One of the things that gets lost or misunderstood when talking about economics is the subjective nature of its analysis. Economic explanations, at least from the Austrian economics school, instruct that valuations are relative to the subject who holds them. For this reason, some people dismiss subjectivist economics because they believe it cannot instruct what ethics are worthy of practice or even because they think subjectivist economics undermines ethics altogether.
The confusion lies in failing to distinguish between two senses of subjectivism, meta-ethical (or explanatory) and normative. Explanatory subjectivism is pretty sensible. Accordingly, if you want to explain why people acted the way they did, you have to look to the beliefs they held at the time of their action. It does not make much sense to interpret why someone acted the way they did by looking through values he or she did not believe.
Subjectivist economists subscribe to this view. And in that sense, subjectivist economics has no implied values other than those values inherent in science, e.g., regards for truth and whatnot. You can consider it value-neutral, but not value-free.
The more controversial (and I think mistaken) view is in normative subjectivism. It is a belief that a value (or end) has no more or no less merit than any other value. It would be perfectly suitable to argue about how to achieve a certain value, but not whether the value is worth pursuing. The case for normative subjectivism is that since everyone is capable of having an opinion, it stands that everyone’s opinion of a desired end is equally valid and equally arbitrary.
Normative and explanatory subjectivism are making two entirely different claims, and you can believe one without believing the other.
Some subjectivist economists, like Ludwig von Mises, held both views.
In “Human Action,” Mises declared, “The teachings of utilitarian philosophy and classical economics have nothing at all to do with the doctrine of natural right. … They recommend popular government, private property, tolerance, and freedom not because they are natural and just, but because they are beneficial.”
Meanwhile, Murray Rothbard, a natural rights proponent and an early Mises protege, accepted only explanatory subjectivism and demanded an objectivist defense for individual rights, which he presented in “The Ethics of Liberty.” (Whether he presented a valid defense is for another time.) The two very much parted ways on this, with Rothbard calling it Mises’ “greatest defect.” Yet they both agreed, at a minimum, that economics can be used to determine if particular means are conducive to achieving particular ends.
Rothbard takes this further in “Power and Market.” He talks about how certain ends can be dismissed because they are unachievable or contradictory to one’s means.
Mises supported a free market purely for consequentialist reasons because he supported the peace and prosperity that result from a free market, which gives a foundation for the greatest possible opportunity for people to act on their judgements. He also believed that the vast majority of people value peace and prosperity. When informed of the benefits of freedom, Mises was convinced that people would choose it overwhelmingly. I think he misread the importance that ethics has on people’s minds.
Part of Mises’ fear was that if he gave ground to ethical objectivists, it would give reason to use physical force again those who did not support the “objective truth,” as presumably approved by a tyrannical majority. Mises also adopted a utilitarian form of consquentialism because he thought it would be better to have a single value (the common good) rather than a number of competing values.
However, although they very well could, I am not so sure that values do have to compete against one another. They could very well complement one another in a non-contradictory hierarchy. The content of a value would have to fit in context with other values to form a a cohesive unit. The consequences of an action have an impact on the worth of that action, but another factor that plays into it is how congruent it is with your other means of action. If you are able to demonstrate the principles necessary to achieve your ends, it is possible to identify the objective causal facts that bring those ends into effect. It would become possible to understand the most beneficial ends of human beings by identifying relevant facts about the nature of human beings. It is possible to understand why human freedom leads to maximizing human welfare. Coupled with the idea that each individual is not capable of achieving values if he or she were not alive, we can say that each individual’s own life is an objective end in itself as a matter of fact.
Since no one’s life could morally be sacrificed for another’s, this would have given Mises an objective basis for individual rights.
While I can rightly dismiss ethical subjectivism, economic subjectivism becomes the basis for understanding economic phenomenon when you appreciate that economic values are a matter of individual judgement and not intrinsic in the product itself.Further Resources
- “Economics and Its Ethical Assumptions” by Roderick T. Long
- “Acting Man: Human Action as an Ultimate Given,” Human Action by Ludwig von Mises
- “Economic subjectivism“
- “Subjective theory of value” on Wikipedia