Economics and Its Ethical Assumptions

When I was given the title “Ethical Assumptions of Economics,” my first thought was to say, “economics has no ethical assumptions.” But then I thought this might not be the best way to earn my keep here. So I’m going to talk about some senses in which economics might have implications for ethics.

There are these two terms that we often hear as characterizing Austrian economics. One is “value-freedom,” or Wertfreiheit. Wertfreiheit does not mean free in a valuable way; it just means a description that doesn’t involve evaluation. To be value-free is simply to describe things, to tell how things are, without advocating any particular point of view.

And closely related is this notion of “value-subjectivism,” the notion that Austrian economics in some sense recognizes only subjective values, only the values to the participants whose actions are being described or explained, and doesn’t evaluate their actions.

Well, if Austrian economics is value-free and value-subjectivist, then it might seem as though it couldn’t have much in the way of implications for ethics. But there are several respects in which ethics and economics nevertheless interestingly interact.

First, it’s worth pointing out that economics is often presented in ways that are perhaps not completely value-free. For example, words like “welfare” and “property” and so forth tend to have value connotations. Now you can try to interpret them value-neutrally, but ordinarily when we say that such-and-such promotes social welfare, it sounds like we’re in favor of it — since we are part of society, and we do care about our own welfare. And when we say that something is someone’s property, that often implies that it’s their legitimate property, and so calling something someone’s property might imply that they ought to have it, not just that they happen to possess it.

You might think this can be used to bias the discussion, but medicine’s a value-free science too; strictly speaking, in purely descriptive terms, medicine is indifferent between health and sickness — it just wants to describe what causes what — but since as a matter of fact practitioners of medicine are practicing it in order to promote health, naturally they’re going to describe it in such a way, where it’s understood that all the participants in the discussion agree that they’re trying to promote health rather than promoting sickness.

Objective Value

There’s perhaps a deeper worry that’s raised by the Greek philosopher Socrates in a couple of Socratic dialogues that are attributed to Plato (but it’s not clear whether they’re really by Plato or not), the Hipparchus and the Eryxias, where he explores the meanings of certain economic concepts like “wealth” and “profit,” and gives something like an argument that these can’t really be value-neutral terms.

Socrates asks the person he’s talking with, “how would you define profit?” And the person answers, “getting more in exchange for less.” You put in a smaller amount, and you get back a greater return than you put in. That’s profit. (Now this doesn’t really distinguish between profit and interest, risk premium, and all that, but never mind.)

Socrates says — translating his example into our money — “if I gave you one $10 bill, and you gave me three $1 bills back, I wouldn’t think I’d made a profit, even though I’d gotten more in exchange for less — I’d given only one bill and I got three back.” So what matters is the value of the bills, and the fact that a $10 bill is more valuable than a $1 bill. You can’t just describe the exchange in terms of empirical mass quantities; you have to describe it in terms of value. You don’t really profit unless you’re getting something of greater value.

And of course Socrates wants to spin this into, ultimately, a moral argument that you don’t really benefit from what you get unless what you get really is of greater real value. So if I get a lot of money by cheating you, then since cheating you is a great harm to my soul and is not outweighed by the benefit of the money I get, I haven’t really profited.

It’s clear enough what someone like Mises would say to this. He’d say: well, it’s certainly true that you can’t define profit in terms of just getting more physical things in exchange for fewer physical things; but you don’t have to interpret it in terms of objective value — you can interpret it in terms of subjective value. You get a profit, not if you get things that are genuinely objectively better in return, but if you get things you value more instead of what you value less.

Part of the reason Socrates and Mises disagree here is that Socrates thinks that valuing something more involves judging that it’s better, and these judgments can be true or false. And what you really want is not to get what you think is better; what you really want is to get whatever is better. And that whole way of thinking is something that Mises opposes, so they’re not really going to see eye to eye here.

Value Subjectivism

Is Austrian economics committed to rejecting any kind of objective morality?

