Monday, April 11, 2011

CHAPTER 18: Before we look at the third paradigm shift (can you recall the first two?) necessary to understand how hierarchy interferes with social order let's review what you have learned so far.

First, economic systems are capable of organizing themselves.  They are examples of complex adaptive systems. 

Second, a prerequisite for this social order to florish is the moral system called natural rights.  People own themselves and their justly acquired property.  They have a right to defend their life, liberty, and property.  There are no other rights such as a right to this or that.  Rights defined that way (sometimes called POSITIVE RIGHTS) are just claims on other people's lives and property.  This is, of course, a formula for social conflict and disorder.  Gun control is a current but certainly not the only example of the conflict that occurs when utilitarians use anti-natural rights means to achieve social goals.  Of course the question still remains.  Is it worth it?  Now we are back to a question of right and wrong. A question of morality and values.  Read this.

Mainstream economists do help to explain some of the unintended consequences of intervention but leaves unexamined the question of natural rights.  This is the result of separating political philosophy from economics. 

Without political philosophy you cannot understand natural rights.  Without natural rights you cannot understand spontaneous order.  Without spontaneous order you cannot understand economics.

Another recent example of  the consequences of interfering with the natural order of the system is the Federal Reserve's interest rate and money supply policies which helped to create the housing boom and bust. Austrian economists believe Federal Reserve policies are now prolonging the necessary adjustments to restore the system to balance and thus making future adjustments more severe.  Think of many small earthquakes versus one really BIG one to get the idea.  

Review Question:  Is it a mistake to teach economics without also discussing political philosophy?  If so, why?  

No comments: