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Sunday, March 31, 2013

Aristotle: private property and money

The views of the great philosopher Aristotle are particularly important because the entire structure of his thought had an enormous and even dominant influence on the economic and social thought of the high and late Middle Ages, which considered itself Aristotelian.
Although Aristotle, in the Greek tradition, scorned moneymaking and was scarcely a partisan of laissez-faire, he set forth a trenchant argument in favour of private property. Perhaps influenced by the private-property arguments of Democritus, Aristotle delivered a cogent attack on the communism of the ruling class called for by Plato. He denounced Plato's goal of the perfect unity of the state through communism by pointing out that such extreme unity runs against the diversity of mankind, and against the reciprocal advantage that everyone reaps through market exchange. Aristotle then delivered a point-by-point contrast of private as against communal property. First, private property is more highly productive and will therefore lead to progress. Goods owned in common by a large number of people will receive little attention, since people will mainly consult their own self-interest and will neglect all duty they can fob off on to others. In contrast, people will devote the greatest interest and care to their own property.
Second, one of Plato's arguments for communal property is that it is conducive to social peace, since no one will be envious of, or try to grab the property of, another. Aristotle retorted that communal property would lead to continuing and intense conflict, since each will complain that he has worked harder and obtained less than others who have done little and taken more from the common store. Furthermore, not all crimes or revolutions, declared Aristotle, are powered by economic motives. As Aristotle trenchantly put it, ‘men do not become tyrants in order that they may not suffer cold’.
Third, private property is clearly implanted in man's nature: His love of self, of money, and of property, are tied together in a natural love of exclusive ownership. Fourth, Aristotle, a great observer of past and present, pointed out that private property had existed always and everywhere. To impose communal property on society would be to disregard the record of human experience, and to leap into the new and untried. Abolishing private property would probably create more problems than it would solve.
Finally, Aristotle wove together his economic and moral theories by providing the brilliant insight that only private property furnishes people with the opportunity to act morally, e.g. to practise the virtues of benevolence and philanthropy. The compulsion of communal property would destroy that opportunity.
While Aristotle was critical of money-making, he still opposed any limitation – such as Plato had advocated – on an individual's accumulation of private property. Instead, education should teach people voluntarily to curb their rampant desires and thus lead them to limit their own accumulations of wealth.
Despite his cogent defence of private property and opposition to coerced limits on wealth, the aristocrat Aristotle was fully as scornful of labour and trade as his predecessors. Unfortunately, Aristotle stored up trouble for later centuries by coining a fallacious, proto–Galbraithian distinction between ‘natural’ needs, which should be satisfied, and ‘unnatural’ wants, which are limitless and should be abandoned. There is no plausible argument to show why, as Aristotle believes, the desires filled by subsistence labour or barter are ‘natural’, whereas those satisfied by far more productive money exchanges are artificial, ‘unnatural’ and therefore reprehensible. Exchanges for monetary gain are simply denounced as immoral and ‘unnatural’, specifically such activities as retail trade, commerce, transportation and the hiring of labour. Aristotle had a particular animus toward retail trade, which of course directly serves the consumer, and which he would have liked to eliminate completely.
Aristotle is scarcely consistent in his economic lucubrations. For although monetary exchange is condemned as immoral and unnatural, he also praises such a network of exchanges as holding the city together through mutual and reciprocal give-and-take.
The confusion in Aristotle's thought between the analytic and the ‘moral’ is also shown in his discussion of money. On the one hand, he sees that the growth of money greatly facilitated production and exchange. He sees also that money, the medium of exchange, represents general demand, and ‘holds all goods together’. Also money eliminates the grave problem of ‘double coincidence of wants’, where each trader will have to desire the other man's goods directly. Now each person can sell goods for money. Furthermore, money serves as a store of values to be used for purchases in the future.
Aristotle, however, created great trouble for the future by morally condemning the lending of money at interest as ‘unnatural’. Since money cannot be used directly, and is employed only to facilitate exchanges, it is ‘barren’ and cannot itself increase wealth. Therefore the charging of interest, which Aristotle incorrectly thought to imply a direct productivity of money, was strongly condemned as contrary to nature.
Aristotle would have done better to avoid such hasty moral condemnation and to try to figure out why interest is, in fact, universally paid. Might there not be something ‘natural’, after all, about a rate of interest? And if he had discovered the economic reason for the charging – and the paying – of interest, perhaps Aristotle would have understood why such charges are moral and not unnatural.
Aristotle, like Plato, was hostile to economic growth and favoured a static society, all of which fits with his opposition to money-making and the accumulation of wealth. The insight of old Hesiod into the economic problem as the allocation of scarce means for the satisfying of alternative wants was virtually ignored by both Plato and Aristotle, who instead counselled the virtue of scaling down one's desires to fit whatever means were available.

Austrian Perspective on the History of Economic Thought (2 volume set)

Saturday, March 30, 2013

Xenophon on household management

A disciple and contemporary of Plato was the Athenian landed aristocrat and army general, Xenophon (430–354 BC). Xenophon's economic writings were scattered throughout such works as an account of the education of a Persian price, a treatise on how to increase government revenue, and a book on ‘economics’ in the sense of thoughts on the technology of household and farm management. Most of Xenophon's adumbrations were the usual Hellenic scorn for labour and trade, and admiration for agriculture and the military arts, coupled with a call for a massive increase in government operations and interventions in the economy. These included improving the port of Athens, building markets and inns, establishing a governmental merchant fleet and greatly expanding the number of government-owned slaves.
Interspersed in this roll of commonplace bromides, however, were some interesting insights into economic matters. In the course of his treatise on household management, Xenophon pointed out that ‘wealth’ should be defined as a resource that a person can use and knows how to use. In this way, something that an owner has neither the ability nor the knowledge to use cannot really constitute part of his wealth.
Another insight was Xenophon's anticipation of Adam Smith's famous dictum that the extent of the division of labour in society is necessarily limited by the extent of the market for the products. Thus, in an important addition to Plato's insights on the division of labour, written 20 years after The Republic, Xenophon says that ‘In small towns the same workman makes chairs and doors and plows and tables, and often the same artisan builds houses...’ whereas in the large cities ‘many people have demands to make upon each branch of industry’, and therefore ‘one trade alone, and very often even less than a whole trade, is enough to support a man’. In large cities’, we find one man making men's boots only; and another, women's only’... one man lives by cutting out garments, another by fitting together the pieces’.
Elsewhere, Xenophon outlines the important concept of general equilibrium as a dynamic tendency of the market economy. Thus, he states that when there are too many coppersmiths, copper becomes cheap and the smiths go bankrupt and turn to other activities, as would happen in agriculture or any other industry. He also sees clearly that an increase in the supply of a commodity causes a fall in its price.

Austrian Perspective on the History of Economic Thought (2 volume set)

Friday, March 29, 2013

Plato's right-wing collectivist utopia

Plato's search for a hierarchical, collectivist utopia found its classic expression in his most famous and influential work, The Republic. There, and later in The Laws, Plato sets forth the outline of his ideal city-state: one in which right oligarchic rule is maintained by philosopher–kings and their philosophic colleagues, thus supposedly ensuring rule by the best and wisest in the community. Underneath the philosophers in the coercive hierarchy are the ‘guardians’ – the soldiers, whose role is to aggress against other cities and lands and to defend their polis from external aggression. Underneath them are to be the body of the people, the despised producers: labourers, peasants and merchants who produce the material goods on which the lordly philosophers and guardians are to live. These three broad classes are supposed to reflect a shaky and pernicious leap if there ever was one – the proper rule over the soul in each human being. To Plato, each human being is divided into three parts: ‘one that craves, one that fights, and one that thinks’, and the proper hierarchy of rule within each soul is supposed to be reason first, fighting next, and finally, and the lowest, grubby desire.
The two ruling classes – the thinkers and the guardians – that really count are, in Plato's ideal state, to be forced to live under pure communism. There is to be no private property whatsoever among the elite; all things are to be owned communally, including women and children. The elite are to be forced to live together and share common meals. Since money and private possessions, according to the aristocrat Plato, only corrupt virtue, they are to be denied to the upper classes. Marriage partners among the elite are to be selected strictly by the state, which is supposed to proceed according to the scientific breeding already known in animal husbandry. If any of the philosophers or guardians find themselves unhappy about this arrangement, they will have to learn that their personal happiness means nothing compared to the happiness of the polis as a whole – a rather murky concept at best. In fact, those who are not seduced by Plato's theory of the essential reality of ideas will not believe that there is such a real living entity as a polis. Instead, the city-state or community consists only of living, choosing individuals.
To keep the elite and the subject masses in line, Plato instructs the philosopher–rulers to spread the ‘noble’ lie that they themselves are descended from the gods whereas the other classes are of inferior heritage. Freedom of speech or of inquiry was, as one might expect, anathema to Plato. The arts are frowned on, and the life of the citizens was to be policed to suppress any dangerous thoughts or ideas that might come to the surface.
Remarkably, in the very course of setting forth his classic apologia for totalitarianism, Plato contributed to genuine economic science by being the first to expound and analyse the importance of the division of labour in society. Since his social philosophy was founded on a necessary separation between classes, Plato went on to demonstrate that such specialization is grounded in basic human nature, in particular its diversity and inequality. Plato has Socrates say in The Republic that specialization arises because ‘we are not all alike; there are many diversities of natures among us which are adapted to different occupations’.
Since men produce different things, the goods are naturally traded for each other, so that specialization necessarily gives rise to exchange. Plato also points out that this division of labour increases the production of all the goods. Plato saw no problem, however, in morally ranking the various occupations, with philosophy of course ranking highest and labour or trade being sordid and ignoble.
The use of gold and silver as money greatly accelerated with the invention of coinage in Lydia in the early seventh century BC and coined money quickly spread to Greece. In keeping with his distaste for money-making, trade and private property, Plato was perhaps the first theorist to denounce the use of gold and silver as money. He also disliked gold and silver precisely because they served as international currencies accepted by all peoples. Since these precious metals are universally accepted and exist apart from the imprimatur of government, gold and silver constitute a potential threat to economic and moral regulation of the polis by the rulers. Plato called for a government fiat currency, heavy fines on the importation of gold from outside the city-state, and the exclusion from citizenship of all traders and workers who deal with money.
One of the hallmarks of an ordered utopia sought by Plato is that, to remain ordered and controlled, it must be kept relatively static. And that means little or no change, innovation or economic growth. Plato anticipated some present-day intellectuals in frowning on economic growth, and for similar reasons: notably, fear of collapse of the domination of the state by the ruling élite. Particularly difficult in trying to freeze a static society is the problem of population growth. Quite consistently, therefore, Plato called for freezing the size of the population of the city-state, keeping the number of its citizens limited to 5 000 agricultural landlord families.

Austrian Perspective on the History of Economic Thought (2 volume set)

Thursday, March 28, 2013

The pre-Socratics

Man is prone to error and even folly, and therefore a history of economic thought cannot confine itself to the growth and development of economic truths. It must also treat influential error, that is, error that unfortunately influenced later developments in the discipline. One such thinker is the Greek philosopher Pythagoras of Samos (c.582–c.507 BC) who, two centuries after Hesiod, developed a school of thought which held that the only significant reality is number. The world not only is number, but each number even embodies moral qualities and other abstractions. Thus justice, to Pythagoras and his followers, is the number four, and other numbers consisted of various moral qualities. While Pythagoras undoubtedly contributed to the development of Greek mathematics, his number-mysticism could well have been characterized by the twentieth century Harvard sociologist Pitirim A. Sorokin as a seminal example of ‘quantophrenia’ and ‘metromania’. It is scarcely an exaggeration to see in Pythagoras the embryo of the burgeoning and overweeningly arrogant mathematical economics and econometrics of the present day.
Pythagoras thus contributed a sterile dead-end to philosophy and economic thought, one that later influenced Aristotle's pawky and fallacious attempts to develop a mathematics of justice and of economic exchange. The next important positive development was contributed by the pre-Socratic (actually contemporary of Socrates) Democritus (c.460–c.370 BC).
This influential scholar from Abdera was the founder of ‘atomism’ in cosmology, that is, the view that the underlying structure of reality consists of interacting atoms. Democritus contributed two important strands of thought to the development of economics. First, he was the founder of subjective value theory. Moral values, ethics, were absolute, Democritus taught, but economic values were necessarily subjective. ‘The same thing’, Democritus writes, may be ‘good and true for all men, but the pleasant differs from one and another’. Not only was valuation subjective, but Democritus also saw that the usefulness of a good will fall to nothing and become negative if its supply becomes superabundant.
Democritus also pointed out that if people restrained their demands and curbed their desires, what they now possess would make them seem relatively wealthy rather than impoverished. Here again, the relative nature of the subjective utility of wealth is recognized. In addition, Democritus was the first to arrive at a rudimentary notion of time preference: the Austrian insight that people prefer a good at present to the prospect of the good arriving in the future. As Democritus explains, ‘it is not sure whether the young man will ever attain old age; hence, the good on hand is superior to the one still to come’.
In addition to the adumbration of subjective utility theory, Democritus's other major contribution to economics was his pioneering defence of a system of private property. In contrast to Oriental despotisms, in which all property was owned or controlled by the emperor and his subordinate bureaucracy, Greece rested on a society and economy of private property. Democritus, having seen the contrast between the private property economy of Athens and the oligarchic collectivism of Sparta, concluded that private property is a superior form of economic organization. In contrast to communally owned property, private property provides an incentive for toil and diligence, since ‘income from communally held property gives less pleasure, and the expenditure less pain’. ‘Toil’, the philosopher concluded, ‘is sweeter than idleness when men gain what they toil for or know that they will use it’.

Austrian Perspective on the History of Economic Thought (2 volume set)

Wednesday, March 27, 2013

The first ‘economist’: Hesiod and the problem of scarcity

No one should be misled into thinking that the ancient Greeks were ‘economists’ in the modern sense. In the course of pioneering in philosophy, their philosophizing on man and his world yielded fragments of politico-economic or even strictly economic thoughts and insights. But there were no modern-style treatises on economics per se. It is true that the term ‘economics’ is Greek, stemming from the Greek oikonomia, but oikonomia means not economics in our sense but ‘household management’, and treatises on ‘economics’ would discuss what might be called the technology of household management – useful perhaps, but certainly not what we would regard today as economics. There is furthermore a danger, unfortunately not avoided by many able historians of economic thought, of eagerly reading into fragments of ancient sages the knowledge gained by modern economics. While we surely should not overlook any giants of the past, we must also avoid any ‘presentist’ seizing upon a few obscure sentences to hail alleged but nonexistent forerunners of sophisticated modern concepts.
The honour of being the first Greek economic thinker goes to the poet Hesiod, a Boeotian who lived in the very early ancient Greece of the middle of the eighth century BC. Hesiod lived in the small, self-sufficient agricultural community of Ascra, which he himself refers to as a ‘sorry place... bad in winter, hard in summer, never good’. He was therefore naturally attuned to the eternal problem of scarcity, of the niggardlinesss of resources as contrasted to the sweep of man's goals and desires. Hesiod's great poem, Works and Days, consisted of hundreds of verses designed for solo recitation with musical accompaniment. But Hesiod was a didactic poet rather than a mere entertainer, and he often broke out of his story line to educate his public in traditional wisdom or in explicit rules for human conduct. Of the 828 verses in the poem, the first 383 centred on the fundamental economic problem of scarce resources for the pursuit of numerous and abundant human ends and desires.
Hesiod adopts the common religious or tribal myth of the ‘Golden Age’, of man's alleged initial state on earth as an Eden, a Paradise of limitless abundance. In this original Eden, of course, there was no economic problem, no problem of scarcity, because all of man's wants were instantaneously fulfilled. But now, all is different, and ‘men never rest from labour and sorrow by day and from perishing by night.’ The reason for this low state is an all-encompassing scarcity, the result of man's ejection from Paradise. Because of scarcity, notes Hesiod, labour, materials and time have to be allocated efficiently. Scarcity, moreover, can only be partially overcome by an energetic application of labour and of capital. In particular, labour – work – is crucial, and Hesiod analyses the vital factors which may induce man to abandon the god-like state of leisure. The first of these forces is of course basic material need. But happily, need is reinforced by a social disapproval of sloth, and by the desire to emulate the consumption standards of one's fellows. To Hesiod, emulation leads to the healthy development of a spirit of competition, which he calls ‘good conflict’, a vital force in relieving the basic problem of scarcity.
To keep competition just and harmonious, Hesiod vigorously excludes such unjust methods of acquiring wealth as robbery, and advocates a rule of law and a respect for justice to establish order and harmony within society, and to allow competition to develop within a matrix of harmony and justice. It should already be clear that Hesiod had a far more sanguine view of economic growth, of labour and of vigorous competition, than did the far more philosophically sophisticated Plato and Aristotle three and a half centuries later.

Austrian Perspective on the History of Economic Thought (2 volume set)

Tuesday, March 26, 2013

The politics of the polis

When man turns the use of his reason from the inanimate world to man himself and to social organization, it becomes difficult for pure reason to avoid giving way to the biases and prejudices of the political framework of the age. This was all too true of the Greeks, including the Socratics, Plato and Aristotle. Greek life was organized in small city-states (the polis) some of which were able to carve out overseas empires. The largest city-state, Athens, covered an area of only about one thousand square miles, or half the size of modern Delaware. The key facet of Greek political life was that the city-state was run by a tight oligarchy of privileged citizens, most of whom were large landowners. Most of the population of the city-state were slaves or resident foreigners, who generally performed the manual labour and commercial enterprise respectively. The privilege of citizenship was reserved to descendants of citizens. While Greek city-states fluctuated between outright tyrannies and democracies, at its most ‘democratic’ Athens, for example, reserved the privileges of democratic rule to 7 per cent of the population, the rest of whom were either slaves or resident aliens. (Thus, in Athens of the fifth century BC, there were approximately 30 000 citizens out of a total population of 400 000.)
As privileged landowners living off taxes and the product of slaves, Athenian citizens had the leisure for voting, discussion, the arts and – in the case of the particularly intelligent – philosophizing. Although the philosopher Socrates was himself the son of a stonemason, his political views were ultra-elitist. In the year 404 BC, the despotic state of Sparta conquered Athens and established a reign of terror known as the Rule of the Thirty Tyrants. When the Athenians overthrew this short-lived rule a year later, the restored democracy executed the aged Socrates, largely on suspicion of sympathy with the Spartan cause. This experience confirmed Socrates's brilliant young disciple, Plato, the scion of a noble Athenian family, in what would now be called an ‘ultra-right’ devotion to aristocratic and despotic rule.
A decade later, Plato set up his Academy on the outskirts of Athens as a think-tank not only of abstract philosophic teaching and research, but also as a fountainhead of policy programmes for social despotism. He himself tried three times unsuccessfully to set up despotic regimes in the city state of Syracuse, while no less than nine of Plato's students succeeded in establishing themselves as tyrants over Greek city-states.
While Aristotle was politically more moderate than Plato, his aristocratic devotion to the polis was fully as evident. Aristotle was born of an aristocratic family in the Macedonian coastal town of Stagira, and entered Plato's Academy as a student at the age of 17, in 367 BC. There he remained until Plato's death 20 years later, after which he left Athens and eventually returned to Macedonia, where he joined the court of King Philip and tutored the young future world conqueror, Alexander the Great. After Alexander ascended the throne, Aristotle returned to Athens in 335 BC and established his own school of philosophy at the Lyceum, from which his great works have come down to us as lecture notes written by himself or transcribed by his students. When Alexander died in 323 BC, the Athenians felt free to vent their anger at Macedonians and their sympathizers, and Aristotle was ousted from the city, dying shortly thereafter.
Their aristocratic bent and their lives within the matrix of an oligarchic polis had a greater impact on the thought of the Socratics than Plato's various excursions into theoretical right-wing collectivist Utopias or in his students’ practical attempts at establishing tyranny. For the social status and political bent of the Socratics coloured their ethical and political philosophies and their economic views. Thus, for both Plato and Aristotle, ‘the good’ for man was not something to be pursued by the individual, and neither was the individual a person with rights that were not to be abridged or invaded by his fellows. For Plato and Aristotle, ‘the good’ was naturally not to be pursued by the individual but by the polis. Virtue and the good life were polis- rather than individual-oriented. All this means that Plato's and Aristotle's thought was statist and elitist to the core, a statism which unfortunately permeated ‘classical’ (Greek and Roman) philosophy as well as heavily influencing Christian and medieval thought. Classical ‘natural law’ philosophy therefore never arrived at the later elaboration, first in the Middle Ages and then in the seventeenth and eighteenth centuries, of the ‘natural rights’ of the individual which may not be invaded by man or by government.
In the more strictly economic realm, the statism of the Greeks means the usual aristocratic exaltation of the alleged virtues of the military arts and of agriculture, as well as a pervasive contempt for labour and for trade, and consequently of money-making and the seeking and earning of profit. Thus Socrates, openly despising labour as unhealthy and vulgar, quotes the king of Persia to the effect that by far the noblest arts are agriculture and war. And Aristotle wrote that no good citizens ‘should be permitted to exercise any low mechanical employment or traffic, as being ignoble and destructive to virtue.’
Furthermore, the Greek elevation of the polis over the individual led to their taking a dim view of economic innovation and entrepreneurship. The entrepreneur, the dynamic innovator, is after all the locus of individual ego and creativity, and is therefore the harbinger of often disturbing social change, as well as economic growth. But the Greek and Socratic ethical ideal for the individual was not an unfolding and flowering of inner possibilities, but rather a public/political creature moulded to conform to the demands of the polis. That kind of social ideal was designed to promote a frozen society of politically determined status, and certainly not a society of creative and dynamic individuals and innovators.

Austrian Perspective on the History of Economic Thought (2 volume set)

