Economics 101 – Part 1: The Scope of Economics

I recently started a recorded learning series where I read out and comment on some of the concepts that I work with here. This is the first part, titled “The Scope of Economics”:



Context (Economics, Human Action, Praxeology, Ethics, and History):

Related Posts:

The Ethics of Voluntaryism – An 8 Step “Cross Examination”

The key here is to get agreement on a step by step basis and refer back to points that have already been agreed upon, should the other person ever contradict himself at any point in time.

Here’s how I would approach it:

1. Let’s say we want to establish a set of rules of preferable human behavior that lays out what people should or should not do (= ethical framework). Do you agree that at the very least the  framework you come up with in the end should NOT allow for the mass genocides, enslavement, or displacements of large number of peaceful people by others? Do you agree that we can safely say that a framework that prevents mass genocide, imperfect and improvable as it may be, is at the very least better than one that DOES allow for such depredations?

So what I want to establish here is a sine qua non for any ethical framework. Everyone knows that people will not always follow rules with perfection, that’s a given. But let’s make the assumption, for the sake of the opposing side’s potential arguments, that people do follow the ethical framework we come up with with 100% perfection. Shouldn’t we make sure at the very least that under that assumption the framework does not allow for any of the unspeakable horrors that we have seen throughout history? Given that people don’t follow any framework with 100% precision, surely if it already allows for mass murder under perfect compliance, then how can it possibly be viable once people start deviating from the rules proposed?

If you can’t get the other person to agree with you on this, then there really is no point continuing the discussion. As you will notice reading on, agreement on this point eliminates certain tricks that dishonest and inconsistent people tend to use whenever they have no more arguments to support their ethical framework.

2. Do you agree that any set of rules about human behavior is always and by necessity absolute and immutable?

This is formulated as a question but it really is an axiom. The other person needs to understand this and fully grasp it. There is no way to deny that any proposed ethical framework  is immutable and absolute. There is no way around this.

Why? Well, this is because even in the most extreme case where somebody says that there should be no rules at all he is in effect proposing an absolute and immutable rule: That you should not establish or follow any ethical rules.

With the average statist you’ll be having the conversation with it’ll be a lot easier. He may say something like “No, I think the majority may, at times, change the rules imposed, through the process of voting.” – So unwittingly he is, again, proposing an immutable, absolute, and overarching rule, and that is that whatever rules the majority votes on are the rules that should be followed.

Again, don’t bother continuing the discussion unless you get agreement here.

3. Do you agree that any immutable human behavioral rules proposed should apply to all humans equally, no matter what their color, religion, race, origin, location etc. is?

This is the requirement of universality. A crucial definition for any ethical framework, just as with any other scientific framework, is that its rules need to apply to all its subjects, in this case human behavior, equally. The idea of equality for all before the law is pretty widespread. So it shouldn’t be too hard to find agreement on this question.

You may not get a racist to agree with you here, but then, why would you want to debate a racist on such complex matters anyway! :)

4. Do you agree that any such set of absolute and immutable behavioral rules has to be consistent and free of contradiction?

This is testing the person on his acceptance of logic, meaning his connection to reality. Again, if someone disagrees on this fundamental point, you can stop talking to him right then and there. If one says you can have a moral framework that says “You should never rape others.” and then in the next sentence “You are allowed to rape others.”, then he’s not someone to be taken serious.

5. OK, let’s say you find something useful in nature that nobody else has touched or used before. You take control of it and transform it for your own use. For example, you find trees, chop wood, and build a small 1 person cottage. Do you agree that if someone else tried to occupy your cottage against your will, that you should be allowed to assert your control over it, and, if he initiates violence against you, use violence yourself to defend it?

This is a crucial step. The answer to this question establishes property rights as derived from homesteading.

I will go through the different possibilities of rules regarding preferable human behavior to deal with this situation now, always keeping in mind the 4 points that we have agreed to above:

(a) Denial of Ownership Claim

Let’s say the answer is that you’re not allowed to use violence to defend your control of the property and that it’s OK for the other person to occupy your cottage and to use violence if you insist.

Thus the absolute, universal, and immutable rule would have to read “Everyone should be allowed to take control of things that another person controls.”

The rule essentially tells you not to assert any claim to things that you’re in control of. But at the same time it tells you that it’s OK to assert claims to things that others are in control of. But the very moment someone takes something from you, he takes control of it and violently asserts a claim to what he now controls in so doing.

Now you would again, according to the rule, have the right to assert your own control over the cottage against the other person’s will. It would be and endless back and forth.

So the whole rule defeats itself. You can’t establish a rule that says “You ARE NOT ALLOWED to assert claims to control things that you have gained control over and you ARE ALLOWED TO assert claims over things that you have gained control over”,  and expect it to comply with the requirement of logical consistency established under #4.

