Macro vs micro Objectivism

John,

There are no two definitions of laissez-faire, but if it will entertain you...

laissez-faire comes from the French, and roughly translates as "let to do". It's connotation is "hands-off". It's denotation, or definition, is to "let things take their course". However, in economic terms it is used to mean the abstention of government from interfering in the free market.

By inference, a laissez market economy would be one where the government makes no laws or regulations that would attempt to dictate how trade can or should be conducted.

By further inference, buyers and sellers would be entirely on their own to negotiate and resolve any differences or problems that arise.

There are many interpretations and attempts at 'limited' laissez-faire, but these, by their nature, are contradictory.

jt

Post 41

Wednesday, July 23, 2008 - 8:15am

Robert,

I'm not really referring to group psychology.

jt

Post 42

Wednesday, July 23, 2008 - 10:44am

Jay my suspicions are confirmed. You feel "laissez-faire capitalism" means "anarchy". Do you think Rand defines laissez-faire capitalism in that way?

There are many interpretations and attempts at 'limited' laissez-faire, but these, by their nature, are contradictory.

I should think so. A free market should mean what it implies, free from coercion. So how could we "limit" being free from coercion? The answer, by means of coercion. To "limit" a freedom means to "coerce". So it is obviously a contradiction. But what you say here is vague:

By inference, a laissez market economy would be one where the government makes no laws or regulations that would attempt to dictate how trade can or should be conducted.

The problem I have with what you say here is you do not try to distinguish kinds of laws as all laws and regulations are not the same, and depending on what kind of law you are looking at, can mean either the preservation of freedom or the opposite, a tyranny. As the term "free market" should imply to you Jay, it would mean for a market to be free, it should be free from coercion. A government establishing laws and regulations to stop one or many individuals from coercing another is not a contradiction to the identity of laissez-faire Capitalism, but rather it is preserving the integrity of that principle. But laws and regulations that set out to stop or limit otherwise free and voluntary trade, are a contradiction to laissez-faire Capitalism. So you are inferring incorrectly.

Post 43

Wednesday, July 23, 2008 - 2:23pm

Hi JT,

Doesn't economics already take care of this topic? What more do you want than to predict the behavior of the masses?

Jordan

Post 44

Wednesday, July 23, 2008 - 1:40pm

John,

I am quite cognizant of the fact that Rand, core Objectivist beliefs, support the role of government in protecting its citizens from coercion (via laws). And I am quite in agreement.

However, when it comes to regulations intended to establish safe practices - which I would personally consider to also be within the realm of 'protecting its citizens' - official Objectivist thought (in virtually every post and comment I see) quickly rejects the concept. Perhaps you are suggesting there is recognition of a finer line, and a greater tolerance from official Objectivist ranks?? If so, it has not been evident in any Objectivist discussions I've seen on regulation.

jt

Post 45

Wednesday, July 23, 2008 - 2:44pm

I sent you an email yesterday with instructions on uploading an avatar image.

(Edited by Ted Keer on 7/23, 4:14pm)

Post 46

Wednesday, July 23, 2008 - 3:52pm

Jay it depends on the regulation, how it is implemented and whether it is subject to a system of checks and balances. I do favor regulations such as requiring pilots to receive a license before flying a plane as an example. Because literally, flying a plane without training is no different than wildly flailing a weapon in a restaurant. Threatening someone, whether through intentional acts or through gross ignorance to take precaution to not endanger someone else, is not voluntary activity. If you put my life in danger, you are doing so against my will. In another thread we discussed nuclear arms and who should have them, whether everyone has a right to them or not, and I argued it is too dangerous a weapon to not have some regulation to it. No one has a right to endanger another person's safety without their consent. But I do have a problem with regulatory bodies having carte blanch power, which is a huge problem with today's current regulatory system.

Post 47

Wednesday, July 23, 2008 - 4:21pm

The Primacy of the Individual

There is a long standing controversy in biology over the "level of selection." Does nature select for genes, organisms or species? Since species change over time, some people argue that species are the object of selection. Others argue that groups are the level of selection since organisms sometimes act to save their kind at the cost of their own lives. Since gene frequencies change over time, some people argue that the level of genes (e.g., Dawkins, The Selfish Gene) is the level of selection. But it is individual organisms - at the level of autonomous physical entities - which live and die, which reproduce or fail to do so, which act to preserve and reproduce their own genes or fail to do so. We do not encounter genes walking around naked. Neither do we see groups or species without seeing viable individual organisms. Genes are real. Species are real. But outside of individual organisms, neither exists. Nature "selects" organisms only, and the change of gene frequencies and of species is a result of the differential survival of organisms.

You said, "Yet the existence of societies is a natural fact, that it is made up of a group of individuals is actually inconsequential." This is not at all true. Just as there are no species except as comprised of individuals which either are or are not alive, which either do or do not reproduce, societies are comprised only of individuals. While any given stone may contain any amount of a mineral, societies a comprised only of whole numbers of individuals. The joke of a family consisting of a mom, a dad and 2.3 children is a joke because there is no such thing as .3 children... except in a morgue.

The fate of a society is determined entirely by the actions of individuals. Only individuals make decisions. Only individuals make discoveries. Only individuals make their beds. It may be useful in certain circumstances to speak in the terms of pollsters, of Barack Obama getting 43% of the vote. But on election day he may get one million votes, he may get zero votes, but he cannot get 3.1415926 votes.

This conversation is still on the level of a floating abstraction. You said, "I think that the objectivist view needs to encompass all the facts that are out there, not just all we would ideally wish them to be." I think this is true, but I fear that your point is that there is some sort of regulation that you wish to be, in defense of which you have repeatedly asserted that Objectivism has holes and needs to address a different level of explanation. I asked for examples of regulations: "Jay, I still think you need to give concrete examples. You say that some regulations might be good to protect us from the dishonest. Like what?" But you gave examples of problems, such as fraud and speculative lending, not your proposed solutions.

In order to proceed further, you have to cut to the chase. Give examples of a specific regulation that you back which you think Objectivism does not support. And show how that regulation can be justified based on a valid understanding of groups which Objectivist thought cannot address with its given tools.

Post 48

Wednesday, July 23, 2008 - 8:18pm

Ted,

Interesting and enjoyable post, but a couple of things...

When I said "that it is made up of a group of individuals is actually inconsequential", I specifically meant in context to the point I was trying to make about differences between the nature of groups and individuals. Put a thousand individuals together and you have an entirely different entity that neither thinks nor acts the same as any one of its parts (hence, also the amoeba example).

urQ " Only individuals make decisions. Only individuals make discoveries. Only individuals make their beds."

Certainly all true, but again moot in context with what I have been saying. Those same individuals have no recourse except to come to some terms with societies - which may not always act in those individual's self interest. It is logically in the individual's enlightened self-interest to try to improve upon the values those societies respect and embrace.

urQ "I think this is true, but I fear that your point is that there is some sort of regulation that you wish to be..."

I have no specific regulation in mind, although there are probably tens of thousands of regulations that have been established without any logical, ethical, or objective guidelines, that I wish could have been influenced by Objectivist thought. In virtually rejecting almost all regulatory authority, Objectivism removes itself from the position of promoting such guidelines. That, to me, is clearly not in the rational self interest of either individuals or the groups of individuals - i.e. society.

I am afraid that I do not understand why the examples presented are unacceptable. They are relatively recent, so at least timely, and they encompass two distinctly different issues. I harbor no pet regulation, and, regrettably, have no chase to cut to. Regulatory issues, on the whole, seem to be the greatest distractions preventing a greater adoption of Objectivist thought and values. I do not think the concept of regulation is necessarily contradictory. Therefore I question the accuracy of current Objectivist interpretations.

jt

Post 49

Wednesday, July 23, 2008 - 7:40pm

John,

urQ "Jay it depends on the regulation, how it is implemented and whether it is subject to a system of checks and balances. I do favor regulations such as..."

Good answer. I make the same point. However, that does not appear to be the officially sanctioned Objectivist view, and precisely because it is not, I search for answers why.

What appears to be the most likely answer is found in that long, thin stretch of the fabric of Individual Objectivist ethics to cover societal practices (government regulation). Perhaps I should just say it is too weak (or questionable) an interpretation. However, I've come to believe it is a matter of cases. Core Objectivist belief is correct in its own right, addressing individuals and individual values - that is case 1. Translating Objectivist beliefs to societal issues and values, complex in their own right, is case 2, and I think such endeavor could better explain and integrate Objectivist principles, enhancing - not contradicting - the core philosophy. Further, I think establishing these new concepts will help develop objective, fair, and accountable regulatory bodies by giving Objectivism new credibility (with the rest of society - essential, of course).

jt

Post 50

Wednesday, July 23, 2008 - 9:40pm

Jay I wasn't aware Objectivism made a philosophical distinction between "laws" and "regulations"? I don't think there is. That is a matter of jurisprudence, of which Objectivism doesn't cover all that much of if at all. I think the distinction made is "initiatory" and "retaliatory" force in Objectivism. Perhaps many Objectivists you've come across have advocated that under no circumstances should there be regulations. I would disagree with them, and I would say there are specific contexts where a regulation is needed to protect against the initiation of force.

However, it seems you want to extend regulations into instances where there are no initiations of force to protect against, and turn regulations into instruments of coercion. You said in post 15:

May as well use the current housing crisis as the second example. In this case, lenders (with maybe a few possible exceptions) were not behaving dishonestly, just carelessly.

They behave carelessly because the government has created a moral hazard by encouraging and backing up subprime mortgages. Banks like Fannie Mae and Freddy Mac were purposely set up by the government to facilitate more loans, even risky ones, even when market conditions are not suitable for more bank loan capacity. Combine that with government manipulation of the banking system and currency supplies, and you have endless disaster after disaster. Government regulations are what caused the current housing crisis, not a lack of them.

As with almost any market (oil another recent example), when prices are seen to be rising, speculators begin to drive prices up further, popularizing the risk until the bubble breaks. This, of course, will be sorted out by laissez faire if nothing else is there to correct the unwise, rampant speculation. However, the existence of regulations that could (only) set intelligent standards or guidelines to lending could have prevented or at least minimized the crisis by assuring known, responsible lending practices would be used.

What practices are you saying are irresponsible and by what standard do you determine what speculatory practices are to be outlawed? Airlines hedge against price fluctuations when buying their fuel so that they can accurately price their airfares to their customers without risk of financial losses due to unexpected price shocks in fuel. Is that irresponsible? Buying futures markets based on current information as to what the future supplies will be also hedge against future shortages. Nothing wrong with that either. In fact the current oil crisis has encouraged other industries to look for other substitutions to oil. Many of the major auto manufacturers have announced moving towards battery powered cars. Nissan has announced it will manufacture a car by 2010 that is less than $15,000, and will run on battery power for up to 100 miles on a full charge, and the cost in kwh will equate to one dollar per gallon of gasoline. The current spike in oils has encouraged more energy sources to be exploited, and will result in innovation and more choices of fuel for the consumer. What would be the alternative if government set prices or stopped "speculators"? We would simply get supply shortages.

(Edited by John Armaos on 7/23, 9:48pm)

Post 51

Wednesday, July 23, 2008 - 8:30pm

Jordan,

First, thanks for using jt.

urQ "Doesn't economics already take care of this topic? What more do you want than to predict the behavior of the masses?"

I assume you mean a separate thread. I will look for it.

I think most necessary work has already been done as far as analyzing behavior of the masses. What has not been done is to try looking at society as an entity, using an Objective eye and logic, and examining if a (probably somewhat parallel) epistemology and set of values can be deduced.

My money would be on discovering a logical extension of Objectivist philosophy, that could aid in better developing a society consistent with Objectivist beliefs.

jt

Post 52

Wednesday, July 23, 2008 - 10:21pm

I agree completely with John's post above, but there is a distinction between laws and regulations - a distinction that does NOT affect the logic of his argument.

Laws are created directly by the chosen representatives (excluding Judicial edict or court precedent which is a different issue). Regulations are created by bureaucrats.

This is important in that checks and balances and the expression of the electorates choices are much further removed and diminished. But John's point that both have force of law (using 'law' in the generic sense) is still true and that is the most important feature.

(Edited by Steve Wolfer on 7/23, 10:23pm)

Post 53

Wednesday, July 23, 2008 - 10:52pm

Steve I agree with you there are distinctions between laws and regulations, specifically in a context of jurisprudence and as you also point out they are distinct as a matter of current practice. The way many regulations are set up I agree are set up without an adequate system of checks and balances. I just don't think there is necessarily a "philosophical" distinction. If the purpose of both laws and regulations are an attempt to stop initiations of force, I think in this regard there is no philosophical distinction.

Post 54

Thursday, July 24, 2008 - 12:45am

John, we agree that the distinction isn't philosophical.

Mostly we need so many fewer laws and regulations - and I'd like to find a way to contain the creation of regulations such as to stop the violations of rights that flow in great quantity from agencies like OSHA, for example. Some kind of check-and-balance on regulatory law. But it isn't the main issue - the main issue is the one you've already mentioned - conformance to individual rights.

I made sure I mentioned in my post that I agreed with you on the points you made - I only wanted my post to be an aside.

Post 55

Thursday, July 24, 2008 - 5:05am

John,

You are again talking about the QUALITY of the regulations, and using that to reject the concept. I am also concerned about the quality of regulations, but would seek to establish objective limits to assure the quality. I might be accused of pragmatism, but I suspect one of the corollaries that might be gleaned from an extended Objectivist philosophy covering 'societal' values is that societies will ALWAYS create regulations (probably part of their nature). So far, this is supposition on my part, but if correct, then Objectivist criticism is being misdirected.

Although I recognize the legal distinctions between laws and regulations, I do not see much more difference between the two than you've expressed. Objectivist ire is consistently directed at regulatory authority though, so I speak more to that issue.

jt

Post 56

Thursday, July 24, 2008 - 5:07am

Steve,

Astute analysis.

jt

Post 57

Thursday, July 24, 2008 - 8:28am

jt,

How familiar are you with economic theory? I get the impression that you may lack some familiarity with the subject. For instance, do you recognize that the current housing crisis -- the sub-prime mortgage mess -- is due to the inflationary actions of the Federal Reserve and that, according to Objectivism, there shouldn't BE a Federal Reserve System -- that banking should not be regulated by a central bank with arbitrary control of the money supply -- that the kind of boom and bust business cycles that we see are due precisely to that kind of system and not to the absence of financial regulation?

- Bill
(Edited by William Dwyer on 7/24, 8:32am)

Post 58

Thursday, July 24, 2008 - 9:45am

Jay said:
When I said "that it is made up of a group of individuals is actually inconsequential", I specifically meant in context to the point I was trying to make about differences between the nature of groups and individuals. Put a thousand individuals together and you have an entirely different entity that neither thinks nor acts the same as any one of its parts (hence, also the amoeba example).

However, even this is dead wrong. It absolutely matters because an "entity" that is of one single mind is not at all the same as that of one "composed" - and quite likely in a temporary or even arbitrary way - of individual entities. First, it can only be treated as a single entity within certain very narrow parameters, such as statistics to calculate life insurance. It cannot be considered that way in any moral sense, certainly.

Secondly, your concept of regulation being missing is wrong - Objectivism suggests and even has models of working examples! These include the many private organizations that can be used to ensure safety, such as Underwriters Laboratories - these groups can test the products and the public will know that something certified by them is safe. It is in their best interest to do so if you are selling a product - if your competition can show you are not safe or not certified people will not buy the product. If your standards drop and you certify unsafe products, your business for certification will then lose its value.

Post 59

Thursday, July 24, 2008 - 11:09am