Monday, March 25, 2013

The first philosopher–economists: the Greeks

1.1  The natural law
1.2  The politics of the polis
1.3  The first ‘economist’: Hesiod and the problem of scarcity
1.4  The pre-Socratics
1.5  Plato's right-wing collectivist utopia
1.6  Xenophon on household management
1.7  Aristotle: private property and money
1.8  Aristotle: exchange and value
1.9  The collapse after Aristotle
1.10 Taoism in ancient China
1.11 Note
It all began, as usual, with the Greeks. The ancient Greeks were the first civilized people to use their reason to think systematically about the world around them. The Greeks were the first philosophers (philo sophia – lovers of wisdom), the first people to think deeply and to figure out how to attain and verify knowledge about the world. Other tribes and peoples had tended to attribute natural events to arbitrary whims of the gods. A violent thunderstorm, for example, might be ascribed to something that had irritated the god of thunder. The way to bring on rain, then, or to curb violent thunderstorms, would be to find out what acts of man would please the god of rain or appease the thunder god. Such people would have considered it foolish to try to figure out the natural causes of rain or of thunder. Instead, the thing to do was to find out what the relevant gods wanted and then try to supply their needs.
The Greeks, in contrast, were eager to use their reason – their sense observations and their command of logic – to investigate and learn about their world. In so doing, they gradually stopped worrying about the whims of the gods and to investigate actual entities around them. Led in particular by the great Athenian philosopher Aristotle (384–322 B.C.), a magnificent and creative systematizer known to later ages as The Philosopher, the Greeks evolved a theory and a method of reasoning and of science which later came to be called the natural law.
1.1 The natural law
Natural law rests on the crucial insight that to be necessarily means to be something, that is, some particular thing or entity. There is no Being in the abstract. Everything that is, is some particular thing, whether it be a stone, a cat, or a tree. By empirical fact there is more than one kind of thing in the universe; in fact there are thousands, if not millions of kinds of things. Each thing has its own particular set of properties or attributes, its own nature, which distinguishes it from other kinds of things. A stone, a cat, an elm tree; each has its own particular nature, which man can discover, study and identify.
Man studies the world, then, by examining entities, identifying similar kinds of things, and classifying them into categories each with its own properties and nature. If we see a cat walking down the street, we can immediately include it into a set of things, or animals, called ‘cats’ whose nature we have already discovered and analysed.
If we can discover and learn about the natures of entities X and Y, then we can discover what happens when these two entities interact. Suppose, for example, that when a certain amount of X interacts with a given amount of Y we get a certain quantity of another thing, Z. We can then say that the effect, Z, has been caused by the interaction of X and Y. Thus, chemists may discover that when two molecules of hydrogen interact with one molecule of oxygen, the result is one molecule of a new entity, water. All these entities – hydrogen, oxygen and water – have specific discoverable properties or natures which can be identified.
We see, then, that the concepts of cause and effect are part and parcel of natural law analysis. Events in the world can be traced back to the interactions of specific entities. Since natures are given and identifiable, the interactions of the various entities will be replicable under the same conditions. The same causes will always yield the same effects.
For the Aristotelian philosophers, logic was not a separate and isolated discipline, but an integral part of the natural law. Thus, the basic process of identifying entities led, in ‘classical’ or Aristotelian logic, to the Law of Identity: a thing is, and cannot be anything other than, what it is: a is a.
It follows, then, that an entity cannot be the negation of itself. Or, put another way, we have the Law of Non-Contradiction: a thing cannot be both a and non-a. a is not and cannot be non-a.
Finally, in our world of numerous kinds of entities, anything must be either a or it won't be; in short, it will either be a or non-a. Nothing can be both. This gives us the third well-known law of classical logic: the Law of the Excluded Middle: everything in the universe is either a or non-a.
But if every entity in the universe – if hydrogen, oxygen, stone, or cats – can be identified, classified, and its nature examined, then so too can man. Human beings must also have a specific nature with specific properties that can be studied, and from which we can obtain knowledge. Human beings are unique in the universe because they can and do study themselves, as well as the world around them, and try to figure out what goals they should pursue and what means they can employ to achieve them.
The concept of ‘good’ (and therefore of ‘bad’) is only relevant to living entities. Since stones or molecules have no goals or purposes, any idea of what might be ‘good’ for a molecule or stone would properly be considered bizarre. But what might be ‘good’ for an elm tree or a dog makes a great deal of sense: specifically, ‘the good’ is whatever conduces to the life and the flourishing of the living entity. The ‘bad’ is whatever injures such an entity's life or prosperity. Thus, it is possible to develop an ‘elm tree ethics’ by discovering the best conditions: soil, sunshine, climate, etc., for the growth and sustenance of elm trees; and by trying to avoid conditions deemed ‘bad’ for elm trees: elm blight, excessive drought, etc. A similar set of ethical properties can be worked out for various breeds of animals.
Thus, natural law sees ethics as living-entity- (or species-) relative. What is good for cabbages will differ from what is good for rabbits, which in turn will differ from what is good or bad for man. The ethic for each species will differ according to their respective natures.
Man is the only species which can – and indeed must – carve out an ethic for himself. Plants lack consciousness, and therefore cannot choose or act. The consciousness of animals is narrowly perceptual and lacks the conceptual: the ability to frame concepts and to act upon them. Man, in the famous Aristotelian phrase, is uniquely the rational animal – the species that uses reason to adopt values and ethical principles, and that acts to attain these ends. Man acts; that is, he adopts values and purposes, and chooses the ways to achieve them.
Man, therefore, in seeking goals and ways to attain them, must discover and work within the framework of the natural law: the properties of himself and of other entities and the ways in which they may interact.
Western civilization is in many ways Greek; and the two great philosophic traditions of ancient Greece which have been shaping the Western mind ever since have been those of Aristotle and his great teacher and antagonist Plato (428–347 BC). It has been said that every man, deep down, is either a Platonist or an Aristotelian, and the divisions run throughout their thought. Plato pioneered the natural law approach which Aristotle developed and systematized; but the basic thrust was quite different. For Aristotle and his followers, man's existence, like that of all other creatures, is ‘contingent’, i.e. it is not necessary and eternal. Only God's existence is necessary and transcends time. The contingency of man's existence is simply an unalterable part of the natural order, and must be accepted as such.
To the Platonists, however, especially as elaborated by Plato's follower, the Egyptian Plotinus (204–270 AD), these inevitable limitations of man's natural state were intolerable and must be transcended. To the Platonists, the actual, concrete, temporal factual existence of man was too limited. Instead, this existence (which is all that any of us has ever seen) is a fall from grace, a fall from the original non-existent, ideal, perfect, eternal being of man, a godlike being perfect and therefore without limits. In a bizarre twist of language, this perfect and never-existent being was held up by the Platonists as the truly existent, the true essence of man, from which we have all been alienated or cut off. The nature of man (and of all other entities) in the world is to be some thing and to exist in time; but in the semantic twist of the Platonists, the truly existent man is to be eternal, to live outside of time, and to have no limits. Man's condition on earth is therefore supposed to be a state of degradation and alienation, and his purpose is supposed to be to work his way back to the ‘true’ limitless and perfect self alleged to be his original state. Alleged, of course, on the basis of no evidence whatever – indeed, evidence itself identifies, limits, and therefore, to the Platonic mind, corrupts.
Plato's and Plotinus's views of man's allegedly alienated state were highly influential, as we shall see, in the writings of Karl Marx and his followers. Another Greek philosopher, emphatically different from the Aristotelian tradition, who prefigured Hegel and Marx was the early pre-Socratic philosopher Heraclitus of Ephesus (c.535–475 BC). He was pre-Socratic in the sense of predating Plato's great teacher Socrates (470–399 BC), who wrote nothing but has come down to us as interpreted by Plato and by several other followers. Heraclitus, who was aptly given the title ‘The Obscure’ by the Greeks, taught that sometimes opposites, a and non-a, can be identical, or, in other words, that a can be non-a. This defiance of elemental logic can perhaps be excused in someone like Heraclitus, who wrote before Aristotle developed classical logic, but it is hard to be so forbearing to his later followers.

Austrian Perspective on the History of Economic Thought (2 volume set)

Wednesday, March 20, 2013



I am striving … to discover whether man still has a place in this tangle; whether he still has any authority among these colossal masses in movement; whether he still can exert any force whatever on the statistics which are slipping from his hands into the abstract and the unreal. Can he have a place, authority, and the possibility of action on a better basis than ill-founded declarations of hope or blind acts of unreasonable faith?

— Jacques Ellul
We are living in “interesting times.” The question is how do we respond to the tumult in which we find ourselves? Most of us, caught up in the important but narrowly detailed matters of our lives, fail to stand back and observe the broader canvas upon which larger events are playing themselves out. As our present social systems continue to collapse around us, our very existence demands that we examine and discover alternative models for social organization.
Our world is undergoing major processes of decentralization, changes that can provide peaceful, liberating, and creative opportunities if we approach them intelligently and without fear. There will, of course, be those with intense and unquestioning attachments to the old order who, like their Luddite ancestors, will strike out with fear and anger at whatever portends a deviation from the familiar. The state—the incarnation of the status quo—will continue to insist upon its destructive divide-and-conquer games in a desperate attempt to continue its power over us. It will provide various groups with differing benefits, e.g., subsidies for one, special privileges for another, tax breaks for yet another, and lucrative government contracts for still another, in an effort to preclude us from developing a sense of common interest.
It is for each of us, however, to see through such contrived divisive practices, and to rediscover our mutual interests. We can find a genuine sense of community in our need to respect and defend the inviolability of each other’s lives, property, and autonomy. And that experience of community would be fatal to the political classes. An etymological dictionary informs us of the interconnected history of the words “peace,” “freedom,” “love,” and “friend.”1 What might our ancestors have known about the nature of relationships—an understanding that has long since been lost by allowing the state to repress our sense of community? Might people who treat one another as “friends” generate the “love” that produces a “free” and “peaceful” society? If so, how would we expect those who exhibit such traits to regard their neighbors’ interests? Is it possible that the ongoing decentralization of social behavior will allow us to reclaim our humanity with one another?
In a period of significant change, we must be prepared to engage in significant learning, rather than just reaffirming what we already know. We need to constantly remind ourselves of the tentative and limited nature of our understanding; of how our thinking is necessarily restricted by our experiences. Such an awareness becomes all the more compelling as the processes of change escalate.
Each of us has a sense of “reality” that can be represented as a circle (see figure 3). At any point in time, what we profess to know about ourselves and our world is contained within the boundaries of our particular circle. Because your experiences differ from mine, the contents of our respective circles will also differ, a fact that not only underlies many of our social problems but, at the same time, creates the diversity that makes cooperation possible. Learning and other forms of creativity involve a continuing synthesis of the known and the unknown. We can expand the range of our understanding only by expanding the circumference of our circle of reality. Throughout our lives, we are confronted by various teachers, who may include parents, school teachers, mentors, writers, friends and relatives, whose own circles of reality can be represented by the dotted line in figure 4.

