positivism is a doctrine I resist granting anything to after getting it in spades in graduate school, but I must admit that its advocates were attempting, and still attempt to this day, to answer Kant’s conclusions and to defend science—at great expense. The expense of positivism was, and still is, to declare the following meaningless: metaphysics, universals, facts, values, and truth. The “truths” it says we can know are only those that are synthetic, that is, tied to perceptual concretes—they are not universal—and analytic “truths,” which are universal but arbitrary and say nothing about reality. The positivists’ misguided “contribution” is to require in the human sciences a distorted version of the method of the physical sciences. (See “The Analytic-Synthetic Dichotomy” in Rand’s Epistemology, 88–121.)
 
Pragmatism, instead of being a villainous philosophy, was a doctrine of empiricism, based on the acceptance of the biological nature of consciousness and the attempt to defend knowledge and science against the attacks of the German, British and American Idealists, this last including the work of Brand Blanshard. The so-called pragmatic theory of truth, namely that truth is what works, attributed to William James, may be poorly formulated, but it is an answer to the rationalism of idealism. It insists that we must stay tied to real activities of life to know what is true. Using this theory of truth, we can say, with qualifications, that capitalism is true because it works, whereas socialism is false because it does not work. My qualifications are that a theory of truth requires more than what the pragmatists offered.
 
John Dewey, whom I read extensively when writing Montessori, Dewey, and Capitalism, did not like the word “pragmatism,” preferring “instrumentalism,” in the sense that thought is the instrument of action, which means all thought and knowledge are for the sake of action, not ivory-towered speculation. I learned many things from my study of Dewey. One is to trust the original source of the author’s own words, not summaries. I read three summaries who disagreed with each other and did not sound like what I read in Dewey. After I had read many works of his, I read Dewey’s Metaphysics by Raymond Boisvert and agreed with him that Dewey not only has a metaphysics, but that it is Aristotelian and his theory of truth is a correspondence theory, though Dewey improves on Aristotle’s theory by rejecting any form of intrinsicism of essences or values.
 
For more on what I found Dewey to be “getting at,” read my post in Applying Principles, 295–99. No, Dewey does not have a theory of concepts or universals, nor is he an advocate of capitalism. I did not read his works on ethics. His metaphysics and epistemology, however, were “getting at” something. He is difficult to read, though he does sometimes use interesting business metaphors, such as, subject matter in education is the working capital of thought. His theory of education is not too different from that of Maria Montessori—and is not, I must emphasize, what many progressive educators say it is.
 
Let me conclude this post with reference to two previous posts about the Bible. The first concerns Jewish political commentator Dennis Prager’s The Ten Commandments, which, he points out, should be translated from the Hebrew as the Ten Statements. What is significant about this short book is that it is not deontological in the Kantian sense that they are ten duties. Indeed, Prager says that these ten statements have driven the development of civilization and “are the greatest list of instructions ever devised for creating a good society.” One other mistranslation, he points out, is that “do not kill” in 1610 King James English should really be “do not murder.”
 
My other post looks at Matthew 7:1–6 in the New Testament. The first verse is the “do not judge” statement that Ayn Rand has made pointedly negative comments about, though some of her followers misunderstand her interpretation of the advice. The rest of the Matthew verses relate the Golden Rule, an early statement of justice, and emphasize that we should use the same standard of value when judging others as ourselves. And that we should be careful when forming partnerships, personal or professional, lest we end up throwing our pearls to pigs who turn on us, trampling the pearls and attacking us.
 
Pretty good advice coming from the New Testament. Even the Bible was “getting at” many true things.
 
 
* In an earlier post, I referred incorrectly to Aristotle’s theory as naïve realism. The theory is occasionally denigrated as “naïve” and I seem to recall it in my undergraduate days being identified as such. But the more acceptable term today is “moderate,” or sometimes “metaphysical,” realism, meaning the essence is “out there” in the thing.

Mises and Epistemology (part three of a three-part series) (Go to part one)(part two)

The human sciences aim to explain the causes of human motivation and behavior, healthy and effective, as well as harmful, and to guide humans in their choices and action to achieve chosen goals. This includes all applied human sciences whose aims are to get things done and done well. Economics is not just a highly deductive science, but also highly applied in that its aim is to define the principles of cooperation under a division of labor that will secure peace and prosperity in a social setting.*
 
Let us now continue with a few additional epistemological issues in Mises’ writing.
 
 
4. The specific understanding. The two fundamental methods of cognition, according to Mises and the Kantian philosophers, are conception and understanding. Concepts, we have seen from part one of this series, according to Kant, are limited to the phenomenal world, which means we cannot know concretes. This poses a problem in particular for historians, since their work is to explain concrete human events of the past. The solution in German philosophy is the specific understanding (Human Action, 49-50). Mises writes:

It is the method which all historians and all other people always apply in commenting upon human events of the past and in forecasting future events….The scope of understanding is the mental grasp of phenomena which cannot be totally elucidated by logic, mathematics, praxeology, and the natural sciences.

The philosopher Bergson, according to Mises, called this cognitive power “intuition,” which sounds antithetical to reason and mystical. And it is, because for Kant concepts and reason, which he had to limit to make room for faith, cannot know true reality.
 
But a correct theory of concepts proves we can know reality. This cognitive power is not properly described as a “specific understanding,” but as the application of previously formed universal concepts, a deductive process. Since our concepts refer to all concretes of a particular type, we live our daily lives applying our previously learned knowledge to identify correctly the specifics we confront. Thus, Sherlock Holmes deduced that Watson just came back from Afghanistan, based on Watson’s tan and signs of having been wounded. And our medical doctor deduces that our cough and runny nose are instances—symptoms—of a cold.
 
Application (1, 2) is the mental process of identifying a this (concrete) as an instance of a that (concept). It is what historians do and what we all do every day.
 
 
5. Regularity in human action, but no constants. Mises (Human Action, 1) is correct to state that there is “a regularity in the sequence and interdependence of market phenomena,” but no “constant relations” (56), or standard unit that can be used to make quantitatively exact measurements of human behavior. Which means no algebraic equations can be identified or used as in physics and chemistry.
 
Human behavior is not deterministic because of free will, which Mises does not explicitly endorse, though he does say that human action is teleological, which is another instance of his Aristotelianism. But because of the observed regularity that is present in human nature, principles and laws of economics, such as the laws of marginal utility and supply and demand, can be formulated and used to interpret current and past economic events and to make predictions, albeit not mathematically precise predictions. This is Mises’ rejection of the positivist demands for a mathematical economics.** (See In Defense of Advertising, 127-30.)
 
Indeed, the inability to formulate mathematically precise propositions and equations is true of all human sciences, basic and applied, not to mention of all the branches of philosophy. Positivism has corrupted our understanding of science, the actual essence of which is conceptualization, which means measurement omission even in the formulation of the equations of physical science. (See In Defense of Advertising, 153-58; Independent Judgment and Introspection, 72-81.) Most measurements, especially statistics, produce historical data, not universal knowledge of cause-effect relationships.
 
 
6. Subjective value. I touched on this subject in a previous post based on what I call Ayn Rand’s general theory of value, but more needs to be said.
 
Mises (Human Action, 96) is mostly correct when he states, “Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment.” Values, and all concepts are within us. Essences and values are not “out there” in the thing. They are not metaphysical. We, using the tools, or mental processes of our consciousness, create, construct, or form concepts, including the concept of what is valuable. But values are objective in the epistemological sense—if the identification of what is valuable contributes to the flourishing of human life.
 
Yes, there is a distinction between object and subject, meaning objects are “out there” and whatever goes on in our minds is subjective, but that is a different usage. Customer value judgments are subjective because their judgments come from inside their heads, but they may or may not be epistemologically objective (correctly identified as beneficial for or harmful to them).
 
Mises—and the positivists—talk about the necessity of all sciences being “value-free,” which means “shoulds” and “oughts” do not belong in science. This derives from Kant who faced a dilemma between ethical values that come from the nature of the mind (not the requirements of human life) and free will that comes from the noumenal world, but is unknowable. Positivists “resolved” the dilemma by explicitly making all values subjective.
 
Economics for the most part is a practical science, establishing principles of how to increase wealth for everyone. One can say that price controls are both immoral and impractical—immoral because of the harm to human life caused by injecting force into voluntary trading and the consequent shortages that result, thus introducing values into the discussion, and impractical because wealth for everyone is decreased, not increased. It is only increased, if in fact it is, for certain privileged groups.
 
Yes, there are those today who say that all issues are moral and political, proclaiming “consumers should or ought not to buy that product” or “that bridge should not be built in that location.” In a free society where individual rights, especially property rights, are respected, such shoulds and oughts would be minimal. Applied sciences assume that actions to be taken are moral and legal, then provide guidance to the achievement of particular goals. The actions are assumed to be moral and legal because the aim of applied science, all sciences actually, is to improve life.
 
Two final quotations from Mises about values: “By means of its subjectivism, the modern theory becomes objective science” (Epistemological Problems of Economics, 192). And: “it is in this subjectivism that the objectivity of our science lies” (Human Action, 21).
 
Mises is stating that the theory of marginal utility answered the water-diamond paradox of the classical economists who had assumed values are “out there” intrinsic to reality. If “subjective” is understood as explained above and can be viewed as epistemologically objective, then Mises is correct.
 
I prefer to call our values, market values in particular, “psychological,” which makes them epistemological, not metaphysical. Restating Mises’ second quotation, I would say, “it is in this recognition that values are psychological, not intrinsic or metaphysical, that the validation of economics lies.” (See In Defense of Advertising, 175-78.)***
 
 
In the first paragraph of the Preface to the Ultimate Foundation of Economic Science, Mises writes, “This essay is not a contribution to philosophy. It is merely the exposition of certain ideas that attempts to deal with the theory of knowledge ought to take into full account.” Mises in dealing with these issues is taking steps toward a post-Kantian Aristotelian foundation of economics. Those who would advance economics further can build on his work.
 
The present three-part series has been my attempt to deal with some of the issues, based on Ayn Rand’s epistemology. It is also my encouragement to students of Ayn Rand to take the work of Mises as both profound and serious. There is much to be learned from him.
 
 
* All sciences, basic and applied, use induction and deduction throughout (cf. Aristotle, Posterior Analytics, in McKeon). The applied sciences—medicine, engineering, psychotherapy, and the business disciplines, among others—are predominantly deductive, drawing their basic principles from the more fundamental sciences.
 
** In technical terms, the physical sciences measure the world using interval and ratio scales, the former using equal intervals from one number to the next (1 to 2 is equal to 4 to 5) and the latter requiring equal intervals and a true zero point to produce valid ratios (for example, Kelvin temperature, but not Fahrenheit or Celsius, which are scaled at the interval level). In the human sciences, measurement is teleological using ordinal numbers and ordinal scales (A is better than or preferred to B and B to C). Relationships of means to ends are graded or ranked because we do not have a unit that serves as a standard of measure in the way interval and ratio scales do. The intensity of preference in the intervals of two people preferring A to B may or may not be equal; we do not know. See Stevens and cf. Ayn Rand, Introduction to Objectivist Epistemology, 32-34, 223-25.
 
*** Ayn Rand in Capitalism: The Unknown Ideal (16-17) distinguishes between market value, or price, as socially objective value, “the sum of the individual judgments of all the men involved in trade at a given time” and philosophically objective value, “as value estimated from the standpoint of the best possible to man.” Understanding this last means philosophically objective values are not much involved in economics, as no such value should or ought to be mandated by law, or priced a certain way.

Read part one, part two.

Mises and Kant (part two of a three-part series) (Go to part one)(part three)

Aristotle’s categories, detailed in his work called The Categories, are fundamental concepts of reality, such as entity, quality, action, etc.
 
Immanuel Kant, using some of those terms, describes categories as fundamental, innate concepts that prevent us from knowing true, noumenal reality. We can only know appearances, says Kant, called the phenomenal world. This creates the impossibility of perceiving “things-in-themselves,” which means concept formation is limited and cannot know concretes (Rickert 1; 2, chap. 5).
 
This is what makes reason impotent to know reality and in essence is Kant’s disastrous influence on later philosophy. It has confounded nearly all who have followed him, including economists such as Ludwig von Mises.
 
But let us go back to birth—of an infant. Perception, which is to say, knowledge of concretes, begins at birth. The infant cries when hungry and cries when having to eliminate. We know this because infants, after a short time out of the womb, will give us a cute smile when sated and when vacated. This is one of our (the infant’s) first perceptions of concretes.
 
Awareness of the concretes of reality is not, or rather should not be, a philosophical problem. We live and act in the world of concretes, which in fact are the so-called things in themselves. A theory of concept formation that incorporates concretes is what has been needed for hundreds of years. Ayn Rand, I submit, has provided this solution and the answer to the philosophical problem of universals (Introduction to Objectivist Epistemology).
 
A child at around one or two, after learning some elementary words, begins to form and apply universal concepts, such as “ball,” “dog,” and “table.”
 
In briefest essence, the child, according to Rand’s theory of concept formation, observes differences and similarities in the world and focuses on the similarities of what we eventually call a ball, dog, or table. Similarities of, say, tables are abstracted from the concretes by omitting their measurable differences, then by integrating the similarities into a new mental entity called a concept. The mind is “so constituted as to be capable of this process,” to borrow a few words from Aristotle (Posterior Analytics, 100a13), which means the child does not have to think about that particular process for it to happen.
 
The concept, using Rand’s metaphor, is like a file folder that includes all concrete, specific tables past, present, or future, observed or not. The (mental) omission of measurements gives us the essential distinguishing characteristic and the nature of the concept as universal. A word labels it and its definition summarizes its meaning, tying it to the general category from which it was differentiated, and to all of those observed and unobserved concretes, its referents “out there” in reality.
 
This is the inductive process of concept formation. Application is the deductive process of recognizing an object initially unfamiliar to us and identifying it as an instance, a concrete, of the concept table.
 
Now let us see what we can say about some of Mises’ confusions caused by German, especially Kantian, philosophy.
 
 
1. A priori categories and the logical structure of the human mind (Human Action, chap. 1 & 2). If by “logical structure of the human mind,” Mises means that consciousness has an active nature, or identity, then he is correct, but Mises says that such categories as causality and human action are innate, prior to experience like, allegedly, mathematics and logic. Therefore, deduction is the fundamental method of praxeology (human science).
 
The a priori/a posteriori distinction, however, is a false dichotomy. All cognition is cognition of reality. If our concepts are true—correctly recognizing or identifying reality—then the most abstract concepts, such as the law of non-contradiction, integral calculus, causality, human action, and the law of supply and demand, are all derived from reality and therefore are empirical. The chain of abstractions required to arrive at these concepts may be extensive, but if true, will be anchored in the perceptual world. In the same way that “human-made object” is anchored in the perceptual world, derived initially from “tables,” “chairs,” and “beds,” and connected to the abstraction from abstraction “furniture,” and still further connected to the broader abstraction of the human made, all the different categories and subcategories of objects that humans create. This last notion of a broader concept becomes a big file folder holding all human-made objects.
 
Mises does not seem to have a notion of abstractions from abstractions, only directly perceivable concretes (an apparent influence from positivism) and the innate categories from which all of economics is supposedly deduced. Indeed, economics is a highly deductive science of application, but its basic concepts and laws are empirically and inductively derived from experience. The concept of human action is not a self-evident axiom, as Mises asserts. Action is an attribute of all living organisms, human action of human beings.
 
 
2. More on the logical structure of the human mind (Human Action, 35).
 
Mises writes, “The human mind is not a tabula rasa on which the external events write their own history.” True. Reality does not write on our minds. We actively identify it.
 
“[The mind] is equipped with a set of tools for grasping reality.” True. We have tools, such as perception, conceptualization, evaluation, etc. They are mental processes that we have the innate capacity or potential to perform. And they constitute the nature or identity of consciousness. But they are not content. Tabula rasa means there is no content in our minds at birth.
 
“Man acquired these tools, i.e., the logical structure of his mind, in the course of his evolution from an amoeba to his present state.” True. “But these tools” Mises continues, “are logically prior to any experience.” They are built-in from birth, yes, and we use them, as mental tools, to identify, not passively receive, reality and to guide our choices and actions.*
 
 
3. Does Mises believe we can know reality? Yes, and this, along with his methodological individualism and emphasis on the nature of things (money, capitalism), makes him Aristotelian, or as Hülsmann (liii) says, “a representative of Aristotelian realism.” In his last book on epistemological issues, Mises writes, “From the praxeological point of view it is not possible to question the real existence of matter, of physical objects and of the external world” (Ultimate Foundation of Economic Science, 6).
 
In Human Action (36), though, he is more equivocal: “It is idle to ask whether things-in-themselves are different from what they appear to us, and whether there are worlds which we cannot divine and ideas which we cannot comprehend. These are problems beyond the scope of human cognition.”**
 
To clarify, nothing is unknowable—with emphasis on the -able—to the human mind. We do not live in a phenomenal world, unable to know the noumenal. We live in reality. And the appearance of a bent stick in water is a correct perception of what looks like, or rather appears to be, a bent stick, though with the use of our sense of touch and our knowledge of the causal effects of light in water, we know that the thing-in-itself stick is not bent. (See the form-object distinction in Rand, 279-82.)
 
 
To be continued next month. At this point, let me emphasize that my comments about Mises are not meant to be serious criticisms of his work. His accomplishments are vast and exemplary, even his partially mistaken epistemology, and especially considering his professional life where he was not offered a professorship in either Vienna or New York. In spite of this he taught and wrote tirelessly as a decades-long lone voice for laissez-faire capitalism. He needs to be read.
 
 
* Ayn Rand rejects the correspondence theory of truth and the misleading notion of “grasping” reality, a relic of naïve realism (though she does use the word in a metaphorical sense). Hers is an identification theory of truth. Our minds must actively focus on reality and form those concepts to identify correctly what is “out there.” The “out there” is what Rand would say is metaphysical, whereas the “in here,” the mental processing of our consciousness, is epistemological. The empirically derived and recognized principles of the applied science of logic, and especially the law of non-contradiction, are the tools by which we judge whether or not our mental content has correctly identified reality or contradicted it.
 
** This quotation apparently is Mises’ way of dismissing as unimportant Kant’s dilemma of appearance versus reality and of asserting his emphasis on analyzing the world in which we live—the Aristotelian world. A few pages later (Human Action, 39), he writes, “Praxeology conveys exact and precise knowledge of real things,” and in Ultimate Foundation, 18, he says, “We see reality, not as it ‘is’ and may appear to a perfect being, but only as the quality of our mind and of our senses enables us to see it,” which I would take to mean reality with no Kantian distortions.

Read part one, part three.

Human Science, Social Science, or Science of Human Action? (part one of a three-part series)(Go to part two)(part three)

For over two centuries, the scientific study of human beings has been given various names, often followed by the word “science”: moral, human, humanistic, social, and cultural. Other suggested names have been the science of human action, or just the humanities.
 
None of these terms should be confused with academic departments in universities or the courses they teach, as these departments and courses usually represent more specific subjects of study determined by current fashion.
 
My goal in this post is to define and delimit the epistemological meaning of the fundamental science of homo sapiens and to differentiate it from two terms in use today: social science and praxeology, the science of human action.
 
To provide a broader context, here is a footnote from my book In Defense of Advertising (162n44):

It has been said that there are three fundamental sciences: physics, biology, and psychology, or physical science, life science, and human science. (Philosophy is not a separate science; it is the science of all sciences, the foundation of them all.) I agree with this three-way distinction. Another way to describe the division is: (1) the sciences of inanimate matter; (2) the sciences of the life forms that possess a vegetative function of life or, in addition, the conscious function of sensation, or, still further, the conscious function of perception; and (3) the sciences of the life form that possesses, in addition to the vegetative functions and the conscious functions of sensation and perception, a volitional, conceptual consciousness.

“Note that the sciences,” I go on, “are cumulative in the sense that principles of physics and chemistry and of the vegetative actions of life are used in the life science of human medicine in such specialties as biomedical engineering, molecular medicine, and cardiology” (cf. Binswanger, 4-16).
 
Physical sciences study inanimate matter; the life (or biological) sciences study living organisms, and the human sciences study human beings. The aim of the human sciences is to study and develop a theory of human nature as the rational animal that possesses a volitional, conceptual consciousness, which means one that exhibits the capacity to reason, not one that reasons automatically.
 
The focus of human science is on the motivation and behavior, primarily, of the individual and only secondarily, of the individual in a group. This makes psychology the basic, foundational field of study of the human sciences.
 
The term “social science” has been around since the eighteenth century but became dominant in the twentieth. It refers to the study of human beings in society and is a close synonym of “sociology,” a word coined by the collectivist philosopher Auguste Comte and defined as the science of society.
 
Comte also coined the word “positivism” as a post-Kantian approach to identifying “true reality,” which Kant said we cannot know, by restricting awareness to directly perceivable concretes, all else being empirically meaningless. In subsequent elaborations positivism came to mean that metaphysics, universals, objective facts and values, and, especially, truth, are all unknowable. All we can do is mimic the physical sciences in method and produce statistical probabilities.
 
The emphasis on “social,” not individual, human beings, and statistics as method, because it looks at groups to come up with averages and percentages, made this so-called science of human beings collectivist at root. “Society,” in other words, became the entity of study, not the individual.
 
Use of the word “social,” or the prefix “socio-,” proliferated to modify many disciplines and endeavors: social psychology, social engineering, social justice, sociobiology, socioeconomics, sociology of (physical) science, and so on. Because of this collectivization of human science, I refused in In Defense of Advertising to endorse the word “social” when writing about the “social” criticisms of advertising. “It is a misnomer,” I wrote:

to refer to these charges [against advertising] as “social” criticisms, for the term “social” implies that morality is essentially a social concept. It is not. Morality defines a code of values to guide each individual in his choices and actions. Hence, the quotation marks around “social” (34n12).