(b) Democratic Approach

One could say that the other person does have the right to occupy your property against your will if the majority of people within some relevant territory agree to the appropriation, in other words, “if it’s majority will”.

This would mean that any group of people could always, and at any time, kick another group of people out of their houses, if only they get 51% of the vote, or whatever other percentage the rule requires.

If the people whose homes were being intruded dared to raise a gun to assert their control, this would mean that in last resort the majority representatives would have the right to gun them down in order to gain control of the properties in question.

Thus invoking majority will, and acting in 100% accordance with the principle, allows for mass genocide or at least enslavement and displacement for the disowned on a large scale, without any violation of the moral principle proposed.

So if your conversation partner agreed to #1, then he cannot possibly support this approach to the question of property rights, since, as we said, any ethical framework should at the very least not allow for mass genocide or displacements of innocent and peaceful individuals, which our peaceful homesteaders in our example are without any doubt.

(c) Nobody Should Control Anything

Another consistent and universal moral rule would be to say that nobody should even homestead anything at all in the first place; that we should all be without control of any goods provided by nature.

Since I think it is safe to assume that anyone who’s debating you does not do so in the nude (at least I would hope so), this proposition can be discarded relatively quickly. But even without clothes, anyone you’re debating must be standing, sitting, or lying somewhere.

He is thus using up and controlling, at least for a brief period, room provided by nature. Thus it would look pretty silly for him to make the case for no ownership at all while violating it on every possible level.

Furthermore, if he agreed to #1 above, then it is pretty clear that he would be contradicting himself in any case here. For if humans should not take control of anything in nature they would all starve to death within a few days. Any ethical framework that desires to prevent mass starvation has to discard of this option completely and unconditionally, if it is to be taken even remotely serious.

(d) Property Rights

Another possibility to approach this question would be to say that nobody should occupy another person’s homesteaded property against his will. From this follows that the homesteader may use violence to prevent the initiation of the occupation of what he has homesteaded. Otherwise, if he was not allowed to, then we’d be back to (a) which is invalid.

This is, out of all the options of establishing an ethical rule to address the question, the only consistent one that also conforms with the four aforementioned requirements.

6. Do you further agree that if you and another person decide to exchange your homesteaded goods between one another, that no third person may initiate violence to prevent the two of you from doing so?

This question establishes the right to free trade.

If #5 has already been agreed upon, then 6 logically follows from that. If one were to initiate violence to prevent the transaction from occurring then he’d be in violation of the very property rights established for homesteaded goods under #5.

7. Do you agree that nobody should be allowed to occupy, against your will, any of those goods that you have acquired in such free exchange?

This question can be approached in exactly the same fashion as question #5, just that here the goods have been acquired in exchange and not via homesteading, except that point (c) is not relevant here since the denial of free exchange and enforcement thereof would violate the conclusions from question #6.

This, then, fully establishes that any form of theft of peacefully acquired goods, be it homesteading or be it mutual voluntary exchange, is to be universally proscribed in any valid ethical framework.

8. Do you agree, then, that people who initiate the occupation of things that others have obtained via either homesteading or free exchange (such as government bureaucrats via taxation), are violating the absolute rules established above?

This question fundamentally establishes the unethical and immoral nature of the concept of government. It simply follows from everything that has been said above. It leads to the natural conclusion that, if one has agreed to all the prior points, the government has to be abolished completely and unconditionally.

It will be very hard to get explicit agreement here, even when people fully get in their heart of hearts that it has to be answered in the affirmative.

However, the good thing is that any counter arguments that people will advance at this point will in one way or another always contradict the points they have already agreed to before.


So you will now always have a way to go back to previously agreed upon principles to demonstrate to people who object to voluntaryism, that their belief system at the very least faces some serious problems that they might want to work out before flat out objecting to a system that happens to be nothing but the necessary outcome of rigorous logic and reasoning from first principle.

Also, don’t get caught up in the lure of pragmatism. People will, even after agreeing to all of the above, often say that we’re just not in a position to make such radical changes and that we have to work within the system etc…

Such objections are missing the point. It may be true that in our lifetime valid ethical rules will not be able to permeate all of society. But that has nothing to do with the validity of the concepts proposed. People at some point also did not believe that the earth was round until sufficient evidence was provided. Abolishionists did not harp on the practicality of abolishing slavery, but on its moral necessity. Feminists accurately pointed out that denying women the right to property ownership was immoral, nobody would say today that their ideas were invalid because they were impractical at the time.

True change takes time. What has been destroyed and eroded over multiple generations will not be fixed in the timespan of a few years or even decades. What is important is to consistently and unabashedly point out the rank immorality at the core of the system to as many open and curious people as possible. The corresponding societal changes will follow sooner or later.

