Buechner’s Objective Economics

[9thdoctor]

There’s a new book forthcoming applying Objectivism to economics. In the advertising it claims to be the first such book. A rank trouble-maker calling himself ND posted the following comment at Capitalism Magazine:

“To the best of my knowledge, this book represents the first attempt to rewrite economics in the light of Ayn Rand’s philosophy of Objectivism.”

While I doubt George Reisman used the phrase “rewrite economics” to describe his “Capitalism: A Treatise on Economics”, it seems like quite an omission to make this claim, unless, of course, Dr. Buechner is not aware of that volume.

http://www.capitalismmagazine.com/economics/6331-objective-economics-the-implications-of-ayn-rand-s-philosophy-on-the-science-of-economics.html

[Guyau]

.

From the Preface:

The primary purpose of economics is to identify, interpret, and explain how a capitalist economy works. Altruism assured economists that capitalism is evil in advance of that knowledge. The evil consequences of this belief permeate all of economics, damning capitalism in both theory and practice. In theory, capitalism never had a chance. Since an evil system cannot work, capitalism was convicted a priori. As for capitalism’s practice, economists’ commitment to the immorality of capitalism blinded them to the facts. Every datum, every event, every phenomenon, every result, every aspect of capitalism was twisted and distorted out of any resemblance to reality in order to make it conform to the altruist agenda.

Looks excellent.

~~~~~~~~~~~~~~~~

Looking through the Index in Dr. Riesman's tome, I see less than a penny on Rand's philosophy, on egoism, or on altruism in relation to Economics. That is not to say Riesman's book is not a great economics treatise. I expect it is, as was Dr. Rothbard's. It is only to say I'm expecting something very different from Buechner's book, based on his description.

Edited March 16, 2011 by Stephen Boydstun

[Philip Coates]

Subject: Buechner's Shameful Lie

Thanks ND, for your act of justice toward Dr. Reisman and his book.

Here is what I just posted at the same place you did ===>

> "To the best of my knowledge, [my] book represents the first attempt to rewrite economics in the light of Ayn Rand’s philosophy of Objectivism." [Nort Buechner]

The above is a truly shameful statement. Nort Buechner -is- indeed aware of George Reisman's book and his massive attempt to apply Objectivism completely and fully to the field of economics. He attended and spoke at seminars and conferences organized by Dr. Reisman.

"Reisman offers the most comprehensive defense of capitalism ever written...Reisman attempts something nobody else has done: combine some doctrines from classical economics, plus the free-market economics of the Austrian School and the pro-capitalist moral vision of Objectivism." -- The Freeman

--Philip Coates

,,,,,

(I have seldom read a book as powerful as Reisman's or learned so much. No matter how good or bad Nort B's book turns out to be, let's not let the bastard get away with this attempt to consign a great mind to the memory hole. Especially if he turns out not to footnote or give credit to Reisman's prior work.)

Edited March 16, 2011 by Philip Coates

[Brant Gaede]

It sounds like more ARI-type fastidiousness.

--Brant

[9thdoctor]

Looks excellent.

Agreed.

Thanks ND, for your act of justice toward Dr. Reisman and his book.

It’s the Essays on Atlas Shrugged imbroglio all over again. Who do they think they’re kidding? Maybe Buechner will back off from this bit of cultism once he’s aware that there will be a similar reaction. Next, an ARIan will write a book covering the same ground Kelley did in The Evidence of the Senses, and claim it’s a fresh breakthrough.

> "To the best of my knowledge, [my] book represents the first attempt to rewrite economics in the light of Ayn Rand’s philosophy of Objectivism." [Nort Buechner]

It’s such a strange statement, to my ears: “Rewrite economics” sounds too much like “rewrite reality”. I wish I’d kept the Second Renaissance catalog mailers from the early nineties, they advertised Reisman’s book well before it came out, showering it with praise. By the time it did come out they’d gotten the boot, and that was the end of it.

[Philip Coates]

> t’s the Essays on Atlas Shrugged imbroglio all over again.

Which one was that?

[9thdoctor]

> t’s the Essays on Atlas Shrugged imbroglio all over again.

Which one was that?

There's a thread for it somewhere. They claimed their collection of essays on Atlas Shrugged was the first of it's kind, then someone pointed out there'd been another previously, it was fought out via Amazon reviews. I chimed in since I have the book, it's quite good BTW.

http://www.amazon.com/Essays-Ayn-Rands-Atlas-Shrugged/product-reviews/0739127802/ref=cm_cr_dp_synop?ie=UTF8&showViewpoints=0&sortBy=bySubmissionDateDescending#R1OV76HDWQSML7

EDIT: Here's the thread

http://www.objectivistliving.com/forums/index.php?showtopic=8357&view=findpost&p=92887

Edited March 16, 2011 by Ninth Doctor

[Philip Coates]

I just noticed this from Buechner's preface:

"Objectivism changes everything about economics. This includes economics’ method, the conception of the economy, the meaning of competition, the conception of price, the principle of gains from trade, the nature of business costs, the concepts of supply and demand, the theory of price, the role of scarcity, and the theory of aggregate production."

Really???

The work done on these principles by Adam Smith, by Von Mises, etc. does not stand? Objectivism was needed to state the concepts of supply and demand or the role of scarcity?

An over-the-top statement like Objectivism changes -everything- in economics does not bode well for the book or for its objectivity in acknowledging previous contributions.

There is a tendency among many in the orthodox wing of Oism to be oblivious to good work, scientific and rational work done in the humanities by anyone before Ayn Rand.

[Philip Coates]

> Looking through the Index in Dr. Riesman's tome, I see less than a penny on Rand's philosophy, on egoism, or on altruism in relation to Economics. [stephen]

Stephen, it's interwoven throughout the book. And what struck me reading this masterpiece of a nonfiction book is that Reisman had exactly the right balance between philosophy and economics throughout. You don't include Objectivism in a discussion of marginal utility, elasticity, downward and upward sloping curves, methods of finance, future discount rates, and a thousand other topics.

Plus, expanding a point from my previous post, Objectivism sets fundamental premises in ethics, in the area of rights, in terms of the power of reason, in terms of rational calculation. But those can be stated and applied in far fewer pages than the purely economic details. And some of them were stated by Adam Smith and others prior to Rand, so you want to credit them and refer to them in the index.

The same would apply if you are writing a book on the philosophy of law from an Objectivist perspective. You would spend far less time laying out the fundamental principles of non-initiation of force, legitimate defense and retaliation that the hundreds or thousands of pages you would spend in applying them to all sorts of cases.

Edited March 16, 2011 by Philip Coates

[9thdoctor]

An over-the-top statement like Objectivism changes -everything- in economics does not bode well for the book or for its objectivity in acknowledging previous contributions.

I hope it's not The Logical Leap all over again.

[9thdoctor]

Well Phil, you and Per-Olof Samuelsson have been labeled “trolls” for your comments by “capmag”, presumably the editor. You’ve condemned the book without reading it. He/She failed to bestow this honor on yours truly. My read is that you’ve condemned the advertising, not the book, which is basically what I did, you just went farther with it.

I don’t think there’s any point in debating over there, I just checked and my comments on Ed Cline’s review of Amadeus have been removed.

http://www.objectivistliving.com/forums/index.php?showtopic=9712&view=findpost&p=117130

http://www.capitalismmagazine.com/arts/movies/6168-%EF%BB%BFamadeus%3A-a-pinnacle-of-cultural-corruption.html

[9thdoctor]

I don’t think there’s any point in debating over there, I just checked and my comments on Ed Cline’s review of Amadeus have been removed.

I did post a reply to the "troll" accusation, as follows:

I think it’s clear that Coates and Samuelsson are not condemning Dr. Buechner’s work, but its advertising.

This disappeared, so I posted it again as follows:

Another of my contributions has disappeared, here it is, repeated:

I think it’s clear that Coates and Samuelsson are not condemning Dr. Buechner’s work, but its advertising.

Is this a glitch, or an editorial action?

And this disappeared as well. Meanwhile, my repost of comments on Amadeus is still there, which sparked a "monstrous" reply, so who knows what the policy is.

http://www.capitalismmagazine.com/arts/movies/6168-%EF%BB%BFamadeus%3A-a-pinnacle-of-cultural-corruption.html

[Philip Coates]

> Well Phil, you and Per-Olof Samuelsson have been labeled “trolls” for your comments by “capmag”, presumably the editor.

Michael says I'm just crave attention, so apparently I'm not getting enough EverybodyShitonPhil on OL, so I have to go over to Capitalism Magazine looking for trouble.

I gather Per-Olof is another attention seeker...

Edited March 21, 2011 by Philip Coates

[9thdoctor]

I have to go over to Capitalism Magazine looking for trouble.

Go give ‘em hell. But save your comments so you can repost them here after they delete them over there.

[Philip Coates]

I don't think my subsequent comment has much value to us here...I'm just correcting the editor's misstatement about me - one time only. (( But if it's of any interest here is the exchange:

<> capmag --> "Interesting how trolls (Philip Coates, Per-Olof S. etc.) are ready to condemn Dr. Buechner without even reading his work. Reisman's work is his attempt at integration of Austrian and Objectivism; Buechner's is a rewrite. They are very different books. This is not say whether one or the other is correct; but, only that Buechner's is a rewrite. As to whether Dr. Buechner is correct or not is another issue for the reader to decide. But the method to decide is not that used by the above trolls."

<> me---> "I wasn't condemning his book, just his claim that it is "the first attempt to rewrite economics in the light of Ayn Rand’s philosophy of Objectivism" and thereby totally failing to acknowledge the massive prior work of George Reisman in this area. I would certainly hope that Dr. Buechner's book itself is a -great- one. And I don't "condemn him" as a person or a thinker. Merely this statement and the enormous injustice done to Dr. Reisman." ))

What is interesting is that (last I checked) they hadn't deleted either your or my or Per-Olof's -original- comments slamming Buechner.

What is even more encouraging is that you got 11 "likes", I got 10, and Per-Olof got 5. While the editor's rebuttal to us got only 1 "like". So, it seems like even on a very loyal and prominent ARI site and online magazine, people overwhelmingly side with Reisman.

It's especially encouraging because the people most likely to vote tend to be the most activist, serious people in any movement.

This by the way, was always my impression -- the ten to one siding with you and me on this issue is not a fluke.

Even though ARI supporters support their work, give them money, work with them or for them, they do not necessarily agree with the more egregious mistakes - such as the treatment of Reisman. (And, of course, we see that now that the internet is so vibrant with McCaskey.)

Edited March 22, 2011 by Philip Coates

[9thdoctor]

What is even more encouraging is that you got 11 "likes", I got 10, and Per-Olof got 5. While the editor's rebuttal to us got only 1 "like". So, it seems like even on a very loyal and prominent ARI site and online magazine, people overwhelmingly side with Reisman.

If only they had a “dislike” button, they do have something like that at Amazon.

It's especially encouraging because the people most likely to vote tend to be the most activist, serious people in any movement.

I suspect that site doesn’t get much traffic. I just checked, they're Alexa figures are much lower than OL's.

http://www.alexa.com/search?q=http%3A%2F%2Fwww.capitalismmagazine.com%2F&r=home_home&p=bigtop

http://www.alexa.com/search?q=www.objectivistliving.com&r=home_home&p=bigtop

Hee-hee, I just reread my reply to the "monstrous" comment, nothing beats the "but Ayn Rand liked it" card. Peikoff even included Schiller's Don Carlos in his "Great Plays" course. Take that!

[Philip Coates]

> Peikoff even included Schiller's Don Carlos in his "Great Plays" course.

That was a good course, naturally my course is better (I'm currently teaching three plays - "Holiday", "Galileo" by Brecht, and "As You Like It" at the CCC school.)

> I suspect that site doesn’t get much traffic.

Maybe so, but still a ten to one ratio ain't bad.

Edited March 22, 2011 by Philip Coates

[studiodekadent]

From the topic, Buechner sounds like a self-promoting idiot with delusions of granduer. He's overstating the importance of his project like you wouldn't believe. People like him only provide evidence for the stereotype that Objectivists are cultists.

The idea that Economics is a corrupt science rotted from the inside with altruism is just plain stupid. I am an economist and never once have encountered ANY (systematic, influential) economic theory that was built on Comtean altruism specifically. Yes, Utilitarianism is NOT Comteanism. Even orthodox Marxism isn't Comtean since its determinist in nature, plus much of early Marxism actually tried to be meritocratic.

And the idea that there are no Objectivist-compatible ideas inside economics is crap. Not only does the Austrian school predate Rand, but there's also Joseph Schumpeter (who's portrayal of entrepreneurship was very Randian). Also, the Dopfer-Potts theory of Evolutionary Economics was written without any prior knowledge of Objectivist philosophy (disclosure: Potts was my thesis advisor and I'm collaborating with him on an article for JARS).

I suspect this book will be distilled idolatory of Rand slathered atop ideas taken from the Austrian school. Probably without granting sufficient credit, too.

Objectivism of course has much to offer economics, but this portrayal of Objectivism descending from heaven in a golden winged chariot to bestow salvation upon economics as a whole from the demonic spectre of Auguste Comte is so hilariously overblown I can only see it as making more people see Objectivim as a joke.

Edited June 29, 2011 by studiodekadent

[Guyau]

.

Objective Economics

How Ayn Rand’s Philosophy Changes Everything about Economics

Northrup Buechner (University Press 2011)

Table of Contents

Chapter One – Method and Context

The Method of Economics: Induction / Other Things Equal

Laissez-Faire Capitalism: Money

Chapter Two – Objective Economic Value

The Modern Meaning of Value: The Role of Philosophy

The Objective versus the Intrinsic and the Subjective

Intrinsic Value versus Subjective Value

Objective Value: The Standard of Objective Economic Value / Knowledge and Objective Economic Value / Optional Values Are Objective Values / Nonobjective Values Are Objective Disvalues / Objective Value versus Subjective Value / Objective Economic Value

Chapter Three – Fundamental Economic Concepts

Supply and Demand: The Importance of a Theory of Price / The Historical Role of the Law of Supply and Demand / The Meaning of Supply and Demand / The Law of Supply and Demand

Goods and Services

Market

Capital and Wealth

Price: The Doctrine of Relative Prices / The Objective Price / The Opportunity Cost Doctrine / The Intrinsic Conception of the Real Price

Competition

Chapter Four – Foundational Theories

The Theory of Consumer Choice: Hierarchies of Values / Consumer Choice / The Diminishing Marginal Value of Money

The Law of Demand

The Principle of Gains from Trade

The Theory of Objective Business Costs: Alternative Concepts of Business Costs / Problems in the Calculation of Business Costs / The Theory of Objective Costs

Chapter Five – Introduction to the Theory of Objective Prices

The Three Theories of Price: Intrinsic / Subjective / Marshall / Objective

Background Considerations

How Prices Are Created: Terminology / The Markets of a Free Economy / The Five Methods of Price Creation

Chapter Six – Someone Sets the Price

The Calculation of Profit

Demand: Socially Objective Value

Unit Costs: Average Cost Pricing / Variable Cost Pricing / Marginalism / The Required Relation of Cost to Price / The Structure of Unit Costs

Competition: The Prices Currently Charged by One’s Competitors / The Quality of One’s Products Relative to Competing Products / Price Leadership

Additional Issues: Expectations / Complications

The Long-Run, Profit-Maximizing Price

Alternatives to Long-Run Profit Maximizing Price

Altruism versus the Profit Motive

Chapter Seven – The Other Methods of Price Creation

Negotiated Prices

Sealed Bid Prices

Auction Prices

Brokered Prices

Chapter Eight – The Theory of Objective Prices

The Extent to which Market Prices Are Objective

Nonobjective Prices

Market Prices and Objective Prices

Objective Economic Value

Chapter Nine – The Factors of Production

The Original Factor of Production

The Law of Demand for Factors of Production: The Rate of Profit on Investment / Relative Importance to the Businessman

The Worker Markets

Chapter Ten – Changes in Objective Prices I

The Effects of Changes in Facts on Set Prices

Background Premises

Changes in Average Cost

Changes in Demand

Long-Run Results

Changes in Competition

Chapter Eleven – Changes in Objective Prices II

The Effect of Changes in Facts on Other Prices

Negotiated Prices

. . .

Chapter Twelve – Scarcity and Profit

. . .

Chapter Thirteen – Total Spending and Production

. . .

Appendix A – The Theory of Price in Modern Economics: A Critique

Appendix B – The Method of Modern Economics: A Critique

Appendix C – Marginalism in Modern Economics: A Critique

Appendix D – The Meaning of Scarcity in Modern Economics: A Critique

Appendix E – The Effect of Changes in Cost on Set Prices: Expansion of the Argument in Chapter Ten

~~~~~~~~~~~~~~~~

Looks excellent!

~~~~~~~~~~~~~~~~

Previously:

. . .

There was some treatment of the synchrony of Rand's objective theory of value and Austrian subjective theory of value in Leonard Peikoff's 1976 lecture series The Philosophy of Objectivism. This was closely tied to Rand's book Capitalism: The Unknown Ideal (1967).

Peikoff 1976:

Economic value (market value) is not intrinsic (no "fair price").

Philosophically objective value coincides with what would be estimated, in context, by the most knowledgeable person. Socially objective value is value as estimated by anyone.

Market value is socially objective value; it is objective because the market system promotes and fosters consideration of reality. There is a tendency for market value to approach philosophically objective value. Economic value (e.g., wages) is not set by the arbitrary whim of capitalism.

I would actually disagree with the contention that market prices are 'objective social values.' I dont think there actually is such a thing as an objective social value, since objective value by definition is related to individual valuers, their contexts, etc. Prices are an average of valuer's valuations, regardless of how those valuers value. They could value something quite irrationally, for example. If valuers value in accordance with Objectivism however, then prices would reflect objective values. i.e. the prices would be derived from facts about reality and man's relationship with it.

Peikoff's phrase socially objective values occurs in his discussion of pages 20-28 of Rand's 1965 essay "What Is Capitalism?" This essay leads those in the collection of essays in Capitalism: The Unknown Ideal (1967). When one turns to the Index of this book, one finds that it was prepared by Alan Gotthelf and that under the entry for values there are two subdivisions: economic (23-28) and moral (20-23).

Moral Values

Rand writes that "'good' and 'value' pertain only to a living organism---to an individual living organism---not to a disembodied aggregate of relationships. / 'The common good' is a meaningless concept, unless taken literally, in which case its only possible meaning is: the sum of the good of all the individual men involved" (20).

Rand then introduces her tripartition of "schools of thought on the nature of the good: The intrinsic theory holds that the good is inherent in certain things or actions as such, . . . regardless of any benefit or injury they may cause to the actors or subjects involved. / The subjectivist theory holds that the good bears no relation to the facts of reality, that it is the product of a man's consciousness, created by his feelings, desires . . . . / The objective theory holds that the good is neither an attribute of 'things in themselves' nor of man's emotional states, but an evaluation of the facts of reality by man's consciousness according to a rational standard of value" (21-22).

I would suggest that Rand here uses the name subjectivist rather than subjective in order to not identify the subjectivist school of value theory with the Austrian subjective value theory.

Economic Values

Rand argues that an objective theory of values bars attempting to achieve the good by physical force. This is the fundamental reason that capitalism---a social system in which deliberate force is limited to self-defense and to enforcement of individual rights by the law---is based on the objective theory of moral values, not on the intrinsic theory nor on the subjectivist theory.

Moreover, "the objective view of values permeates the entire structure of capitalist society. . . . / The free market represents the social application of an objective theory of values" (23-24). Since values, on the objective theory, must be discovered by man's mind, men should be left free to discover them. Because values are objective, not intrinsic, every man should be left free to judge values "for himself, in the context of his own knowledge, goals, and interests" (24). Because values are objective, not subjective, capitalism allows the plethora of human values to be arbitrated by the nature of reality, including the reality of economic demand: "if a man's judgment is right, the rewards are his; if it is wrong, he is the only victim" (24).

"The market value of a product is not an intrinsic value. . . . And, within the broad field of objectivity, the market value of a product does not reflect its philosophically objective value, but only its socially objective value. / By 'philosophically objective', I mean a value estimated from the standpoint of the best possible to man, i.e., by the criterion of the most rational mind possessing the greatest knowledge, in a given period, and in a defined context. . . . / The free-market value of goods or services does not necessarily represent their philosophically objective value, but only their socially objective value, i.e., the sum of the individual judgments of all the men involved in trade at a given time, the sum of what they valued, each in the context of his own life" (24-25).

Andrew, do you have this essay of Rand's? When you read this stretch of it, do you find the concept socially objective values more sensible?

I do have that essay. However, I still consider 'socially objective values' to be incoherent. A market price, if generated by valuers valuing rationally, would descend from objective values but it would not be objective per se. It would be an average of objective values. And remember that most people do not value rationally these days, so market prices represent an average of many different values.

Rand argues that the market demand for a product can be based largely on an irrational scale of values, yet that market value of the product be a socially objective value. She uses the example of spending one's income on things like cosmetics to the neglect of saving for contingencies such as use of the capital equipment (e.g., a microscope) at the office of one's physician. She then argues that if the market is allowed to operate free of intervention, there are incentives for one to learn a more objectively correct (philosophical objective values) savings habit (WC 25).

There is another, more extreme sort of case to which this strand in Rand's reasoning does not extend, so far as I can see. Suppose crack-cocaine were legal and there were a market demand for it. Would this demand be a case of socially objective value? The market demand for this product is based entirely on the irrational values of the afflicted consumers. It would seem that this market demand could not be fairly characterized as socially objective value in the way of the cosmetics/savings example. There is no prime facie rationality (normative rationality) to using this product, unlike the cosmetics example.

So I doubt that Rand's idea that economic values are socially objective values can be extended to cover absolutely all products and services that bring a price. On the other hand, her idea of socially objective values as rational, objectively correct consumer values joined with, and even dominated by, irrational consumer values seems sensible.

I am not clear on your point about market price being not objective because it is a resultant of the values of the traders. Since I am ignorant of which wines taste wonderful, I go by price, and it has proven to be an extremely reliable guide.

My point is that something cannot be 'socially objective.' Prices can be derived from facts of reality, but not only will they not always be (as you conceded) but because we cannot verify the mental processes behind the value judgements then we cannot verify correct integration. You can do this with one mind, not with a process that imputes the verdicts of billions of minds.

Edited June 29, 2011 by Stephen Boydstun

[Guyau]

.

Prof. Buechner writes: “In the way that counts, modern economics is fully subjectivist. What makes it so is its explicit foundation in the idea that all economic activity flows out of consumer preferences” (37).

The Austrians held that “the foundation of value is the value placed on an item by consumers. That is the starting point. Then that value is reflected back to the factors [land and labor] that produce the item” (87).

Buechner certainly allows that consumer goods, not capital goods, are the goods that directly serve human life. “The output of each business in the economy functions as a link in a chain of cause and effect, the final link being a consumer good or service” (243). Demand for labor and capital goods—employees and producer goods—does indeed derive from consumer demand for consumer goods and services. However, according to Buechner, “most economists also interpret derived demand in a sense which is not valid: that consumers control the economy and that the economy is for the sake of the consumers” (244). To the contrary, Buechner argues that “capitalism is a system of producer sovereignty. Usually changes in the structure of production do not originate with changes in consumers’ demand, but with changes in producers’ ideas” (244; cf.).

“If we take men’s desires as the root of economic activity, we cut loose from reality the entire realm of economics. . . . For the economist, the issue must be: what are the relevant economic facts? The fact at the base of economic activity is man’s nature as a rational animal,” an animal producing by reason in order to survive (305).

The special area of interest in this work is theory of price, which Buechner argues is almost always determined by objective values, in Rand’s sense of the concept objective value. This treatise does not deal with theories of money or with theories of the business cycle.

[studiodekadent]

Prof. Buechner writes: “In the way that counts, modern economics is fully subjectivist. What makes it so is its explicit foundation in the idea that all economic activity flows out of consumer preferences” (37).

The Austrians held that “the foundation of value is the value placed on an item by consumers. That is the starting point. Then that value is reflected back to the factors [land and labor] that produce the item” (87).

Prof. Buechner is equivocating on the word "value."

"Moral Value" and "Economic Value" (or exchange value) are not the same thing. Accepting the subjective theory of economic value does not oblige one to accept a subjective theory of moral value. By the same token, one can accept the labor theory of economic value (an intrinsicist theory of economic value) without accepting an intrinsicist theory of morality.

Buechner certainly allows that consumer goods, not capital goods, are the goods that directly serve human life. “The output of each business in the economy functions as a link in a chain of cause and effect, the final link being a consumer good or service” (243). Demand for labor and capital goods—employees and producer goods—does indeed derive from consumer demand for consumer goods and services. However, according to Buechner, “most economists also interpret derived demand in a sense which is not valid: that consumers control the economy and that the economy is for the sake of the consumers” (244). To the contrary, Buechner argues that “capitalism is a system of producer sovereignty. Usually changes in the structure of production do not originate with changes in consumers’ demand, but with changes in producers’ ideas” (244; cf.).

As much as I love to make the producer an heroic figure, this is clearly the wrong way to do it.

Is the economy "for the sake of the consumers?" Yes, it is. Buechner's error lies in creating two classes of people; "consumers" and "producers" and attempting to distort the traditional concept of "consumer sovereignty" into a kind of altruism (i.e. via the use of words like "for the sake of the consumers").

In reality, people are both consumers and producers. The real world isn't divided into Hank Reardens that consume nothing and produce everything, and Ellsworth Tooheys that consume everything and produce nothing.

Everyone, to varying extents, performs acts of both production and consumption. A typical person goes to a job and produces and thus gets paid. After that, they go home and eat something (consume food), watch some TV (consume entertainment) then go to bed and then start the cycle all over again.

But here's the rub; why do they produce? They produce in order to consume. If people didn't need to eat to live, they wouldn't farm. If people didn't need shelter from the elements, they wouldn't build houses. If people didn't enjoy stimulation, we wouldn't have an entertainment industry. Production is a means to an end; consumption.

This is not bad. Nor does it make producers into altruists. They too, like everyone else, produce in order to consume; they want to make a profit so they can spend it on goods which make them happy.

As for "consumer sovereignty" vs. "producer sovereignty," Buechner is correct that what is produced depends on the ideas of producers (an observation made by Schumpeter). But consumers won't just buy anything full stop; they'll buy something if they believe it will serve as a means to their own ends. Producers invent novel ways of satisfying consumer needs and desires (and remember, all people are both producers and consumers), but it is those needs and desires which are the vital factor here. It is indeed the consumer, or more correctly the desires of consumers, that is sovereign.

This doesn't make producers into altruists. Producers aren't fulfilling consumer desires as an end in itself; they're doing it because they want to make a profit and spend that profit on things that make them happy. There is NO contradiction between "consumer sovereignty" and egoistic motives for production.

Honestly, Buechner's motivation is clear; he wants to valorize production and entrepreneurship and purge the Keynesian idea that consumption is the primary driver of the economy (although Keynes' was talking about GDP growth, not some sort of spiritual stewardship of 'the economy' or the like). This is a very noble aim. But in order to do this, he makes the following errors:

1) Reading neoclassical economics through a filter of Randian moral abstractions (which, I hasten to add, I agree with), and thus distorting the meaning of neoclassical economics in order to make it 'fit in' to some morality play ripped out of Atlas Shrugged.

2) Dichotomizing people into distinct, mutually-exclusive classes with opposing interests who are fighting for "sovereignty" over the economy (in a manner that is surprisingly reminiscent of Marxism).

3) Divorces production from consumption, divorces means from ends, completely sunders economy from teleology and makes "production" into some intrinsic, acontextual, Kantian perfect duty.

I don't intend any offense to either Prof. Buechner or yourself, Stephen, but this section is embarassingly bad and riddled with both misrepresentation and context-dropping (in the case of misinterpreting neoclassical economics by running it through a Randian ethical filter), Class Analysis (by setting up a producer-consumer dichotomy), and anti-teleology (by divorcing consumption from production).

“If we take men’s desires as the root of economic activity, we cut loose from reality the entire realm of economics. . . . For the economist, the issue must be: what are the relevant economic facts?

"Economic facts" includes human desires. An "economy" is a system of subjects, i.e. individual agents with free will/consciousness/etc. Because they have free will, they don't act in a determined way like particles in a field. Since how they act is a product of their consciousness as a whole (including free will), then this means that yes, their desires (i.e. their ends/goals) are economic facts.

Buechner is making a very similar mistake to that which George Reisman made in Capitalism; he's attempting to basically remove "the subjective" (in the Austrian sense) from economics. Why? Because, to Objectivists (who use the word "subjective" in a different sense to Austrians), the word "subjective" is a dirty word and the word "objective" is a very pleasant word (even if Objectivists also use "objective" in a very different sense to the Austrian economists). As such, every attempt is made to give an economic theory an "objective" gloss and avoid any reek of "subjectivism" even if Austrian Objectivity/Subjectivity is not the same as Objectivist Objectivity/Subjectivity (for more on Reisman's error, see Tabarrok, A (1997), Book Reviews, Review of Austrian Economics (1997) 10, no. 2: 115-131).

The fact at the base of economic activity is man’s nature as a rational animal,” an animal producing by reason in order to survive (305).

...An animal which needs to produce because it needs to consume in order to survive and flourish. Also ignored is the fact that "economic" means "economizing" i.e. prioritization of limited means towards various ends; scarcity (i.e. a situation where ends > means) is the fundamental fact at the basis of economic activity. A post-scarcity world (i.e. where means > ends) would certainly have a lot of productive activity, but would it be fair to call it economic activity? I'm not sure I'd say it shouldn't be called "economic" but the question is clearly a fair subject for debate.

The special area of interest in this work is theory of price, which Buechner argues is almost always determined by objective values, in Rand’s sense of the concept objective value.

Really? Buechner is arguing that the majority of market participants use an Objectivist-compatible means of evaluating their prospective economic activity in order to pursue Objectivist-compatible ends? This is true for some market participants much of the time, but many people do NOT think in an Objectivist-compatible manner about most economic activity. I can think of a few industries where this is prominent; the fashion industry more often than not deals with second-hander popularity-seeking (ditto with most popular art industries)(there are of course exceptions in both cases). Marketing and advertising frequently pander to the lowest and most parasitic motivations of people.

Rand endorsed von Mises, so clearly she understood that economic subjectivism wasn't a threat to her philosophy. Since all alternatives to economic subjectivism (in the neoclassical sense) fall into what Objectivists would call Intrinsicism, there really is nothing more to be said about an "Objectivist" theory of exchange value. "Objectivism supports the Subjective Theory of Economic Value" is not a contradiction in terms, to anyone that understands the precise definitions of the concepts in the proposition.

Edited August 23, 2011 by studiodekadent

[Guyau]

Prof. Buechner’s discussion of the concept of economic value and its relation to Rand’s distinction among theories of the bases of chosen value in general—the distinction between theories of value as fundamentally intrinsic, as fundamentally subjective, or as fundamentally objective—will be found on pages 23–38.

Buechner argues that Karl Menger’s economic theory is based implicitly on the concept of objective value (in Rand’s sense) in Note 8 on page 318. This and other traits of Menger’s theory receive high praise from Buechner.

There is no statement, implication, or insinuation in Buechner’s book that producers are not also consumers, and vice versa. There are no reifications of abstractions in this book.

Buechner’s treatment of the concepts of absolute and relative scarcity will be found on pages 235–43 and in Appendix D.

Buechner cites the work of George Riesman,* his colleague at St. Johns, at appropriate points in Objective Economics. Buechner acknowledges his learning from and concord with Riesman, as well as his difference. See the entry Riesman in the Index.

~~~~~~~~~~~~~~~~

PS

Yes, that should be Reisman. Thanks, Roger (#23).

~~~~~~~~~~~~~~~~

PPS

. . .

Oh, and does the book even mention Schumpeter? Because Schumpeter is the only economist with a similarly heroic depiction of Entrepreneurship to Ayn Rand.

. . .

I see. You have not read this book.

Yes, Schumpeter puts in an appearance, on a pertinent fine point.

Edited August 25, 2011 by Stephen Boydstun

[Roger Bissell]

Prof. Buechner’s discussion of the concept of economic value and its relation to Rand’s distinction among theories of the bases of chosen value in general—the distinction between theories of value as fundamentally intrinsic, as fundamentally subjective, or as fundamentally objective—will be found on pages 23–38.

Buechner argues that Karl Menger’s economic theory is based implicitly on the concept of objective value (in Rand’s sense) in Note 8 on page 318. This and other traits of Menger’s theory receive high praise from Buechner.

There is no statement, implication, or insinuation in Buechner’s book that producers are not also consumers, and vice versa. There are no reifications of abstractions in this book.

Buechner’s treatment of the concepts of absolute and relative scarcity will be found on pages 235–43 and in Appendix D.

Buechner cites the work of George Riesman,* his colleague at St. Johns, at appropriate points in Objective Economics. Buechner acknowledges his learning from and concord with Riesman, as well as his difference. See the entry Riesman in the Index.

When I googled "George Riesman," I was instead given "hits" for "George Reisman." Weird.

Even weirder, the same thing happened when I googled "Leonard Piekoff." :-) (No, I was ~not~ given "hits" for "George Reisman"!)

REB

[studiodekadent]

Prof. Buechner’s discussion of the concept of economic value and its relation to Rand’s distinction among theories of the bases of chosen value in general—the distinction between theories of value as fundamentally intrinsic, as fundamentally subjective, or as fundamentally objective—will be found on pages 23–38.

Buechner argues that Karl Menger’s economic theory is based implicitly on the concept of objective value (in Rand’s sense) in Note 8 on page 318. This and other traits of Menger’s theory receive high praise from Buechner.

Whilst I disagree with the idea that Economic Subjectivism implicitly assumes the Objectivist idea of objective value (since Economic Subjectivism applies irrespective of whether or not valuers are using Objectivist standards of valuation (in which case the moral value of the good would be objective (in the Randian sense) but not necessarily the price per se) or whether valuers are using completely arbitrary standards of valuation (in which case the value of the good is subjective (in the Randian sense)), the fact that Buechner essentially embraces the Austrian theory of economic value under a different name means that the book is nothing more than a rehash of Austrian economics, using terms which can easily mislead people into thinking Objectivism is a form of Instrinsicism (this is precisely how Kirzner reacted to Reisman's book), coupled with a hell of a lot of Rand idolatory and overstated claims about the absolute amazingness of Objectivism.

Oh, and does the book even mention Schumpeter? Because Schumpeter is the only economist with a similarly heroic depiction of Entrepreneurship to Ayn Rand.

I am an Objectivist, but I am not going to back up the narrative that Objectivism is descending from the heavens to rescue Economics from the demonic specter of Auguste Comte.

There is no statement, implication, or insinuation in Buechner’s book that producers are not also consumers, and vice versa. There are no reifications of abstractions in this book.

In that case, Buechner is overdosing on hyperbolic, dramatic language which can easily result in misinterpretations. This was one of Rand's unfortunate flaws and Buechner seems to be continuing the tradition.

[Brant Gaede]

There's a new book forthcoming applying Objectivism to economics. In the advertising it claims to be the first such book. A rank trouble-maker calling himself ND posted the following comment at Capitalism Magazine:

"To the best of my knowledge, this book represents the first attempt to rewrite economics in the light of Ayn Rand's philosophy of Objectivism."

While I doubt George Reisman used the phrase "rewrite economics" to describe his "Capitalism: A Treatise on Economics", it seems like quite an omission to make this claim, unless, of course, Dr. Buechner is not aware of that volume.

http://www.capitalis...-economics.html

You don't apply Objectivism to economics or economics to Objectivism. If the economics are valid they are objectively valid, a redundancy. Objectivism, a philosophy and Objectivism, the philosophy of Ayn Rand, are two different things. The latter is a cultural artifact that put too much into philosophy that didn't belong there. Philosophy is the way to knowledge and right action, if it be a true philosophy, it is not other branches of knowledge and inquiry. Reality and reason are not unique to Objectivism. Objectivism only gets traction in the ethics--halfway traction from halfway understanding (being generous) of what is a human being and the needs of a human being qua human being for the human being will be being, one way or the other--and trying to deal with it. The other star of Objecivism is not any of its four real branches--metaphysics, epistemology, ethics, politics (chuck esthetics, please), but that Ayn Rand came with all four--a complete integrated system in its basics. Top to bottom. A to Z.

--Brant

puttin' Phil to didactic shame