Figure 3.

Figure 4.
Such teachers seek to persuade (or cajole) us to expand our definitions of reality by moving from our present boundaries of understanding outward toward theirs. The kind of learning most of them induce, however, is largely linear in nature, consisting of new information or modifications in our methods of analyzing information already known to us. Examples of such learning may be found in taking a survey course in history that is followed by an advanced course in French history, or learning a foreign language after having mastered your own, or progressing from an understanding of simple mathematics to calculus. A metaphor for this kind of accretive learning can be found in the nautilus or the snake, which expands its shell or sheds its skin to accommodate its continuing growth.
Because these linear methods of learning tend to be gradual and evolutionary in nature, they pose no “clear and present danger” to our established patterns of thinking. Through negative feedback, we reinforce—and thus stabilize—our prior learning. To the extent our thinking has been institutionally-directed, these conservative influences help restrict change to within limits that can be accommodated to the interests of such formal systems. But to the degree processes of change are restricted, the negentropic vitalities of both the individual and the broader social system are threatened, producing ossifying tendencies which can eventually bring about the societal collapses previously identified. For an individual or a civilization to maintain its sense of vibrancy, a more fundamental kind of learning must be employed: paradigm breaking. While this kind of learning emerges from what has been previously known, its implications tend to be more revolutionary than evolutionary in nature. Not surprisingly, given the conservative nature of institutions, paradigm breaking has always been resisted by institutional hierarchies, creating the conflicts between individual and societal needs to resist entropy, and institutional interests in preserving their established positions.
All learning—even that which is linear—generates uneasiness, as we move from comfortable confines into the uncertainties of the unknown. As I tell my first year law students, the most important factor in learning is to become comfortable with uncertainty; to welcome the unknown; and to be willing to look foolish in the eyes of others. Drawing upon the study of chaos, learning consists of having your thinking put into turbulence, then looking for patterns that bring order out of the resulting tumult. The alternative, of course, is to simply give up and allow the turbulence to collapse into entropy. Having sufficient experiences with linear learning, we are disposed to tolerate the distress it produces—not unlike learning to tolerate the discomforts of dental work.
But with paradigm breaking, the learning is nonlinear in nature. Again, as the study of chaos illustrates, any system, including our learning, can reach a bifurcation point, at which it moves from its regular, linear state into turbulence and irregularity. Operating from a particular model of reality (e.g., Newton’s mechanistic description of the universe), we continue our gradual accumulation of information. But over time, exceptions to such mechanistic interpretations begin to appear. For a while, such deviations are dismissed as “measurement errors” and conveniently ignored. But with the passage of time, such exceptions become more numerous and more difficult to explain away under the prevailing model. Then, as Kuhn reminds us, a paradigm breaker emerges and suggests not simply a linear accretion to a body of accepted knowledge, but a more fundamental transformation of the previous model. Settled and regularized patterns of thinking are then thrown into a turbulent state. A new paradigm is presented for consideration (e.g., quantum mechanics, or chaos theory).
Whereas the role of the linear teacher is represented by the dotted line (figure 5), the paradigm breaker can be represented as being at point “x,” far outside—but still related to— the older circle of reality. At such a point have stood the likes of Copernicus, Newton, Pasteur, Darwin, Freud, Einstein, and now, apparently, those working in the studies of chaos and complexity. By being so far removed from the accepted range of understanding, however, the paradigm breaker is more easily seen, by those within their respective circles of reality, as outrageous, dangerous, or even insane. Thus have avant garde poets and artists been called “madmen;” inventors and pioneering scientists labeled “crackpots” and even “criminals;” and philosophers and religious teachers stigmatized as “heretics” or “deluded paranoids.” From the persecution of Socrates to Lenny Bruce, from Galileo to Wilhelm Reich, from Jesus to Ezra Pound, defenders of the institutional order have exhibited little tolerance for those who dared to expand the existing circles of human understanding.

