That philosophic ideas count is no news to Austrians whose economic theories rest on
conceptual analyses of action and value. But philosophy can confuse as well as guide. This
morning I will discuss two philosophical mistakes that in recent times have supported dangerous
idiocy and while undermining the market. I begin with the more familiar mistake, that
of Reifying Society.
This is the belief that society names an entity with its own causal powers, and that people
are the way they are because society makes them so.
Like a mother ship sending out smaller versions of itself on specific missions, the treatment
of society as a thing over and above its component individuals leads to more specific abstract
Nouns such as crime, wealth, poverty, savings and peer pressure, being treated as names
of real factors. Unlike most fallacies, which are committed when people do not heed what
they are saying, reification is taken by its devotees not as a blunder, but a major sociological
discovery. Analytically speaking, the worst effect of reification is to give rise to pseudo-explanations.
People to entities like society or crime appeases the appetite for understanding without supplying
genuine intellectual nourishment. An hour later, you're still curious. Slum youths
commit so much crime, we are told, because they are affected by peer pressure. Yet what
is peer pressure but other slum youths committing crimes and inviting their friends along? Peer
pressure is just another name for the phenomenon we are asked about in the first place. Criminal
Examples of this sort of thing can be multiplied without end.
In my book, I cite some Connecticut residents complaining, quote,
We were bypassed by the wealth that surged through Fairfield County in the 1980s.
Then there is this priceless sentence from the New York Times, quote,
The Carter family is being stalked here by what the Klan's 54-year-old matriarch Regina
calls a monster, crack cocaine. She has watched it swallow her daughter, and now she is fighting
for her grandson's soul. Another one I came across recently when Alex Haley was caught
for plagiarism, the Washington Post reported that he had been bitten by the virus of plagiarism.
As these examples show, reification relieves the guilt of responsibility.
Don't blame unproductive reckless behavior on the tiny cog, but on the big social machine
of which it is a helpless part.
But the flip side of absolution for vice is disrespect for virtue.
Tiny little cogs can hardly be autonomous or have rights to be free.
What individuals think of as their own decisions are forced on them.
Thus, the only way to improve society is by tinkering with the big machine on gross, sweeping
individuals along in the process.
Such systematic intervention, of a sort only government can undertake, seems to conflict
with individual liberty, but hey, individuals are not free anyway.
They are slaves to their social role, so in forcing them to act in new ways, giving them
From New Roles, the state does nothing worse than society has done to them already.
This mode of thought is at work in a tax, for example, on the use of cheap overseas
labor by American firms.
Juanita in the Philippines makes running shoes for 50 cents an hour, a good deal all around.
The finished product is less expensive than if manufactured domestically, and Juanita
is better off than she would be without a job.
Of course, 50 cents is less than an American would get, mainly because so many other members
of Juanita's labor pool are willing to accept that wage, but many people find this scandalous.
Juanita, you see, is exploited, forced to work for 50 cents by the, quote, poverty of
the, quote, third world she is mired in.
The solution, of course, is to attack the entity poverty itself by making Nike pay higher
Interventionists scorn Hobbes' words that, quote,
the value of all things contracted for, like Juanita's labor, is measured by the appetite
of the contractors, and therefore the just value is that which they be contented to give.
The interventionist's response is that Juanita does not contract voluntarily, for she is
is caught in a system, and blah, blah, blah, blah.
Here is where the reification comes in.
Having treated the Philippine labor
pool as a thing external to Juanita, Carlos, and Corazon,
which makes them accept relatively low wages,
interventionists don't bother to ask why the Philippine labor
pool is that way.
It is that way because, in fact, for reasons having
to do with education, ability, and training,
Most Filipino labor is not worth more.
Perhaps Filipinos do not know how to bargain collectively.
That, too, is a reflection of the ability
of individual Filipinos to cooperate with each other.
Quote, the economy doesn't make anyone do anything.
It is just a name for individuals exchanging goods
and services.
The character of an economy is explained
by the interaction of its constituents.
Once this is clear, intervention in, quote, the economy
is seen for what it is namely pushing people around. Belief in collectives rests on a confusion
between two kinds of traits of individuals. First there are the traits people have when
they are taken in isolation such as height, weight, age and health. Obviously these individual
properties cannot explain how people behave in social groups. Watch Robinson Crusoe on
on his desert island as long as you please and you will never learn what sort of conversationalist
he is. If social holism, this is a very popular view, is the claim that the properties of
groups cannot be reduced to the individualistic properties of their members, it is true. However,
people also have relational traits. Crusoe's tendency to tell jokes to anyone who will
listen, for instance, is one such. Now, even though that trait involves reference to other
of the People. It still pertains to Crusoe the individual. Thousands of miles from another
soul, Crusoe is still a good conversationalist in the sense that he would tell jokes if he
had an audience. The big point is that the properties of a group can be reduced to the
relational properties of its individual members. Once you know how these members react to each
other, how garrulous they are, how cooperative, how keenly they negotiate, you can predict
and Holism is false. Just keep these two kinds of traits distinct and you will never reify.
As I say, most Austrians already know of the aid and comfort reification lends to collectivism
and socialism. I now turn to what I regard as a much more consequential error. It is
also very little discussed, so its destructive effects largely escape notice. It gets a bit
I refer to the notion that things are never what they seem, or to put it more abstractly,
that science always explains away appearances in terms of their opposite.
Let me get specific, this all gets back to our common worry, but I want to tell about
four familiar but genuinely epical discoveries in the history of science, which have been
In 1573, Copernicus demonstrated that the earth revolves around the sun. The sun and
the stars are in fact fixed relative to the earth.
A century later, Robert Boyle revived the corpuscular theory of matter, which takes
It takes the physical world to consist of numerous minute particles whose interactions
explain the properties of macroscopic objects. Two corollaries learned by most of us by high
school were drawn from this view. First, ordinary objects like this lectern are mainly empty
space. Remember when they told you that? Not solid. And second, color is not a feature
Color is an effect of these little particles on the nervous system and resides in the mind.
The corpuscular theory did not gain firm empirical support until the 19th century, but it quickly
persuaded Newton, John Locke, and other luminaries. It has been part of our intellectual heritage
for Hundreds of Years 3. Jumping to modern times, puzzles about radiant
energy and electron orbits led physicists early in the century to propose that the energy
possessed by bodies does not vary continuously but comes in discrete amounts. Fully worked
out, this so-called quantum theory implied that the more definite a body's momentum,
the fuzzier its position. Thus, at any time, this hand is spread by waves of probability
over the entire universe. It only seems to occupy a sharply bounded region because that
is where the probability waves peak. Incredible as this sounds, it had better be true since
it is the theory on which transistors are based and all our VCRs and computers, so it
4. Einstein's 1905 Special Theory of Relativity denies that there are such things as space
and time, as ordinarily understood. You may think the Mars Pathfinder, the taxpayer's
latest gift to scientists, is doing something right now, at the very moment I am speaking.
Not so. Two events that are simultaneous for you are not simultaneous for observers moving
Everything Relative to You. What is more, the distance from here to Mars also varies
with the speed of the observer. Absolute simultaneity and distance do not exist. As if that weren't
weird enough, Einstein later announced that objects falling in a massive body's gravitational
field do not actually pick up speed. Mass warps space, and what we perceive as gravitational
Acceleration is Uniform Motion in Curved Space-Time. Well, these cases are so fascinating
because in each one, what we believe based on ordinary observation is completely overturned.
The sun seems to move across the sky, but it really doesn't. Lecturns seem to be solid
and brown, but they really aren't. Hands seem to occupy definite positions, but they
Something seems to be going on right now, but it really isn't.
Some of these inferences, of course, are open to challenge.
To call something solid, may be argued, means that I can't put my hand through it, and
I can't put my hand through this lectern, whether or not it is mostly empty space.
It can also be argued that color refers to whatever it is about an object, including
the arrangement of atoms at its surface, which causes certain sensations in me.
Since the arrangement of atoms at this lectern surface does cause the requisite sensations,
the lectern is brown, period.
Still, the message is clear.
In four striking cases, scientific investigation showed the world to be the reverse of how
it appears.
And what has happened, I believe, is that historians of science who should know better
have radically overgeneralized these cases into, in the jargon of the prime offender,
a paradigm. Science always shows that things are the reverse of how they seem. Deep scrutiny
of virtually any phenomenon will reveal that everyday convictions about it are wrong. In
fact, taking things at face value betrays naivete, or readiness to debunk is the mark
of the sophisticate, what David Riesman called an inside dopester.
At one point in Gilbert and Sullivan, Gilbert and Sullivan's pinafore, Little Buttercup
Things, Things are seldom what they seem, skim milk masquerades as cream.
So I'll call this jaundiced view the skim milk fallacy.
If anybody can think of a better name, I'm open.
Skim milking, I believe, looms large among the factors that have opened the floodgates
to oceans of nonsense.
The skim milk presumption that things are seldom what they seem was not given currency
by any one writer or group, although Thomas Kuhn's work on the irrationality of science
has no doubt helped. So did Freud's doctrine that the reasons from which people think they
act usually rationalize less savory motives they are unaware of. No, it took hold mostly
because of the inordinate attention given these four celebrated discoveries of things
not being what they seem. I have no quarrel with the discoveries themselves, but they
cannot be taken as typical of science because they all concern phenomena on non-human scales.
It is no wonder that common sense does not register quantum or relativistic effects.
They happen too fast, on too great or small a stage, where velocity is not reached in
normal experience.
Evolution had no reason to prepare us for what happens in nanoseconds at astronomical
distances or near the speed of light.
However, evolution did shape our faculties to work reliably at the dimensions at which
economic and social phenomena take place.
A creature poor at recognizing food or anticipating what his fellow beings will do is apt to leave
fewer descendants than more insightful competitors, and we descended from those competitors.
About matters at the scale of human behavior, how things seem to us is an excellent guide
to how they really are.
That is why skim milking is a fallacy.
Well, okay, this is all very interesting.
Now to connect it to modern left-wing liberalism and socialism.
One of the most vexing aspects of liberal conventional wisdom is its extreme perverseness.
Why do so many intellectuals believe such insane nonsense as the following?
Punishment does not deter.
Marriage is like prostitution.
Males are innately like females.
Homosexuals are just like heterosexuals.
People's freely contracting to exchange goods are being coerced, but buying the only make
of shoe from the Soviet State department store is freedom.
Intelligence is irrelevant to life outcomes.
Any student can perform at gifted levels if his teacher believes he can.
Giving money to women who have illegitimate children discourages illegitimacy.
Taxing something leads to more of it.
Look-say is better than phonics.
Idiocy is strength. It's the latest one. Joseph Stalin was a nice guy. Why, we constantly
ask at conferences and in private conversations. I mean, after all, Peter Klein was asking
this. Why would anyone believe such demented idiocy? Liberals are anti-experts. They can
be depended on to be wrong. What they think is a trusty guide to what isn't so. Why?
Of course there are many specific causes, and we've heard some already, envy, guilt, identification
with the underdog, the prospect of running the state's coercive machinery, but something
must prepare the mind to accept what contradicts experience and common sense.
This is where skim milking enters.
I suggest that things are believed, these things, these crazy nutty things that most
Most of my 140 IQ colleagues believe, are believed because they contradict observation and common sense.
For the theme uniting the tenets of conventional liberal wisdom, that is, left-wing liberalism,
is that they all run exactly counter to experience.
I think they are arrived at from experience via the assumption that experience always misleads.
For imagine yourself, for imagine that you fancy yourself a deep thinker.
You want to distinguish yourself from the herd by knowing things they don't.
Being scientific is also good, and you've picked up the impression that the aim of science is to overthrow popular prejudices.
Remember, left-wingers tend to be more educated so they have heard about those discoveries that I've been talking about.
You may well then reason about human behavior like this. The sexes seem to differ, so they must be the same.
Men and women seem to bond from profound emotions, so their association is commercial.
A desire for sex with another man is utterly alien and repulsive to heterosexual males,
so the homosexual personality must be just like the heterosexual.
English is a phonetic language, so it should be taught as if it were ideographic, as if it was little Chinese pictures.
Capitalism leads to prosperity wherever it has been tried, so it must be bad.
Socialism never works, so it must be good.
Nobody forces market interactants to do anything, so they aren't free.
Under socialism, you are not allowed to do anything, so you are free.
Everyone fears death, pain and loss of property, so threats of death, pain or confiscation
do not affect behavior.
Some individuals do well in school from the earliest grades, master difficult material
that leaves the rest of us behind, and are counted on as the problem solvers in the workplace.
Therefore intelligence has nothing to do with success.
Some people can't grasp simple ideas no matter how patiently we explain them.
Therefore their failure is our fault.
People become demoralized when what is theirs is taken from them, so raising taxes makes
them work harder. I've actually had people tell me that. Sort of a reverse Laffer curve.
People feel most comfortable with others like themselves, so they will love ethnic diversity.
Stalin accepted a messianic creed whose Armageddon is a confrontation with capitalism. He possessed
atomic bombs. He was willing to kill millions of his own countrymen in pursuit of his aims.
So his truculence was our fault. Only a fully committed skim-milking liberal could dream
up reasoning like this. But it all too easily gulls the average person, rightly impressed
by science while wrongly convinced that science and common sense are at odds. Once again,
there are many reasons why Joe Sixpack acquiesces in liberal absurdities. But one, I suggest,
and I throw this out because I haven't seen it discussed, is the skim-milk fallacy. The
The paradoxes of liberalism are widely accepted by the public because it too is under the vague impression that science shows us what is really going on as opposed to what seems to be going on.
That's why so many people don't believe the evidence of their senses.
Let's scrutinize the invidious relation of skim milking to economic liberty.
All forms of socialism come down to the belief, in Orwell's phrase, that freedom is slavery.
Beneath the skin of bourgeois rights to non-interference, this is the kind of
Marxist line that's still popular, lurks the skull of bondage.
Recall that Marx impressed generations of intellectuals by calling his socialism
scientific. Earlier brands had been touted as morally superior to the market,
But moral superiority is hard to prove empirically.
Here was socialism deduced from laws of history.
That also has a very nice ring.
What conception of science encouraged the revolutionary Marx?
Then as now, the paradigm of a scientific breakthrough was the Copernican,
where appearances were denied.
Well, the one thing obvious about trade, employment and other commercial transactions
is that they are voluntary.
And a scientific theory should assert that they are not. That, for instance, employment
is wage slavery. The worker is forced to accept a pittance for wages because there are other
workers bidding for his job in the, quote, economic system. Notice, by the way, how skim
milking works hand-in-hand with reifying here. On the other hand, progressive taxation, on
its face coercive, enhances freedom by reigning in plutocrats. So does the minimum wage law,
despite seeming to curtail a range of bargains. A novel invention or service so desirable,
everyone wants to exchange goods for it as a monopoly, which forces itself on helpless
consumers. Gotta fight that. Prices set by the government, which seem to be uninitiated,
coercive, liberate consumers from monopolistic schemes. The pattern of the old Marxist left
to construe what looks free as enslavement and what looks coercive as liberating, continues
with Marx's New Left Children.
You might think you could see by looking, as Yogi Berra would say, that men and women
pair up because they want to, that in all societies women care for the children because
they want to do so more than the men, and that men achieve more high status positions
because they choose to pour more of their energy into doing so than women.
Ah, but you would be wrong.
Men and women act this way because they are brainwashed by patriarchy.
Only affirmative action role models created by judicial fiat, jaw-boning of colleges to
get rid of men's wrestling in favor of women's field hockey, and total war on stereotypes
will free men and women to be themselves.
And we would never have known any of this had we relied on appearances.
Isn't sociology wonderful?
Ironically, Marx and his followers have overlooked another scientific revolution, which also
also overthrew a few appearances, but which, properly understood, deepens appreciation
of the market.
The theory of evolution showed the appearance of design in nature to be misleading.
That most features of living organisms display goal-directedness and the efficiency of artifacts
led mankind for many ages to think the natural world was planned.
As Darwin explained, however, design can be mimicked by randomly generated variations competing
to reproduce under environmental constraints. The world may be an artifact in some ultimate
theological sense, but so far as natural processes go, it merely simulates one. Unplanned goal-directedness
of the sort we see in nature calls to mind the spontaneous, uncoordinated order that
that emerges as goods compete to survive in the market.
Animals must absorb energy and attract mates.
Goods must absorb factors of production and attract buyers.
Complex ecosystems evolve as only those organisms survive,
which can find sufficient food, and only those goods
and services survive, which can be transported
to a sales point.
Both the wild and the market witness progressive refinement
as variations of surviving designs
are generated and themselves culled.
Leaving the Hardiest Variance of Variance
Early models, dinosaurs, the Rio, give way to later ones, horses, the corvette, and crude
methods of reproduction, mitosis, piecework, to more elegant, sex, the production line.
Liberals fret about the unplannedness of the market.
They call a healthcare non-system of private doctors, private insurers, and private hospitals
a hodgepodge.
Other appearances really do deceive. Undesigned order is perfectly possible. Research illuminating
not only the processes I've mentioned, but also the more mysterious properties of socioeconomic
systems like the emergence of morality. The market depends on good faith. But why do people
keep their word when they can get away with profitable deception? Why do we tend to punish
greed when colluding with it would be advantageous? For reasons, it turns out, not far from those
for which animals will not pursue combat to the death, and the ratio of males to females
in a population remains 50-50. At the same time, as you can see, this research also helps
reduce large-scale system features to the behavior of competing individuals, driving
another nail into the coffin of reification. In this, it is pursuing the true and permanent
aim of science, the explanation, not the poo-pooing, of what we observe. Science, properly understood,
is pretty nifty after all. Thank you.