We can distinguish between two kinds of value-subjectivism. You can have explanatory value-subjectivism, which simply means that in explaining someone’s actions, you appeal to their evaluations, not yours — just as in explaining someone’s actions you appeal to their beliefs and not yours. If you see someone walking out on a bridge, and you know the bridge is unsafe and is likely to collapse, but they don’t know that, then in interpreting why they’re doing what they’re doing you shouldn’t attribute to them your belief that the bridge is unsafe if they don’t have that belief. If you try to explain their action by appealing to your belief that the bridge is unsafe, your explanation isn’t going to be any good.

So likewise, if you’re explaining their actions you also have to appeal to their values. Suppose that you hate vanilla ice cream, and you see someone trying to get some. What they’re doing would make no sense if you assumed that they share your value. Instead, your evaluation of their taste in ice cream doesn’t make any difference to explaining — whether they’re right or wrong to like vanilla ice cream, nevertheless the fact that they like it is what explains their going after it.

So explanatory value-subjectivism doesn’t say anything one way or the other about whether there is such a thing as objective value; it just says that if you’re going to explain people’s actions, you explain them in terms of their desires, not yours.

Normative value-subjectivism, on the other hand, means that there are no objective values, that there is nothing to value over and above just whatever any person happens to want. There’s no right or wrong way to want things; you can’t be right or wrong about your ultimate desires.

So these are two different things, and you can see that at least it’s not obvious that explanatory value-subjectivism entails normative value-subjectivism.

Now Mises seems to have thought it did, and I think his reason for thinking this is not just that he somehow confused two kinds of subjectivism; I think there’s a deeper reason he thought this. The fact that Mises thinks that these two go together, and that both explanatory value-subjectivism and normative value-subjectivism are true, helps to explain why a lot of people interpret Austrian economics as being against any kind of objective value.

Rothbard, on the other hand, accepted explanatory value-subjectivism. He thought that in explaining people’s actions, or in trying to understand and describe economic behavior, you appeal to their beliefs and desires, not yours — but he thought normative value-subjectivism was false. He thought that there was, on the basis of philosophical arguments — the kinds of arguments he gives for example in his book The Ethics of Liberty, where he tries to develop a libertarian theory of rights — he thought you could give arguments to establish that certain values were objectively valid. But he thought those arguments didn’t make any difference to how you interpreted people’s economic behavior.

If economics is value-free in the sense that it doesn’t presuppose any particular values, as Mises and Rothbard both seem to agree about economics, you might wonder how economics can serve as a basis for advice. Economists are often called upon to give advice; how can they do that? Well, there are several different possibilities.

Mises’s view is that it’s impossible to give advice about ultimate goals — except in terms of just saying, “well, I like this goal, you should pursue that,” but you can’t really give any reasons, Mises thinks, for ultimate goals. But given a certain ultimate goal, you can give reasons for adopting certain means to it. And economics is useful for that. Economics can tell us what sorts of actions tend to have what sorts of consequences. So if you happen to want to have, or want to avoid, certain consequences, then the economist can tell you what things to do that are likely to get you the consequences you want and to avoid the consequences you don’t want.

Although you might be in the field of medicine working on germ warfare, in which case you’re interested in causing sickness, most doctors, most of the time, are interested in curing disease, we hope, and so if you go to a doctor for advice, the doctor can just assume that what you want is what will promote health.

But of course it’s not part of the medical expertise to tell you whether health is a good thing. Nowhere in medical school can you learn any reason for thinking health is a good thing. That’s not a medical question. Mises would say it’s not an answerable question at all; others might say, well yes, maybe it is an answerable question, but at any rate it’s not a medical question — maybe it’s a philosophical question or a theological question or something like that.

Socrates used to say that the doctor can tell you what’s likely to make you live or die, but the doctor can’t tell you whether you’d be better off alive or dead. That goes outside of the doctor’s area of expertise. The philosopher tells you whether your life is worth living or not: “the unexamined life is not worth living,” so if you’re not examining your life, you’re better off dead. That’s what Dr. Socrates would say.

Mises thinks economics can tell us how to pursue the ends we happen to have, and given that most people prefer prosperity to poverty and cooperation to chaos, Mises thought that there’s some general, all-purpose advice that economists can give.

Rothbard went further. In the last chapter of Power and Market, Rothbard says that although economics per se can’t give us positive ethical advice — it can’t tell us what goals to aim at — it can criticize certain goals as being incoherent. And although I say that Rothbard here is going beyond Mises, in a sense Rothbard would think of himself as continuing what Mises was doing, even if Mises didn’t call it this. So for example Mises argues that socialist calculation is impossible: you cannot rationally allocate resources in a socialist economy. Well, suppose that was your goal — to rationally allocate resources in a socialist economy. It certainly seems relevant to find out that the goal is impossible. If the goal is impossible, then it seems like you don’t have any good reason to pursue it.

This is a way of criticizing ends: not criticizing ends on the grounds that they’re bad, that it would be a bad thing to achieve this goal, but rather to argue that the goal can’t be achieved at all. So in the last chapter of Power and Market, Rothbard runs through what he calls various positions of “anti-market ethics,” and tries to refute various positions on the grounds that they posit goals that are somehow economically impossible, or logically incoherent, or in one way or another can be shown not to be possible. But he doesn’t think that economics can per se give us positive goals to aim at, or show us what is really worthwhile; he thinks you have to do philosophy for that. That’s why he only does this criticism of ethical theories in Power and Market, and you have to go to The Ethics of Liberty to get his positive ethical arguments.

Positive Ethics

The question is: can economics or praxeology give us anything more than that? Can it give us any implications for positive ethical theorising? What more can it tell us about ethics? I’m going to explore some various possibilities. If you’re hoping that I’m going to derive an ethical system from the axioms of praxeology for you today, well — we don’t have time for that! So I’m just going to give various suggestions about various issues.

First of all there’s this big dispute between Mises on the one hand and Carl Menger, the founder of the Austrian School, on the other. Menger had a category of what he called “imaginary goods.” He said that in order for something to be a good, it has to meet a certain number of criteria, one of which is that it has to be suitable for achieving certain goals or satisfying certain human needs. But, he says, there are some things that don’t really satisfy any human need, while you think they do — like fake cures, things that are supposed to cure you but they don’t really work; he seems for some reason to have included cosmetics in this category; you might wonder about that. But anyway, he thinks various things that don’t really meet any human need are not real goods, they’re imaginary goods, because although they may be suitable means to certain goals, those goals are not in fact genuine human needs.

Mises thought this was a horrible mistake. Mises said the economist has no business pontificating about whether these are genuine needs or not; if you want to explain human behavior, what we think of the person’s desires is irrelevant. If you want to understand the market for horoscopes, or if you want to understand the market for something genuinely valid, it doesn’t make any difference. As long as people think horoscopes are valuable, then they’ll be willing to pay for them, and if they don’t think they’re valuable, then they won’t, regardless of whether they really are valuable or not. Mises thought this category was irrelevant for economics.

But he didn’t just think it was irrelevant for economics, he thought it was irrelevant, period. It wasn’t just that classifying something as an imaginary good was a job for the philosopher rather than for the economist; Mises thought that it wasn’t a job for anybody — because he thought the only way we can make mistakes is about means. We can’t evaluate ends as right or wrong. Our ends are just whatever we want. If you want to justify what you’re doing, you have to appeal to some further end you have. Why am I walking over here? In order to get to the chair. Why do I want to get to the chair? In order to sit down. Why do I want to sit down? Well, at some point you just have to end with “because I want to, and that’s that,” Mises thought.

Mises thought the ultimate goal is not capable of being rationally assessed. The only things you can criticize are people’s means. The only mistakes you can make are about the means to your ends, not about the ends themselves.

However, there’s a distinction which Mises doesn’t consider which might complicate this. It’s the distinction between instrumental means and constitutive means. And here’s a way of thinking about this. Suppose that I want to play the Moonlight Sonata; and so I save money to buy a piano, and to buy sheet music, and to take piano lessons and so forth, so that I’ll be able to play the Moonlight Sonata. These are all means to the end of playing the Moonlight Sonata; if you ask me why am I saving this money, why am I buying a piano, etc., I would say these are all means to my ultimate goal, which is to play the Moonlight Sonata.

But now suppose you come upon me in the middle of playing the Moonlight Sonata, and I’m hitting a particular note. And you ask me: “Why are you hitting that particular note? Is it just that you find that note valuable in and of itself?” And I would answer: “No, I’m playing that note because I want to play the Moonlight Sonata, and I can’t play the Moonlight Sonata without playing that note at that point.” Well, in a sense, then, playing that note is a means to playing the Moonlight Sonata; but it’s not a means in the other way. It’s not a means that’s external to the end; it’s a means that’s part of the end.

When a means is external to or merely instrumental to an end, then it would make sense to say, “I wish I could have the end without having to go through all these means.” I wish I could be at the top of the mountain without having to climb all this way up, or I wish I could play the Moonlight Sonata without having to save all this money to buy a piano. But it doesn’t make any sense to say, “I wish I could play the Moonlight Sonata without having to play all these notes” — because the Moonlight Sonata just is those notes in that order.

So there are cases where a means can be a constitutive part of the end rather than being an external means to it. And a lot of things that Mises considers ultimate ends you might think are really means, but they’re constitutive means rather than instrumental means. So then the question is: well, can we deliberate about constitutive means? How do we determine whether something is a constitutive means to an end? It seems it’s not a matter of cause and effect any more; it’s more a matter of logical or conceptual analysis.

Why does Mises think that if you’re an explanatory value-subjectivist, you have to be a normative value-subjectivist? I think that his reason comes in his two-step argument for why he thinks explanatory value-subjectivism implies utilitarianism. (Both these steps, I think, are denied by Rothbard.) So first he thinks that explanatory value-subjectivism implies normative value-subjectivism: if you can only explain things in terms of people’s subjective values, then you have to give up the idea of there being any objective standard of value. I’ll say in a minute why I think he thinks that. Second, he thinks that that position in turn implies utilitarianism.

And you might think that’s very odd; because you might think that if someone says economics implies utilitarianism, it sounds like they think that economics implies a positive ethical theory — because we usually think of utilitarianism as a particular ethical theory, a theory that says that certain things are objectively good. The standard versions of utilitarianism, like John Stuart Mill’s version, assert that a certain goal — human welfare, happiness, pleasure, satisfaction — is intrinsically valuable and worth pursuing, objectively so. And then our job is to pursue it.

Clearly Mises can’t mean that. Since Mises thinks that there are no objective values, when Mises embraces utilitarianism he can’t be embracing the view that human welfare is an objective value. What Mises means by “utilitarianism” is a little bit different from the kind of utilitarianism that people like John Stuart Mill advocate. By “utilitarianism” Mises means something like simply giving people advice about how to achieve the goals they already have. So you’re not necessarily endorsing their goals, but utilitarianism says that really the only real role for any kind of evaluation is simply to talk about means to ends, because you can’t evaluate the ends.

And I think we can see both why he thinks explanatory value-subjectivism implies normative value-subjectivism, and why he thinks that in turn implies utilitarianism of his sort, in this quote from Theory and History:

All nonutilitarian systems of ethics look upon the moral law as something outside the nexus of means and ends. The moral code has no reference to human well-being and happiness, to expediency, and to the mundane striving after ends. It is heteronomous, i.e., enjoined upon man by an agency that does not depend on human ideas and does not bother about human concerns.

So that’s the position that Mises thinks he’s attacking. He’s attacking the view that the proper moral code is completely independent of what actually makes people happy or what they actually happen to want.

And in a sort of slap at Kant, he calls this sort of thing “heteronomous.” Now the term “heteronomous,” which is supposed to be the opposite of “autonomous” — “autonomous” means somehow governed by a law you give to yourself, and “heteronomous” means governed by a law imposed on you from something else — Kant had used the term “heteronomous” to mean following your inclinations, which are external to and distinct from your rational will, and therefore you’re acting heteronomously when you obey your inclinations. Now Mises is sort of turning Kant’s terminology upside-down here.

But Mises thinks it’s presumptuous to tell people that they ought to be pursuing something completely unrelated to anything they actually happen to want, desire, or have any motivation or personal reason to pursue. Now I think the reason he thinks that is that if you think that all action, as praxeology teaches, is a matter of pursuing ends, and the ends you pursue are your own — you can’t pursue someone else’s end unless it also happens to be your own end — then it just doesn’t even make sense to demand of people that they pursue some end that they have no motivation for, no interest in, no personal reason to pursue.

So you might say that he’s relying on something like the “ought implies can” principle — that it doesn’t make sense to demand that you morally ought to do something unless you can do it. If I said, “you are morally obligated all to fly up to the ceiling right now,” that wouldn’t make any sense, to say that you ought to do it or that you should feel guilty for not doing it, because you don’t have the choice, you don’t have any control over whether you do that or not. I think that Mises thinks that because our actions can only be actions aiming at ends that we have — we can’t perform an action without aiming at some end, and the end has to be an end we’ve got — it just doesn’t make any sense to demand of us that we act in accordance with some objective code of ethics.

However, I think that what he’s really arguing for here is better understood as a kind of ethical internalism rather than genuine normative value-subjectivism. Ethical internalism is the view that you can’t have any moral duties that you don’t have any motivation to pursue. Now that’s a broad family of theories, because according to some theories the moral duty just gives you a motivation, whereas for other theories, no, you’ve already got your motivations, and the moral duty can’t get its foot in the door unless you’ve already got one. Those are very different kinds of internalism. But still the internalists all agree that there are no moral duties without some corresponding motivation on your part. And I think that Mises is really arguing forthat. But it’s important to see that that’s not the same thing as normative value-subjectivism, because it might be that, given your motive, and given some appropriate story, the moral duty really is an objective one.

And likewise, the reason he thinks that this has to be purely utilitarian, that there can’t be any actions that are right or wrong in themselves, but only as part of promoting some further goal, is that he thinks all action has to have a means-end structure. But again, you can have a means that is constitutive rather than instrumental. If I’m playing this particular note because I want to play the Moonlight Sonata, then that note is a means to playing the entire sonata, but it’s not an external one. Likewise, people who say a certain action is morally right in and of itself might mean that it isn’t an external or instrumental means to some further goal, but is just part of, say, the good life.

The Goal of Happiness

Now something like Mises’s view was recently defended by Leland Yeager in a book called Ethics As Social Science, where he accepts Mises’s view that ultimate goals cannot be rationally assessed. He says: therefore, ultimate goals are rationally arbitrary, but the means to those goals aren’t, and therefore the advantage of utilitarianism of Mises’s sort, which simply says, “promote whatever satisfies human desires,” is that it’s the best theory because it minimises the amount of ethical arbitrariness. All that’s arbitrary is just this ultimate goal, happiness; but although it’s arbitrary, it’s not terribly controversial: most people are pro-happiness. Whereas if you add more intrinsic values in addition to happiness, things like moral duties and so forth, then you’re increasing the number of ultimate ends. And since ultimate ends are rationally arbitrary, your theory is getting more arbitrary the more of those you add.

I’m not so sure about that; if you really think the whole thing rests on an ultimate thing that’s arbitrary, I’m not sure that whether it’s one or many makes that much difference. But at any rate, the assumption that you can’t rationally assess ends is something that I’m not convinced of. There’s something called reflective equilibration, which is the idea that you weigh various beliefs and values and judgments against each other and see whether they conflict with each other. If they conflict with each other then you revise them to make them not conflict. And so if you’ve got some ultimate end, you can’t assess it as a means to some further end, perhaps, but you can assess it by whether it fits in consistently with everything else. Now that’s a kind of assessment. You might think it’s a kind of wimpy assessment, but it’s an assessment.

We started off with Socrates, and Socrates has to come in again. There’s this tradition I call the eudaimonic tradition, from the Greek word for happiness or well-being, eudaimonia. And this is a tradition that runs through Socrates, Plato, Aristotle, the Stoics, and it runs on through the medieval philosophers and the Scholastics, Aquinas and so forth; in fact it’s the dominant ethical tradition of the first 2,000 years of Western philosophy. It’s not until after the end of the Middle Ages that it begins to be whittled away by new theories. And this is the view according to which there is an ultimate good, which usually gets called “happiness” — but that can be somewhat misleading, because it’s not a pleasant feeling of satisfaction, although it may involve that — but it’s a state of your life objectively going well, your life being an objective success, something like your being successful at living a good human life: that’s what eudaimonia is. That’s the ultimate good.