Individualism and the individual are primary. Sigmund Freud, who described himself as a “liberal of the old school” (classical liberal), “was fully persuaded that individual and social psychology are impossible to separate” (Gay, 338; Independent Judgment and Introspection, 50n3). Not just impossible to separate, I would add, the individual is the starting point of analysis, proceeding later to the individual’s relation to and interaction with others in a group setting. Society is an assortment of individuals who are the primary entities.
 
The dispute over methods, or methodenstreit, of the nineteenth century involved Carl Menger of the Austrian School of economics and Gustave Schmoller of the German Historical School. Menger advocated a distinctively Aristotelian theory of universal principles and their application to individual human action. Schmoller rejected such an “essentialist” epistemology and advocated the positivist notions of collecting large quantities of historical data, especially statistics.
 
This dispute emphasized among the Austrian economists that economics was a narrower subject of a broader theory of human science. Ludwig von Mises, at first, accepted “sociology” as the parent discipline, but rejected its collectivist premises and followers. He settled on praxeology—a word not coined by him—to define a science of human action. Many of his followers today continue to base the foundation of economics on praxeology.*
 
From the first time I read Mises, I found his epistemology of praxeology thorough and intriguing, but not quite right in the sense that it did not seem to comply precisely with my understanding of Ayn Rand’s epistemology. My conclusion today is that Mises was so much caught up in German philosophy that, though he went a long way toward rejecting many of its irrational premises, he failed to remove all of the primacy-of-consciousness notions, most notable being his acceptance and use of Kant’s words “a priori categories.” Mises’ use of these terms, however, is more Aristotelian than Kantian, but that will have to be postponed to next month’s post.
 
The problem with a science of human action is that it lacks a theory of human nature. As a concept it tries to account for all human behavior in what amounts to a substitute for moral or practical philosophy without addressing or accepting the metaphysics—philosophical psychology—of a volitional consciousness (cf. Rand, 117, 133-34, and Long). Mises abundantly uses such terms as choice (caused by ideas), value judgments, and purposive behavior (of determining means by which to achieve ends), but does not explicitly endorse free will, leaving that issue to science as an unanswered problem—of determining the relation between our brains and consciousness.**
 
Praxeology as a concept also actually ignores ethics, because the science is said to be “formal” and “value-free,” yet the production of wealth as the aim of economics is hugely beneficial, i.e., a value, to human life. Further, praxeology does not recognize or accept human psychology as the basic, foundational human science. Indeed, Mises, using a positivist premise, relegates the psychological theory of human motivation and behavior to experimental psychology, a naturalistic psychology (or physical science), as he calls it, and the applied science of psychotherapy, which he prefers to call thymology, to history.***
 
This reveals the crucial error of praxeology, namely that it does not have a valid theory of universals to answer the irrationalism of the past two hundred years. Mises correctly recognizes that the epistemological problems of economics lie in the forms of irrationalism he was up against. These include polylogism (the theory of many logics, especially an attack on Aristotelian logic), historicism (the theory that history is determined by forces beyond human control, meaning the human sciences can only produce time-bound statistical generalities) and positivism, all three of which still plague us today.
 
Kant’s transcendental idealism told us reason is impotent to know reality.
 
Ayn Rand’s theory of concepts, however, through her theory of abstraction as measurement omission, has given us a theory of universals grounded in reality. Conceptualization, properly understood and practiced, is what enables us to study and understand homo sapiens as the rational animal with a volitional consciousness, which enables us to study and understand human motivation and behavior as an individual and as a member of society.
 
Psychology, economics, political philosophy, and all of the applied human sciences follow without having to obsess continually over exact measurement or probabilities. More in next month’s post.
 
 
* The term “praxeology” was coined as early as 1882 from the Greek word praxis, meaning action or practice. See Hülsmann, Introduction to Epistemological Problems of Economics, xxii. This forty-seven page introduction is an excellent summary of Mises’ work.
 
** All we can know, says Mises, is that an acting person’s choices derive from “his individuality—the product of all that he has inherited at birth from his ancestors and of all that he himself has experienced up to the critical moment” of making a final choice, which sounds like determinism. Ultimate Foundation of Economic Science, 58. See also Human Action, 46-47.
 
*** Thymology (Theory and History, chap. 12; Ultimate Foundation, chap. 2, section 8), like praxeology, was not coined by Mises. The term derives from the Greek word thumos, meaning soul or spirit, feeling or thought. Thymology is history in the sense that the psychotherapist must understand the patient’s concrete here-and-now thinking errors that are causing the unhappiness, as similarly the medical doctor must identify the specific ailment of a specific patient in order to recommend treatment. However, both psychotherapy and medicine rely on a vast store of previously learned universal concepts and principles that apply to these cases. Application is the epistemological process, an integral, deductive part of conceptualization and essential part of any applied science. Generalization is the prior, inductive component. “Thymology,” I submit, is not a necessary or helpful term, as applied psychology is the applied human science that psychotherapists practice, and basic or theoretical psychology is the inductive, conceptual science that is broad enough to include the experimental practitioners. Mises, as do I, rejects the pejorative term “literary psychology,” sometimes unjustly applied to Freud.

Read part two, part three.

A General Theory of Value

Ayn Rand defines value as “that which one acts to gain and/or keep” and applies the concept to all living organisms. A value presupposes answers to the questions “to whom?” (or “what?” in the case of lower living species), and “for what purpose?”*
 
Can we apply this definition to the economic concepts of value and utility, especially as used by the Austrian economists? When I was teaching, I would tell my students that the law of marginal utility can more clearly be called the law of marginal value. Was I correct? Let us see what we can come up with.
 
The answer to Rand’s two questions, as applied to all living organisms, is to sustain and enhance that organism’s life. The amoeba takes in nourishment from its environment, the plant strives to get as much sunlight and nitrogen as possible, and the family dog may stare at us and give an affectionate growl to communicate when it is time for dinner.
 
For human beings, the term is not just a moral concept. While Rand uses it to develop her ethical theory, “value” applies to every action humans take in life, moral or immoral, healthy or unhealthy, law-abiding or criminal, productive or indolent, correct or mistaken.
 
Human beings—each one of us as individuals—because we possess free will, must choose what will sustain and enhance our lives. We must declare something to be a value and then pursue it.
 
An important note here: value is not “out there,” intrinsic in the thing that we like. It is a relationship to us that we rate (evaluate) as beneficial. And we may be mistaken in our judgment or choose what is harmful either to ourselves or to someone else.
 
“Value” is also not subjective, as many economists believe. The concept of value arises in our heads, our consciousness, when we judge the something outside of us to be valuable—with emphasis on the last four letters. What is outside of us is only potentially a value. We must recognize it as such, then actualize it by acting to gain and/or keep it.
 
If we are accurate in our judgments, the value is objective—in its epistemological meaning, as Rand would say. It is not metaphysical in the sense that essences and values are “out there,” in the thing. This is the naïve realist view that has caused so much havoc in our understanding of the meaning of objectivity, especially in the field of economics. If we are inaccurate in our judgments and the value is harmful for us, we can then say that we are mistaken and the chosen value is merely subjective.
 
To illustrate further the meaning and role of values in our lives, some of us may choose honesty as a way of life, others dishonesty or theft to acquire values. Some may build bridges for a living, while others become truck drivers. Some may eat vanilla ice cream, while others prefer chocolate, and still others may not eat ice cream at all.
 
Many values that we pursue, as I have written before—a specific food, career, romantic partner, etc.—are optional and do not need to be pursued by everyone, whereas moral values are universal requirements for the sustenance and improvement of human life as a rational being.
 
Now let us look at the meaning of value and utility in economics, taking value first. Austrian economists Carl Menger (pp. 115, 121) and Ludwig von Mises (p. 96) define value as the importance of something to us, Menger adding that it satisfies a need and maintains our lives and well-being. Mises goes on to emphasize that value means preferring one thing to another. Both consider values subjective (cf. Hülsmann, pp. xxxiv–xli).
 
As stated above, values are not subjective. Also, the words “importance” and “preference” are close synonyms of “value,” making the definitions circular: “I value what is important to me and I value what I prefer.” The economic concepts do not clarify the meaning of value, though Menger’s additions that values satisfy needs and maintain our lives and well-being are real properties of accurately identified values.
 
Rand’s definition is general with a broad genus (“that”) and differentia (“one acts to gain and/or keep”).** For human beings, it is the latter, our action, that actualizes those things outside of us to make them values. Iron ore and oil, for example, before they were extracted and turned into steel and gasoline, did not have value for anyone—until entrepreneurs acted to turn them into economic goods.
 
Economic goods, incidentally, are things that have been turned into values that consumers desire and pursue, in contrast to “free goods,” such as oxygen in the air we breathe. Oxygen is a value required for life, but we do not have to pay a price for it, that is, unless we are going deep sea diving. Then it becomes a highly valued economic good (cf. Reisman, pp. 40-41).
 
Now the economic concept of “utility,” as I also said to my students, does not seem to be especially useful. Its meaning is “usefulness” or “serviceableness” to meet our needs, which again is a synonym of value. It predates the philosophy of utilitarianism, but was popularized by the utilitarians who introduced many errors into ethics and economics, not least the subjectivism, relativism, and collectivism of values.
 
The law of marginal utility can indeed be stated as the law of marginal value, meaning the larger the quantity of something that is available to us as a value, the lower the value we will place on a single (or “marginal”) unit.
 
The law, of course, resolves the so-called paradox of value of the classical economists who could not explain why diamonds are so much more valuable, in economic terms, that is, higher priced, than water, the answer being the quantity of each that is available to us. Stranded in a desert, fully dehydrated, we would value a glass of water as equal to life itself. But neither value—diamonds or water—is subjective. The values are contextual and determined by each individual in his or her situation.
 
Thus, Rand’s definition of value gives us a general theory of value, applicable to all living organisms, including the wide range and types of values held by human beings.
 
All human action, to borrow a few words used by Mises (chap. 1 & 4), is guided by a goal that becomes the standard by which we identify the steps or means (intervening values) required to achieve the goal. The goal is the ultimate end or value that we seek. This description of human action applies to ethics, economics, psychology, engineering, and so on. Every action we take is motivated by our desire to acquire and use a specific value.***
 
 
* Rand’s words (her italics): “of value to whom and for what?”
 
** The genus of human values can also be elaborated as anything that we view as sustaining and enhancing our lives, keeping in mind that mistakes can be made and anti-life conduct can be willfully chosen. Action to acquire and use the chosen value remains the differentia.
 
*** This last differs from Mises who says that we are motivated by a “felt uneasiness” to seek those values. Sometimes we might be so motivated. Sometimes we act out of habit, such as eating lunch because it is time, not because we feel any “uneasiness” in our empty stomachs. Sometimes, when we are confident of acquiring a value, the expected pleasure is the motivator.

How Do We Know Concretes?

To the layperson the title of this post must seem strange.
 
To academics, especially philosophers, the issue for a couple of millennia has been a big deal.
 
Of course we know concretes, says the layperson. We open our eyes and look out at the world—to see specific, individual, concrete people, animals, plants, and things. Reminiscing about our childhood, we can recall many specific, individual concrete events, ranging from games we played with relatives or next door friends to vacations taken with the family to the years spent in various schools.
 
And historians specialize in reporting the concretes of the past, do they not? Well, throughout the nineteenth century, and still today, historians, along with psychotherapists, medical doctors—and anyone working in applied fields—are said not to be true scientists. Only theoreticians are scientists. This is the dispute over theory versus history.*
 
To put the issue in more philosophical terms, we live in a world of particulars, yet with the exception of proper names our knowledge consists of universals.
 
Theories, science, and principles are all expressed in terms of universals. How do we use those universals to know particulars?
 
The problem arises from the theory sometimes called naïve realism—Aristotle’s improvement on Plato—that says universals are external to our minds, lodged, so to speak, in the things of reality, “out there,” but not in Plato’s separate realm.
 
Aristotle said that the form is embedded in the matter, form being his word for what in more modern terms we call essence or essential distinguishing characteristic. Matter, as in the stuff that something is made of, is what makes the thing a unique, concrete individual entity.
 
How can we know concretes when nearly all knowledge is universal? The glass on my desk, so the theory goes, contains “glassness,” the universal essence that we grasp and understand as a thing we drink liquids out of. The glass, or in my case, plastic, that the container is made of is its matter, and this includes its color and the number of ounces of liquid it can hold.
 
The matter of the glass, we could say, is that the glass on my desk is plastic, its color is blue, and it holds twelve ounces. Does that mean we have understood the concreteness of this glass?
 
No, say the critics of Aristotle’s common sense realism, because we are using universals in every word (“plastic, blue, twelve ounces”) to describe this individual concrete. We fail to get to “the thing in itself” (the thing as it really is, its identity), a problem that led John Locke, in exasperation, to conclude that the individuality of a thing is “something I know not what.” Further problems led David Hume to fail to find a “necessary connection” between cause and effect, heading us down the road to Immanuel Kant who said we can never know true, noumenal reality (where the “thing in itself” is presumed to reside).
 
And that is where we are today—reality is unknowable, concepts are arbitrary, and nothing is universal—with bad consequences in ethics and politics: values are subjective and there is no objectively valid, justifiable political or economic system.
 
Thomas Hobbes said we need a strong “public sword” to keep the peace among warring groups, each with its own arbitrary values, but today’s postmoderns want to crush any group with different values, especially those who advocate capitalism.
 
In other words, dictatorship follows from philosophy’s failure to solve the so-called problem of universals.
 
But let’s go back to our layperson who looks out at the world and sees a myriad of concrete things and their attributes. Although such a layperson may still think in Aristotle’s realist tradition by saying, “I just look and see glassness in the glass,” the conclusion is not correct, because there is in fact no essence of glassness in the thing out there. The layperson’s mind is doing more than he or she thinks.
 
What Aristotle called abstraction—mentally separating the form from its matter—is a more complicated process than he knew.
 
Concept formation, or conceptualization, is the human being’s method of turning percepts into universal concepts. How does this occur?
 
All knowledge begins at birth with perception, by observing concrete particulars. Later, when we begin to talk, we learn to form concepts, which become our universals.
 
Ayn Rand’s theory (ch. 1 and 2) holds that concepts and essential distinguishing characteristics are in our minds, not “out there” in the thing, but if we correctly identify what’s “out there,” the essences and concepts are objective, in an epistemological sense, not intrinsic or metaphysical as both Plato and Aristotle thought.
 
The process proceeds as follows. We perceive many similarities and differences among the things of the world. When we focus on one group of similar things that are somewhat similar to, but also different from, another group, we have isolated something we want to identify with a concept and word.
 
To form the concept, we focus on the characteristic(s) that explains and causes most of the others, then omit its measurements. Measurement omission in the process of abstraction is what enables us to identify the essence of the concept.
 
Using Rand’s example of forming the concept “table,” we isolate (from chairs and beds) those objects that have flat surfaces and are designed to hold smaller objects. Individual, concrete tables differ according to their measurements, but the measurements of their height, length, width, color, oval vs. rectangular top, etc., are omitted to make the concept of “tableness.”
 
The omitted measurements are still there, in reality and in the concept formation process, but they are not used (or necessary) to form the concept. Identifying that tables are flat and hold other objects is all we need to know to distinguish tables from chairs and beds and to give us the essence or essential distinguishing characteristic of tableness. Particular height, width, weight, color, shape of top, etc., are left out. A word and definition are finally assigned to complete the process of concept formation.
 
All the varying aspects of each entity in the world, including the varying measurements of all its qualities, and including its location and time of existence, are what give each entity its unique individual, concrete identity.
 
How do we know the entity as a concrete? To say it one more time, initially through perception.
 
We then identify it with a concept and word. Then, our ever expanding accumulation of concepts—our increasing knowledge—enables us to know and describe the concretes in their extensive variety, their attributes and actions and their myriad differences according to their varying measurements.
 
Assuming our concepts accurately describe the concretes they represent, that is, their referents out there in reality, and are not detached or floating, we have objective knowledge.
 
And that objective knowledge can be theory or history, basic science or applied science, general knowledge or personal knowledge. In all cases, it is knowledge of the concretes of reality.
 
Our minds are not “mirrors of nature,” as critics of “naïve” Aristotelian realism often say. They are active processors of it. Rand’s recognition of the mind’s active nature and her incorporation of it into her theory provides a major improvement on and defense of Aristotle’s epistemology.
 
We might, although she may not like it, even call Ayn Rand’s theory a “mature” realism about knowledge.
 
 
* Ludwig von Mises clarified the issue by rejecting the Hegelian-Marxist view that there are laws of history. Rather, Mises recognized that there is a valid science of individual historical events using the theories of basic sciences, especially psychology and economics, to understand and describe those events. Psychotherapists and medical doctors, in addition, use the theory of basic sciences to identify and treat their patients’ problems, which to the therapist and doctor are de facto historical events. This is called applied science.

The Communist-Fascist-Leftist Democratic-Socialist-Progressive Totalitarians: A Glossary of Dictatorship

This post can be thought of as a kind of compendium of dictatorship, with many links to previous posts where I have touched on the notions.

All terms in the title represent people who desire to, or do, exercise absolute authority or power over the citizenry. Differences between the terms and the people who espouse them are negligible. The consequences of such absolute power are not pretty.

Let me start with the totalitarians. They are the ones who want to and do use total coercive, governmental control to tell us what we can and cannot do in our personal and professional lives. Like, you know in recent times, to leave our homes, travel, sit down in a restaurant, run our businesses, etc., and perhaps even talk to our neighbors. In other words, covid totalitarianism.

The “left,” as in the left-right continuum, refers to the degree of government intrusion in and control of our personal and professional lives. The “far left” wants to control all, which means they are totalitarians. The right limits the government to self-defensive coercion against those who initiate physical force.

The left is Leninist socialism (there is no other type). It is Lenin’s giant post office that we all work for (government ownership of the means of production), protected by an armed proletariat (or other such “protectors”). The right is laissez-faire capitalism.*

The left wants to and does use physical force to establish and control everyone through a dictatorship. The right wants to and does establish the protection of individual rights, including especially property rights, political freedom, and equality before the (rationally defined, objective) law.
 
The middle ranges of the continuum are varying mixtures of freedom and dictatorship (or freedom and controls, as some say). The societies are also called mixed economies. “Moderates,” so called, fall within these ranges. They apparently like to distinguish themselves from the “extremists” on both ends of the continuum.

The freer countries of today’s world, including the United States, are mixed societies of freedom and dictatorship, the dictatorial control coming from the deep states’ and their governments’ overabundance of overly broad, vague laws and administrative rules (Applying Principles, pp. 81-83).

Putting the word “democratic” in front of socialism does not make it a kinder, gentler Garden of Eden in which the lion lies down beside the lamb, nor does it make socialism more peaceful than Marx’s violent revolution. It just means democrats want to use the vote and discussion to abolish private property and establish Lenin’s post office, in increments by gradually moving the mixed economy to total control. In recent times, note how less gradual and more quickly this move seems to be occurring.

The problem with democratic socialism, as F. A. Hayek (chap. 10) and George Reisman (part I) have pointed out, is that the democrats’ policies require coercion to enforce. And because the policies violate some citizens’ rights for the favor and privilege of others, sooner or later the citizens whose rights are being violated start thinking about rebelling. Eventually they disobey the dictatorial edicts. To maintain control, the “lions” in the government will gladly sacrifice the lambs to their favor and privilege.

The worst in moral character, as Hayek demonstrated, rise to the top of government leadership because democrats lose their nerve to enforce coercive policies. Reisman, putting it more bluntly, says that armed robbery and murder become necessary to overcome the citizens’ armed resistance to coercive policies. The worst who have risen to the top gladly comply with this requirement. (Motivation? Envy and hatred.)

This is the time when society becomes rather inelegant or unpretty, you know, as in one-party rule, political imprisonment and executions, expropriation of property, and censorship—and often is followed up with gulags and concentration camps.

Democracy (Applying Principles, pp. 101-05) means unlimited majority rule, which is a form of dictatorship. A modest search of the US’s founding fathers will reveal a frequent use of the word “tyranny” in conjunction with democracy. That’s why they called our new nation a constitutional republic, the constitutional part including a bill of rights that restrains the majority. “Democracy” and “free society” only go together if the words “classical liberal” are its modifiers, as in classically liberal democracy.

The significance of the vote in modern history, as identified by Ludwig von Mises (sec. 8, chap. 1), is its use in the transition of leadership, i.e., the vote in place of guns, which means the avoidance of civil war.

The progressives are socialists through and through, though divided into two eras of American history. The early progressives (Applying Principles, pp. 110-13), from 1880s to about 1930, were educated by German professors who were democratic socialists. Back in the US, the progressives’ goal was to replace classical liberalism with the so-called social variety (social liberalism, Applying Principles, pp. 36-39) by establishing an administrative state, i.e., a large bureaucracy of “experts” voting in new laws and establishing regulatory rules to tame the alleged “capitalist beast.” In other words, to establish a mixed economy that would move steadily toward socialism.

The modern version of progressivism, from 1930 to the present, was initially explicit communism or socialism, at least until the mid 1950s. It was Nikita Khruschev’s leaked secret speech about Stalin that caused the leftists to hide behind the banner of progressivism, often dressed up as democracy. (A “soviet is an elected governmental council in a Communist country.”)

Communism and fascism, the final terms to mention, are both forms of socialism, and both decidedly leftist. Marx, Engels, and Lenin all considered communism a synonym of socialism. Fascism (Mussolini’s term) and Nazism (Hitler’s version) were systems that inherited industrial economies with large private sectors. The essence of fascism, as identified by Mises, is a nominal—in name only—private ownership of the means of production, with severe or total control and regulation by the government. Mises’ essentialization (chap. 7) makes it clear that fascism, as “socialism of the German pattern,” belongs on the left in the left-right continuum. It is only the manner of control that differs.

This means today’s mixed economies that have private property and private ownership of the means of production and are controlled and regulated by the government are fascistic. This includes present-day United States. The amount and severity of control pushes the country closer and closer to a de facto socialism.