Figure 5.
We tend to forget that many major discoveries and creations produced by mankind, whether in the arts, the sciences, agriculture, business, medicine, technology, philosophy, religion, or social practices, have come about only as a consequence of a few men and women being willing to stand far outside the accepted circles of understanding and appear to be outrageous to their contemporaries. These people did not create what they did by remaining faithful to the prevailing thinking of their times. Such outrageous people moved outside their circle of understanding, which, like the forces of gravity, pressure us to return to the status quo of the center, and teased or coaxed the rest of us to step outside our existing circles in order to gain a different perspective on reality. As we amass the courage to do so, we also learn something about the transient nature of all paradigms.
We are presently moving into a fundamentally new social environment, one as dissimilar to that into which we were born as today’s world would be to that of my grandparents. How we choose to respond to such changes will tell us much about the future of our civilization. Perhaps we can take a lesson from the astronauts who first landed on the moon. They had crossed the boundary into a frontier known to no other human. While their safe return home was dependent upon the linearly-structured spaceship that had brought them to their destination, their behavior on the moon was—like that of the earthbound pioneers on the overland trails—governed by the thinking and values they had taken with them. There were no familiar freeways upon which to drive their vehicles, no speed limits to obey, nor any “safety-net” to protect them from unanticipated problems. They had to adapt themselves to new experiences with the lunar gravity which, unlike the earth’s, was not as constraining. What an apt metaphor in our efforts to discover a world lacking in what has become familiar to us.
Learning, as with other processes of change, can be likened to the “cutting-and-filling” functions of a river. As the river pursues its meandering course, the centrifugal forces on its outer side are stronger, and cause the river to eat into the surrounding banks, bringing dirt, gravel, and silt into the flow. On the inner side—where the force is weaker—silt accumulates to form new land masses. Through this process, the river continues to redefine its boundaries and move into new territory.
We live in a culture in which people like to imagine themselves on the “cutting” edge of change, a function that would include “paradigm breaking.” But like the ongoing life of the river, attention must also be given to the role of the “filling” side of change. After all, it is on the filling side of the river that the silt gathers to provide a bed for the growth of new plant life.
The cutting and filling interplay finds expression in the roles played by linear and nonlinear forms of learning and thinking. The architectural genius Frank Lloyd Wright engaged in nonlinear, outside-the-circle behavior in designing his buildings. At the same time, he relied upon more linear, mechanistic thinking in addressing such matters as structural supports, the most efficient distribution of building forces, and other physical ways in which form and function became integrated into pragmatic forms of artistic expression. Painters and sculptors have to become disciplined in specific skills in order to give an outward embodiment to their inner sense. All creative acts depend upon such interaction.
An example of the creative interplay between the forces of change and stability implicit in the “cutting-and-filling” metaphor, was the emergence, in the 1960s, of a number of independent social movements that challenged the established mindset. Fundamental changes in thinking began to arise among people interested in civil rights, peace, libertarian systems, the environment, the role of women, and a variety of alternative social practices and lifestyles. I vividly recall the dynamics occurring during these years. There was a highly-energized, spontaneous flow of ideas emanating from a mixture of intuitive insights, emotions, unbridled speculation, and the observations of earlier philosophic thinkers. It was initially an exciting period of self-discovery, in which inquiries from within became the focus of our questions to the outside world. “Why have we allowed ourselves to live in ways that served systemic interests rather than our own?” was asked in each of these social arenas, as we continued cutting into the banks that surrounded us.
Rather quickly, however, attentions shifted to the filling side. Abstract conclusions were drawn from what often turned out to be superficial insights, and new belief systems emerged. Free and open speculation became structured into ideologies, moralistic dogmas, political movements, and, ultimately, statutory mandates. New “isms” were thus born, as men and women surrendered the joys of imagination and exploration for the security of attachments to new sets of fashionable doctrines. In the words of Frank Chodorov, expressed during this time period, far too many limited themselves to “wanting to clean up the whorehouse, but keeping the business intact.”2
The question mankind has always faced is how to maintain the dynamics of this “cutting-and-filling” interplay. Previous successes have a seductive quality that attracts us to make permanent the forms that produced past benefits, a temptation that gives birth to institutions and endangers opportunities for continuing creativity. It is the interconnected processes of change that sustain an individual, a business firm, a society, or even a civilization. If surrounding conditions are not receptive to such changes, they may fail to take root and become instruments for growth. The Greek engineer Hero of Alexandria who died in 70 A.D., invented a steam engine that was seen as little more than an object of amusement. It was not until the seventeenth century that the practical implications of this tool began to develop. So, too, the Industrial Revolution flowered in England and America, rather than such countries as France and Russia, for reasons that included opportunities for creative undertakings.
While Western civilization appears to be in a state of rapid decline, the societies that have housed this culture are not destined to collapse. Historians are fond of addressing “the decline and fall” of earlier civilizations, as though their deaths ended their influences upon humankind. But in much the same way that our biological descendants continue our genes long past our lives, so-called “dead” cultures retain their influence in the present. Ancient Greek philosophers still provide a starting point for most modern philosophic studies, just as Greek thought and language influenced Rome’s culture in the years following its decline in the west. Roman law and engineering inform current practitioners in these fields; and the Saracens introduced Europeans to the concept of “zero,” which, itself, had been borrowed from India, making possible not only more sophisticated forms of mathematical analysis, but modern computers. The Saracens also brought paper and papermaking from China to the West, and replaced Roman with Arabic numerals. Along with the Greeks and Romans, the Saracens were significant contributors to one of Western civilization’s most creative periods, the Renaissance, a word meaning a “renewal” or “revival” of classical influences. Human language, regardless of its specific form, continues, like a meandering river, its ongoing processes of change and adaptation, deriving its contents from centuries of interconnections. In varying degrees of influence, the history of mankind will continue to perform its filling functions as we go on with life’s game of challenging the familiar with the novel.
Western civilization is in a state of turbulence, and seems to have reached a bifurcation point at which the thinking that underlies it, and the forms such thinking expresses, will either generate systems that are more supportive of life, or collapse into an entropic death. Technological changes continue to astound us, and may provide a base from which a social metamorphosis might occur. We humans are a pragmatic lot, and have ways of borrowing from other cultures and civilizations methods that are useful to our efforts to sustain ourselves. As individuals, we will find Roman engineering more suited to our purposes than Roman military techniques. Our creative efforts will, of course, be resisted by weak and destructive people who continue to dream of empires and conquest, and work to dam up the river lest it cut into new territory. But, as with any dam, the river will eventually prevail, providing the rest of us with opportunities for filling in and adapting creative changes to our daily lives.
The life force, in whatever form it finds expression, has always been adept at circumventing barriers placed in its way. Plants and trees maneuver themselves around rocks or fence posts in order to get more direct sunlight. In human affairs, the marketplace has long found ways of satisfying the demands that the state chooses to make unlawful. Why we tolerate the erecting of restraints—which increase the costs to life sustaining itself—is a question deserving of inquiry, particularly in assessing the conditions necessary for maintaining a vibrant civilization.
We are intelligent and resilient beings who can, and do, find new ways of achieving our productive ends. At the same time, we are social beings who require organization and cooperation with one another not only to survive, but to maintain our sanity. Our present institutionalized practices, however, do not serve such needs well. Our traditional model of a centrallydirected society, in which order is presumed to be the product of rules imposed upon mankind by coercive means, may be all but defunct. Because of the sharp contrast between institutional interests in stability and uniformity, and individual interests in autonomously-directed variation; and because most of us have accepted the conflation of institutions and society into a single entity, with the former being the expression of the latter, we have managed to make social conflict a nearly universal feature in our lives. Those who can only confront the resulting violence, economic dislocation, institutional bureaucracy and ineffectiveness, anger, depression, despoliation, alienation, despair, and other symptoms of social discord, with an intensified outpouring of proposals grounded in the same interventionist premises that have produced these problems, fail to grasp the fact that our institutionally structured world is in a state of utter disrepair.
Naiveté alone sustains a faith in the capacity of traditional thinking and institutional systems to overcome the disordered and destructive world they have produced. Our world is in crisis, and only a fundamental shift in our thinking can reverse our entropic course. Thomas Kuhn’s analysis—in chapters one and three—of the history of scientific inquiry may provide a beginning point for understanding the social transformations currently taking place in our world.
Beginning at least in the late nineteenth century, and continuing throughout the twentieth, the anti-life implications of the established model became apparent. The most virulent manifestation of these symptoms, the state, became increasingly expansive in its systems and mechanisms of power, as well as more destructive of human life, not only through wars and genocides, but through the regulation of economic activity which it was presumed state authorities had the capacity to direct for the sake of human well-being.
Many social and political philosophers who antedated the twentieth century had, through their insights and reasoning, warned us of the dangers inherent in depending upon state systems. But, like the alcoholic who does not see the long-term implications of short-term conduct, most of us failed to allow such warnings to affect our illusionary expectations. Now, in recent decades, our idealized hopes have collided with the harsh reality that the playing out of such systemic premises has proven destructive of the conditions necessary for the survival of mankind.
In hindsight, one can see that Plato’s pyramidal archetype was ill-founded. The state has long depended for its existence upon the popular illusion that it is capable of planning for and controlling events in order to accomplish desired ends. But as we become more aware of the uncertainties inhering in complex systems, the futility of trying to regularize our lives in conformity with this belief becomes increasingly apparent. Political history, whether in the realms of foreign or domestic policies, economic regulation, or other aspects of life subject to governmental authority, is a testimony to the failure of this traditional model to achieve expected ends. Inability to account for outcomes inconsistent with such expectations produces a crisis— “turbulence”—to which a response must be made. Either of two options then seems available: (1) to bring about no change at all, and allow the system to collapse into total entropy, or (2) to generate a basic “paradigm shift” that will produce a more sophisticated, orderly system. On the assumption that an intelligent response to the present organizational crisis will obviate the first alternative, the next question becomes whether there is a sufficient basis in our thinking for bringing about the necessary transmutation. As Kuhn has made clear, such a paradigm shift will occur only if a better model is available to overcome the failures and shortcomings of the prevailing one.

