So, has the nation really drifted that far to the left, or are we simply struggling with our semantics?

From the NY Times:

"Weekend Opinionator: A Different Sort of Red America

By Tobin Harshaw

Perhaps the most telling line in the Oxford English Dictionary’s definition of “socialism” is this one: “The range of application of the term is broad.” That’s something to bear in mind as we consider a much-discussed poll, released by Rasmussen on Thursday, that found that “Only 53% of American adults believe capitalism is better than socialism.” For the record, here is the primary O.E.D. definition:

A theory or system of social organization based on state or collective ownership and regulation of the means of production, distribution, and exchange for the common benefit of all members of society; advocacy or practice of such a system, esp. as a political movement. Now also: any of various systems of liberal social democracy which retain a commitment to social justice and social reform, or feature some degree of state intervention in the running of the economy.

As for Rasmussen’s definition, well, there isn’t one: “The question posed by Rasmussen Reports did not define either capitalism or socialism.”

‘Socialism’ rises in the polls — but do Americans even know what it means?

But the pollsters did point out an anomaly: “It is interesting to compare the new results to an earlier survey in which 70% of Americans prefer a free-market economy. The fact that a ‘free-market economy’ attracts substantially more support than ‘capitalism’ may suggest some skepticism about whether capitalism in the United States today relies on free markets.”

So, has the nation really drifted that far to the left, or are we simply struggling with our semantics? Plenty of folks in the blogosphere were happy to answer that question.

Steve Benen, the Political Animal, is pleased, but also sees a shifting in the lexicon.

In terms of interpreting these results, the numbers certainly aren’t what I expected, and it’s hard to know why respondents answered as they did. Perhaps “capitalism” lost some of its appeal when our economy collapsed. Maybe a lot of people heard the media connect Obama and “socialism,” and since they like the president, they figure socialism can’t be that bad. In a similar vein, if right-wing blowhards like Limbaugh keep screaming that socialism is manifestly evil, there may be some who assume the economic model must have merit.

But I was especially intrigued by the 27% who weren’t sure which was better. Talk about a sign of the times — more than one in four aren’t quite sure whether capitalism or socialism is the superior system.

Mark Thompson at the League of Ordinary Gentlemen feels his fellow conservatives have nobody to blame but themselves. “When you falsely complain that every single thing your opponents try to do is socialism and absurdly hold your bloviating, unpopular selves up as bastions of capitalism, you probably shouldn’t be surprised when people start thinking socialism doesn’t look so bad, and capitalism doesn’t look so good,” he writes. “Let the record also reflect that I, personally, remain firmly with the 53 percent; I just don’t blame the other 47 percent for thinking otherwise.”

Matt Yglesias of Think Progress feels that times have changed enough that “socialism” is “good branding”:

The whole idea is that we should put society first rather than capital, or money. That sounds good! But in the United States we never had a Socialist Party so “socialism” was primarily associated with the Union of Soviet Socialist Republics which was not at all good. But to people under 30, there’s less of that old resonance. And saying that Obama, who’s popular, is a “socialist” may simply tend to make people have warmer feelings toward the word “socialism.”

The New Republic’s John Judis seems to think the poll’s younger respondents have a better fix on things than the O.E.D.:

According to the poll, 53 percent of Americans think capitalism is preferable to socialism, while 20 percent say socialism is preferable. And among those trustworthy adults under thirty, 37 percent prefer capitalism, 33 percent socialism, and 30 percent are weighing the alternatives. What, you might ask, does this all mean? I don’t think it’s a vote for Soviet-style socialism. While Cold War conservatives did their best to identify socialism, and European social democracy, with Soviet or Cuban communism, the identification doesn’t seem to have survived the Cold War itself.

Instead, what those 30 percent of under-thirties probably mean by “socialism” is a much greater degree of government–and public–control of private corporations and of the market. That would put the United States closer, say, to Sweden, France, or Germany, but would not put it anywhere near the old Soviet Union, which tried to abolish the market itself. Most of all, I imagine, it’s an expression of extreme disillusionment with the magic of the market as preached by Republicans and some Democrats as well.

It’s also, I think, not an incorrect understanding of socialism. As a political philosophy, socialism predated Marx as any reader of “The Communist Manifesto” or of “Socialism: Utopian and Scientific” is aware. In America, too, there were Christian socialists like Walter Rauschenbusch, who was an important influence on Martin Luther King, and prairie socialists in Kansas or Oklahoma who never envisioned giving up their farms for socialism. The point that runs through all these many varieties was not collectivism, but instead the subjection of large banks and businesses to social priorities: “people before profits,” as Bill Clinton said in 1992. And that’s what those 20 percent of Americans in the Rasmussen Poll seem to be opting for.

McQ at QandO, however, sees this youthful exuberance as little more than naïveté:

As you’ll note, the older someone is, the more likely they are to understand what socialism is and how it is inferior to captialism. The under 30 crowd, with no wisdom and little practical experience outside of academia - not to mention having not yet [completely] traded their utopian fantasies for the best practical system which has been shown to work - have a large group who either believe socialism is better or just aren’t with it enough to have an opinion.

Once past 30, and having put a few years under their belt in the real world, suddenly the utopian scales begin to fall from their eyes and they have a bit of an epiphany. As for those over 40 being so strongly for capitalism, most of them remember the old USSR and how well socialism worked there.

While Dr. Steven Taylor at PoliBlog thinks we should ignore the whole thing: “Given that it is manifestly clear from recent political rhetoric that people in general have no idea what an appropriate definition of either of these terms is, it is impossible to ably interpret these results. Further, if we assume that part of the question did include the issue of which is ‘better’ we would have to know what that meant to the respondents as well. ‘Better’ at doing what?”

Others on the right, however, are alarmed. TigerHawk blames the tax code:

The percentage who approve of capitalism in this poll (53%) is very close to the percentage of the population that pays (or belongs to a family that pays) any federal income tax (as of 2006, 59%). Indeed, since the top 50% paid more than 97% of all federal income collected in 2006, it is safe to say that the proportion who support capitalism, as opposed to socialism, is almost identical in size to the percentage of Americans who earn enough actual income to pay material income taxes. While the correlation between the two groups is not perfect — no doubt there are Hollywood types, professors, and United States Representatives who both pay income taxes and profess to be socialists — it is almost certainly high. Again, it should not surprise us that the beneficiaries of socialism would support it, and the people who pay for it would prefer a system that allows them to keep more of what they produce.

And, as Kathy at Comments From Left Field points out, steveegg at Sister Toldjah blames the schools: “The worse news is that those under 30 are almost evenly divided, with 37% saying capitalism is better, 33% saying socialism is better, and 30% unsure of what they think. It is not a coincidence that the radicals of the late 1960s were entering the decision-level positions of the education establishment 30 years ago.”

Susan Duclos of Wake Up America, however, urges her compatriots to see the glass as 53 percent full:

Rasmussen headlines with “Just 53% Say Capitalism Better Than Socialism.”

In that results piece it shows that 53 percent of American’s prefer capitalism over socialism, with only 20 percent thinking socialism is preferable and 27 percent that are not sure what they believe.

Amazing they would headline with the word “just” in there when it clearly shows the majority, 53 percent, favors capitalism with a 33 percent different between the two opposite ends of the spectrum.

I don’t even count the “unsure” totals because even if you divide it straight down the middle you still have 33 percent more favoring capitalism …

Many think 53 percent is not a large enough number, but considering socialism only gets a solid 20 percent support, I say the numbers are very good indeed and people shouldn’t focus on those who are “unsure” because when capitalism is called “free market economy” that 53 percent rises considerably to 70 percent.

Dr. Helen Smith, a.k.a. Mrs. Instapundit, manages to agree with both Duclos and steveegg: “Frankly, I am amazed that so many people think that capitalism is better. That’s a good sign. Also, I wonder if most Americans, especially the younger ones could even give an adequate definition of socialism and capitalism. Perhaps they just hear the buzzword, Socialism, and say that is better, like some kind of trained parrot. No surprise there, with what they learn in many schools.”

But Jesse Taylor at Pandagon thinks that while education is a red herring, one of the right’s favorite events of the last half-century actually kicked off the trend:

What element of modern primary and secondary pedagogy over the past, say, 20 years has led our youth to believe that socialism is awesome? Actually, nothing. The real secret is that the Berlin Wall fell, which paved the way for conservatives to call everything Democrats have proposed in the interim socialism (this isn’t to say that they weren’t doing that before, but it became much easier for them to say it without the Giant Socialist Enemy Beast forcing us to duck and cover under our desks every day). I came up in a world where “socialism” was defined in popular parlance as “liberalism”. Bill Clinton, effectively a liberal Republican, was a socialist. Barack Obama, a moderate Democrat, is a socialist. There’s an actual socialist in the Senate, and yet all the Democrats in the Senate (except Ben Nelson and Evan Bayh)? Socialists.

The main people responsible for the embrace of “socialism” are the pro-capitalist conservatives who’ve so diluted its meaning that it’s okay to embrace socialism, because the majority party in the country and our tremendously popular president are socialists.

So, amid all this partisan bickering and sophistic solipsism, enter the éminence grise of Marxist historians. Writing at The Guardian (and commenting on a real crisis rather than a methodically questionable poll), Eric Hobsbawm raises a question: “Socialism has failed. Now capitalism is bankrupt. So what comes next?”

The basic idea that dominated economics and politics in the last century has patently disappeared down the plughole of history. This was the way of thinking about modern industrial economies, or for that matter any economies, in terms of two mutually exclusive opposites: capitalism or socialism.

We have lived through two practical attempts to realise these in their pure form: the centrally state-planned economies of the Soviet type and the totally unrestricted and uncontrolled free-market capitalist economy. The first broke down in the 1980s, and the European communist political systems with it. The second is breaking down before our eyes in the greatest crisis of global capitalism since the 1930s …

Impotence therefore faces both those who believe in what amounts to a pure, stateless, market capitalism, a sort of international bourgeois anarchism, and those who believe in a planned socialism uncontaminated by private profit-seeking. Both are bankrupt. The future, like the present and the past, belongs to mixed economies in which public and private are braided together in one way or another. But how? That is the problem for everybody today, but especially for people on the left.

Nobody seriously thinks of returning to the socialist systems of the Soviet type - not only because of their political faults, but also because of the increasing sluggishness and inefficiency of their economies - though this should not lead us to underestimate their impressive social and educational achievements. On the other hand, until the global free market imploded last year, even the social-democratic or other moderate left parties in the rich countries of northern capitalism and Australasia had committed themselves more and more to the success of free-market capitalism. Indeed, between the fall of the USSR and now I can think of no such party or leader denouncing capitalism as unacceptable. None were more committed to it than New Labour. In their economic policies both Tony Blair and (until October 2008) Gordon Brown could be described without real exaggeration as Thatcher in trousers. The same is true of the Democratic party in the US.

Well, that’s not very cheery. And why is it a problem primarily for the left?

You may say that’s all over now. We’re free to return to the mixed economy. The old toolbox of Labour is available again - everything up to nationalisation - so let’s just go and use the tools once again, which Labour should never have put away. But that suggests we know what to do with them. We don’t. For one thing, we don’t know how to overcome the present crisis. None of the world’s governments, central banks or international financial institutions know: they are all like a blind man trying to get out of a maze by tapping the walls with different kinds of sticks in the hope of finding the way out. For another, we underestimate how addicted governments and decision-makers still are to the free-market snorts that have made them feel so good for decades …

A progressive policy needs more than just a bigger break with the economic and moral assumptions of the past 30 years. It needs a return to the conviction that economic growth and the affluence it brings is a means and not an end.

Lovely thought, that, but it does bring up the question of what “end” we’re looking for, and we’re hardly likely to find social consensus there — call it a contradiction of Marxism. In any case, Barbara O’Brien of the Mahablog anticipates a few other criticisms Hobsbawm is likely to engender and attempts to nip them in the bud.

The True Believers of both sides will argue no, no, no, pure Marxism/Free Market Capitalism has never been tried. But “pure” anything has never been tried. That’s the reality of our human condition. Any endeavor that requires human input is never pure. It will suffer some degree of corruption. Put together people, money, and power, and corruption is a certainty. That’s why any workable, sustainable model factors in corruption and makes some provision to keep it to a minimum.

That’s what the Marxists and the Ayn Rand culties cannot understand… There has to be a way to reign in the power, to diffuse it, to oversee it and make it accountable to other power. That’s one reason the public and private sector need each other — to keep each other semi-honest.

Nicholas John Mead has similar predictions on how Hobsbawm will be received: “Many of the comments that follow his piece however take issue with his assertion that socialism has failed. The communist brand of ’socialism’ practiced in Russia wasn’t socialism at all - more a vicious state centralised authoritarianism that had little to do with true socialist ideals. The same could be said however for the type of neo-liberal capitalism we have today which has strayed so far from the principles and ideals of pure capitalism as outlined by founders such as Adam Smith that it’s almost unfair to say that capitalism has failed also.”

Another British blogger, Karl Naylor, thinks Britain might be primed for the revolution.

In many ways, Britain under New Labour has been a feeble old body politic artificially hooked up to a life support machine through the injection of capital, migrants, indeed of life from elsewhere whilst its internal organs have started to pack up.

The cosmetic changes after 1997 did nothing to reform what had been going wrong with Britain: relying on London as the dynamo sucking international capital and injecting it back out across the rest of a lame deindustrialised candyfloss economy and listless acres of legoland …

The way in which Britain has deluded itself that even if it is not an economic and political powerhouse of the global economy it can be a Global Player, with Lilliputan figures like [Foreign Secretary David] Miliband ‘positively’ demanding NATO expansion into Eastern Europe in the face of Big Bully Russia.

Where New Labour commissars, Liberal mandarins and the British Council have desperately sought to emphasise that Britain’s “cultural power” makes it fit to strut about on the World Stage and pontificate about how great it is and why the world should buy into its stupid universe of pop royalty dreck and BBC costume dramas.

The harder the crash, the better it might be for Britain. It might finally wake up to the reality of its shrunken economy, decaying political system, and overextended strategical posture and try to live within its means, as well as to just stop pontificating about the superiority of its supposedly higher ‘values’.

And O’Brien, for her part, thinks that liberals in the United States might be in a stronger position than their British counterparts.

Hobsbawm talks about recent British history, New Labour and Thatcherism. But similar things go on here (is it the almost-common language?). Our Right has effectively taken itself out of the conversation (even though it won’t shut up) because it can’t let go of its old ideologies and aphorisms that don’t work any more. I’m not sure if what passes for a “Left” here is fully cognizant of the new reality, either.

But unlike the Right, the current Left has no one economic model that we all put on an altar and worship. At least some among us are looking hard at the current reality and thinking through solutions that might work in the real world, as opposed to solutions that make good sound bites and look good on a bumper sticker.

So there you have it: the worse the crash the better off we are, good riddance to the altar of free-market capitalism, and we’re now following blind men in mazes. The stock market may be rallying, but it doesn’t seem helping us shape the economy, or the socio-economic ideologies of tomorrow."

Me:

From Milton Friedman:

“The collapse of the Soviet Union in 1989 delivered the final blow to the belief in socialism. Hardly anyone today, from the far left to the far right, regards socialism in the traditional sense of government ownership and operation of the means of production as either feasible or desirable. Those who profess socialism today mean by it a welfare state. ”

I think that this is still true.

— Don the libertarian Democrat

"As was the case in the 1930s, we also have a choice"

Martin Wolf on Keynes on the FT:

"We are all Keynesians now. When Barack Obama takes office he will propose a gigantic fiscal stimulus package. Such packages are being offered by many other governments. Even Germany is being dragged, kicking and screaming, into this race.

The ghost of John Maynard Keynes, the father of macroeconomics, has returned to haunt us. With it has come that of his most interesting disciple, Hyman Minsky. We all now know of the “Minsky moment” – the point at which a financial mania turns into panic.

Like all prophets, Keynes offered ambiguous lessons to his followers. Few still believe in the fiscal fine-tuning that his disciples propounded in the decades after the second world war ( TRUE ). But nobody believes in the monetary targeting proposed by his celebrated intellectual adversary, Milton Friedman, either( TRUE ). Now, 62 years after Keynes’ death, in another era of financial crisis and threatened economic slump, it is easier for us to understand what remains relevant( I SAY USEFUL ) in his teaching.

I see three broad lessons.

The first, which was taken forward by Minsky, is that we should not take the pretensions of financiers seriously. “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.” Not for him, then, was the notion of “efficient markets”( I AGREE ).

The second lesson is that the economy cannot be analysed in the same way as an individual business. For an individual company, it makes sense to cut costs. If the world tries to do so, it will merely shrink demand( AS A WHOLE, I CAN UNDERSTAND THIS ). An individual may not spend all his income. But the world must do so( TRY TO ).

The third and most important lesson is that one should not treat the economy( ECONOMICS IS FINE HERE ) as a morality tale( HERE I DISAGREE COMPLETELY. MORALITY IS PART OF POLITICAL ECONOMY ). In the 1930s, two opposing ideological visions( THERE WERE OTHERS, THANKFULLY DEFEATED ) were on offer: the Austrian; and the socialist. The Austrians – Ludwig von Mises and Friedrich von Hayek – argued that a purging of the excesses of the 1920s was required. Socialists argued that socialism needed to replace failed capitalism, outright. These views were grounded in alternative secular religions: the former in the view that individual self-seeking behaviour guaranteed a stable economic order(I DON'T AGREE WITH HIM HERE. VON MISES CRITIQUE OF SOCIALISM WAS MORE THAN A MORALITY TALE, AND SO WERE HAYEK'S VIEWS ABOUT THE MARKET AND THE DANGERS OF TOO MUCH STATE CONTROL); the latter in the idea that the identical motivation could lead only( IT WAS THIS MECHANISTIC APPROACH TO POLITICS AND POLITICAL ECONOMY THAT MADE MARXISM, FOR EXAMPLE, NOT SUITABLE FOR HUMAN CONSUMPTION ) to exploitation, instability and crisis.

Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge( WRONG ). He wished to preserve as much liberty as possible( I AGREE. AS DO I. ), while recognising that the minimum state( HERE I DISAGREE ) was unacceptable to a democratic society with an urbanised economy( I CAN FORESEE A TIME OF LESS GOVERNMENT INVOLVEMENT, BUT THIS IS CURRENTLY TRUE ). He wished to preserve a market economy, without believing that laisser faire makes everything for the best in the best of all possible worlds( I WOULD SEEM TO AGREE WITH HIM ).

This same moralistic debate is with us, once again. Contemporary “liquidationists” insist that a collapse would lead to rebirth of a purified economy( COMPLETELY UNBURKEAN ). Their leftwing opponents argue that the era of markets is over. And even I wish to see the punishment of financial alchemists who claimed that ever more debt turns economic lead into gold( I WOULD LIKE TO SEE THE PUNISHMENT OF CRIMINALS ).

Yet Keynes would have insisted that such approaches are foolish. Markets are neither infallible nor dispensable( TRUE. THEY ARE USEFUL. ). They are indeed the underpinnings of a productive economy and individual freedom( TRUE ). But they can also go seriously awry and so must be managed with care( TRUE ). The election of Mr Obama surely reflects a desire for just such pragmatism( TRUE ). Neither Ron Paul, the libertarian, nor Ralph Nader, on the left, got anywhere( TRUE ). So the task for this new administration is to lead the US and the world towards a pragmatic resolution of the global economic crisis we all now confront.( I AGREE )

The urgent task is to return the world economy to health.

The shorter-term challenge is to sustain aggregate demand( YES ), as Keynes would have recommended. Also important will be direct central-bank finance of borrowers( YES ). It is evident that much of the load will fall on the US, largely because the Europeans, Japanese and even the Chinese are too inert, too complacent, or too weak( TOO MUCH BEGGARING ON THEIR PART ALREADY ). Given the correction of household spending under way in the deficit countries( SPENDER COUNTRIES ), this period of high government spending is, alas, likely to last for years( BTREATHE DEEPLY MATE ). At the same time, a big effort must be made to purge the balance sheets of households and the financial system. A debt-for-equity swap is surely going to be necessary( IT WON'T NEARLY BE AS LARGE AS HE THINKS. TOO MANY PEOPLE WANT THE OLD SYSYEM BACK. IT SUITS US. ).

The longer-term challenge is to force a rebalancing of global demand. Deficit( SPENDER ) countries cannot be expected to spend their way into bankruptcy( TRUE ), while surplus ( SAVER )countries condemn as profligacy the spending from which their exporters benefit so much( THAT'S WHY THEY'RE STRUGGLING TO KEEP THIS SYSTEM ). In the necessary attempt to reconstruct the global economic order, on which the new administration must focus, this will be a central issue. It is one Keynes himself had in mind when he put forward his ideas for the postwar monetary system at the Bretton Woods conference in 1944.

No less pragmatic must be the attempt to construct a new system of global financial regulation and an approach to monetary policy that curbs credit booms and asset bubbles( WE'LL TRY ). As Minsky made clear, no permanent answer exists( TRUE ). But recognition of the systemic frailty of a complex financial system would be a good start( OK ).

As was the case in the 1930s, we also have a choice: it is to deal with these challenges co-operatively and pragmatically or let ideological blinkers and selfishness obstruct us ( I AGREE ). The objective is also clear: to preserve an open and at least reasonably stable world economy that offers opportunity to as much of humanity as possible( I AGREE ). We have done a disturbingly poor job of this in recent years. We must do better. We can do so, provided we approach the task in a spirit of humility and pragmatism, shorn of ideological blinker. ( WE GET THE POINT )

As Oscar Wilde might have said, in economics, the truth is rarely pure and never simple. That is, for me, the biggest lesson of this crisis. It is also the one Keynes himself still teaches( I AGREE )."

He gets a bit simplistic, but I generally agree with what he's saying, except for the fact that, long term, I believe that less government with a growing and balanced economy is possible. Keynes view is still too rooted in the 30s to be of major use to us undigested, and is much too pessimistic and mechanistic, as that era tended to be. Again, Political Economy and Politics are underpinned by the context and presuppositions of the time.

What Keynes offers us is a little useful wisdom and a narrative of perceived success at helping the world out of a crisis, which goes a long in times like these.

"the main propositions about economics that so-called Austrians believe."

Via Positive Liberty, I came upon this credo of Austrian Economics put up by Peter Boettke :

"Proposition 1: Only individuals choose.

Man, with his purposes and plans, is the beginning of all economic analysis. Only individuals make choices; collective entities do not choose. The primary task of economic analysis is to make economic phenomena intelligible by basing it on individual purposes and plans; the secondary task of economic analysis is to trace out the unintended consequences of individual choices."

I'm not sure that I understand this. Can't a Union, say, the UAW, choose to ratify a contract? Also, I don't understand what it means to say "make economic phenomena intelligible", if all there is to describe are individual actions. In order to describe a person's choice, say, why he chose an apple instead of a pear, you simply ask him. His intentions make his decision intelligible. All economic choices are is really a subset of human choices and actions that have to do with things like buying and selling. In the same way, one can only have an unintended consequence of an action where one has an intention to be fulfilled by the action that goes sideways, or that one didn't foresee. However, an unintended consequence can't simply mean anything that flows from a particular action, otherwise it encompasses consequences that can't be humanly predicted, and, therefore, can't even be intended.

When you limit or delimit a range of human action as economic, you are already abstracting out a quality that rises over and above individual actions. It's the difference between the members of the set, and the set. To the extent that you attempt to standardize, regularize, or categorize, particular human actions, you are describing something over and above the individual, unless saying that individuals make choices and collective entities do not, simply means that collective entities are not physical. Yet, even that seems false, since a club can be a group of particular individuals. This seems a lot like Russell trying to define numbers with sets, and getting into a bit of jam by doing so, as I remember.

A point about methodology. It's no good telling me that something I can say meaningfully doesn't really mean anything. If I say, "The Chess Club is meeting on Tuesday", you can't reply that I really mean to say that " The members of the Chess Club are going to meet on Tuesday". Suppose I say, "The Chess Club is 100 years old". Do I mean to say that the members of the club are all 100 years old?

"Proposition 2: The study of the market order is fundamentally about exchange behavior and the institutions within which exchanges take place.

The price system and the market economy are best understood as a “catallaxy,” and thus the science that studies the market order falls under the domain of “catallactics.” These terms derive from the original Greek meanings of the word “katallaxy”—exchange and bringing a stranger into friendship through exchange. Catallactics focuses analytical attention on the exchange relationships that emerge in the market, the bargaining that characterizes the exchange process, and the institutions within which exchange takes place."

This sounds like barter. Here's Liddell:

katallagê ¹

I.exchange, esp. of money: the profits of the money-changer, Dem.

II.a change from enmity to friendship, reconciliation, Aesch., etc.

2.reconciliation of sinners with God, NTest.

I like number three. None of them fit. Anyway, from Wikipedia, this is funny:

"According to Mises (Human Action, page 3) it was Richard Whately who coined the term "catallactics". In effect, in Whately's book Introductory Lectures on Political Economy, published in 1831, it can be read:

"It is with a view to put you on your guard against prejudices thus created, (and you will meet probably with many instances of persons influenced by them,) that I have stated my objections to the name of Political-Economy. It is now, I conceive, too late to think of changing it. A. Smith, indeed, has designated his work a treatise on the "Wealth of Nations;" but this supplies a name only for the subject-matter, not for the science itself. The name I should have preferred as the most descriptive, and on the whole least objectionable, is that of CATALLACTICS, or the "Science of Exchanges.""

Also, in a footnote to these sentences, he continues:

"It is perhaps hardly necessary to observe, that I do not pretend to have classical authority for this use of the word Catallactics; nor do I deem it necessary to make any apology for using it without such authority. It would be thought, I conceive, an absurd pedantry to find fault with such words as "thermometer," "telescope," "pneumatics," "hydraulics," "geology," &c. on the ground that classical Greek writers have not employed them, or have taken them in a different sense. In the present instance, however, I am not sure that, if Aristotle had had occasion to express my meaning, he would not have used the very same word. In fact I may say he has used another part of the same verb in the sense of "exchanging;" (for the Verbals in are, to all practical purposes, to be regarded as parts of the verbs they are formed from) in the third book of the Nicom. Ethics he speaks of men who hold their lives so cheap, that they risked them in exchange for the most trifling gain []. The employment of this and kindred words in the sense of "reconcilement," is evidently secondary, reconciliation being commonly effected by a compensation; something accepted as an equivalent for loss or injury."

It has also been cited that Whately first coined the term in commentary during his Oxford lectures. ^[3]

I love when he says," nor do I deem it necessary to make any apology for using it without such authority". No. But you need to spend a paragraph justifying it.

I think I said buying and selling earlier, without have to search through Liddell. What about the institutions? Fine. But this kind of defining the limits of a subject is messy.

"Proposition 3: The “facts” of the social sciences are what people believe and think.

Unlike the physical sciences, the human sciences begin with the purposes and plans of individuals. Where the purging of purposes and plans in the physical sciences led to advances by overcoming the problem of anthropomorphism, in the human sciences, the elimination of purposes and plans results in purging the science of human action of its subject matter. In the human sciences, the “facts” of the world are what the actors think and believe.

I would say that Human Agency has Intentionality.

"The meaning that individuals place on things, practices, places, and people determines how they will orient themselves in making decisions. The goal of the sciences of human action is intelligibility, not prediction. The human sciences can achieve this goal because we are what we study, or because we possess knowledge from within, whereas the natural sciences cannot pursue a goal of intelligibility because they rely on knowledge from without. We can understand purposes and plans of other human actors because we ourselves are human actors."

I agree.

"But unless the Martian comes to understand the purposes and plans (the commuting to and from work), his “scientific” understanding of the data from Grand Central Station would be limited. The sciences of human action are different from the natural sciences, and we impoverish the human sciences when we try to force them into the philosophical/scientific mold of the natural sciences."

The Martian would use the Martian version of the Principle of Charity. Read Quine.

"Proposition 4: Utility and costs are subjective.

All economic phenomena are filtered through the human mind. Since the 1870s, economists have agreed that value is subjective, but, following alfred marshall, many argued that the cost side of the equation is determined by objective conditions. Marshall insisted that just as both blades of a scissors cut a piece of paper, so subjective value and objective costs determine price (see microeconomics). But Marshall failed to appreciate that costs are also subjective because they are themselves determined by the value of alternative uses of scarce resources. Both blades of the scissors do indeed cut the paper, but the blade of supply is determined by individuals’ subjective valuations."

Marshall is philosophically correct. Cost is not Subjective. Cost can be no more subjective than the meaning of a word. We can't have a Private Language, and we can't have a Private Cost.

As Wittgenstein says:

94. But I did not get my picture of the world by satisfying myself of its correctness; nor do I have it because I am satisfied of its correctness. No: it is the inherited background against which I distinguish between true and false.

Institutions and the meanings of words and the cost of a pear are objective, not subjective. What is subjective is my decision to buy the pear or not.

"In deciding courses of action, one must choose; that is, one must pursue one path and not others. The focus on alternatives in choices leads to one of the defining concepts of the economic way of thinking: opportunity costs. The cost of any action is the value of the highest-valued alternative forgone in taking that action. Since the forgone action is, by definition, never taken, when one decides, one weighs the expected benefits of an activity against the expected benefits of alternative activities."

This is not how human beings act. This picture is an abstraction, an attempt to organize disparate intentions and actions. Nothing more. It might be useful, but it is not true.

As Yeats says:

"Man can embody truth but he cannot know it. W.B. Yeats"

"Proposition 5: The price system economizes on the information that people need to process in making their decisions.

Prices summarize the terms of exchange on the market. The price system signals to market participants the relevant information, helping them realize mutual gains from exchange. In Hayek’s famous example, when people notice that the price of tin has risen, they do not need to know whether the cause was an increase in demand for tin or a decrease in supply. Either way, the increase in the price of tin leads them to economize on its use. Market prices change quickly when underlying conditions change, which leads people to adjust quickly."

The price system is useful to us. Nothing more. If something was or becomes more useful, we will use that. It has no special magic.

"Proposition 6: Private property in the means of production is a necessary condition for rational economic calculation.

Economists and social thinkers had long recognized that private ownership provides powerful incentives for the efficient allocation of scarce resources. But those sympathetic to socialism believed that socialism could transcend these incentive problems by changing human nature. Ludwig von Mises demonstrated that even if the assumed change in human nature took place, socialism would fail because of economic planners’ inability to rationally calculate the alternative use of resources. Without private ownership in the means of production, Mises reasoned, there would be no market for the means of production, and therefore no money prices for the means of production. And without money prices reflecting the relative scarcities of the means of production, economic planners would be unable to rationally calculate the alternative use of the means of production."

The only book by Von Mises that I really liked was "Socialism". It is the best book on the subject. I haven't read it for many years, but as I remember it, Von Mises said that if Socialism could do what is says it can, we would all be socialists. However, it cannot. That's my opinion, but my opinion is provisional. I don't like the human nature argument at all. It could be that the reason private property works has nothing to do with what we tell ourselves. What has come about has done so because it works, not because it was preordained. We merely perceive what works as preordained.

"Proposition 7: The competitive market is a process of entrepreneurial discovery.

Many economists see competition as a state of affairs. But the term “competition” invokes an activity. If competition were a state of affairs, the entrepreneur would have no role. But because competition is an activity, the entrepreneur has a huge role as the agent of change who prods and pulls markets in new directions.

The entrepreneur is alert to unrecognized opportunities for mutual gain. By recognizing opportunities, the entrepreneur earns a profit. The mutual learning from the discovery of gains from exchange moves the market system to a more efficient allocation of resources. Entrepreneurial discovery ensures that a free market moves toward the most efficient use of resources. In addition, the lure of profit continually prods entrepreneurs to seek innovations that increase productive capacity. For the entrepreneur who recognizes the opportunity, today’s imperfections represent tomorrow’s profit.1 The price system and the market economy are learning devices that guide individuals to discover mutual gains and use scarce resources efficiently."

The most efficient uses of resources for what? I actually helped start a business. It was formed really out of dissatisfaction by the two other people who started the business with me with the business we were working at. I simply went along for the ride. People starts businesses for many different reasons. They do it. That's what we need to know. Some incentives might work once, and not work later. That's life.

"Proposition 8: Money is nonneutral.

Money is defined as the commonly accepted medium of exchange. If government policy distorts the monetary unit, exchange is distorted as well. The goal of monetary policy should be to minimize these distortions. Any increase in the money supply not offset by an increase in money demand will lead to an increase in prices. But prices do not adjust instantaneously throughout the economy. Some price adjustments occur faster than others, which means that relative prices change. Each of these changes exerts its influence on the pattern of exchange and production. Money, by its nature, thus cannot be neutral...

But inflation is socially destructive on several levels. First, even anticipated inflation breaches a basic trust between the government and its citizens because government is using inflation to confiscate people’s wealth. Second, unanticipated inflation is redistributive as debtors gain at the expense of creditors. Third, because people cannot perfectly anticipate inflation and because the money is added somewhere in the system—say, through government purchase of bonds—some prices (the price of bonds, for example) adjust before other prices, which means that inflation distorts the pattern of exchange and production."

I generally agree with this, but it strikes me as exaggerated. A little inflation might well work for reasons that are hard to define. Major discontinuities are generally destructive.

"Since money is the link for almost all transactions in a modern economy, monetary distortions affect those transactions. The goal of monetary policy, therefore, should be to minimize these monetary distortions, precisely because money is nonneutral.2"

I don't know what's being distorted. It's like saying that if a planet does something different than expected, and varies from our models, it's a distortion. Rather, it's simply that our models are of limited use.

"Proposition 9: The capital structure consists of heterogeneous goods that have multispecific uses that must be aligned.