And morality is not just an instrumental means to that good; it’s actually part of it. Morality stands to the ultimate human good as playing one note stands to playing the whole sonata — or actually, probably as playing two-thirds of the sonata stands to the whole sonata (or if you’re a Stoic, as playing the entire sonata stands to playing the entire sonata).

And there are some interesting connections between this tradition and Austrian economics, simply because Austrian economics in a way indirectly grows out of this tradition. The earliest forerunners of Austrian economics are the late Scholastics, who developed a subjective theory of value in the explanatory sense of “subjective,” and they developed many of the early theories and early parts of what would later go on, running through the French School, finally to become the Austrian School. And if you look at Rothbard’s History of Economic Thought, there’s a long section on how cool the Scholastics were. So from the fact that the Scholastics are forerunners of Austrian economics, and the Scholastics are coming at the tail end of this tradition that runs back to Socrates and Aristotle and so forth, I think it’s not that surprising that there are some commonalities.

For this tradition means-end analysis is central: we evaluate things in terms of their being means to ends. But each person has an ultimate end. And this ultimate end isn’t just feeling satisfied or something like that; it’s an objective state of human flourishing. And we can talk about wrong ends as well as wrong means, because those wrong ends are really misidentified constitutive means. So in other words, if you wrongly value something as an end, what’s really going on is that you are taking it to be a constitutive part of your ultimate good when it isn’t.

Now according to this tradition, why do they say that we have just one ultimate end? Why not say that we have lots, that there are lots of things we want: ice cream, fame, not being killed? We’ve got all these different things, but why suppose that they’re all constituents of some big super-end? Well, I think part of the reason they think this is: what happens when you make trade-offs? Suppose there are two ultimate ends you have: ice cream and fame. Those are two ultimate ends you have, and they come in degrees. (That’s why I didn’t use not being killed, because that’s less a matter of degree.) So you want more ice cream, and you want more fame. And sometimes those go together, like winning an ice-cream-eating contest. But still there are lots of cases where these goals might conflict, and so you have to do trade-offs, and decide between them.

If you’re deciding between them, that’s an action. Actions have to have a means-end structure, right? So if you’re trying to decide how to trade off between ice cream and fame, then doing that must be a means to some end. Well, what is the end? It can’t be the end of maximizing the ice cream, because you haven’t decided whether that’s what you’re going to do. It can’t be the end of maximizing fame, because you haven’t decided that. It can’t be the end of getting the maximization of both, because it’s a trade-off — that’s impossible. Instead, you’re trying to maximize something of which these two are parts, some general, overall satisfaction — that’s what you’re trying to maximize. You might wonder whether “maximize” is even the right word, but anyway you’re trying to promote some good that includes both of these intrinsic good; these are intrinsic parts of your overall good. And it’s that sort of thing that leads the eudaimonists to think that whenever you’re acting, you’re always promoting some ultimate good of yours, some ultimate end or aim.

Why not just say that the ultimate aim you’re pursuing is some psychological state, like pleasure? We know how John Stuart Mill would have analyses this; he’d say, well, you like ice cream because ice cream isn’t really your final end, ice cream promotes pleasure. And you like fame because it also gives you pleasure. And so it’s really pleasure that’s the ultimate goal, and ice cream and fame are simply means to that. And then your trade-off is just to determine which one will give you the most pleasure.

Or as Mises puts it, Mises talks about getting rid of uneasiness. And sometimes he seems to mean this in a purely formal sense: simply getting something that satisfies you more instead of something that satisfies you less, getting something you prefer over something you “dis-prefer,” to use a Stoic term. (Actually to misuse it, in this context.) But sometimes Mises talks as though there’s this feeling you get of uneasiness: which of the various things I can choose will make this feeling go away? Getting rid of that horrible feeling of uneasiness is the goal. Sometimes Mises sounds like that, sometimes he doesn’t.

At any rate, you might say: why not take that view? Why not say that our ultimate goal is some psychological feeling like pleasure, or decreasing felt uneasiness, or something like that, and that everything else we do is a means to that?

Well, here’s the problem with that view. Suppose I buy life insurance. And you ask me, why am I doing that? And I say: so that my loved ones will do well after my death. So it looks like I’m treating buying life insurance as a means to my loved ones’ doing well after my death. Now this is either an ultimate goal of mine, or it’s a means to some further goal. Well, whichever one it is, this is not a feeling. And it’s also not the cause of a feeling. Unless you’re assuming that you’re looking down from heaven after you’re dead — or up, if things go worse — but anyway you’re hanging around after death and seeing your loved ones doing well, and you’re getting a charge out of that. But it seems like you don’t have to assume that you’re actually going to experience your loved ones’ doing well in order to buy life insurance. People who don’t believe in an afterlife, or people who believe in an afterlife where they’re off somewhere not being involved with human concerns, still buy life insurance. So it seems that this is something we do that is not a means to pleasure.

Now obviously someone could say: well, wait a second, you get pleasure out of the thought that your loved ones will do well after your death, right? Yeah, that’s true. So here’s something, the belief that my loved ones will do well. And that causes pleasure. And maybe that’s part of my reason for buying life insurance. But is it really plausible to say it’s really that belief rather than their actually doing well? Because one isn’t a means to the other. Your loved ones’ doing well in the future can’t be a cause of your belief that they’ll do well now, unless you believe in backward causation. So even if you believe that the belief is part of your goal, there’s still the goal of their actually doing well too — unless you think you don’t really have that goal at all, you really just have the belief as your goal.

Suppose I offer you a magic pill that costs half the cost of the life insurance. And this magic pill will make you believe that your loved ones will do well after you’re dead. And so you can either have the life insurance for $100, or this pill for $50. If all you care about is the belief that your loved ones will do well, then you’d take the pill over the life insurance. Well, from the fact that presumably at least a lot of people would buy the life insurance rather than the pill, that suggests that they care about their loved ones’ actually doing well.

And likewise Aristotle thinks that this is naturally the way we think. He raises the question: can people’s welfare be affected after they’re dead? And he didn’t believe in an afterlife, at least not a personal afterlife — he thought there was some aspect of you that lived on, but it wasn’t your personal identity — so he wasn’t talking about an afterlife. He thought that if there’s something you cared about, a loved one or some project, and right after you die the project either succeeded or failed, he thought that would make some difference to how we evaluate the success of your whole life.

So our ultimate good, according to this tradition, is not pleasure — although pleasure’s part of it, pleasure’s one of the things we care about, relief from felt uneasiness is great, but it’s not the only thing that we actually pursue.

Aristotle would say that your life’s being an objective success includes the well-being of your friends. It’s not that the well-being of your friends causes you some jollies — it does, sure, but that’s not all there is to it. In fact, he would say that the welfare of your friends causes you pleasure because it’s part of your good, not vice versa — that pleasure is a byproduct of getting what you think is good rather than the opposite.

Rights and Utility

Okay, let me finish up with a largely unrelated question — though it’s not completely unrelated, because these all interconnect. The question is about the relation between rights and utility.

The question is whether rights derive from utility — in other words, is the reason that we have rights the fact that rights are a strategy that’s most likely to promote either our personal self-interest or social welfare (you can take either an egoistic or a universalistic version of utilitarianism) — is that the ultimate foundation of rights? Or are our rights completely independent of utility? There are those who think that our rights are completely based on utility, that the only grounding for rights is that they somehow are strategies for promoting human welfare, either one’s own or everybody’s. And in some sense Mises seems to think something like that. On the other hand, you might think rights are completely independent of utility, that rights just are what they are, regardless of their results. Maybe Walter Block thinks that, I’m not sure. Rothbard is often said to have thought that, but if you read The Ethics of Liberty it’s not so clear; there is some sort of eudaimonic thing going on in the background there, with the Aristotelian stuff in the early chapters.

I want to end by giving some quick reasons why I think that it’s a mistake to think either that rights depend wholly on utility or that rights are wholly independent of utility.

Here’s why I think rights can’t depend wholly on utility: because whatever we choose, we choose either as an ultimate end or as a means — in economic terms, either as a producer’s good or a consumer’s good. Either you choose it as some ultimate thing you want for its own sake, or you choose it as a means to producing some further thing. So if any sort of utilitarianism is true, then morality is a producer’s good, not a consumer’s good. And it’s solely a producer’s good; I mean, everyone agrees that it’s partly a producer’s good. Everyone agrees that one of the things about morality that’s good is that it has good results. But if you’re a utilitarian, you have to think that morality is not a constitutive means to the good, it’s simply a purely instrumental means.

