Posted by David in Economics, Politics, The Social Sciences.
Tags: Epistemology, Libertarianism, Robert Nozick
Robert Nozick is most famous for his 1974 book “Anarchy, State, and Utopia” (ASU). I have mixed feelings about this book, even though I consider it a must-read. For those who have not yet read it, it is a natural-rights theory that defends a society where government is limited to the enforcement of property rights and contracts. Though I found the book extremely inspiring when I first read it (it’s a real page-turner: I brought it with me to my sauna and continued reading it in 100-centigrade heat), I have become increasingly skeptical of natural rights theories.
Why? Consider the first sentence in ASU; “Individuals have rights.” While I and Robert Nozick and some others may find this inspiring and uplifting, the sad state of reality is such that this is not a self-evident truth for most people I know. It gets even worse when the consequences are considered (i.e. taxation is a form of slavery and all prohibitions of acts between consenting adults violate individual rights). Most will just consider such conclusions nonsensical, since it implies that governments are the primary violators of human rights in this world (which I think is true, but which nevertheless seems unpalatable to most of my relatives, friends, colleagues, and passing acquaintances).
But there are other problems. Nozick relies on the Lockean proviso, which states that anyone can appropriate unowned land if one “mixes one’s labor with the land.” But with a subjectivist approach to economics, this seems very fuzzy indeed. If I go to Antarctica and think about a venture that would use up all the snow, does that make me its rightful owner? After all, I mixed my labor (in this case, a mental exertion) with the entire continent. I hope you get my point. There is no obvious way in which labor is mixed with land. What constitutes such a “mixing” could only emerge through largely arbitrary legal conventions, which are hard to reconcile with any objective natural rights (unless natural rights are conceived of as an open-ended family of alternative appropriation processes, but surely this would make natural rights extremely flexible: e.g. cultivating the land doesn’t count as “mixing” unless one has sufficient armaments etc.)
There is also the problem of the non-spatial nature of the theory. While self-ownership may be persuasive (and I sincerely hope it will become persuasive to more people in the future), the introduction of a spatial dimension complicates matters. For example, Nozick describes a process by which a dominant protection agency becomes a monopoly without violating anyone’s rights. Thus, a minimal state (neither more nor less) is the only legitimate framework for social interaction. But in a spatial world, it is certainly possible to conceive of a world with many small jurisdictions which co-exist in a sort of higher-level anarchy. In other words, there could be mutually beneficial inter-jurisdictional agreements that are not subject to any state regulation or law (the Law Merchant is a historical example of this, as are modern reputation-based networks of cooperation in science).
But this does not mean that ASU does not provide a number of valuable insights. First, and most important, Nozick makes it very clear that property rights and human rights are indistinguishable. This is entirely in keeping with modern property rights theory in economics, but contradicts popular misconceptions. Second, the hypothetical emergence of the state through an invisible-hand process is an ingenious example of spontaneous-order theory, which brings to mind Menger’s treatment of the emergence of money and indirect exchange. Finally, the third part of the book (A Framework for Utopia) is one of the most inspiring visions ever articulated. It shows how a minimal state is compatible with more extensive voluntary communities, for example permissive, religious or egalitarian communities (granted, would-be paternalists would not find any support for their aspirations in the book, which I think is a good thing indeed!).
ASU was not Nozick’s only book, nor necessarily his most important one. I wholeheartedly recommend “The Nature of Rationality,” which has been extremely useful for me in my attempts to pursue a consistent research program. The most important suggestion is that people attempt to maximize a “decision value,” which is a weighted sum of the causal, evidential, and symbolic utility of a course of action. This value can be applied to all human decisions and choices, including theory choice. For example, my interpretation is that different economists differ in the weight they give to the three types of utility: ranging from 100% causal (Mises) over 100% evidential (Friedman) to 100% symbolic (the type of economists who are only concerned with showing off their mathematical wizardry to their peers). Personally, I prefer an approach that mixes causal and evidential utilities, and which avoids symbolic utility.
Nozick can also be entertaining. For example, when discussing symbolic utility, he uses the minumum wage as an example of pure symbolic utility, since theory and empirical investigations both conclusively demonstrate that the effect of a minimum wage, ceteris paribus, is to increase unemployment and make the poorest people poorer. His conclusion is that a minimum wage “symbolizes” helping the poor, and therefore people may feel good about themselves if they support such interventions. In another entertaining article, he proposes an informal sociological theory that attempts to explain the widespread hostility among intellectuals toward capitalism (hint: a sort of cognitive dissonance that results from the dissimilar reward structures in schools and markets). But his most entertaining – if not his most profound – hypothesis is that six percent is the maximum proportion of any population who would voluntarily choose to live in a socialist community (the maximum proportion of Ashkenazi Jews who chose to live in Kibbutzim in Israel, who Nozick claims were more favorably predisposed to socialism than any other group of people).
Criticizing Nozick, the economist Robert Solow once said that nothing is more dangerous than a philosopher who knows a little bit of economics, to which Nozick replied that the only thing that is more dangerous is an economist who knows no philosophy. But I think that Nozick was not only a better philosopher than Solow; he was also a better economist (unless symbolic utility is the only thing that counts). Reading Nozick reveals that he had a sophisticated understanding of economics in the Smith-Menger-Hayek tradition, rather than the Walras-Pareto-Samuelson tradition to which Solow subscribed. Needless to say, I’m partial to the former tradition: economics as philosophy rather than engineering.
Posted by David in Politics.
Tags: Robert Nozick
Robert Nozick, in his 1993 book (The Nature of Rationality) introduces the distinction between three different types of utility: causal, evidential, and symbolic. When people make a decision, he argues that they attempt to maximize its “decision value,” which is a weighted sum of the expected causal, evidential, and symbolic utility of the decision.
Causal utility is basically deductive; it is based on cause-and-effect reasoning. Evidential utility is associated with statistical correlations of various sorts. And symbolic utility reflects the pure symbolism of achieving something, even in the absence of any causal-theoretical or evidential-empirical indications. Nozick’s example of symbolic utility in action is popular support for policies that economists tend to oppose, such as a minimum wage and rent control laws. Such laws symbolize helping the poor, even though their long-term indirect effects may actually make the poor worse off, according to Nozick.
But support for counterproductive welfare policies in Europe and North America pales in comparison with the nation-building symbolism of Asian governments. For example, Taiwan’s government decided that it was a good idea to build the world’s tallest building (Taipei 101) and invest in the world’s most expensive build-operate-transfer project (Taiwan’s high-speed rail). Likewise, China’s government invested in the world’s fastest rail link (Shanghai’s Maglev) and Malaysia’s government decided to promote a population aim of 70 million people, after a group of Japanese consultants had advised that Malaysia could not support a Shinkansen-type railroad unless its total population reached 70 million. I have come to believe that symbols of national development are more important to most Asian politicians than development in terms of better quality of life (as conventionally measured) for the average citizen.
The problem with giving priority to national development symbols is that it tends to crowd out the kind of low-profile infrastructure investments that Westerners take for granted. For example, Taiwan’s cities (mostly) lack sidewalks and trash cans. In Malaysia, I experienced a state-of-the-art half-empty airport without water. In China, landscaped boulevards hide back alleys that look like sewage conduits. But the symbolic utility of national monuments are apparently shared by most citizens. Elections in Taiwan never focus on rice-and-soup issues such as taxes, sidewalks, or education. What excites people are instead issues such as the name of the country, the design of the national flag, and the number of diplomatic “allies” that can be bought. So symbolic utility is the name of the game in Asian politics.
