Tag: theory

How to Play Basketball Well

The same way you do everything else well.  Practice, then reflect, then practice some more.

The common, conveyor-belt education system has a pretty bizarre approach to learning.  It doesn’t mirror any learning pattern that high performers in any field use.  It looks something like this:

Theory–>Theory–>Theory–>Theory–>Theory–>Practice (end)

In other words, you sit in classrooms studying things and memorizing knowledge from “experts” for nearly two decades.  Then you’re supposed to take all that theory and successfully practice it in the real world and live happily ever after.  Education is done, now you just go live well.  You’re supposed to succeed in the marketplace and life after only ever thinking about it.  Unless the theory is the practice – unless you’re learning to be an academic – this is a very bad way to learn.

I’ve written before about how absurd it would be if we taught bike riding the way we teach careers.  But I’ve been thinking a lot lately about an even better comparison, and one I know more about than biking.  Basketball.

How do you learn to play basketball?

First, you practice.  Maybe on a mini hoop, maybe on a full-sized hoop.  But you just start shooting and dribbling.  After you have the basic motions and movements and muscle memory down, you start playing with other people in actual games.  You play a lot of pick-up basketball.  Maybe you play in an organized team setting.  The coach might have you focus on specific aspects of the game or skills as you drill and condition.  You’ll scrimmage, run plays, and plot your approach to offense and defense.  You play, then a new concept is introduced, and you immediately play some more and try it out.  Then you stop to reflect and get feedback, tweak your approach, and play again.

At the highest level, this pattern is even more pronounced.  Good players practice a lot.  There is no world in which merely theorizing about basketball teaches you to succeed on the court.  Practice is always the first step and vastly more important if you have to choose one.  But when you go from good to great players, something else happens.  Theory comes into play.  The learning pattern for playing most successfully looks something like this:

Practice–>Practice–>Theory–>Practice–>Practice–>Theory…(ad infinitum)

Great players spend more hours in the gym than anyone.  But after they play they also reflect on their performance.  They review film from previous games.  They study what the offense did.  They observe what happened and theorize about why they were stopped in the paint by this or that defense.  They plan for the next game.  They review film of the next opponent and plot an approach to match.  They constantly reflect on the feedback they get from the real world of practice and play.  They seek out other achievers who have struggled with mental toughness, or strength building, or recovery from injury.  They employ motivational tactics and specialized training.

Notice the pattern because it’s very important.  Hours of film study and offensive scheming are of no value to the novice.  If you’ve never hoisted a ball in the air, learning the perfect placement of your index finger or the optimal use of trash-talk to gain a mental edge isn’t going to help you.  Theory is hugely important.  But it becomes important only when it has past practice upon which to reflect and future practice for which to prepare.

Notice also that, unlike the conveyor-belt education system, the basketball model is never done.  There is no end point.  It’s an ongoing process.  There is no graduation.  Michael Jordan, at the peak of his game and dominating the greatest ballers on the planet, famously came back from every offseason with something new.  He practiced.  He reflected and theorized.  He tested it with more practice.

In this model the role of teacher fades almost entirely.  Specialists with knowledge of the history of the game or the mechanics of the human elbow can be employed in specific situations when needed, but they are in no way the key ingredient to learning the game nor are they valuably employed until a whole lot of playing has occurred.  Instead, coaches and trainers emerge.  People who don’t tell you which facts about basketball are correct and must be memorized, but people who challenge you to get off your butt when you don’t feel like practicing.  People who help you in the process of reflecting on your unique game and keep you accountable to your unique practice process.  They are observers who watch you in the actual act of playing the game and provide real-time feedback from their vantage point.  They aren’t your authority – you can find a new coach anytime – but there for motivation and insight.  Some of the greatest players are famous for ignoring their coaches as often as listening to them even though they deeply respect them, which strikes me as a pretty normal and healthy way to see the relationship.

Another important thing about learning basketball is the value of mimicry.  How did the hook shot join the common arsenal of post players?  Because someone did it well and everyone who played against them realized how effective it could be and began to copy it.  How do you learn to crossover or headfake?  By being crossedover or headfaked at the playground and determining to do the same.

Learning happens more from being around people and environments than it does from consciously thinking about them.  You have to be immersed in the actual play of the game.

My friend and colleague at Praxis – TK Coleman, our Education Director – loves the game of basketball probably even more than I do.  We don’t view this analogy as just a cute comparison.  I think success in any career is far more like success in basketball than it is like success in a classroom.  The principles of learning the game are the principles of learning to perform in just about every other arena.  This is why we are so focused on apprenticing at startups and small businesses – practice – and reflecting on the experience and how new skills and mindsets can make it better – theory – and trying them out – practice – and discussing…etc.  This is why our advisers have coaching sessions with participants, rather than giving them lectures.  Philosophy is hugely important to success in any field.  But only if you’re already in the field trying things out.

Kids aren’t practicing for life or career by sitting in the classroom taking tests.  They’re theorizing about it.  They’re not observing those who are successful (except, best case, at teaching) and mimicking them.  They’re reading what other people said about the successful.  They’re being introduced to a few fragments of the history of the game or uniform design or what one conditioning coach thinks about one approach to calf muscles.  They’re not being transformed into great players, they’re simply checking the memorization of lifeless, contextless knowledge off a list of assignments.

You can’t expect to win by studying.  You’ve got to play the game.

School is a 16-Year Internship for Professors

Want to learn something?  Be around it.

The habits, ideas, processes, and perhaps most importantly, incentives of the environment you want to be a part of will teach you vastly more than consciously studied facts.

Julian Jaynes, in his seminal book on consciousness, cites a study where students were told to compliment any girl wearing read.  Within a week, red outfits were everywhere in the school.  The girls weren’t consciously responding to factual knowledge but internalizing the compliments and altering their behavior subconsciously.  Jaynes argues that learning signals, skills, and even reasoning are not, in fact, conscious processes.  In fact, after taking in the basic structure, being conscious of learning gets in the way and slows the process.

This means the subconscious queues and incentives of the environment are a more powerful force in determing what you learn than whatever conscious topic is presented.  What you pickup on and get rewarded for and see others doing to succeed or fail shapes how your brain transforms and adapts to succeed.

This has some pretty interesting implications for schooling, from kindergarten through college.

The school setting, whatever subject is being taught consciously, is a single-file line-standing, speak-when-given-permission, the “expert” knows all right answers, zero-sum, obedience training program.  The clear “winners” in the school setting are the authority figures and those who best please them.  The academics and kids who do things that academics like.

In other words, school is a 16-year internship for being a professor.

You’re immersed in the daily habits, worldviews, problems solving methods, attitudes, and incentives of professors.  What you learn from shadowing academics isn’t whatever topic they might be teaching as much as how to be like them.

This is, of course, the ideal program if you want to be an academic.  I have many wonderful professor friends and I’ve met some young people who want to be professors.  The system was built for them, and it’s a good fit.  They should stick with it happily.

The problem is that most people have no idea that they are in an extended academic internship.  Most don’t want to be professors or they simply have no idea whether they do or not because they’ve never been around anything else.

