The Praxeology of Revolution

I have as much confidence in Austrian economics as I do in Newtonian physics; that is I understand the danger of falling rocks as I do the danger of crashing economies. I state this in the context that, as Jeff Deist acknowledges, our arguments are failing as something of a socialist worldview is growing in popularity. This is true in spite of the overwhelming theoretical and empirical evidence that as an organizing principle in society socialism will be and has been consistently terrible towards human flourishing. I write also in the context of a naturalized French citizen following the weeks of demonstrations by the gilets jaunes.  They certainly have some valid complaints. Taxes are too high. The state, centered in Paris, has its tentacles intertwined through virtually all aspects of life strangling initiative. But their solutions to these problems, articulated in short interviews or simply on the signs carried during demonstrations, seem to me to be mere envy and more socialism.

Perhaps a reason that free market ideas are not accepted is the tendency in libertarian discourse to limit analysis to only the non-aggression principle and economics. I was reminded of this listening to an interview of a typical lefty French intellectual. Normally I would not take note of anything he said, but his critique of French President Macron as someone who only understands an Excel spreadsheet rang true.  Thus, it is not just for Macron, but also I think some libertarians might have this Excel mentality. Human Action: The Scho... Ludwig von Mises Best Price: $6.75 Buy New $15.36 (as of 05:45 EST - Details)

An idealized example, that is in actuality often in the news in France, is the closing of a factory to be relocated to a country with lower labor costs. But also critically important is that move is to realize lower tax and regulatory costs. A libertarian analysis would explain that this is a good result as the price of the product will be reduced making everybody wealthier. But, clearly, the individual workers involved will become less wealthy after the closure. In more aggregate terms, the greater the capital investment in each worker the greater the wealth producing capacity. Thus, capital disinvestment makes these workers less valuable. Here in France, the fact that the “world” will be wealthier is not a recompense because the former workers believe it is at their expense.

I believe the libertarian analysis to this situation needs go beyond Austrian economics.  Consider this paragraph from the Introduction to Human Action:

For a long time men failed to realize that the transition from the classical theory of value to the subjective theory of value was much more than the substitution of a more satisfactory theory of market exchange for a less satisfactory one. The general theory of choice and preference goes far beyond the horizon which encompassed the scope of economic problems as circumscribed by the economists from Cantillon, Hume, and Adam Smith down to John Stuart Mill. It is much more than merely a theory of the “economic side” of human endeavors and of man’s striving for commodities and an improvement in his material well-being. It is the science of every kind of human action. Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference. The modern theory of value widens the scientific horizon and enlarges the field of economic studies. Out of the political economy of the classical school emerges the general theory of human action, praxeology1. The economic or catallactic problems2 are embedded in a more general science, and can no longer be severed from this connection. No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology.

1.The term praxeology was first used in 1890 by Espinas. Cf. his article “Les Origines de law technologies,” Revue Philosophique, XVth year, XXX, 114-115, and his book published in Paris in 1897, with the same title.

2.The term Catallactics or the Science of Exchanges was first used by Whately. Cf. his book Introductory Lectures on Political Economy(London, 1831), p. 6.

The beginning of this passage is in perfect consonance with Jordan Peterson explaining the eternal nature of hierarchies. But relevant here is the distinction between praxeology in general and catallactics, the praxeology of exchange. The fact is, if people come to believe their economic system is treating them unfairly they might eschew voluntary exchange and choose violence. If a critical number people in a given region come to the same conclusion a violent political revolution might occur. This praxeology of revolution needs to be addressed in the libertarian analysis. As the Ron Paul Institute’s Daniel McAdams explained during a recent interview on the Corbett Report, “revolutions are bad things.”

To be clear, I am opposed to any kind of law penalizing a company for moving a factory. But libertarians must explain to the displaced workers why this occurred beyond the Excel spreadsheet calculation; that is existing government interference that raises costs. Furthermore, the factory owners need to consider the praxeology of revolution even though the ultimate costs of societal breakdown are impossible to include in the spreadsheet analysis. This essay is a call to libertarian intellectuals to consider praxeology in the larger sense such as to refine the arguments that can be used to convince workers and owners of the positive potential to choose liberty rather than socialism.

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