Constant Conservative Ron Paul...

[Ben]

What is "rational self-interest?" Most people will say they are willing to sacrifice now, while they are alive, to make life better for their grandchildren and great grandchildren. The successful propagation of your genes through future generations is tautologically advantageous for your genes, but it would be difficult to detail an argument that it was rational for an individual to make sacrifices now in order to make life easier for future individuals who might share some copies of his genes. The point is that rational self-interest doesn't cover the bases. Rational self-interest alone cannot drive an economy that promises the stability and agility that is required for our future survival. Rational self-interest never gets beyond the rational motivations of the self. It is an insufficient grounding for a philosophy of economics and governance. Empathy, ethics, morality and sacrifice are not derivative of rational self-interest and yet they necessary components of living life successfully with others.

I agree with you Trish when you write: "Rational self-interest alone cannot drive an economy that promises the stability and agility that is required for our future survival."
Oil companies pursue their own interest. Regardless of the harm it may cause to future generations. Namely global warming.
So-called rational self interest could also be: I -- or we -- just don't care about future generations. Which, of course, is frightening.
ExxonMobil is concerned about the next quarterly profits. That's considered rational.
But what will global warming do to people who walk the planet in, say, 50 years or 100 years? Or 150 years? Or 200 years? I mean, at the dawn of the so-called Industrial Revolution many would've said: what impact will this have on future generations. Some would've said: Who cares; we'll be dead. But we're living with the consequences of that. The good consequences -- and the bad.
Our economic system is saying that: profits are more important than people. That's the scary nature of these so-called rational corporations and the entire economic system.

Stand Still for the Apocalypse:
http://www.truthdig.com/report/item/...ypse_20121126/

[trish]

I wonder even how one’s interests are to be judged rational. “Is it rational for individual X to have interest Y?” How does one decide questions of this sort? What is the rational procedure for deciding whether an it is rational for X to have interest Y? What factors are rationally relevant to making such a judgement? Do interests arise and develop within an human mind or are they rationally chosen? I wonder whether the whole concept of “rational self-interest” isn’t indicative of a self-contradictory misunderstanding of human psychology that was invented to bolster a reactionary economic ideology.

Given interests it is easy to see how reason can be applied to decide how best to optimally promote those interests. Suppose you have an interest Y. “I will act to promote interest Y,” can be used as a postulate (a starting point) in any chain of deductions you make to justify an action. For example from “I will act to promote Y,” might be used to in a chain of deductions that concludes with “I will perform action Z.” If the deductive chain is logically valid one might say that Z is the rational thing for you to do. But what axioms do we use to decide whether it was ever rational for you to adopt, develop, grow, happen upon or choose interest Y? Does rationality apply at this level?

X has a wife and a mistress. One might say X has two conflicting interests. One might say that if X has a wife, then he has no rational justification for having a mistress. Another might say it’s irrational for X to remain married to his wife if he wishes to maintain his interest in his mistress. Still, a more urbane observer who knows the family intimately might not see the conflict in these interests as very compelling, not significant enough to require X to sacrifice one interest for the other. There are no set rules to decide which interests are rational and which aren’t; i.e. the word “rational” has no application here. We have interests because human beings develop interests and pursue them. Should Mr.K sell his business and devote his life to writing? He loves both. He can afford it either way. He just has to decide which of his consuming interests should be allowed to oust the other. But he can’t decide that. He just has to wait and see which interest will eventually consume all his attention. Rational self-interest doesn’t apply.

Q is devoted to debauchery, he is a true hedonist. He works hard, saves up money and every year he takes a long vacation in one of the world’s sex resorts. Currently he’s a happy man. Surely Q’s interest in debauchery is irrational, right? It’s pursuit increases his exposure to life threatening diseases, it burns through his money etc. etc. Is it always irrational to risk exposure to disease? Of course one can think of situations where the risk is warranted. If the risk was taken in pursuit of an interest worthy of risk we would say the risk was warranted. We all agree that the risks taken by police and fireman on 9-11 was a noble and worthwhile risk to take. Debauchery not so much. But what if Q thinks the pleasures are worth the risk? Q has two interests, his health and his pleasures. Neither is rational nor irrational. Those words just don’t apply to interests. He simply has two interests that are in conflict. No one has a rational basis for deciding which he should pursue. No one. Not even Q. But Q, and no one else, experiences his interests. Only in Q will one interest win out over the other. Which one wins is not a matter rationality. We can say that his health is more important to his future pursuits and interests; but that’s not the same as his self-interest.
It seems to me that Rands philosophy and libertarianism in general is based on fallacious concept, namely, rational self-interest.

People have interests. They all arise from within the self. So the “self” in “self-interest” refers to the intension of the interest, not on who has the interest. So if X has an interest Y, how does he decide whether Y is a self-interest? How does X discern the intension of Y? Suppose Y is the welfare of his mistress. Well it’s not about X’s welfare. So maybe it’s not a self-interest. But it is about HIS mistress’s welfare, so maybe it is a self-interest.

Let’s try something easier. X has taken an interest in the plight of sick and poverty stricken child whom he never met. Responding to a charity ad, X sent money to help the ill child. The interest, call it C, is the health and welfare of the child. Is it a self-interest? It is certainly one of X’s interests. It sprung from within his breast (with a little help from the ad); but the intension of C is the child’s welfare. Most of us would say that for X, C is not a self-interest. So if it couldn’t possibly be a rational self-interest. Rand’s libertarianism would advise X not to pursue C. In fact Rand claims the it’s people pursuing non-self interests who muck things up. Objectivism claims the world would work better if we all just stuck to pursuing our own “rational” self-interests.

The first example about X’s interest in the welfare of his mistress muddies the waters a bit. It demonstrates that the notion of “self-interest” is fuzzy around the edges; i.e. not absolutely clearly defined. The second example, however, demonstrates that we can find unambiguous cases of non-self-interest. But the second example also provides a clear counter to the objectivist dictum that one should only pursue one’s rational self-interest.

Some Randians will argue that X is pursuing his rational self-interest when sending money to charity sponsoring the child. They will argue that X is free to determine his own interests and when he makes a free and rational choice those interests become his rational self-interests. If you have a genuine interest it is in your self interest to pursue it. If the first example muddied the waters a bit, this attempt to save objectivism makes them opaque even to Superman’s X-ray vision. It not only make “rational self-interest” a vacuous concept but it renders “self-interest” vacuous as well.

The whole pursuit of objectivism is simply ill-conceived. Rand was a writer of young person’s books (a bad one at that). She was not a philosopher, nor was she an economists. She was born and grew up in Russia 1905, suffered under the communist rule and emigrated to the U.S. in 1925. Her writings are understandably reactionary diatribes against “collectivism.” That doesn’t make them right, nor does it make selfishness a virtue.

[Stavros]

Trish, there is a large literature on 'rational choice' theory, but it might help to think historically about the growth of capitalism and the way in which the spread of it outside Europe and the USA collided with existing economic systems, and how, it seems, capitalism has triumphed -but at whose expense? I am thinking, for example, of the moral economy contasted with the market economy.

The market economy became the means whereby the Ottoman Empire in its Middle Eastern domains in the second half of the 19th century, and for example the British Empire in East Africa, attempted to integrate 'backward' areas that were not producing profits, into a centrally managed system that craved them.

The growth of agriculture in Palestine, and what today is Jordan, Syria, and Lebanon was built on existing markets, in fruit and vegetables, cotton and silk and so on, but collided with the moral economies which existed side by side with these markets, most of which were based on large cities and towns such as Jaffa (oranges); Beirut and Damascus (silk and cotton). Outside these markets in rural areas, people practised subsistence agriculture which in a good year meant they could sell their surplus in markets, but mostly it was a moral economy where decisions were made that were considered good for the community as a whole rather than decisions that were determined by what was good for markets. Thus land may be farmed in rotation, with one family's land lying fallow for a year to protect its soil, with that family being compensated for its loss of production by the others; just as the distribution of goods would be decided morally - on the basis of need- rather than in market terms =the ability to pay. The Ottomans, and subsequently the British and the French, hated this moral economy because by the standards of the market it was not considered productive, whereas markets were viewed as dynamic, and giving people an incentive to produce for themselves through their benefit from sales. However in a precarious environment where it might not rain enough to produce a good crop for three years in a row, is a market economy superior to a moral economy?