You can’t discover what you might enjoy or be good at from academic books and practictioners telling you about it.  You need to experiment and experience it.  You need to be around people doing those things.  You need to apprentice with people other than just academics to learn what people other than academics do and how to succeed in that world.

Get out of the classroom and try real world stuff to find what you enjoy and are good at and immerse yourself in the subconscious learning of how to succeed in whatever environments you explore.  A few courses or books or a major can’t give you that knowledge while your subconscious is fully occupied with learning how to be a professor.

You might not be learning much from the conscious process of schooling (hence forgetting everything after the test), but you’re definitely learning something in school.  The question is, do you want to learn that something?  Will it help you, or set you back in a dynamic marketplace that cares only for value creation, not academic process?

Yes, this realization is precisely why Praxis was created – to give you a real-world apprenticeship with top entrepreneurs in a variety of industries and dynamic businesses.  Check it out.

Problems with the Ideas/Action Dichotomy

It is possible to have ideas without action.  It is not possible to have action without ideas.

In my personal habits I am a very action biased person to the point of impatience and occasional recklessness.  Yet in the bigger scheme I place far more importance on the role of ideas over action, theory over practice.  Not because I think theory without practice is good, but because I know action without ideas is impossible.  Thinkers can not act.  That’s a tragedy.  But actors can never not think.  If they believe they are just acting and not philosophizing they’re simply doing bad philosophy.

All action is based on theory.  My friend Steve Patterson summed this up nicely:

“Human action is an expression of philosophy. Every decision we make is inescapably framed and guided by our ideas about the world. Sometimes these ideas are clearly communicated by our actions; we write a book or create meaningful art. Other times, our ideas are so silent we aren’t even aware of them; they become a kind of subconscious framework for our actions.”

When you act you do so because you have ideas about your present condition, beliefs about a preferable future state, and beliefs about how the action will bring it about.  Those who brag about acting over thinking are admitting to taking actions based on unexamined ideas.

There are two main ideas underlying all action, and both need to be examined.  The first is an idea about an end state one wants to reach.  The second is a theory of causality about what will bring that end state.  An end state that is actually bad, or that the actor wouldn’t actually enjoy if they reached is is troubling.  It’s the dog that catches the car.  Many activists or “doers” imagine they want what they are chasing but they have not put any difficult, disciplined philosophical work in to examine their desired end, and to get to know themselves and see if it’s truly a desirable state.

Theories of causality are even less examined.  So many well-intentioned people imagine a better world.  Even if they’re sure they’d want to get there, many lose patience with theorizing and want to just do something.  Doing something can be an integral and valuable part of forming a theory of how to get there the way experiments help shed light on physical phenomena.  But if the actor doesn’t regularly stop to theorize, incorporate experience as feedback, adjust causal assumptions, and repeat, the action is useless or worse.

In our society you get points for doing something.  If what you want is noble and you’re doing something, you’re applauded.  Never-mind that you may lack any understanding of physical, economic, or social realities that can cause your action to result in nothing or even the opposite of your goal.

It is for this reason that I cringe when I hear people praise either ideas or action at the expense of the other.  In fact, I think the only camp that really does this are the activists.  The thinkers talk about the importance of ideas, and many may be too fearful or lazy to do any real-world testing, but they don’t typically claim that action is worthless.  The self-proclaimed doers often vociferously vilify philosophizing  as a waste.  They do not realize that their denunciation is simultaneously an announcement that they are acting on unexamined and often bad ideas.  By decrying philosophers they don’t separate themselves from philosophy, they just become bad philosophers.

Practice without theory is not an option.  For this reason it is incumbent on all action-biased people to engage ideas with ferocious seriousness.  Ideas not acted upon may be sad, but action not contemplated can be utterly disastrous.

Think clearly; think boldly; think big and you can achieve big results.

Agere sequitur credere.

Don’t Go to College

Good friend and collaborator T.K. Coleman invited me on his show, “Conversations with FiFi & T.K.” to talk about Praxis and why traditional education doesn’t cut it any more.  We had a great conversation and I got to field some good questions about the Praxis idea.  Made me all the more excited for the start of our first class in February!  Hope you enjoy the interview.

The Timeless Way of Being

I am currently reading Christopher Alexander’s The Timeless Way of Building on the recommendation of a friend.  It is one of those books that is so full of insight that it cannot be absorbed all at once, especially with the analytical part of the brain.  It is as intuitive as it is logical.  It’s the kind of thing that forces you to think outside of your paradigms, but in a way that is oddly comfortable.

Yesterday a section of the book stood out to me in particular.  It was about the patterns in building that are good at resolving conflicting forces, and those that are not.  Alexander maintains that there is near universal agreement on what patterns of, say, a window or a garden resolve conflicting forces.  He asks people how they feel in a certain window area vs. another, and 95% or more feel good in the same one.  It may seem outlandish to claim that there is so little disagreement about what makes for a good pattern in building, but the key for Alexander is the word feeling.

He does not ask what they think of flat windows vs. Bay windows.  He does not ask their opinion on window material or position.  He does not ask what a builder should do.  He does not ask anything that evokes a belief or idea or a connection to some overarching plan or policy.  These ought expressions get in the way of the is  of the forces at work within us.  It turns out it is incredibly hard to be honest with ourselves about what feels good.  It takes a lot of discovery, and shedding all the baggage and ideology we carry around.

It someone asked me what I thought of using locally grown ingredients in food, my mind would immediately leap to the idiotic and regressive political movements that seek to force economies into localism, drive up prices, drive down quality, get everyone too involved in everyone else’s business while self-righteously proclaiming the superiority of an absurd proximity bias.  In other words, my thoughts on the matter would probably be negative.

Because of this, it is possible that I would overlook an opportunity to bite into a delicious and juicy local fruit at a farmers market, for fear of giving credence to the food busybodies.  These thoughts – my view that no one ought to get preachy about local ingredients – might prohibit me from finding alignment with the genuine feelings within me.  It’s harder than it first seems to constantly stay in touch with what feels right – with who we actually are – in the face of all the things we think we should be and believe.

This is one of the reasons democracy is such a poor way of resolving collective action problems.  It not only seeks and allows our mere opinions, it rewards our proclamations of what we wish we thought, or what we pretend to want, instead of what actually make us fuller, happier people.  It rewards and glorifies the boring lies and spin we weave into our narratives, and vilifies our honesty about what really harmonizes with us.

It’s much more fruitful to dig down to the bottom and discover what you really do feel, and work with those forces rather than pretending they don’t exist.  This is why capitalism is such a powerful and beautiful system of social coordination; because it takes humans as they are, imperfect knowledge and motives and abilities, and the scarcity and difficulty the natural world presents, works with it, and channels it all in a harmonious and life-giving way.  Capitalism is honest.

This is why the economic way of thinking – the rational choice model – is so enlightening and useful in explaining human behavior and institutions.  It does not condone or condemn, it just accepts ends as a given and seeks to understand what means will and will not achieve them.

Certainly some goals or desires or feelings are better than others.  Certainly some are worth trying to change.  But playing pretend and building patterns around forces we wish existed in us and in others, instead of what’s actually there, doesn’t help.  There is no better way to express this insight than to quote The Timeless Way at length:

“But a pattern which is real makes no judgments about the legitimacy of the forces in the situation.

By seeming to be unethical, by making no judgments about individual opinions, or goals, pr values, the pattern rises to another level of morality.

The result is to allow things to be alive – and this is a higher good than the victory of any one artificial system of values.  The attempt to have a victory for a one-sided view of the world cannot work anyway, even for the people who seem to win their point of view.  The forces which are ignored do not go away just because they are ignored.  They lurk, frustrated, underground.  Sooner or later they erupt in violence: and the system which seems to win is then exposed to far more catastrophic dangers.

The only way a pattern can actually help to make a situation genuinely more alive is by recognizing all the forces which actually exist, and then finding a world in which these forces can slide past each other.

Then it becomes a piece of nature.”

Mr. Alexander is an architect and is here talking about patterns in rooms, gardens, buildings and towns.  He refers to things like the human desire to go towards the light in the room, and the desire for comfortable seating.  The patterns he seeks are those that bring into harmony such forces.  But read the above again, slowly, and consider how much broader this insight might apply; to institutions, to social coordination problems, and to our own lives.

Bitcoin – Because Everyone Has to Say Something

Whatever it is, whatever it will become, Bitcoin is pretty cool.

I’ve enjoyed watching it get a lot of attention, and draw attention to big ideas and questions like the role of money, decentralized orders, radical choice, polycentrism and the digital future.  It’s also a little depressing to read the flow of articles on Bitcoin coming from most journalistic outlets.  Not because they like or dislike Bitcoin, or because they describe it correctly or incorrectly, but because their grasp on the economics of money, from its origin to its uses and history, is shaky at best.

No one need be an expert on economics – especially the conceptually difficult arena of monetary economics – to write for a newspaper.  But when you are writing about money, and confidently, it behooves you to dig in and discover what this money is all about.  Rothbard’s famous quote applies here,

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Thankfully, none of this economic ignorance matters as it regards Bitcoin itself.  Bitcoin doesn’t care what journalists think.  The always quotable and insightful Jeff Tucker summed up why very nicely in a recent Facebook post,

“It’s so strange how this how thing is becoming some kind of fight between pro- or anti-BTC, as if this were some policy thing. It’s not. This is a market technology. It either works or it doesn’t. It’s like being for or against email, for or against online media, for or against Skype. I mean, if you don’t like it, don’t use it. Whether it succeeds or not is up to any intellectual; it’s up to the market.”

The downside of journalistic economic ignorance is that it may result in confused ideas among the public, and therefore create incentives for confused policy from lawmakers.  I’ve heard journalists claim that government guarantees are the best and only sign of a sound money, (because, you know, hyperinflation never happens) and that the core purpose of a currency is price stability (because, of course, markets have been traumatized when trying to adjust to the rapidly falling prices in, say, the tech industry).  It’s sad to see such silliness, but it’s also great to see discussion everywhere about what makes a currency.

It can be helpful to compare money to language.  Both are spontaneous orders.  Both are tools that facilitate exchanges between people.  Both are wholly dependent on the individuals involved for their value and evolution; yet neither can be controlled by any one person.  Try introducing a new language, or even a single new word to an existing language.  Not easy.  Yet anyone is free to try, and new words emerge constantly.  They stick around only so long as they are perceived as valuable ways to facilitate an exchange of ideas.  It doesn’t really matter what experts think makes for a good word or language.  It matters what actually takes root in the world – a world where people face trade-offs and try to get the most value for the least effort.

Bitcoin kind of reminds me (as an admitted computer ignoramus) of programming languages.  Computer programmers have developed and become conversant in all kinds of languages that mean almost nothing to me.  These emerged out of nowhere in a relatively short period of time.  Some lived, some died.  Today, they provide an incredibly valuable function that serves not just programmers, but all of us, even though almost none of us speak the language.  Perhaps Bitcoin could evolve similarly.

Even if never the dominant currency “above the table” so to speak, it may find a powerful place in behind the scenes markets among niche experts, just as programming languages do all around us.  Maybe you or your friend or your uncle will never own Bitcoins – none of you probably write computer code either – but perhaps the crypto currency will be busy at work facilitating exchanges among many market participants you interact with.

I don’t really know, and I’d rather spectate than speculate.  It’s pretty fun to watch, and it’s even better to hear the chatter about a lot of topics I never expected to see in the public conversation.  Money is a mysterious and complex thing.  It’s prudent in such matters to refrain from confident proclamations.  I’m as likely to buy-in to someone’s prediction of Bitcoin as I am their prediction of which words will fall in and out of use in the next ten years.

Everything as a Joke

Sometimes things get too serious.  Subtle stresses build up, multiple to-do lists compound in the back of the mind, over-analysis creeps in, and the smallest misunderstandings or miscommunications cause deep consternation.

Most of us aren’t working our fingers to the bone in the field anymore. Most of us have thinking jobs.  Sounds easy.  In many ways it is; I wouldn’t trade it for a life of hard labor.  But it is taxing to think through every idea you encounter in a day, decide what’s worth while and what needs to be discarded or altered, reformat it, repackage it, and transmit it to the appropriate party in the right tone.

If you work in a field all day, you know that you need to give your body sufficient rest between shifts.  You also need to give your body other forms of activity like sports or recreations.  It’s not so different when your work is mental.  Your mind needs rest.  Your mind also needs other forms of recreation.  It needs to be engaged with the world in a way that is entirely different than what your daily work demands.

Humor is the best medicine for a worn-down mind that needs more than rest.  It allows you to fully engage your mind, but from a completely different angle.  It’s like changing the view, or putting on a new pair of lenses that reveal an entirely different world in front of you.  It’s a shock of fresh, cool water for a dehydrated brain.

Take a chunk of time to deliberately see everything as a joke.  Go scan your Facebook feed, the headlines, your RSS reader, your inbox, or your neighborhood.  Think of it all as hilarious.  You’ll be surprised how often it actually is hilarious, but you failed to notice in serious mode.  Make fun of everything, laugh at everything, take nothing seriously.  It’s a very powerful catharsis, and you might make some healthy discoveries in the process.

Institutions Can Improve Even If People Don’t

Originally posted here.

Airlines are loaded with passengers who surf the Internet while soaring through the air, chatting in real-time to anyone else on the globe, posting in social media, shopping, and downloading and reading books on a wide variety of readers. Such a scene would have astonished a person living 50 years ago, to say nothing of a person living 500 years ago.

How do we account for this? A person born five centuries ago is probably just as smart as someone born today. The raw material of the human brain has not changed much during this span of time. Yet people are today infinitely more capable of accomplishing almost any task imaginable than people in 1512.

The greatest navigator of centuries past would have found it a monumental task to leave from one destination and arrive at a precise latitude and longitude halfway across the globe, and it would have taken months. Today, a half-witted teenager can use Google Maps and modern transportation to accomplish the same feat in a single day.

The greatest communicators in the past were unlikely to reach 1 million people with their ideas in a lifetime. Today, the most-incoherent celebrities can reach millions in minutes on Twitter. Conversely, if the greatest scientists today were sent back in time, they would be able to achieve almost nothing absent computers and modern lab equipment.

A weak and feeble worker today can move more tons of earth than the strongest shovel-wielding excavator of the past. Given the inherited technological progress of humanity, even an average Joe can do amazing things with ease. It does not take a superior human to achieve superior results.

Economically speaking, the marginal productivity of workers increases with the capital and technology available to them.

But let’s broaden the point to issues of morality. How can we become better people — more peaceful, cooperative, and creative — in the same spirit in which we have become more effective and productive with better technology? We need better moral “capital” and moral “technology” that enables morally superior outcomes even without morally superior people.

The moral technology I am speaking of is social and political institutions. A person born today is no more or less likely to be moral than a person born 500 years ago, but they can be more or less likely to act morally based on the institutions around them.

Moral institutions change and evolve just like technology. They can reduce or expand not only the morality of individuals on the inside, but the harm or good caused by their actions on the outside. The most saintly person born into a world where slavery was the norm would have very limited ability to stop the practice, though she could abstain from participating in it at great personal cost.

A horrendously evil person born into a world where slavery is considered abhorrent would be unable to lord over slaves, without tremendous personal cost. It is entirely possible that many people living today have it in them to be on par with the worst slave masters in history — only the opportunity for their evil does not present itself, given the progress in this area of our social and political institutions.

This does not mean that individual choices are meaningless. Far from it. A moral person can always do good within their institutional framework, and a good framework can exponentially enhance the good one can do. Individual choices are vastly important.

But in order for the world to be free of oppression by states, for example, it does not require that every individual be an angel or that the average morality of the population be better than it currently is.

How can institutions improve if morality does not? Institutions are ultimately the result of our beliefs. Better beliefs will result in better institutions, but better beliefs do not require morally superior people any more than beliefs in a heliocentric solar system require more-intelligent people.

Many people believe the Earth revolves around the sun not because they are smarter than ancient peoples, but because they grew up in a world where that was accepted. Many people believe slavery is wrong not because they are morally superior to all people from ages past, but because they grew up in a world where slavery was condemned.

The broader social narrative creates the institution. But where does this narrative come from? Here’s where individuals come in again.

Progress typically begins with iconoclasts and radicals espousing and experimenting with ideas that challenge the status quo. This is true of technological, intellectual and moral progress. The few who advance these radical ideas attract small, but influential followers, and some minds are changed by argument alone. But the real change comes when discussion turns into demonstration.

When the Wright brothers got off the ground, when slavery ended in some countries and the economy did not collapse — these occasions did more to change the prevailing beliefs about manned flight and slavery than did the necessary intellectual work that preceded them.

People do not have to possess superpowers to learn and adapt. All humans do it. Learning even to reject foundational and dearly held beliefs is possible and frequent in history, especially because the change typically takes place over several generations, so that each generation has to learn to give up only a part of the cherished belief. When it is understood that a new belief will result in better outcomes, it can be adopted with relative speed and ease, sometimes without any conscious “a ha!” moment at all.

Neither technological nor institutional progress is inevitable. History is replete with times of retrogression and collapse. When there are no radicals challenging the status quo, innovating and demonstrating new and better beliefs, it is not long before the prevailing institutions stagnate or advocates of a romanticized past win the day and drag humanity backward.

Progress is not inevitable, but progress is entirely possible even with flawed humans like us. Our beliefs can change as we learn better ways of doing things, and with our beliefs will change our institutions. Better institutions — free institutions, rather than coercive ones — will result in a better world.

We ought to continue to discuss and demonstrate the fact that states — their oppressions, confiscations, impositions, kidnapping, counterfeiting, and war — are not necessary or beneficial. Better morality is always better, but if we change the prevailing narrative about states, we can live in a stateless world even without a saintly populace.

It is a false and arrogant belief that only angelic geniuses are capable of believing that statelessness is possible and desirable. If a bunch of idiots can live in a world of technological wonder, so too can a bunch of jerks live in a world of freedom.

Review: Madmen, Intellectuals, and Academic Scribblers

Any book that uses an Oxford comma in the title is immediately in my good graces. Add the nicely designed cover, the slim size, and the intriguing topic, and Edward Lopez and Wayne Leighton would have had to commit heinous rhetorical or logical crimes to turn me off of their new book, Madmen, Intellectuals, and Academic Scribblers. Fortunately, they commit no such crimes but present a sweeping and readable examination of the forces that generate social change.

I have long been obsessed with the question of how to change the world. In my personal life, this question took me from humanitarian mission trips, to politics, to policy advocacy, to education, to developing educators, to raising support to develop educators. To borrow the old adage, I found I could do more in teaching a man to fish than giving a man a fish…then I took it further: Now I raise the capital to build the factories to make the rope to produce the nets to give the teachers to teach people to catch millions of fish.

This doesn’t mean I’ve discovered once for all the secret of changing the world; far from it. Every day my approach changes as I gain experience and learn new ideas. Madmen is, in many ways, a clear articulation of many of the ideas I’ve come to hold about social change. It details how Public Choice Theory reveals that governments have all the wrong incentives for positive change. It discusses the role of ideas, and how they are able to overcome the vested interests that Public Choice makes seem so insurmountable. It lays out Hayek’s description of social change coming from intellectuals, and spreading through the general public. But Madmen adds a new dimension, one I have not been able to integrate into my worldview until recently: the bottom-up role of culture, and the circumstance of time and place.

It is not only coherent, conscious ideology that determines what institutions will be tolerated, and therefore what incentives exist and what outcomes result. The conscious beliefs of individuals in society do play a major role, and are something we focus on perhaps because we feel capable of altering them through education and persuasion. But there is also a role for bottom-up, experiential, subconscious or tacit knowledge. The kind of knowledge that culture carries from generation to generation, passing on when it produces better outcomes.

Often no one is aware the valuable function of such cultural trends or norms. Economist Peter Leeson has done research on a variety of bizarre superstitions and practices embedded in various cultures; memes that seem to have no value. If you asked the members of that culture what the purpose was, they would likely provide an answer steeped in their religion or mythology. Yet time and again, the practices have proven efficient means of achieving desirable ends, at least compared with the known alternatives. Such cultural norms needn’t be recognized for what they are even by the people that benefit from them in order to have influence over institutions, incentives, and outcomes – good or bad.

I’ve come to believe that, when it comes to bringing about a better world, valuing freedom because we’ve experienced it and consider it normal is just as important as valuing freedom because it makes sense in the moral or utilitarian abstract. A generation that believes in the power of voluntary cooperation because they take part in it every day is no less valuable than one that reads libertarian theory.

Madmen integrates the top-down flow of ideas from intellectuals to the general public with the bottom up influence of learned cultural memes, and uses the combined forces to explain where the ideas come from that shape the institutions in which (as Public Choice reveals) incentives will lead to predictable outcomes. To create this integrated view of social change, Leighton and Lopez ask and answer three questions:

1. Why do democracies generate policies that are wasteful and unjust?

2. Why do failed policies persist over long periods, even when they are known to be socially wasteful and even when better alternatives exist?

3. Why do some wasteful policies get repealed (airline and telephone regulations) while others endure (sugar subsidies, tariffs)?

They offer answers in less than 200 pages, yet somehow manage to work in an expansive history of economic and political thought, beginning with the earliest philosophers and ending with the most current economists. This is an excellent tour of political economy as a discipline: what questions it asks, what personalities populate the field, and what competing and complimentary theories they present. There is enough detail to satisfy the wannabe economist in me, and enough colorful storytelling to sate my inner layman.

The book opens with a story of the shot-clock that saved basketball, and closes with a story of hybrid wheat that saved millions of lives. It is full of examples of social change, both good and bad, and the authors’ thoughts on why it happened when and how it did. If you are interested in how the world works from a ten thousand foot vantage point, I cannot recommend Madmen, Intellectuals, and Academic Scribblers enough.

How the World Will Change

(Originally posted here.)

When the world becomes free it will not be by the creation of new laws, or the removal of old, or new political leaders or any election result. It will not be because of a change in government, but because of a change in attitude toward government. It will not be because of legislation, but because of disregard for legislation.

Genuine change will come when the state is ignored, not reformed. It will come not when politicians are better, but when they are irrelevant.

When state-made law is no longer deemed necessary or important it will not be respected. When it is not respected it will not be enforced because it will not be enforceable.

This is how the world will change.

Evidence in the Face of Disbelief

The world can become free of the barbarous relic called the state. The state is a dangerous fiction whose power rests entirely on people’s belief in its necessity, or inevitability. Belief in the state is not insurmountable. It is not hard-wired into the human mind. It is not a given that a state must or will always exist. The state, like so many other superstitions now thought to be outrageous, inhumane and inefficient, can be left in the ash heap of history.

Many once laughed at the notion that an institution as old as humanity itself, the institution of slavery, would or could ever be removed. The prevailing wisdom for centuries, even among those who had discovered the moral repugnance of slavery, was that it was just a part of human nature. Reformers argued the best thing was to work for a more humane version of slavery.

Slavery was an institution that, however evil it may sometimes be and however utopians might imagine a more perfect world without it, was here to stay. Some embarked on efforts to improve the institution, to teach masters to be “good” to their slaves. Some setup rules and mores designed to limit the nastiest outcomes of the institution. But the institution itself was as unavoidable as scarcity and death.

The fatal flaw in this thinking is that slavery and government, unlike scarcity and death, are human institutions. They are, above all, mental constructs. Their physical manifestations are not physical realities humans simply encounter in nature, but realities we create, and humans only create by first imagining. An idea does not become an action unless the individual actor believes that the idea is worth acting on. To subjugate another human being, or to condone or allow the subjugation of one by another, one must first have the idea of subjugation and must believe that acting on it is preferable to ignoring or condemning it. Scarcity and natural death need no such human consent. The old saying about death and taxes turns out to be only half true.

If the state, like slavery, is the result of the ideas held by people it is not inevitable. Some day humanity could look back on the institution called the state with the same sense of shame and wonder that we now have about slavery. How could so many people – many of them good people – live their lives day in and day out surrounded by an institution so inhumane, so nakedly violent and demeaning? Did they really think it was necessary? Did they not understand how degrading it was? It will be hard to understand how so many humans thought the state was inevitable, tolerable and even good. As sure as slavery became a hated relic, so can the state.

How It Happens

When slavery ended it was not by changes in rules or laws or political leaders. Such changes often quickly follow changes in belief and mistakenly receive the credit, but they are never the cause. Slavery ended as people’s ideas about it changed. People began to believe it was not only an evil, but an unnecessary one. People began to believe it so evil that they were willing to tolerate the short-term sacrifices of ending it in order to reap the long-term improvement in the human condition.

The calculation of cost and benefit changed as people’s sense of morality trumped their sense of conservative institutional stability. The unknown outcome of ending slavery became an acceptable risk when considered against the known evil of the institution, which became an unacceptable reality.

Political Reform

Political reform can never bring about liberty. It can on rare occasion expand a bit of liberty for a few, but as long as that expansion occurs via political methods, it means bargaining that often takes away freedom in some other arena, or the long-term furtherance of trust in the state. The political game is about reshuffling and re-enforcing the necessity of the state.

The political game attracts great attention, and as such many suggest using it as a means of educating people about the power of liberty. Politics as education is only valuable in the long term to the extent that it educates people that politics is at bottom bad and government cannot ever be good. If it merely inspires people to advocate that the state do to things better, it is not, in the end, going to make society more free. It is disbelief in politics and in the state that leads to freedom.

The Chinese army fired on their fellow citizens in Tiananmen Square. This massacre was not caused by political leaders and generals saying, “Shoot”; but by men in the Chinese army deciding to shoot. It was not caused ultimately by bad leadership, but by a belief in the necessity of obeying orders. There will always be people with a will to power; a desire to control. Only when the rest don’t believe that power to be necessary and therefore do not obey does freedom reign.

Shift Focus

Humans want to solve problems in the most immediate and direct way possible. We want to know where the problem of restricted liberty begins. We discover the source in a gradual progression. First the focus is on people – the wrong political leaders. This quickly generalizes to political parties or groups, then to policies or laws, then to agencies and institutions, and finally to the state itself.

Here it seems we’re at the core of the problem: the state itself. Not any of the personalities or parties or bureaus or laws under its aegis. But a further shift in focus is required. The state is not the root of the problem. The real problem is not an institution, but an idea. It is the idea that government is necessary. That’s the culprit and final basis for every bad thing the state has ever done.

To a small degree, a shift in focus is happening now. A great many people don’t believe that a particular politician will solve the problems created by the state. An increasing number don’t believe one party is more likely than another to do so. It is more common to hear institutions or the incentives built into the system of government blamed. This is progress. It is, however, still rare to hear the existence of the state itself blamed, and rarer still to hear blame placed on the idea that a state is necessary.

The belief in its necessity gives rise to the state, which by definition is full of bad incentives that attract and nurture bad people in bad parties. To say the people, parties, or policies are the problem would be like blaming the sidewalk for breaking your leg after you walked off a tall building because you were ignorant of the staircase and elevator. Frustration with the sidewalk is useless and ignorant. The proper response would be to question the necessity of walking off the building; perhaps in so doing you would discover other less painful methods of achieving your goal and reaching the ground floor.

There is no form or arrangement of a state that can guarantee liberty. The answer is always peace, markets, and voluntarism. The ring of power cannot be wielded for good, but must be thrown into the fire before it uses good for evil.

Changing Lives and Changing Life

I do not wish to downplay the possible outcomes of attempts to reform the state. By such efforts lives can be changed. A court decision can save an individual or a whole neighborhood from being bulldozed by the state. The removal of a regulation can change the life of an entrepreneur and allow her to pursue her dream. These activities are analogous to disaster relief or soup kitchens; they can genuinely change lives and offer welcome relief. They can change lives, but they cannot change life.

Disasters will still come and go. The conditions that brought about hunger are not ameliorated with the appetite of the person receiving soup. The liberty-crushing actions of the state do not cease when it ceases to crush one neighborhood or regulate one industry for some period of time. The state will – must – continue to seek its own expansion, and it will push at every weak point it finds to do so, ensuring that an endless stream of lives will remain to be helped, but that the conditions of life itself will not be fundamentally altered. Treating disease is noble, but it is different than eradicating disease.

Changing lives is good and fulfilling work. But for those courageous enough to dream, changing life itself is bliss, and can only be done by undermining, not improving the state.

What to Do?

The only tactic worth pursuing is enlightenment. Enlightenment of self and of others, and both continuously. This does not mean telling people what to believe or what to do. It is more akin to discovery than education. A teacher may help you discover truth by providing information, but the discoverer has to have curiosity and openness. It is the discoverer himself who chooses to discover.

Become a free person, and your freedom will be a beacon to others who are searching. Create liberty in your own life, exchange ideas, be open to the power of human creativity. Free your own mind and you will begin to help others to free theirs not by telling them what to believe, but by demonstration and discussion.

The market does not produce new innovations and technologies because smart people tell others what to design; instead it is a constant dynamic give and take, show and tell, creation and imitation, trial and error, the greatest ongoing play of economic exchange.

The building of a free-society needn’t wait until the state is limited or absent; indeed the state will not wither until the free society is first built to replace it. The explosive power of ideas will destroy the foundations of the state as free people continue to live and breath those ideas and demonstrate the life, energy, fun, progress and fulfillment in freedom.

This does not mean everyone who wants liberty must do the same thing. Demonstrating and discussion the ideas of a free society is such a broad and evolutionary task that it opens endless doors. The differences we have in ability and interest lead to numerous efforts, and enlightenment leaves ample room for differentiation.

Our differences will manifest in which “others” we exchange with, and what methods and mediums we use. But it must be an exchange of ideas and the building of a free society. It cannot mean deceiving, cajoling, “nudging”, forcing, bribing, or dictating. These, in the end, will only lead to less freedom.

Liberty not inevitable, but it is possible. A state that does not trample liberty is not possible. So long as the state is deemed necessary it will exist, and the state will always grow beyond its originally desired limits. The state will prey upon society until it destroys it, and then destroys itself. But if the belief in the necessity of the state remains, the deposed state will soon be replaced by a new one and the process will begin again.

The only foundation that society can be built on without collapse is a belief in statelessness.

It must be belief. Consequential (practical) and deontological (moral) arguments against the state miss the point. People will accept an inefficient and immoral system if they believe it necessary. Once they find it unnecessary, they will abandon it and give moral or practical reasons for doing so, but the belief in the necessity of the state must go first.

Imagine Liberty

Ludwig von Mises described three preconditions to human action. An individual must have dissatisfaction with his current condition, a vision of something better, and a belief in the ability to achieve that vision.

Everyone has dissatisfaction with government. Almost no one has a vision of something better. People have visions of a differently structured “necessary evil”, but their lack of imagination makes them keep the modifier, “necessary”. The Proverb says that for lack of vision people perish.

If we open up our imagination there is abundant evidence of order without the state. Non-state norms and institutions produce the majority of the world we see around us. Historically, society precedes the state, and there is ample evidence of stateless solutions to problems we are taught to believe only the state can solve.

Beyond past or present evidence, an application of our knowledge of human potential can also help us envision what could be. Science fiction writers imagine unheard of technologies by looking at technological advances in the here and now. They extrapolate and predict where human ingenuity, if it continues on its present course, may go. The best social thinkers do the same with society.

Some advocates for liberty do have a vision of something better. They can imagine multifarious social arrangements without the state. But most still lack the third condition of human action; a belief in the ability to get there. After so many vein attempts at revolution and political activism it seems there is no answer. But in some ways, the second condition of action is the answer to the third. If enough people can imagine a better solution, they will cease to support an inferior one (even in the face of the unknown, if they believe it to hold promise) and cease to prohibit new experiments. People with imagination too small to envision an automobile may very well accept restrictions on road building. But people who can’t envision the specific manifestation of the automobile, but can imagine human progress and invention capable of surprising them will be reticent to restrict the construction of something with unknown promise.

This is why we needn’t all share the same, or even a very specific, vision of a stateless world. We must, however, be brave and broad-minded enough to see in human relations the potential of order without the state.

For those who can imagine such a world, the task is to open others up to the same possibility. Show them, intrigue them, inspire them. Where imagination is wanting, so is liberty.

When It Happens

Perhaps the beginning of the end of the state will be gradual. Maybe state efforts to restrict minor activities will be increasingly ignored. Bans on food and drink may be laughed at and become unenforceable. Perhaps it will slowly extend to ignoring bigger and bigger restrictions.
Perhaps it will start with a bang. The prohibition of drugs may simply come to an abrupt end, and sooner than anyone expects. Public schooling may suddenly become so little used and so uncompetitive in the face of educational innovation that it disappears.

It may happen without a big production. The visage of the state may not even die with its function. The royalty of England still exist, but they are longer relevant in regulating daily life. They exist as reflection or memory of what was once believed. Some Native American tribes perform rain dances not because they believe, as they once did, that they will bring rain, but as an homage to their past. The state may transform similarly. It may never “go away”, but it may cease to have meaning except as a tradition. Parades and pomp may remain while power over our lives withers.

Fast or slow, big or small, conscious or unconscious as it may be, the world will change. The state can be a relic of the past, harder to understand as time moves on, like slavery in America today. In so many ways the trend is well underway and we are already in a mostly stateless world, though it is little appreciated or understood. It may be a matter of merely realizing what is already true: the state is not, and never has been necessary.

Realistic and Radical

The dissolution of the state doesn’t rely on people to become better or morality to change, or for the next step in evolution. It is a fallacy that government is inevitable and necessary. It could wither away in no time. It is only a matter of us changing our beliefs, paradigms, and theories of world. It only requires that we realize that it is not necessary. I say only, but the power of imagination necessary to see that the state is not is no small thing. Opening our minds to this possibility is the greatest and most promising intellectual and practical adventure.

Old, New, Borrowed, Blue

Old

An imaginative and captivating read, Screwtape Proposes a Toast was C.S. Lewis’s follow-up published in the Saturday Evening Post to his popular book, the Screwtape Letters.  Screwtape is a fictitious correspondence between a senior and junior devil about how to damn men’s souls.  In the follow-up, Lewis has poignant insights into the nature of modern society, and in particular the way in which equality and democracy can corrode all that is good and sturdy in humans.

The text is posted here.  You can also read a PDF version of the original magazine publication here.

“Now, this useful phenomenon is in itself by no means new. Under the name of Envy it has been known to humans for thousands of years. But hitherto they always regarded it as the most odious, and also the most comical, of vices. Those who were aware of feeling it felt it with shame; those who were not gave it no quarter in others. The delightful novelty of the present situation is that you can sanction it — make it respectable and even laudable — by the incantatory use of the word democratic.”

New

Jeffrey Tucker absolutely nails it in this piece for The Freeman.  Jeff is one of those guys that gets freedom on a real gut, rubber-meets-the-road level.  He also gets it on an intellectual level.  He can pull from a treasure trove of work done by great thinkers on why liberty trumps central control, and he can also pull from keen insights on every day life and apply it all to present ideas for living free, here and now, and fighting to free the future.  Tucker talks first of the intellectual journey to anarchism, then the practical journey; the part that really transforms your outlook on life.

