Dear J:
There are several ideas here. I disagree with you that reputation can’t be bought and sold. It is. It is called good will. Firms sell for more than their capital equipment based on that type of reputation.
On the other hand, no one owns his reputation, since it consists of the thoughts of other people, and none of us own the thoughts of other people. I make this point in my book Defending I, in the chapter on libel.
Also, I don’t see how this issue impacts on the case for anarchism, which I support.
Best regards,
Walter
Walter E. Block, Ph.D.
Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics
Loyola University New Orleans
6363 St. Charles Avenue, Box 15, Miller Hall 318
New Orleans, LA 70118
Skype: Walter.Block4
tel: (504) 864-7934
From: J
Sent: Thursday, January 03, 2019 2:17 PM
To: Walter Block <[email protected]>
Subject: Re: Does the calculation problem explain politics?
The historical review of the agreed values of voluntary exchanges using money is
the best way to anticipate an agreeable value for future planning.
Unfortunately, some goods cannot be exchanged at all but are nonetheless
essential for mutual agreement in ordinal value for any cooperation to happen.
Reputation regarding the evaluation of goods, services, and the behavior of
others is one such non-economic good.
If reputation could be exchanged with the same ease as money, or if a commonly
agreed reputation could persist in spite of aggression, there would tend to be
no state for all cooperation depends in part on having shared non-economic
values to proceed but systematic aggressive cooperation also depends on the
potency of aggression to deprecate voluntary valuation which forces acceptance
of the lesser-of-two-evils.
Is this an old or fallacious idea?
Thank you for your time,
J
On Thu, Dec 27, 2018 at 1:10 PM Walter Block <[email protected]> wrote:
Dear J
Melt this down to 150 words, and I’ll respond
Best regards,
Walter
Walter E. Block, Ph.D.
Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics
6363 St. Charles Avenue
Loyola University New Orleans
New Orleans, LA 70118
tel: 504 864 7934
skype: Walter.Block4
From: J
Sent: Thursday, December 27, 2018 5:26 AM
Subject: Does the calculation problem explain politics?
I have been puzzled by some paradox. There seems to be nothing that government intervention improves, yet it always tends to dominate up to the point of its own collapse or some mysterious forces that limit it only in some places and times. As an anarchist, I’m bothered by the fact that anarchy isn’t the predominant form of all institutions and I have struggled to explain why government exists and what can be done to stop its pernicious effects.
This is part of a multi-part response to try to resolve this. I want to make sure I get my premises correct before proceeding. I am considering the possibility that the arguments around the economic calculation problem explain why there is government and politics, and suggest a solution toward anarchy. I have shared with some libertarian friends who sometimes find my arguments compelling. Perhaps you can rebut the argument or add to it.
I have been thinking of the socialist/economic calculation problem that Mises is so famous for discovering. I know that at small scale communities, smaller than Dunbar’s limit, interpersonal valuation of subjective utility are made to an extent that a stable tribal or Amish society is possible. I wouldn’t claim any methodological soundness of the valuations, I’m just clarifying my thoughts so you might be able to clear up something for us in our NH community. Large communities, like cities must collaborate largely in a decentralized and anonymous way using money to establish the correct ordinal valuation of goods continuously. It’s clear that a few factors are necessary to avoid the socialist calculation problem:
1. a lack of money manipulation – sound money
2. a lack of commerce manipulation – liberal exchange of goods
3. property rights enforcement – exchange is no good if goods are simply stolen, taxed, extorted, or otherwise absconded afterwards
4. liberal (in the classical sense) exchange of goods using money
I may have missed something or gotten something wrong. For my concerns what matters is that there are certain rules to follow otherwise there is no practical/effective way to order a complex society using economic goods in a sustainable way. To the extent that the rules are followed or to the extent that the economic activity happens outside the confined domain of voluntary exchange for money requires inferences which are ideally based on reverse imputation (valuation based on observed demonstrated preference). These are are necessarily costly transactions to arrive at and never as accurate as reverse imputation. Also, eventually a tipping point is reached and society regresses toward the Crusoe economics of small primitive tribal societies despite their mutual preference otherwise. To correctly place a rubber ducky on the value scale for a city of inhabitants without any sound money, without demonstrated preference, or property rights of the rubber ducky, would take god-like investigative efforts, the valuation couldn’t be fully trusted regardless of the investigative effort,
Here is the first premise: in order for goods to be usefully compared, in ordinal utility, at every size of society, which is measured in terms of individual people, demands voluntary transactions, using sound money, of goods having stable and objectively agreed upon property rights.
I would paraphrase the finding of the economic calculation problem as to the extent any combination of sound money, property rights, and voluntary exchange is forgone is the extent to which inter-personal valuation is more disagreeable. Am I wrong to see this as something that we could order? It seems that socialism fails less miserably in smaller communities suggesting it has diseconomies of scale more than a categorical distinction in effective outcomes from voluntary markets with property rights and sound money. My argument depends on the premise that there is an objective difference between prohibiting all transactions at all times, and prohibiting all but one type of transaction. I don’t think we can say one type of manipulation is more harmful because all manipulation makes comparison difficult or impossible, but we can say less of the same manipulation is better. Once someone destroys your rubber ducky, determining the “correct” remuneration is costly, error prone, and unstable because we are left with the fundamental problem of interpersonal valuations of subjective utility or preference. If the value of money constantly fluctuates from regulation, then likewise remuneration is difficult to assess correctly.
The second premise is that the concomitant complexity or difficulty of valuations that arise from departing from voluntary exchange, property rights, and sound money can be compared ordinally per each departure.
So we could agree that determining the “correct” remuneration for destroyed rubber duckies is less difficult when there are more voluntary transactions of subjectively the same rubber ducky as per the victim, ceteris paribus, than in situations where all people simply abstain from the exchange of rubber duckies.
The only other premise needed is that there are a classification of goods that are by their very nature impossible to directly and objective compare but are nonetheless necessary to exchange in a complex society.
Reputation for respect of others’ property rights is not something that can be exchanged like rubber duckies, but it can be easily destroyed, and without it we are left dealing with the complexities of interpersonal comparisons of subjective utility because nobody will voluntarily exchange with people that cannot be trusted.
I believe this paradox can be resolved in favor of anarchists and doing so will yield a solution to the sate. What are your thoughts? Am I simply unaware of some relevant literature? Did I assume an unsupported premise?
Thank you in advance for any time you devote to helping me understand this,
Justin Hale
1:02 pm on April 11, 2019