Like passengers shipwrecked on a previously undiscovered island, or our ancestral pioneers entering a new frontier, we must explore uncharted territory. As in survivalist stories and training programs, we bring with us a variety of tools that may prove to be either useful, or a hindrance, in our efforts to sustain ourselves in a new society. We will also bring with us, of course, our prior thinking, derived from the formal learning and other experiences that have produced our fragmented and limited understanding. Should we try to concoct an alternative model out of a reshuffling of abstract ideas, our efforts would suffer from the same shortcomings found in all utopian thinking. Unless we are consciously aware of the influence of Heisenberg’s “uncertainty principle” at work upon our minds, our efforts may accomplish little more than to confirm the prior thinking that got us to the troublesome place where we find ourselves. A belief system can never rise to a higher level of authenticity than the thinking of its creators. The unintended consequences resulting from our acting upon belief systems— which, by their nature, are inherently limited by our prior experiences—may lead us to produce the kinds of paradigm shifts discussed by Kuhn. An awareness of both the limited nature of our understanding, as well as how our acts of observation influence what we see, may help transform our hubris into humility.
If our explorations are to be a catalyst for change, rather than a hindrance, we must be prepared to think outside the circle of prior learning and find comfort in the uncertainties that accompany our endeavors. As with the advance of scientific understanding, regularities that can be more readily explained by a new paradigm will likely bring about a shift in our thinking. We may discover patterns by which living systems organize themselves without conscious, external direction. Will the order upon which our lives depend be found within the regularities that arise, spontaneously and without design, from the interplay of human behavior; or shall we continue to seek such patterns within consciously formulated rules crafted in furtherance of the interests of those with access to the systems of power that generate such mandates? Will orderliness, in other words, express the central importance of autonomy and differentiation in human affairs, or the premises of a systematically directed uniformity? Will its emphasis be a reflection of the importance of social processes, or of institutional forms?
How we answer such questions will tell us how our lives and other property interests are to be controlled. We may discover that a self-organizing society can function only on the basis of decision-making authority being diffused into the hands of individual actors, each of whom will pursue their unique purposes in the concrete circumstances before them, a condition that necessarily implies the private control of property.
We must begin by casting aside the illusory thinking that sustains the collective systems that are destroying us. The pursuit of self-interest, which expresses itself in individualized spontaneity and autonomy, goes to the essence of all living things; such dynamics drive life in its varied manifestations. Coercion is anti-life, for it forces life to go in directions it doesn’t want to go.
As long as we regard the lives and property of one another as interests to be forcibly exploited in furtherance of our respective ends, we ought not wonder why our world is fraught with wars, genocides, suicide bombings, rapes, street-gang violence, riots, murders, terrorist attacks on skyscrapers, robberies, and all the other atrocities we so unthinkingly accept as “human nature.” Such behavior is the product of our assumptions about how human society is to be organized, which, in turn, are brought about by our thinking.
As command-and-control systems continue to erode, it is time to consider whether a holographic social model might be better suited to our purposes. Drawing upon the metaphor of Indra’s Net, can we think of our relationships with others in terms of horizontal interconnectedness rather than the divisive categories to which we have been conditioned? Can we learn that most civilizing of all traits: to respect the inviolability of one another’s person? Will we be able to understand that a system grounded in mutual respect for our claims to immunity from coercion can only be based on the private ownership of property, a concept that goes to the essence of the question of how authority will be exercised among people? Knowing how, and by whom, decisions over people’s lives and property are made tells us whether a given society is organized through individual liberty or political violence.
As we synthesize our understanding of the incalculable nature of complexity with our expectations of social systems, we may develop a deeper understanding of the biological, social, and spiritual necessity for autonomy and variability. Instead of having such values as liberty and diversity tolerated as little more than atavistic expressions of ancient liberal sentiments, we may discover why our very survival depends upon them. Our institutionalized practices have been built upon a distrust of ungoverned life processes, but such formalized systems are destroying human life, society and, apparently, Western civilization itself. We need to reaffirm not just the idea, but the functional reality of spontaneity and dissimilarity within society.
In many respects, as our world has become more industrialized and institutionalized, it has fallen into patterns of uniform, standardized behavior and, what is far more dangerous, standardized thinking. The idea that human conduct should be restrained within templates of institutionally defined regularities is a long-standing article of faith within modern society. Nowhere is this premise more firmly entrenched than in the belief that a monolithic, state-controlled legal system must superintend human affairs.
As I have demonstrated, such institutionalizing practices are being challenged—and without centralized direction—across the tapestry of human society. Perhaps as a social expression of Newton’s third law of motion, there has been a countervailing emergence of numerous subcultures within different nations. Such tendencies should remind us of the need for the proliferation of pluralistic values and practices within society if we are to remain vibrant and creative and, in the process, continue to resist our entropic fate. Harmony can arise only out of diversity. Where there is no diversity, no differentiation, there is only monotony. One of the most important lessons that chaos theory can provide is that our culture must become one in which the commitment to autonomy and diversity is the culture.
If the rest of nature has discovered the harmonious implications of the inviolability of property boundaries within a species, what prevents us allegedly intelligent and rational humans from having such an understanding? If property boundaries do not serve as the basis for social order, what will? We need not speculate as to the alternative, nor of its consequences. We need only look at our present world, where constantly changing whims and power alliances of some are forcibly imposed upon others; where differing groups compete with one another for control of the machinery of the state to plunder, coerce, and even destroy one another; and where “intelligence” is considered an integral part of the process by which people ritualistically slaughter one another. The twentieth century’s two hundred million victims of wars, genocides, and “sanctions,” should remind us of the deadly consequences of behavior that knows no boundaries—i.e., of practices not constrained by principled limitations that can reasonably assure each of us an immunity from being violated.
Our institutionally-directed society has taught us to think of “right” and “wrong” social behavior largely in terms of standards that the state promulgates. It is sufficient, for such thinking, that a legislative body or the executive branch of government has formulated rules that the courts are willing to enforce. In this way, liberty and the inviolability of the individual has given way to legalistic notions of “procedural due process” as a principle for restraining state power. Such a politically-based standard allows for any form of conduct, even that which causes no physical injury to another, to be labeled criminal or tortuous if a sizeable number of people object to it. The history of “victimless crimes” (e.g., drug use, prostitution, gambling, etc.) proves the point.
With the invasion of property boundaries as the standard for what is appropriately called “improper” behavior, the opportunities for state-enforced fashions or whims to limit the liberties of individuals is minimized. There is no “wrong” that does not reduce itself to a measurable trespass to private property interests. Indeed, any politically-defined and enforced “wrong” that does not rise to the level of a trespass would, itself, be a trespass upon the interests of those regulated.
This is why a book on property and liberty requires so much attention to the nature and forms of our social systems: these interests are unavoidably intertwined. If we are to live as free, self-controlling people, the underlying premises through which we cooperate with one another must reflect such purposes. Cooperation, the organizing principle of the marketplace, is grounded in a respect for the inviolate nature of each other’s property boundaries. Coercion, the essence of all political systems, is premised on a rejection of the property principle.
It is critical for us to re-examine the basic assumptions upon which our social systems are to be based. What are the values and the practices we are to embrace? We might begin with the inquiry offered by Franz Oppenheimer, who distinguished the two basic methods for acquiring wealth. The first was the “economic means,” which arose from the free exchange of property claims in the marketplace; the second was the “political means,” which consisted of the use of violence to despoil property owners of their property interests.3 As the state has increased both its powers and appetites, the political means has become ascendant in our world. But growing public opposition to wars, eminent domain, regulation of economic life, and taxation, has both encouraged and accompanied the processes of decentralization that are working to dismantle governmental structures.
The political establishment no longer enjoys the confidence that earlier generations placed in its hands. Its response has been to increase police powers and surveillance; expand penitentiaries and prison sentences; build more weapons of mass destruction; and create new lists of enemies against whom to conduct endless wars. The state has become destructive of the foundations of life, particularly of the social systems and practices that sustain life. Were its attributes found within an individual, it would be aptly described as a psychopathic serial killer! But its destructiveness can no longer be tolerated by a life system intent on survival. Unconscious voices are informing conscious minds that it is time to walk away from these instrumentalities that war against life. The state is like a chicken that has just had its head chopped off: it flaps and flails around in a noisy and messy outburst of disordered energy, spreading blood in its trail. But it is all reflexive action with no creative purpose beneficial to the life of the chicken, whose fate has already been determined.
Is it possible that the intellectual transformations that have driven scientific revolutions could teach us anything that might help bring about fundamental changes in our social thinking in order to extricate humanity from self-destructive practices? The study of chaos reminds us that our world is, indeed, quite complicated. At the same time, we are beginning to understand that, if we are to live well, our thinking—including the practices and systems that our thinking generates—had better not be complicated. To presume that a complex world can be rendered orderly through the imposition of elaborately structured systems and rigidly enforced rules, is to fail to comprehend nature’s inherent orderliness, as well as the dangers associated with the disruption of such undirected regularities. As we learn more about chaos, including how our inherently limited knowledge and understanding can never keep up with the interconnected complexities of our world, we may discover that the quality of our lives depends on learning how to live with greater flexibility, diversity, spontaneity, and uncertainty than our institutionallystructured systems allow—qualities demanded by the unpredictable and uncontrollable nature of a complex universe.
It may be said that quantum physics, chaos theory, or holographic systems have, at best, metaphorical applications to human affairs. But such an objection begs the question, for our understanding of the world has always advanced through the use of metaphors. What our minds embrace as “truth” largely consists of a sophisticated labyrinth of interconnected abstractions, put together by our minds with such detailed consistency as to cause us to believe they represent objective truth. Abstractions piled upon abstractions have produced a base of conscious understanding grounded in metaphor.
It has been our practice to apply metaphysical models as broadly as possible. Hegel’s “dialectic” was used by Karl Marx to explain his social and scientific models. Religious cultures have provided metaphorical explanations for regularities in nature as expressions of a divine will, just as Newton found it useful to interpret such orderliness in the mechanistic form of a giant clockwork. Our organizational practices have also been grounded in analogical thinking. Thus, the pyramidal model of social systems has its origins in beliefs about the nature of order in the universe. If we think of order as a quality imposed upon the world—whether by divine forces or so-called “laws of nature”—we will be inclined to embrace social systems that reflect such a model. As our understanding of orderliness is transformed, we should expect our social systems and practices to reflect such changed awareness. Thus, if the study of chaos, complexity, and quantum mechanics, informs us that order is a quality that arises from—rather than being mandated upon— human behavior, we may find ourselves attracted to a holographic metaphor for society.
The underlying premise of a holographic model is that orderliness is distributed throughout the system as the product of the interconnectedness of its subsystems. The regularities of the marketplace arise not through the designs of planners, nor even the intentions of market participants, but as the unintended consequences of people pursuing their disparate and often contrary interests. The interplay of such varied purposes, with each participant committing his or her resources on behalf of a desired end, generates widespread patterns for which all participants, but none in particular, are responsible. It is the diffusion of authority into the hands of resource owners that gives the marketplace its resiliency and viability. It is this same dispersion of energy that gives meaning to a holographic system.
A spontaneous order arising through adaptability, rather than design, is found throughout non-human nature in animal and plant life not known for being centrally-directed or supervised by outside forces. The concept of evolution is grounded in life forms responding to changed conditions by altering their behavior and/or biological structures, a practice echoed by mankind in the history of industrialization. In the continuing evolution of technologies, we see the same interplay of stability and change producing life-enhancing modifications beyond the capacities of centralized authorities to create.
Perhaps the metaphor provided by the dynamics of a river system can help us transcend our present mindset that so insistently wars against life. The words of Will Durant, with which I began this book, make a fitting contrast between the violence and destruction wrought by the force of the river, whose course has long entertained our dark side as the study of history, and the peaceful activities taking place on the banks where people live and produce the values necessary for the sustaining of life. It has been my purpose to explore the conditions that must prevail on the banks if a free, productive, and humane civilization is to exist.
The question that has always confronted mankind is whether society will be conducted by peaceful or violent means. Our conditioned thinking, however, has kept us from examining the implications of these alternative forms of behavior. The distinction between such practices rests on whether trespasses will or will not be allowed to occur. It is not that property trespasses can produce violence; they are violence, whatever the degree of force that is used. The property principle—in restricting the range of one’s actions to the boundaries of what one owns— precludes the use of violence. As long as we choose to deny the necessity of this principle, we should cease getting upset over the political and private acts of violence that are the unavoidable consequences of failing to respect the inviolability of the lives of our neighbors.
The extent of the social harmony we generate can be measured by the degree of respect we accord this principle. The concept has been tortured, twisted, and misunderstood by people in virtually every segment of society, including political ideologues of both the “Left” and “Right,” as well as by judges and lawyers. The reason for this confusion is rather clear: for men and women to understand the nature and importance of private property would call into question the entire political order, which is premised upon the formal usurpation of authority over people’s lives and property. In our politically institutionalized relationships, divisive thinking manifests itself as coercively structured systems for transgressing one another’s property interests.
Although we continue to recite bromides about our culture’s commitment to the private ownership of property, most of us have little understanding of the nature of ownership, or how the state regularly transgresses such interests. The depth of confusion on the part of most Americans about private property was brought home to me a number of years ago when I was visiting London. While waiting for my wife and daughters in an indoor mall, I decided to check on the amount of film remaining in my camera. As soon as I took the camera from its case, a security guard came up to me and said, quite politely, “I’m sorry sir, but you cannot take pictures in here.” After assuring him that I was not intending to take pictures, I asked why there was such a prohibition. “Because it’s private property,” he informed me. As I reflected on his response, I pondered how a security guard in a shopping mall back home in California might have responded to such an inquiry under similar circumstances. I imagined replies ranging from “because those are the rules,” or “because I said so,” to “I don’t know: that’s just what we’ve been told.” I wondered how many American shopping centers I would have had to visit before finding a security guard or building manager who would regard it an adequate answer to respond “because it’s private property.” How ironic—although it may provide but another instance of the unity in apparent opposites—that, in a socialistic nation such as Great Britain, it should be considered a sufficient explanation that a property owner does not allow photographs to be taken.
The most compelling case for the private ownership of property lies in its implicit affirmation of the primacy of individual interests as the focus of any social arrangement. The measure of any society’s respect for the innate worthiness of individuals is found not in abstract platitudes, but in the degree of commitment people have to the maintenance of exclusive realms of decision-making within which each of us is free to direct our own lives and pursue our dreams and ambitions. No society can reasonably claim to be humane and decent as long as the purposes and desires of individuals are regarded as secondary to any collective undertaking. Until we are able to grasp this fundamental point, and learn to move beyond our attachments and subservience to institutional identities, human society will never amount to much more than a form of bondage—of forced servitude and plunder carried out through “due process of law.”
What I have endeavored to express herein is not just a new set of ideas, and certainly not an ideology. The property principle is a reflection of how the world actually works. That other living things follow such practices—with no known belief systems or dogmas to direct their behavior—should suggest to us some underlying principle common to life itself.4 But mankind, whose collective arrogance presumes a special dispensation from nature, has ignored such a principle to its detriment. Only a very intelligent species has been able to construct systems, practices, and beliefs that have placed us and kept us in a state of perpetual war and misery with one another! Perhaps the awareness of what we are doing to ourselves will energize our intelligence and generate new patterns of living.
The study of both physics and economics informs us that there are costs associated with every activity. The fundamental conflict between a system of privately owned property and a political system is this: where private property interests are respected, the costs of human action are borne by those who desire a given activity and are prepared to pay the full costs thereof by committing their resources to its achievement. The nature of politics, on the other hand, is to forcibly transfer such costs to others. When we compel others to commit their lives and other property interests to programs they do not wish to support, we foster social conflict, which reveals itself in the form of trespasses against individuals. There is an integrity to a system of private property in that the costs borne, and the benefits received, by a given course of action are experienced by the owner. There is no integrity in political action, however, as the relationship of costs to benefits is fragmented.
Contrary to the polemics of Hobbes and other statists, every political system is an institutionalized means of forcibly transferring control of property from owners to non-owners. Of course, this is too candid and unvarnished a statement for most conventional, formally educated men and women to comfortably consider. The price of admission into the antechambers of the philosopher kings has been one’s tacit agreement to never call a thing for what it is, for truthfulness and clarity would allow others to apprehend the nature of the game being played at their expense. Because we prefer our illusion that politics is a noble, socially responsible undertaking, we resist these more pedestrian explanations, or dismiss them as “simplistic thinking.”
But what practices are more “simplistic” than those grounded in the belief that social order can be generated by an institutionalized elite using formal tools of violence to compel individuals to act as the elitists choose them to act? What arrogant assumptions underlie both the propriety of employing such methods and the belief that sufficient knowledge of means and outcomes lies in the hands of those enjoying the use of such coercive power? As we are discovering, life is far too complex and subject to far too many perturbations to any longer permit the illusion that human society can be organized and run from the top-down. It is time we gave Plato a decent burial.


If there is any period one would desire to be born in, is it not the age of revolution; when the old and the new stand side by side, and admit of being compared; when the energies of all men are searched by fear and by hope; when the historic glories of the old can be compensated by the rich possibilities of the new era? This time, like all times, is a very good one, if we but know what to do with it.

— Ralph Waldo Emerson

Boundaries of Order: Private Property as a Social System