In Kenya, there is a powerful argument that an undercurrent in the Mau-Mau rebellion of the 1950s was precisely the dislocation of the moral economy that had existed among the Kikuyu, which suffered as their lands were taken over by White setllers practising agricultural capitalism based on the production of goods for markets (in tea, coffee etc). The crisis this engendered in terms of the inheritance of land -lost through colonial disposession-, and the distribution of its products in a roughly equal manner throughout the Kikuyu -lost through the creation of markets- could not be resolved in the context of colonial rule -indeed, it was because some Kikuyu abandoned the 'age old' practices to graft themselves on to the colonial system in order to benefit from it tha explains why Mau-Mau in essence was a war within the Kikuyu for the soul of the Kikuyu people. Capitalism, in this sense, is the destroyer of one world, and the creator of another.

[trish]

Thank you Stavros for your examples. The contrast between the “moral economy” of the rural regions outside Beirut and the “market economy” of the Ottomans is engaging.

My concern in the last post was theoretical and focused not so much on the whether objectivist economic principles are good or bad but whether they are conceptually coherent. One more brief attempt to clarify:

To choose rationally, one needs to assess the costs and benefits of various choices. But one man’s cost may be another man’s benefit. Costs and benefits are measured relative to one’s interests. Rational choice is possible only when one has a clear idea how each possible choice would benefit one’s interests and how each possible choice would impede one’s interests. Clearly then, rational choice is possible only if one’s interests are available before the rational analysis begins. Therefore, to choose one’s interests rationally it is required that one’s interests already be known! There is no such thing as rational self-interest. There are only interests.

[Stavros]

Thank you Stavros for your examples. The contrast between the “moral economy” of the rural regions outside Beirut and the “market economy” of the Ottomans is engaging.

My concern in the last post was theoretical and focused not so much on the whether objectivist economic principles are good or bad but whether they are conceptually coherent. One more brief attempt to clarify:

To choose rationally, one needs to assess the costs and benefits of various choices. But one man’s cost may be another man’s benefit. Costs and benefits are measured relative to one’s interests. Rational choice is possible only when one has a clear idea how each possible choice would benefit one’s interests and how each possible choice would impede one’s interests. Clearly then, rational choice is possible only if one’s interests are available before the rational analysis begins. Therefore, to choose one’s interests rationally it is required that one’s interests already be known! There is no such thing as rational self-interest. There are only interests.

First of all I should make it clear that I do not believe in a processional theory of history, that a moral economy pre-dates a capitalist economy. In those parts of the Middle East dependent primarily on rainfall as the water supply for agriculture, a moral economy can be a response to a crisis following a sequence of seasons with low or insufficient rainfall, but also political crises created by war or invasion. Collective action thus becomes a 'rational choice' but in this way exposes the broader question inherent in the assumption made by rational choice theory: why? Why would an individual subsume their interests in a collective decision-making process over which they may not have any influence or control?

Rational Choice theory became dependent on mathematical modelling and game theory to explain the myriad of choices that people make, but could never adequately explain social norms, except as describing them as social norms! Just as rational choice can become a circular argument by claiming all social or economic actions are rational.

For example, to most people maximising the benefit of one's skills is a rational choice -if you have a degree in medicine and have trained as a doctor, it makes sense to become one, rather than opt to drive a taxi; but even that can be a rational choice if, for example, an accident as an intern engendered a crisis of self-belief that made practising medicine so traumatic it became impossible. With therapy, it may be possible to practise medicine yet again. Similarly, it may seem irrational for a 19 year old to steal a car, given the sanctions imposed by society upon it as a criminal act. But if the 19 year old is not seeking an economic reward in money for the vehicle, but a social reward in the approval of his gang, then it is a rational act. The same goes for the Japanese kamikaze pilot or an Islamic suicide bomber -neither act has a direct financial reward for the man, both seek appproval from their most valued social group -Japanese patriots, and those Muslims who believe suicide bombings are 'martyrdom operations' that bring glory rather than shame on the family.

What rational choice theory stumbles over is precisely the apparently irrational acts of individuals that can only be explained by norms -why, after all, should a teacher join the teachers union if there are so many teachers in it one more won't make a difference, but still benefit from the wage increase negotiated by that union?

So the issue may be, as you suggest, that the problem lies with the emphasis on rationality as the driver of economic and social behaviour; that human beings have individual desires, but social needs; that we contain within ourselves contradictions that rationality can neither predict, nor explain.

This is a useful overvew of rational choice theory:
http://www.soc.iastate.edu/sapp/soc4...onalchoice.pdf

[trish]

I agree with your last post. It comes pretty close to expressing what I was trying to say. Nicely done.

I'm am somewhat familiar with Von Neumann's and Morgenstern's game theoretic approach to economic theory. They, I think, would've been the first to admit their analysis presupposes the players have a known and fixed set of quantifiable interests. Their theory tell the players how to play rationally so as to optimize those interests, it doesn't tell them how to choose their interests. That is why rational choice theory fails to adequately deal with the formation of interests that arise out of social norms, and personal fascinations.

Thanks for the link. I'll check it out.

[broncofan]

I'm sure there are many games where an individual acting rationally in his own self-interest ends up with a worse outcome because he failed to take into account the behavior of another player (or is the "rational" person a game theoretician?). A Nash equilibrium arises when each player is making the best decision he or she can make taking into account the decisions of all other players, thereby making it irrational to defect. Yet it is probably more common for rational decisions made on an individual basis to have unintended consequences, sometimes resulting in a position worse than status quo.

I think the explanation of social values shows that rational interest cannot be very easily approximated, but there also seems to be something inherent in the nature of competition. People will do things in competition that will inevitably destroy them in the long-run. Win the battle lose the war. Pyrrhic victory. We hear about this in war, but in economic competition, such as with oligopolies selling highly elastic goods, individual self-interest results in a premium good being converted into a commodity. Aggrandize market share and end up with a worthless market. Of course I suppose it depends how you define group, because society is composed of consumers too who could argue they would be harmed by collective action in that paradigm.

Why subvert your individual decision-making to the group? One reason is that people do not let you act in a vacuum. They are aware of what you are doing and will retaliate if they think you trammelled on their interests.

[broncofan]

Just as rational choice can become a circular argument by claiming all social or economic actions are rational.

This sort of gets back to fixing meanings for such terminology. But it is especially difficult with such words as rational or reasonable or self-interest. Can every action be considered a selfish action because by subverting self-interest you serve your self-interest? Is everything rational in the sense that some interest must have been valued favorably to all those competing? Is the determination of what's rational subjective and individualized or objective based on group norms? If the determination of what is rational is subjective, then every action must be rational, unless one made a decision when he was in a state atypical for him. But if he was, then it would be rational for him to make such a decision when in that state. Tremendous circularity.

But this puts the lie to all arguments about rational self-interest because they all impute differing degrees of omniscience to the actors. And it presumes some sort of fixed relationship between information and choice (input and output). Any decision is made within an extraordinarily complicated, fluid system.

[Ben]

Saving Economics from the Economists:

http://hbr.org/2012/12/saving-econom...conomists/ar/1

[trish]

Is that like saving climatology from climatologists? Or biology from biologists? Or is it more like saving theology from theologians, or parapsychology from parapsychologists?

Economics is not the study of business management. Nor is it the study of entrepreneurship (whatever the fuck that is). Just as thermodynamics seeks to establish the emergent properties of complex, many-bodied physical systems, economics seeks to establish the emergent properties (if there are any) of complex, many-bodied economic systems. The emergent laws of thermodynamics cannot predict the behavior of a particular molecule, but only the interrelationships between statistical variables such as average kinetic energy (temperature). Similarly, economics cannot predict which stocks will rise, nor can it tell you how to manage your business. It cannot predict the behavior of single constituent elements of the system. It attempts to understand the system at the macroscopic level. Economics, like thermodynamics, or climatology should indeed be driven by empirical data, but at the appropriate scale. Just as the weather on a single day at a single place is irrelevant, to climatology, the details of a single business and what made it fail or succeed may or may not be relevant to economics. We should probably leave home economics to home makers and leave economics to economists.