“[L]et me admit that my anarchism is probably more practical than ideological—which is the reverse of what it is for the most well-known anarchist thinkers in history. I see the orderliness of human volition and action all around me. I find it inspiring. It frees my mind to understand what is truly important in life. I can see reality for what it is. It is not some far-flung ideology that makes me long for a world without the State but rather the practical realities of the human struggle to make something of this world though our own efforts. Only human beings can overcome the great curse of scarcity the world has imposed on us. So far as I can tell, the State is, at best, the great annoyance that slows down the mighty project of building civilization.”

Borrowed

I borrowed this story from a friend’s Facebook feed.   She rightly pointed out that this research has pretty significant implications for the social sciences and might alter the current direction of sociology, psychology, and behavioral economics.  What I find interesting is how common-sensical the findings are.  The fact that this work will shake up these disciplines reveals just how silly and prone to trendiness academia can be.  I’m also willing to wager that, should this and similar work start a new trend in the social sciences towards more context-dependent theories, the pendulum will swing absurdly far and another counter-revolution will happen a few decades later reminding us that, yes, some elements of the human mind are universal.  The paper posits, in short, that institutions matter, a lot.  They shape our worldview and affect everything from how our brain processes spacial relations, to our sense of fairness.

“The potential implications of the unexpected results were quickly apparent to Henrich. He knew that a vast amount of scholarly literature in the social sciences—particularly in economics and psychology—relied on the ultimatum game and similar experiments. At the heart of most of that research was the implicit assumption that the results revealed evolved psychological traits common to all humans, never mind that the test subjects were nearly always from the industrialized West. Henrich realized that if the Machiguenga results stood up, and if similar differences could be measured across other populations, this assumption of universality would have to be challenged.”

Blue

This excellent book review by Anthony Gregory is depressing, or “blue”, upon first reading, especially if you’re new to revisionism.  The patriotic myths of war heroes and cunning statesmen are shattered, and with them a sense of American identity.  It takes some time.  You have to stand back and look at the facts and alternative narratives free from nationalistic impulse.  Then you grasp that most history books are little more than propaganda favoring the powerful status quo.  It hurts at first. With time, it is liberating.  This book review is an excellent appetizer for this way of examining the past.  Open your mind and give the revisionist view a try.  Let it sink in before you reject it.  See what happens.  I’m willing to bet you’ll develop lingering suspicions about mainstream histories.  That’s a good thing.

“The Founding Fathers are the first official heroes targeted, appropriate in both chronological terms and in considering the civic mythology of the United States. And so who were the true heroes? According to Russell, it was the rabble. John Adams, Alexander Hamilton, Sam Adams, John Jay and the rest of them looked upon the common American people, populating Philadelphia where they were holding their conspiratorial meetings, as “vicious,” “vile” and otherwise unsavory folk. “But what the Founding Fathers called corruption, depravity, viciousness, and vice, many of us would call freedom”

Why Corporations Don’t Support Freedom

There is a common assumption that advocacy of free-market ideas is funded in large part by big corporations.  As much as I wish the many great organizations and projects that are educating in liberty received financial support from large corporations, almost none of them do, and when they do it is in very small amounts when compared to the other things such firms support.

But why?  Businesses are constantly hampered and harassed by government regulation, taxation, and the uncertainty of the legal landscape one day to the next.  Don’t they stand to gain from laissez faire?  Well, yes, businesses stand to gain tremendously from market freedom.  Entrepreneurs, owners, employees, consumers, and every other market participant stands to gain.  Businesses of all sizes stand to gain, provided they can produce what consumers demand.

Aye, there’s the rub.

You see, while business stands to gain from free exchange, nobody knows which specific businesses will be most successful in a competitive environment.  Consumers are a tough bunch to please.  It takes a lot of work, and there’s a lot of uncertainty.  The creative destruction of the market is a little daunting to a businessperson who dwells on it for long.  It’s easier, for those who can afford it, to cozy up to the state and ensure that it’s restrictions and interventions hurt you a little less than they harm your competitors.  If you have resources enough and play your cards right, you might even be able to get policies that make you more profitable or put your competitors out of business entirely.

The result?  Bigger businesses tend to support state intervention, because they have the lawyers and money and can hire the guns of government.  It is entirely possible that some of these very businesses would fare better under economic freedom, but they don’t know for sure, so they go the somewhat safer route of state cronyism.  Smaller businesses typically aren’t organized enough and lack the resources to manipulate policy in their favor.  Worse still, the unimaginable number of new ventures that would have been created were it not for government impediments have no voice at all; we don’t even know who would have created them.

In short, freedom is good for business, but scary to businesses.

Worldviews Matter

This is an article I wrote during the last presidential election for the Western Standard Shotgun Blog.  The election-specific parts are really not the crux of the post, so I think it’s still relevant.

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A colleague sent me this article by Michael Knox Beran for the City Journal, titled, “Obama, Shaman”. The article is fantastic, not because it is a critique of one candidate from one party, but because the insights are far broader and can be applied to nearly any political or cultural folk-heroes of today. Beran draws upon strains of thought throughout ancient and classical literature and philosophy to highlight two very different worldviews.

America has a strong tradition of the worldview that sees man as fallible and existence as including pain and discomfort. Indeed, this worldview sees any life without some form of pain being a life without cause and effect, without choice; a robotic reality that would really be no existence at all.

The other worldview, the author points out, has surfaced in various forms throughout history and is the impetus for movements that nearly always result in a great deal of concentrated power. Since man need not be fallible, giving “the right person” unlimited power to do what is good for all is not viewed as dangerous, but rather necessary. From Machiavelli to Saul Alinsky, strategists have created a playbook for an ascent to power by those believing pain can forever be alleviated if only they are given the absolute power to enact their reforms. But the strategists only lay the plan; the philosophy that engendered the belief that such a plan could (or should) actually work came first. In the article, Beran describes many of those who have championed a paradigm which makes this belief possible.

As I’ve written before, paradigms are powerful, and hard to change. The lens through which one views the world, especially the human world, will determine the conclusions drawn from any set of data. Data, sensory perceptions, are completely devoid of actionable meaning without a theoretical framework through which to interpret them. For this reason, establishing and continually re-evaluating one’s framework becomes the constant task of the honest intellectual.

All good political philosophy and economics is essentially an effort to synthesis data and extract some kind of meaning from it – to create from observations a viable paradigm of human action. Knowing human nature is the most important and foundational element of ethics, political philosophy and economics. As the old adage goes, “knowing thyself” is the best place to start. I submit that the best way to know thyself is to find out what your worldview is (you have one, whether you know it or not).

What kind of lens do you look at the world through? What are the assumptions you take with you into every situation? Know your worldview, analyze it for logical consistency, test it against observation, discard or reform it if need be; this is the most difficult, rewarding and necessary task of human understanding.

Some snippets from the Beran article below should whet your appetite to read the entire piece:

“In his unfinished treatise Economy and Society, Max Weber defined charisma as “a certain quality in an individual personality by virtue of which he is set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities.” Weber was able to do little more, before he died in 1920, than give a pseudoscientific élan to an idea that had been kicking around for centuries. Most of what he said about charismatic authority was stated more cogently in Book III of Aristotle’s Politics, which described the great-souled man who “may truly be deemed a God among men” and who, by virtue of his greatness, is exempt from ordinary laws.

What both Aristotle and Weber made too little of is the mentality of the charismatic leader’s followers, the disciples who discover in him, or delusively endow him with, superhuman qualities. “Charisma” was originally a religious term signifying a gift of God: it often denotes (according to the seventeenth-century scholar-physician John Bulwer) a “miraculous gift of healing.” James G. Frazer, in The Golden Bough, demonstrated that the connection between charismatic leadership and the melioration of suffering was historically a close one: many primitive peoples believed that the magical virtues of a priest-king could guarantee the soil’s fertility and that such a leader could therefore alleviate one of the most elementary forms of suffering, hunger. The identification of leadership with the mitigation of pain persists in folklore and myth. In the Arthurian legends, Percival possesses an extraordinary magic that enables him to heal the fisher king and redeem the waste land; in England, the touch of the monarch’s hand was believed to cure scrofula.

It is a sign of growing maturity in a people when, laying aside these beliefs, it acknowledges that suffering is an element of life that sympathetic magic cannot eradicate, and recognizes a residue of pain in existence that even the application of technical knowledge cannot assuage. Advances in knowledge may end particular kinds of suffering, but these give way to new forms of hurt—milder, perhaps (one would rather be depressed than famished), yet not without their sting. We do not draw closer to a painless world.”

And…

“The danger of Obama’s charismatic healer-redeemer fable lies in the hubris it encourages, the belief that gifted politicians can engender a selfless communitarian solidarity. Such a renovation of our national life would require not only a change in constitutional structure—the current system having been geared to conflict by the Founders, who believed that the clash of private interests helps preserve liberty—but also a change in human nature. Obama’s conviction that it is possible to create a beautiful politics, one in which Americans will selflessly pursue a shared vision of the common good, recalls the belief that Dostoyevsky attributed to the nineteenth-century Russian revolutionists: that, come the revolution, “all men will become righteous in one instant.” The perfection would begin.”

America’s Great Depression

Murray Rothbard’s seminal but often overlooked work, America’s Great Depression, is especially enlightening since the 2007 financial crisis.  If you want to read the entire 400 page book (which I highly recommend), here it is.  If you’re short on time, here’s a 12 page summary of the main arguments in the book with some additional context.  Enjoy.

Was Adam Smith Wrong?

Here’s an article I originally wrote for the Prometheus Institute.

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Disagreeing with a man whose face appears on the necktie of many a freedom-lover is perhaps dangerous, but sound reason can’t be sacrificed on the altar of great men – and Smith was a great man.

Indeed, Adam Smith, in his depiction of the division of labor in a pin factory and his timeless prose on the invisible hand and the self-interest of the butcher, offers some of the greatest explanations and defenses of capitalism ever written, even some 230 years later. I consider Smith a great thinker, and a hero of liberty. That doesn’t mean he was never wrong; particularly when it comes to the question of value.

Smith’s thoughts on the derivation of value in his Wealth of Nations laid the groundwork in this area for later thinkers like David Ricardo (another brilliant mind who was right about many other things) and eventually Karl Marx. In the case of the latter we have clearly seen how bad ideas can have horrific real-world consequences. As John Maynard Keynes famously remarked,

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”

I might add too the bad ideas of otherwise good economists.

Smith essentially, though somewhat confusedly, argued that the value of any good was ultimately derived from the amount of labor it took to produce. Money or commodity prices reflected only the nominal but never the real value of a good. In this way he described the different prices of different goods as a simple formula:

“If among a nation of hunters, for example, it usually costs twice the labor to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer.” (The Wealth of Nations, Book I, Chapter VI)

Smith elaborated further by describing other costs of producing a good, including the role of the entrepreneur and capitalist and the profits they require. Unlike Marx, Smith never denigrated the role of the capitalist or the profits they earned, but his conception of value resulting from the cost of production (ultimately labor) opened the door for the idea that anything charged or earned above the cost of real inputs is unnecessary; excellent fodder for anyone anxious to obtain power by appealing to an envious middle class.

The problem with Smith’s analysis is not that the cost of production has no link to the value or money price of a good – indeed, the two are closely connected. He merely had the relationship backwards.

In reality, prices reflect the money equivalent of the value a buyer places on a good. That is to say, an individual who wishes to have a good places an entirely subjective value upon that good as compared to other goods, and the difference is typically expressed in terms of money. If in Smith’s example no one cared for beavers, the cost of killing a beaver wouldn’t matter; the beaver would sell for little or nothing. There is no one value of a good, but each individual values each good differently, as compared to other goods. It is the same for Smith’s supposedly changeless measure of value, labor. An hour of the same kind of labor may be valued (or disdained) to different degrees by different people.

It is for this reason that price is merely the reflection of the amount of money an individual was willing to give up to obtain a given good in the most recent exchange.

However, Smith was correct in seeing a relationship between the cost of production and price: Once a producer or entrepreneur has an indicator of what someone was willing to pay for a good, he can speculate how much others will be willing to pay in the future. He may be incorrect, but he will start with an estimate based on past experience and hope to get an equal or higher price. It is the estimated price (which reflects the value others place on the good) that will dictate how much he can spend on production. If a producer expects a good to sell for $1, he will be willing to spend up to $0.99 to produce it. (This is obviously a simplification, as he may be willing to take short term loss if he expects long term gains, he may want more than a $0.01 profit, etc.) In other words, the amount of labor and other costs of production flow from the expected sale price of the good, not the other way around. No one will spend more to produce an item than they believe others will be willing to pay to buy it.

Smith correctly saw that the various costs which go into production must be paid by the sale price of the final good. What he failed to see is that the costs of production do not create the price of the final good or imbue it with some objective value, but that the subjective value that each consumer places on the good sends signals backwards to producers and tells them how much they can expend on production without suffering a loss.

That Smith saw the factors which go into the production of a good as the cause of the price, rather than the effect, may seem like a small error. But economics, like all attempts to study the behavior of human beings, is a subtle science which requires great attention to the correct logical progression of actions. A misunderstanding between cause and effect can be fatal.

A slight adjustment to the angle of a satellite signal can, when extrapolated over thousands of miles, result in a beam nowhere near its target location. Likewise, looking at an economic phenomenon, such as the price of a good, from an even slightly incorrect angle can result in consequences far greater than imagined when spread over time and by different minds in different cultures. I would never single-handedly blame Adam Smith for the horrors of socialism. But his backwards theory of value contributed, over time and space, to a set of ideas which laid the theoretical groundwork for socialism – a philosophy completely contrary to the views of Smith.

I still admire and respect Adam Smith as one of the world’s great minds and a positive force in the battle for liberty. His conclusions and prescriptions were correct, even though his methodology was sometimes flawed. However, the lessons to be gleaned are to never let admiration for a great mind blind you to areas in which they are in error; and that even correct conclusions, if based on incorrect reasoning, can be dangerous.