Right now, people in Detroit, Stuttgart, and Tokyo City are designing cars that will not be purchased for a decade. How do they know how to allocate resources to meet that goal? Production is always for an uncertain future demand, and the production process requires different stages of investment ranging from the most remote (mining iron ore) to the most immediate (the car dealership). The values of all producer goods at every stage of production derive from the value consumers place on the product being produced. The production plan aligns various goods into a capital structure that produces the final goods in, ideally, the most efficient manner. If capital goods were homogeneous, they could be used in producing all the final products consumers desired. If mistakes were made, the resources would be reallocated quickly, and with minimal cost, toward producing the more desired final product. But capital goods are heterogeneous and multispecific; an auto plant can make cars, but not computer chips. The intricate alignment of capital to produce various consumer goods is governed by price signals and the careful economic calculations of investors. If the price system is distorted, investors will make mistakes in aligning their capital goods. Once the error is revealed, economic actors will reshuffle their investments, but in the meantime resources will be lost"

I don't understand the use of "distorted". People use the information available as best they can. If they make too many cars, why is that a "distortion"? If I throw a pitch and it's called a ball, is that a distortion?

"Proposition 10: Social institutions often are the result of human action, but not of human design.

Many of the most important institutions and practices are not the result of direct design but are the by-product of actions taken to achieve other goals. A student in the Midwest in January trying to get to class quickly while avoiding the cold may cut across the quad rather than walk the long way around. Cutting across the quad in the snow leaves footprints; as other students follow these, they make the path bigger. Although their goal is merely to get to class quickly and avoid the cold weather, in the process they create a path in the snow that actually helps students who come later to achieve this goal more easily. The “path in the snow” story is a simple example of a “product of human action, but not of human design” (Hayek 1948, p. 7).

The market economy and its price system are examples of a similar process. People do not intend to create the complex array of exchanges and price signals that constitute a market economy. Their intention is simply to improve their own lot in life, but their behavior results in the market system. Money, law, language, science, and so on are all social phenomena that can trace their origins not to human design, but rather to people striving to achieve their own betterment, and in the process producing an outcome that benefits the public.4

This seems true. As Austin says:

"...our common stock of words embodies all the distinctions men have found worth drawing, and the connections they have found worth marking, in the lifetime of many generations: these surely are likely to be more numerous, more sound, since they have stood up to the long test of survival of the fittest, and more subtle, at least in all ordinary and reasonable practical matters, than any that you or I are likely to think up in our armchair of an afternoon – the most favorite alternative method"

"The implications of these ten propositions are rather radical. If they hold true, economic theory would be grounded in verbal logic and empirical work focused on historical narratives. With regard to public policy, severe doubt would be raised about the ability of government officials to intervene optimally within the economic system, let alone to rationally manage the economy.

Perhaps economists should adopt the doctors’ creed: “First do no harm.” The market economy develops out of people’s natural inclination to better their situation and, in so doing, to discover the mutually beneficial exchanges that will accomplish that goal. Adam Smith first systematized this message in The Wealth of Nations. In the twentieth century, economists of the Austrian school of economics were the most uncompromising proponents of this message, not because of a prior ideological commitment, but because of the logic of their arguments."

I don't see these propositions as that radical, and they seem true, by and large, as does this final statement. I also don't like the phrase "logic of their arguments". All this says is that the proposition follow from each other, not that they are true. Logic needs premises.

Am I an adherent of Austrian Economics? No. It seems to be a misnomer, for one thing. But do the economists mentioned in this group have a lot of important things to tell us? Yes.

"And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning. "

Matt Welch on Reason noticed a George Will piece I missed:

"George Will on Sunday furthered his valuable recent service to the nation by giving Republicans the kind of intellectual shock therapy they'll need if they are to learn anything both useful and objectively pro-freedom from their electoral drubbing earlier this month:"

Shock Therapy? They need a head transplant, and those are still at least a decade away at current levels of funding. President Obama, are you listening? Is this Rent Seeking?

Here's Will:

"Conservatives rightly think, or once did, that much, indeed most, government spreading of wealth is economically destructive and morally dubious -- destructive because, by directing capital to suboptimum uses, it slows wealth creation; morally dubious because the wealth being spread belongs to those who created it, not government. But if conservatives call all such spreading by government "socialism," that becomes a classification that no longer classifies: It includes almost everything, including the refundable tax credit on which McCain's health-care plan depended. "

You know, I agree with Will here. He and I disagree about much and most, and, I suppose, economically and morally. But the principles are spot on.

"Hyperbole is not harmless; careless language bewitches the speaker's intelligence. And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning. This is the only major industrial society that has never had a large socialist party ideologically, meaning candidly, committed to redistribution of wealth."

Now, that's just too good. He's on par with Buiter here.

"In America, socialism is un-American. Instead, Americans merely do rent-seeking -- bending government for the benefit of private factions. The difference is in degree, including the degree of candor. The rehabilitation of conservatism cannot begin until conservatives are candid about their complicity in what government has become.

As for the president-elect, he promises to change Washington. He will, by making matters worse. He will intensify rent-seeking by finding new ways -- this will not be easy -- to expand, even more than the current administration has, government's influence on spreading the wealth around."

Have to agree with him again. I think that our disagreement is in degree and timetable.

Here's my comment on Reason:

Don the libertarian Democrat | November 17, 2008, 11:49am | #"Hyperbole is not harmless; careless language bewitches the speaker's intelligence. And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning."

That quote is so good I'm good to keep it posted on my blog. I sure wish I would have said it. Maybe someday, a few years down the road, I will.