Other issues associated with fascism, such as racism, militarism, intimidation of voters, concentration camps, and declarations of emergency powers, are either nonessential to the meaning of fascism or are shared with socialism. Not all fascist countries were racist, for one thing, and Hitler learned his tactics from Lenin and Stalin.

Where does this put the United States today? No matter what you call it, we are headed toward a communist-fascist-leftist democratic-socialist-progressive totalitarianism.

Keep in mind, as David Horowitz says (quoted in his website’s masthead), “Inside every progressive is a totalitarian screaming to get out.”

And as Ludwig von Mises (p. 52) put it, “Every advocate of the welfare state and of planning is a potential dictator. What he plans is to deprive all other men of all their rights, and to establish his own and his friends’ unrestricted omnipotence.”


* The “right,” traditionally, has been said to be the home of fascistic, military dictatorships, and the notion can be traced to what is called right-Hegelianism and to the French Revolution. This designation is often meant to denigrate capitalism as fascistic and the accusation comes from the communist-socialist leftists.

From the Preface to Applying Principles

Applying Principles: Short Essays Based on the Philosophy of Ayn Rand, Economics of Ludwig von Mises, and Psychology of Edith Packer will be published October 1. It is my first ten years of blogging. The book may be preordered at Amazon and Barnes & Noble, with more information on its website books.jkirkpatrick.net. Here are edited selections from the preface.


Although I spent thirty-six years in college classrooms teaching undergraduate and graduate students business marketing, my bachelor’s degree was in philosophy. That subject influenced and underscored my entire career. As a result, I never let the day job of teaching students how to sell soap (as I would often describe my academic duties) become disconnected from its foundations in psychology, economics, or philosophy.

Indeed, I recognized early in graduate school that marketing, as well as the other business disciplines, are properly described as applied sciences that rest on those more fundamental fields. “Art” is sometimes used to describe applied science, but the usage is correct only if it is meant as a synonym. Often the word is meant to disparage applied fields because they are allegedly less precise or rigorous than “real” science, which means the physical or quantitative sciences. A student many years ago complimented me when she realized that advertising was as disciplined (her word) as finance, her major. There may not be universal equations in the applied human sciences, but the principles are universal in their appropriate context and the fields are “disciplined.”

Business as applied science is analogous to medicine and engineering. Medicine rests on biology for its more fundamental foundation and engineering on physics and chemistry. All fundamental and derivative special sciences, again in turn, rest on philosophy. All such fields are related and should be integrated, rather than isolated as they so often are in today’s academic world.

Thus, what I did when researching, writing, and teaching was to apply principles from the other, more fundamental fields, which explains my interest in epistemology and psychology, as well as the principles unique to marketing and advertising.

To illustrate further, the civil engineer whose goal is to build a bridge must know not just the fundamentals of physics and chemistry, but also the nature and composition of materials (used to build the bridge), and also the nature and behavior of rivers, which includes the history of the particular river over which the bridge will span and the nature and behavior of the river’s soil and water.

Applied science gathers all relevant concrete facts of the specific case it is working on, then uses, that is, applies, the universal concepts and principles of the fundamental sciences on which it rests, plus the narrower concepts and principles of its discipline.

Application is one of the two fundamental methods of cognition and is deductive. Generalization is the other and is inductive. We all use both every day in our lives. The two methods, as I say in my 2018 blog post, “are not the monopoly of scientists, philosophers, or academics in general.” Generalization gives us concepts and principles to guide our lives, while it also gives us theory and theoretical science. Application, which requires the previously acquired knowledge that generalization gives us, is what our medical doctors do, what Sherlock Holmes did, and what we do on a daily basis.

Application means we identify “a this as an instance of a that.” We present a cough and runny nose to our doctor and he or she quickly concludes, based on accumulated knowledge and patient history, that we have a cold. Similarly, Holmes saw that Watson was tanned and showed signs of having been wounded in a war; thus he concluded Watson recently came back from Afghanistan. And a child applies the previously learned concept of balance by shifting weight when learning to ride a bicycle. All three examples are processes of deduction, and illustrate how deduction is the predominant method of applied sciences, as well as everyday life.*

Deduction, therefore, is essentially what I have been doing when writing my blog posts. I am not in any intended way coming up with new concepts or principles, nor am I repeating the proofs of the great writers listed in my masthead, or others I may cite in a post as a reference. I take their ideas and apply them to specific issues.


The following essays are not journalistic as a newspaper column might be. I gave myself the assignment always to come up with something more fundamental than the news of the day, whether theoretical or historical, which last includes relevant citation of research.

The posts are organized into seven chapters, listed chronologically within chapter. Because of the way I write—“interdisciplinary” to use the academic jargon—one may quibble over some classifications. The chapters are “Capitalism and Politics,” “Academia,” “Education,” “Psychology,” “Epistemology,” “Youth Sports,” and “The Arts.”

I do have favorites. It was difficult to choose one per chapter, but here they are, in chapter order:

• “The Reductio of Bureaucracy: Totalitarian Dictatorship”

• “Because the Stakes Are So Small”

• “Go Fish!”

• “Look at Your Premises. Look. Look. Look!”

• “Why Don’t Facts Matter?”

• “Yes, There Is Crying in Softball”

• “Life in Three-Quarter Time”

My idea for publishing this collection comes from two books of columns: All It Takes Is Guts by economist Walter Williams and Double Standards by radio show host Larry Elder. I did not read these books from beginning to end. I skimmed the table of contents and read whatever caught my attention. Readers of this work might want to do the same.


* It is in this sense that history is also an applied science. We, as well as professional historians, look at past events, natural or human, and try to explain them, that is, identify their causes, by reference to our accumulated theoretical knowledge. Historians in the human sciences rely in particular on political philosophy, economics, and psychology. See Ludwig von Mises, Theory and History, amazon.com.
 

Capitalism: A Treatise on Economics, by George Reisman—A Review

According to Frances Grimble, professional book reviewer and editor at Lavolta Press, many reviewers are guilty of “not reading the book thoroughly—just skimming, or just reading the first chapter, or reading the press release and jacket copy, but none of the book.”

On at least one prominent occasion, and possibly two, that occurred with economist George Reisman’s magnum opus Capitalism: A Treatise on Economics.

I assure you I have read Professor Reisman’s book.

Below is a review I wrote that unfortunately never was published. I had almost forgotten about it. In December 1996, I began submitting a shorter version to several publications that should have published it—Wall Street Journal, Forbes, Investor’s Business Daily, NY Times, plus a few others—but they predictably rejected it. Since then, the review has been sitting idly on my Cal Poly website.

Here it is.


In a 1989 article in The National Interest, Francis Fukuyama declared that the worldwide collapse of socialism signified only one thing: “the unabashed victory of economic and political liberalism.” In a New Yorker article a year later, Robert Heilbroner (hardly a friend of capitalism) acknowledged that Austrian economist Ludwig von Mises “of course . . . was right”—when Mises in 1920 explained why socialism and communism must inevitably fail. Capitalism, it would seem, has won the historic economic and political battle of the twentieth century.

George Reisman, former student of Ludwig von Mises and currently economics professor at Pepperdine University in Los Angeles, has written a manifesto for the twenty-first century to insure that this victory over socialism is not transitory. Capitalism: A Treatise on Economics is an exhaustive defense of laissez-faire capitalism as prerequisite for continued progress of material civilization. Reisman’s arguments are persuasive.

By integrating forgotten but sound principles of such classical economists as Smith, Ricardo, Say, and James and John Stuart Mill with equally sound principles of such Austrian economists as Menger, Böhm-Bawerk, Wieser, and Mises, Reisman develops powerful and highly original theories of aggregate profit and interest, saving and capital accumulation, wages, and aggregate economic accounting. In the course of presenting these theories, he demonstrates the role of technological innovation in reducing prices and increasing the supply of capital goods. He demonstrates that the economic function of businessmen and capitalists is to raise the productivity of labor and thereby the standard of living of the average wage earner. By applying his developed theories in scholarly but compulsively readable detail, Reisman dismantles Marxism, Keynesianism, the “monopoly” and “oligopoly” doctrines, environmentalism, and all fundamental forms of socialism and interventionism. This book is at once an introductory, intermediate, and advanced text on economic theory, as well as a mine of information on current political and economic issues.

The work is divided into three major parts. Reisman begins Part One, “The Foundations of Economics,” by defining the field as the “production of wealth under a division of labor,” immediately disputing the “scarcity” definitions found in contemporary economics textbooks. He goes on to discuss the nature of wealth as “material goods made by man,” the connection of wealth to human reason, and the attacks on the accumulation of wealth by the environmental movement. The second and third parts of his book roughly correspond to “micro-” and “macroeconomics,” respectively, although he, along with all Austrian economists, disputes the legitimacy of such a division.

In Part Two, “The Division of Labor and Capitalism,” Reisman states and defends over the course of several chapters one of his fundamental propositions: that human life and well-being depend on the production of wealth, which in turn depends on the rising productivity of labor, which in turn depends on an expanding division of labor, which, finally, depends on the institutions of laissez-faire capitalism. Chapters 6–8 of Part Two incorporate a revised and expanded version of Reisman’s 1978 book The Government Against the Economy, which earned him an endorsement from Nobel laureate (and Austrian economist) F. A. Hayek.

The culminating chapter of this Part is Reisman’s thoroughgoing discussion of all forms of monopoly. He rejects the popular economic concept on which the American antitrust laws are based, namely that monopoly is a single seller in a given territory. He concludes that the only valid meaning of the term is government-granted privilege. In this chapter, he argues that the antitrust laws are in fact pro-monopoly and that the socialist state is the one giant monopoly critics have long charged capitalism of tending toward. He demonstrates how Böhm-Bawerk and Ricardo use cost of production as a determinant of prices, rather than as a support of Marxism; Reisman then uses the ideas of both economists to critique the marginal revenue doctrine of contemporary economics. Reisman concludes the chapter by demolishing the perennial bugbear of business theory: the doctrine of pure and perfect competition.

The final chapter of Part Two discusses the productive roles of such maligned business activities as moneymaking, stock and commodity speculation, so-called insider trading, retailing, wholesaling, and advertising. It concludes with a refutation of the Marxian exploitation theory by using classical economics, specifically by throwing out the primacy-of-wages doctrine and replacing it with the notion that the original and primary form of income is profits. In other words, what Robinson Crusoe earns on his desert island is all profit; when he hires Friday, Crusoe must then deduct Friday’s wages from his—Crusoe’s—profits. From this follows a radical reinterpretation of “labor’s right to the whole produce.”

In Part Three, “The Process of Economic Progress,” Reisman explains in considerable detail the mechanism by which a free economy advances or, if interfered with by the government, does not advance; his theme is that progress requires saving (investment), capital accumulation, and technological advancement.

He begins by defending both the quantity theory of money and Say’s Law, which he says should more properly be called James Mill’s Law. He argues that monetary demand is entirely a function of the quantity of money existing in the economic system, whereas real demand is determined by capital accumulation and increased production. Consistent with the Austrian business cycle theory, he points out how government manipulation of the money supply, among other government policies, causes inflation, recession, and mass unemployment; in the absence of such manipulations and especially with the adoption of a 100%-reserve gold standard, full employment and an economy free of volatile swings would be the norm.

Real wages, Reisman demonstrates, are increased by raising the productivity of labor, while the productivity of labor is increased by capital accumulation, and this last is caused by saving and technological progress. Any attempt to increase wages through inflation or minimum wage laws is doomed to failure because such policies only increase money wages, not the worker’s standard of living. Under capitalism real wages rise relative to and because of the declining prices that accompany capital accumulation; in this process money wages may actually fall. Technological progress is an important determinant of capital accumulation because it is necessary to offset diminishing returns. This discussion is part of many that aim to refute the claims of Keynesian macroeconomics.

One of the legacies of classical economics, which encouraged Marx to develop his exploitation theory, was the notion that capital accumulation and falling prices must inevitably lead to a falling rate of profit, eventually falling to zero. Reisman’s most original contribution to economics is his theory that net consumption plus net investment equals aggregate profit. The primary source of aggregate profit, states Reisman, is the personal consumption expenditures of the owners and creditors of businesses. This net consumption, which is the consumption expenditures of everyone in the economic system minus wages paid to workers, will always exist as long as the owners and creditors of businesses seek to spend money in personal, non-business ways. The rate of net consumption constitutes the real rate of profit.

Net investment, which is productive expenditures minus costs, does tend toward zero, because productive expenditures and costs in the long run and in the absence of an increasing money supply tend to equal one another. Where the money supply increases over time, however, and it would increase even in a precious metals economy, net investment tends to equal the rate at which the money supply increases; thus, the rate of net investment constitutes the nominal rate of profit. Through a series of nearly a dozen ingenious graphical figures, contrasting stationary and progressing economies, Reisman demonstrates this theory and its role in the accumulation of capital, as well as the effects of taxation, budget deficits, and other government hindrances on the process of progress.

Reisman also presents his own approach to national income accounting, arguing that gross national product (or gross domestic product) essentially measures the rate of increase in the money supply and considerably understates national income; he suggests and demonstrates gross national revenue as a better measure. In a chapter-length critique, Reisman concludes that Keynsianism is merely “a piece of flotsam and jetsam from the wreckage of critical thought that [has been] carried along by the tide of irrationalism and anticapitalism.” Finally, Reisman’s last chapter is a detailed, practical political and educational program of deregulatory and privatization steps by which to establish a laissez-faire society.

This book advances economic theory by several leagues and will not be surpassed for many decades; socialist sympathizers and interventionists of all types, if they are to maintain any scholarly or political respectability, must address Reisman’s arguments. Informed by the philosophy of Ayn Rand, as well as the economics of Ludwig von Mises, this book is not a conservative manifesto; rather, it is a liberal program in the spirit of the Enlightenment and, in many respects, in the spirit of nineteenth century progressive liberalism. It is a defense of secular, scientific, and technological values that emphasize reason and self-realization of the individual human mind as the essence of political freedom. When it comes to the alleged anarchic and feudal nature of capitalism, however, Reisman demonstrates that those epithets are in fact precise descriptions of socialism.

Indeed, the progressive or modern-day social liberals would do well to heed Reisman’s section on the “indivisibility of political and economic freedom.” They just might come to understand how his theory represents the true nature of liberalism, a market liberalism for the twenty-first century.


Postscript. See last month’s post on “Profits over People or Primacy of Profits?” which includes a brief outline of Professor Reisman’s theory of profit. A more detailed, though still brief, summary of his “Net Consumption, Net Investment Theory of Aggregate Profit” can be read in my 2004 article published in the American Journal of Economics and Sociology.