Why is that problematic? Well, nearly all sophisticated utilitarians — and this definitely includes Mises — think that it’s not a good strategy to promote human welfare to constantly be deciding everything on a case-by-case basis. Most sophisticated utilitarians are some kind of rule-utilitarians, or indirect utilitarians. They think that you have to commit yourself to some general set of principles or values. You can’t just decide everything that comes up on a case-by-case basis. The best way to achieve long-term results of the kind you want is to commit yourself to acting in a principled fashion.

Here’s an example that John Hospers, a former Libertarian Party candidate for President, gives in one of his books. He says: suppose you’re an umpire in a game, or a referee, and you’re making decisions, making calls — “he’s safe,” “he’s out,” — and you suddenly begin to reflect philosophically while you’re standing out there, and you think, “What’s the purpose? What’s my purpose here as a referee? Well, my purpose is to facilitate the game going well. What’s the purpose of the game?” And suppose that you conclude that the purpose of the game is to give pleasure to the spectators. I don’t know whether that’s the right story about the purpose of the game, but suppose that’s what you conclude. Then you might conclude: “Well, then, when I give my calls and decide who’s safe and who’s out, I should make whatever call will be most pleasing to the spectators. And so I won’t pay any attention to the actual rules of the game; I’ll just consider: is it a home game or an away game? How happy are the people in the stands going to be with my ruling?”

Now this might maximize spectator pleasure in the short run, but soon it’ll become obvious that winning or losing in this game no longer depends at all on the skill and abilities of the players. The players can just do any darn thing, and you’ll automatically rule in favor of team A if there are more people in the stands favoring team A. Once it turns out that you’re ruling in this manner, all the fun’s going to go out of the game for the spectators. If you’re constantly ruling with an attempt to please the spectators, that’s going to end up in the long run making the spectators very unhappy. You’re much more likely to please the spectators in the long run if you just stick to the rules of the game.

Likewise, most utilitarians think that you’re more likely to promote human welfare in the long run if you stick to definite rules. And libertarian utilitarians think these definite rules include rules of property rights and non-aggression and so forth, that sticking to those in the long run causes more happiness, because people can count on having their rights respected, they’re not constantly worried that suddenly their rights are going to be overridden for social utility, and so forth. So they’re going to be better off.

So what most utilitarians say is that you should behave as if you valued these rules for their own sake, even though you really value them just for the sake of utility. But my worry is: what does it mean to say that you should value something as if it were valuable for its own sake? I mean, either you value it for its own sake or you don’t. If you value it for its own sake, then you’ll choose it if it competes with some other value; if you don’t value it for its own sake, then you’ll give it up if you find some other way of promoting the same goal. If your only reason for respecting rights is to promote social utility, then you’d be irrational not to give up rights in any particular case when you could promote social utility otherwise. So my worry is that this rule-utilitarianism or indirect consequentialism or whatever you want to call it is praxeologically unstable.

However, I also think there are good praxeological reasons not to think that rights are completely independent of utility. And that’s because given precisely the view I discussed earlier, according to which whenever you’re doing trade-offs between different things, where you’ve got different ends, you have to regard them as different parts of an overarching end. Well, unless rights are the only thing you care about, the only value you have — and I’ve sometimes told Walter that that’s his view (although it isn’t really, but it’s fun to say that) — unless rights are the only values you have, then you have to say: here are a bunch of values, there’s the content of justice or rights, but there are also these other values, and they all have to fit together. And if all your values have to fit together, then it doesn’t really make sense to think that you can sort of separate one off and completely decide it without paying attention to any of the rest of them. I think each part of your value system has to have its content at least responsive to the other parts.

And this is what the Greeks called “unity of virtue.” Now people often say that the unity of virtue just means that if you have one virtue, you have to have them all; but I think the real core of the view is that the content of any one virtue is partly determined by, or responsive to, the content of the other virtues. Your account of what justice requires can’t be completely independent of your account of what courage requires, or your account of what generosity requires, or your account of any other virtue.

Listen to the archived media version of this speech in Mises Media.