Related Posts:

Ethical Relativism

Related Posts:

Ramblefest – Epistemology, Logic, Evidence, Senses, Quantum Physics, Religion, Ethics, etc …


Related Posts:

Human Action, Ethics, Praxeology, Economics, and History

I recently spent some time integrating different concepts I read about into one coherent framework.

In particular I borrowed from Stefan Molyneux’ Universally Preferable Behavior and from Mises’ Human Action. The flowchart below is the result.

It enables you to (at least that’s the idea) categorize any theory someone proposes about Human Action into a proper sub-category.

Human Action, Ethics, Praxeology, Economics, and History


Examples of Theories About Human Action

  • Aesthetics: You should prefer truth to falsehood.
  • Morality: You should not initiate violence.
  • Personal Preference: I would prefer if you wore red rather than gray.
  • Economics: When one prefers 1 gold coin over good A, then he will be willing to surrender ownership of A in exchange for the coin.
  • Other Praxeology: A human who gets attacked will avoid the attack or defend himself.
  • Economic History: The average price of houses in the US declined from 2006 through 2010.
  • Other History: On October 29th Nima wrote this blog post on his laptop.

Determining True from False Theories About Human Action

As with any other science, the criterion for determining the truth or falsehood of a theory about Human Action, is logical validation and empirical accuracy.

Gray Areas

One issue that seems to worry people is that of gray areas. Most people are worried that if we allow for gray areas in the field of Ethics, it ceases to be a science. Others say that since there are gray areas in Ethics it doesn’t qualify as a science. Such assertions make little sense.

First of all, science is a process, not an absolute immutable law. It is the ongoing process of pursuing knowledge. It is true that the objective of science is the examination of truth versus falsehood in every field of human knowledge. But that doesn’t mean that there are no gray areas. There are certainly things that can without a doubt be confirmed as true or dismissed as false. Simple mathematical theories come to mind, for example. Then there are cases where the line becomes more blurred.

For example, biology teaches us that a bird has two wings, but once every so often a bird with one wing is born. Does this mean we are absolutely incapable of classifying the creature as a bird? Furthermore, does it completely detonate the science of biology?

Of course it doesn’t. It is thus the same way with Ethics. For example, sometimes the line between Aesthetics and Morality becomes blurry. To what extent can something be considered “considerable effort”?

Is it considerable effort if I’m a 3rd grader and I have to avoid walking by the 4th graders’ lockers because sometimes there is a bully who (rather pathetically) punches my shoulder? Maybe, but probably not as much as, say, having to move to another country. Is the bully’s action immensely evil? Probably not, at least not as evil as, say, waging a genocidal war that murders and/or dislocates millions of innocents.

Thus such gray areas actually help us explain why we condemn certain acts as enormous evils, while others can be considered minor evils, or even borderline aesthetically negative, rather than plain immoral.

Lifeboat Scenarios

Then there are those who like to put us to the test by confronting us with incredibly ridiculous horror scenarios or lifeboat situations which are supposed to invalidate the concept of objective Ethics: “What if a creature from another planet were to destroy the planet unless I raped a 29 year old prostitute using a condom? Surely THEN rape is moral, huh, huh??”

Such scenarios are not even remote arguments against the conceptual validity of Universally Preferable Behavior. Whether a space alien asks me to rape another person to save the world or not, it remains a true statement that rape cannot be universally preferable because the statement creates a logical contradiction. This would be akin to saying “Would you agree with the Grand Xenu that 1+1=3 if he threatened to destroy the whole world otherwise?” Heck, sure I would … does that mean that the theory 1+1 = 3 is true ??

Conformity with theories about Universally Preferable Behavior is optional. People are free to believe in false theories and act upon them. This doesn’t make the truth or falsehood of the theories ambiguous.

That having been said, I would like to encourage people to focus on solving the obvious problems we are facing in today’s world. Human Action, and Ethics in particular, is a science that is of course ultimately supposed to help us all live better and more peaceful lives. It is a science about rationally choosing and acting humans (where rational does NOT mean flawless, but rather non-instinctive action).

It is not a science about an imaginary society where all food has run out, all water is gone, all means of production have ceased functioning, all land has disappeared, and everyone is trapped in a giant ship that is sinking with only 3 lifeboats left to occupy. In such a world, human action ceases to exist and gives way to the instinctive and immediate whims of starving brutes fighting for survival. The relevance of Human Action and Ethics shrinks into irrelevant nothingness.

A medical doctor, well versed in the sciences of medicine and human biology, would be at a loss when tasked with saving an individual who suffers from tuberculosis, cancer, broken arms, and chopped off legs while having a heart attack and a brain aneurysm after having been hit by a train. Does this detonate the science of medicine?

The conceptual existence of gray areas and the conjuring up of lifeboat scenarios don’t make a dent in the concept of objective Ethics as defined by us here.

Related Posts: