Tag: economics

When No Argument Can Save You

On By Adam GurriIn DialogueLeave a comment

This week I had the pleasure of listening to my friend Noah appear on EconTalk to discuss the status of economics as science with my former professor in that discipline, Russ Roberts.

I would characterize neither of them as epistemologists or philosophers of science, but perennial practitioners. The chief difference between them, other than age or Noah’s ability to draw on a knowledge of physics as well as economics, is one of faith.

Noah himself brought this up: all science requires a leap of faith somewhere, as he put it. The example he used was Galileo’s experiment demonstrating that two balls of different mass will fall at the same rate. There’s only so far you can go to prove that this represents a universal law, or even a very general one. What if it only applies in our part of the universe? What if it only applies when there is a human observer?

Noah isn’t saying this makes us helpless or that we have to willfully ignore such thought experiments—nor should we.

The arc that Russ Roberts has gone through on this subject since I took his class during the crash in 2008 to the present can be characterized as a loss of faith—rather than the embrace of a given intellectual framework.

Russ has become unwilling to make that leap of faith when it comes to economic methods and arguments. But more importantly, he has lost faith in the sense of trust—trust in his fellow economists. Most importantly of all, he has lost faith in his own judgment.

The questions that he seems to come to again and again—why economists can’t agree on the effect of the 2009 stimulus, whether any study has ever completely won over people whose perspective was at odds with its conclusions—are attempts to establish, or prove once and for all the absence of, the credibility of economics as a field.

I’m not sure there’s an answer that could satisfy him. There’s a certain self-fulfillingness to losing trust in this way, much as widespread generosity in granting trust seems to perpetuate itself. How such trust can get established in the first place is a mystery, one that I’m certainly not going to get to the bottom of in a blog post.

The Ontology of Economics

On By Samuel HammondIn Economics, Philosophy, Social ScienceLeave a comment

Earlier this year I opined on twitter that economists are essentially philosophers with full employment:

Jokes aside, my glaring omission, of course, was ontology. Ontology is the subset of philosophy concerned with the nature and categories of being and existence. In the case of economics, the core ontological preoccupation is with the nature and existence of market equilibria and their constituent parts: supply and demand, institutions, representative agents, social planners, and so on. Some focus on ontologies of being, like a static equilibrium, while Hayek and Buchanan famously had ontologies of becoming that emphasized the importance of analyzing economic processes. Others debate the gestalt between whole markets and individual exchanges — supply and demand curves versus a game theory model of bargaining, say. Others-still question the reality of economic “absences,” like productivity measurements produced as a statistical residual, or the output gap between real and potential GDP.

Economic ontology therefore touches on every aspect of economic thinking and analysis, and as such the biggest rifts in economics often come down to mutually incompatible ontological commitments. For instance, I once read a polemic against Keynesian economics that proclaimed matter of factly that the macroeconomy “doesn’t exist,” that it’s nothing more than a metaphor for a complex aggregation of individual interactions. Well — no duh. Individuals are aggregations of complex biochemical interactions, as well, but that doesn’t make them any less real. Much like debating the point at which a collection of individual grains becomes a heap — there simply is no fact of the matter.

As in the example above, it’s important to be able to discern the difference between a category mistake (like attributing motives to GDP or the fallacy of composition) and a difference in construal (like acknowledging aggregates exist in the first place). More often than not, the existential quantifier (or dubbing something “real”) is less about proposing an object as genuinely more or less fundamental and more about raising or lowering that object’s social status. This may be incredibly useful in the context of rhetoric and persuasion, but it is usually safer to embrace a plurality of ontologies as equally valid based on use and context.

That is, economists should be ontological pluralists. And self-consciously so.

Who Will Speak For Us?

On By Adam GurriIn RhetoricLeave a comment

Storytelling is central to the human experience. It sets us apart from other animals to almost the same degree as language itself.

As stories are generated and retold, we develop a kind of grammar. These days, we call the units of that grammar tropes. I have a trope in mind that I wanted to begin with, but for once TV tropes appears to have failed me. There’s one that’s in the ballpark of what I’m going for, but not exactly there. But I’m betting you’ll find this familiar.

Imagine a father who has very particular expectations for their son. Beyond expectations, he have been excited by the prospect of his son taking over the family business, or becoming a doctor or lawyer, or starting a family, ever since he was born. The father has invested an enormous amount of emotional energy into this vision. The son wants to go to college, or wants to be an actor, or doesn’t want to have kids, or is gay. When he confronts his father about it, it is a tremendous blow. His father is completely devastated to lose this story of his son’s life that he had held onto so tightly. But the father pulls himself together, and gives his blessing, even if it isn’t needed. Even if the son is still dependent on the father materially, the father respects his son’s autonomy too much to try and strong-arm him into the path he wanted.

The son goes on to pursue his chosen path, and the father never once gives him grief about it again. But he also never entirely recovers from the disappointment. Perhaps it is only a lingering sadness, perhaps it becomes a more acute depression as the years go on. But he genuinely cares about and respects his son, and never makes him feel as though this depression is his son’s fault. Perhaps he skillfully conceals it; perhaps the son lives in a distant city so the visits are few enough that not much skill is required. But he takes pride in the life that his son has, even if he still can’t help letting the glimmering dream of what could have been weigh on him.

A Story of a Different Kind

Now, let’s tell that again in the language of economics.

The father had strong preferences when it came to how his son was to live. His son’s life choices thus constituted an externality on him, positive or negative. When given the opportunity to attempt to credibly threaten to impose costs should his son deviate from his preferred path, the father revealed through his action that he more highly valued his preference for being respectful than his preference for the specific life plan he had in mind for his son. This choice entailed certain costs but it gave him the most value out of his available options, as it must have if he made the choice voluntarily.

Has rather a different feel to it, doesn’t it?

At my request, Mark Lutter offered a few critical comments on Deirdre McCloskey’s latest paper. I’m not going to get into the comments on economic growth; for one thing, I’m not all that qualified to. For another, McCloskey hasn’t really made her positive case there yet. But I want to address his last three points, especially the last one:

McCloskey is arguing that economics should embrace speech, stories, shame, and the Sacred. I agree. Economists should also take culture more seriously, take beliefs and morality more seriously, and rely less on complex mathematics. However, economists can do all that just fine within the existing framework.

Related is his sixth point that “she argues that things like identity and morality cannot be captured by neo-classical economics, but gives little reason as to why.” I would say that “cannot” is probably the wrong word. You can capture anything within any framework, if you desire to—but beyond a certain point it often means assuming the can opener.

What McCloskey means when she makes statements about “the immense literature on ethics since 2000 BCE” or “the exact and gigantic literature about ideas, rhetoric, ideology, ceremonies, metaphors, stories, and the like since the Greeks or the Talmudists or the Sanskrit grammarians” she is advocating learning from the humanities. She is saying that there has been a conversation about human nature and culture and ideas for thousands of years, and economists would do well to familiarize themselves with it. If they’re going to dismiss it, they ought to dismiss it from a place of knowledge rather than because it is the path of least resistance.

I think the central point of debate here is what should be integrated into what. Should the sacred be integrated into “the existing framework” in economics, or should the existing framework be integrated into something bigger, older, and richer? I think you know my answer, and McCloskey’s.

The story I started out with is based on insights drawn from a storytelling tradition that I have been immersed in since practically before I spoke my first word. You tell me: do you want to reduce that story to the version that can be accommodated by the existing framework in economics? Or do you want to use the insights of economics without giving up on what is at work in the older tradition?

The Conversation of Social Science

“Cross-discipline” is a phrase used to describe the collaboration across the traditional boundaries between academic schools, but usually still within social science. It’s the talk among economists, sociologists, and psychologists, to name a few prominent fields that come to mind.

It’s this conversation that I thought of when I read Mark’s seventh point:

Seventh, and this applies to McCloskey more broadly than just this paper, what basis does she have for abandoning central economic assumptions. For ideas to matter either preferences are not constant (what she seems to be arguing given her jabs at de gustibus) or rational expectations is false. You cannot have all constant preferences, rational expectations, and ideas mattering. Given the importance of constant preferences and rational expectations the burden of proof is on McCloskey to change methodological assumptions. This burden of proof is especially difficult to reach in complex problems, and she fails to meet it.

Setting to the side whether McCloskey provided enough evidence, it seems odd to say that the burden is on those who are challenging assumptions just because those assumptions are important. Especially since constant preferences is one of the most notorious assumptions of economics outside of the field. To quote Daniel Kahneman:

To a psychologist, it is self-evident that people are neither fully rational nor completely selfish , and that their tastes are anything but stable. Our two disciplines seemed to be studying different species, which the behavioral economist Richard Thaler later dubbed Econs and Humans.

Kahneman and Thaler are one side of a big conversation that started in the 70s between psychologists and economists, the impact of which is still being felt in the latter field today. Psychologists like Kahneman can point to experimental evidence indicating that people’s preferences are not stable.

Economists, especially the institutional and Austrian variety, argue that taking people outside of institutional and cultural contexts into the highly specific environment of (usually) a college lab can only yield limited insights. Moreover, they point out how microeconomics makes the best predictions in specific domains, most concretely in auctions or in finance. And those predictions rest on the assumption of stable preferences, among others.

The categorical nature of the debate as I have witnessed it can grow tiring. Personally, I am persuaded by the “of course preferences aren’t stable” line of argument; I find it hard to believe that the changes I’ve witnessed in people in my own life are merely anecdotal. On the other hand, preferences must be stable to some degree; while not completely unchanging, nothing would get done if they were just constantly cycling.

So my question is: to what degree are preferences stable. Or more methodologically significant: what degree of stability is required to explain the empirical phenomena that line up with economic theory? I’m sure there’s a literature on this, but I confess to not having read it. Perhaps Mark or a reader can point me in the right direction.

More Human Than H(u) = α + βM + γA + δN + ε

But the most important disagreement is right there in Mark’s sixth point:

A simple explanation of identity and morality is they serve to signal in group status. People want to trade with people who have a shared set of expectations about what constitutes fair trade. More importantly, they want to live with people with a shared understanding of permissible violence. Because the most convincing person is one who believes what they are saying, identity and morality are a central part of humanity.

This is the exact sort of thinking that McCloskey is going after.

A relevant passage from her paper:

I get the price theory: price and property, the variables of prudence, price, profit, the Profane as I have called them, move people. But the point here is that they are also moved by the S variables of speech, stories, shame, the Sacred, and by the use of the monopoly of violence by the state, the legal rules of the game and the dance in the courts of law, the L variables. Most behavior, B, is explained by P and S and L, together:

B = α + βP + γS + δL + ε

Signaling, avoiding violence, setting terms of trade; these are P variables or possible P and L variables. McCloskey doesn’t deny them. But if Mark thinks he’s “embracing” S variables “within the existing framework”, he’s wrong. He’s simply reduced them to P (and possibly also L) variables.

This can perhaps be understood by reference to an earlier Sweet Talk conversation on the subject of honor and honoring. Sam, ever the economist, pointed out that honorable behavior is often socially desirable. As a result, we confer honors upon people who have proven themselves to be honorable; we give them medals in public, we announce their names on a list, sometimes we even erect monuments. This serves to subsidize the positive externalities to honorable behavior.

I agreed, but quickly added that there is such a thing as honor. Honor is not simply about producing social value—not that Sam every claimed as much, mind you! No, honor is about doing the right thing, even if you are not honored for it, even if it results in a material or emotional loss. And the conversation, reaching back before the Greek tragedians and up to the present from thinkers such as Rosalind Hursthouse, is full of people arguing that you should do the right thing even when it is in some way spiritually or morally deforming. If the only options in front of you are all terrible ones, you still must do what a good person ought to do, given those options.

Rather than whether or not S variables can be integrated into economics, the real debate is whether they exist at all. McCloskey’s claim, which I believe, is that attempts to translate S variables the way Mark did is the same as writing them off entirely for P variables. In an otherwise marvelous paper, Vlad Tarko errs in seeming to think that McCloskey herself makes a symmetrical mistake by assuming that there are only S variables, or that they are the only ones that matter. In fact, The Bourgeois Virtues is simply about making the case that there are S variables at all, in the face of a discipline that effectively rejects it.

Tarko takes an approach that I think McCloskey would approve of, speaking of “incentive-invariant” ideas and culture. It reminded me of this section of her paper:

The equation is not wishy-washy or unprincipled or unscientific. The S and L variables are the conditions under which the P variables work, and the P variables modify the effects of the S and L variables. Of course. For example, the conservative argument that laws serve as education would connect L causally to S, by a separate equation. Or again, when the price the Hudson Bay Company offered Indians in Canada for beaver pelts was high enough, the beaver population was depleted, in line with P-logic. But S-logic was crucial, too, making the P-logic relevant. As Ann Carlos and Frank Lewis explain, “Indian custom regarding the right to hunt for food and other aspects of their `Good Samaritan’ principle mitigated against the emergence of strong trespass laws and property rights in fur-bearing animals; conflict in the areas around the Hudson Bay hinterland contributed to an environment that was not conducive to secure tenure, and attitudes towards generosity and even a belief in reincarnation may have played a role” in running against better P-logic rules that would have preserved the beaver stock.

What this is all getting at is that there are true, internal goods as well as external ones. Commitment to particular internal goods both face external constraints, and have implications for the shape of some of those constraints. S variables influence P variables and are influenced by them in turn.

The traditional agrarian way of life has been largely washed away by the tide of the Great Enrichment in the countries where it has advanced the furthest. But the Amish have largely preserved it in their communities. They have done this in part through a commitment to shared values; S variables. They also have a very unique way of governing their communities, and are highly committed to enforcement through practices such as shunning; L variables. They have also had to buy up farmland in order to maintain their way of life; as that strategy has been exhausted they’ve had to allow a larger and larger fraction to work off the farm and even open businesses; P variables.

McCloskey’s equation is, of course, just a useful metaphor. As David Weinberger paraphrased:

As Umberto Eco says, there are many ways to carve a cow but none of them include a segment that features a snout connectd to the tail.

McCloskey’s three variables are a useful way of carving the cow, as is “the existing framework” in economics. But none should stand on their own, and (to stretch this metaphor a bit further than its usefulness) all end up discarding large segments of the original animal.

The best approach to understanding the human animal is to take in the whole conversation, not just economics and not just social science. For McCloskey as well as Michael Oakeshott, the voice of poetry, one of the oldest voices, deserves a place. Personally, I stand with them.

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The Glamour of Macho Epistemology

On By Adam GurriIn Rhetoric7 Comments

One of the central claims of Deirdre McCloskey’s The Rhetoric of Economics is that there is a major disconnect between the practice of economics and how economists describe that practice. She indicts the field for embracing the ideals of reductionist modernist scientism; that is, of thinking that it is possible to develop a single scientific method that can be explained and easily understood by undergraduates, which nevertheless provides an unshakable foundation for progress in science.

I’ve taken up this argument elsewhere, but I want to focus on an interesting aspect of it here. Unlike the party line at many of the heterodox schools of economics, McCloskey does not deny that economists have made progress in the past 50-100 years. She thinks the proliferation of mathematical models and econometrics have been tremendously beneficial, in fact. She simply thinks that, by taking too narrow an interpretation of what counts as science, economists have handicapped themselves unnecessarily.

But isn’t it interesting that they could hold onto an epistemology that is completely wrong, and yet continue to make progress in practice? The divide between what is described as scientific and what economists do in practice is uncanny; why does it exist? Why does it go so largely unnoticed? Could it serve some purpose?

I am reminded of Karl Popper’s description of the towering figures of the Enlightenment—how they were seized by the notion that truth is manifest, that it is visible and recognizable if only you seek to find it. Popper argued that this is utterly wrong, yet amazingly, belief in it motivated some of the best work in science and scholarship in history.

The irony of this example is that Popper and his intellectual descendants are the primary targets of McCloskey’s book and its sequels. But could Popperian falsificationism play a similar role for economists as the doctrine of a manifest truth did for the Enlightenment thinkers?

It puts me in mind of Virginia Postrel’s The Power of Glamour, though glamour is visual rather than verbal. Still, there is an image here—an image of oneself as scientist, and image of what it means to be a scientist. Glamour is an image that is more simple, more perfect than reality could ever be, and it provokes a sense of longing. It is “known to be false but felt to be true.”

The glamour of Popper’s epistemology is hard to deny. The essay in which Popper discusses the doctrine of manifest truth, “On the Sources of Knowledge and Ignorance,” is part of the collection called Conjectures and Refutations. Throughout the collection Popper calls for scientists to advance “bold conjectures” and then “attempted refutations.” Popper makes the aspiring scientist feel akin to the courageous warrior; not advancing timidly but boldly, sticking your own neck out for the greater good of all. In short, he makes science sound exciting—no small accomplishment.

McCloskey doesn’t deny that science often requires courage—and the rest of the virtues. What she denies is that the practice of science boils down to Popper’s very simple formula. For one thing, falsification is not so straightforward as Popper claims. People must be persuaded that a falsification has occurred, a much more spongy matter than hard-headed methodologists like to make it sound. For another, most of science is getting up to speed on other people’s accomplishments, ideas, failures, and so on. In short, it’s immersing yourself into a body of scholarship. There is simply nothing sexy about that.

What macho epistemology along the lines that Popper and other methodologists may do is spark people’s initial interest in a field. Science, like all practices, has standards of quality that are accessible only to those who have been inculcated in the norms of the community of practice. Before that inculcation takes place, the thing that draws people in the first place, the carrots, are external goods. That is, the promise of material rewards, or fame, or glory, or anything other than the “goods internal to the practice”, and MacIntyre would say.

What are we to make of this? Does science need a noble lie? I would not go that far. Like McCloskey, I believe in the strength of committed self-consciousness. But I also don’t think that sweeping aside shared myths and glamour is a guarantee of future success; for one thing, history has shown us that a great deal can be accomplished even while buying into some very implausible myths. For another, we all need objects of aspiration, even if complete attainment is forever out of reach.

But not all such aspirations are made equal. And there’s a strong case to be made that the methodologist mythology worshipped in economics has run out of resources for spurring further advancements. I stand with McCloskey in believing that it is high time for economics to step out of the sandbox.

The Costs Are the System

On By Adam GurriIn Politics5 Comments

I have not one, but two fellow Sweet Talkers who want me to believe that the political system just is lies and violence.

Here’s Sam:

When I say that the lies and the violence ARE the system, I mean simply that as long as there are rewards to being cunning or wicked, there will be cunning, wicked men on earth. Peaceful, cooperative people require defense against the cunning and the wicked. Such defense is necessarily violent, and by the logic of coalition politics, it is often necessarily deceitful. Without measured, controlled, well-directed violence, there is chaos and social disorder. Sometimes this means stuffing a couple dozen or so ICBMs inside a big steel tube and sending it out on the most dread of all possible missions. Most of the time, it means issuing select members of the community a badge and instructing them to enforce the law as she is written.

Here’s BF:

There are few (no?) truly unalloyed goods in the world. Even if one views government as a necessary instrument for preserving the social order, or, even, that the current governance structure is a force for good in the world, there have to be costs; this is aside from the literal monetary costs, but also includes the implicit human costs that are necessary for the system to work. Even if you assume the current structure of the criminal justice system is a net-good, you have to be honest and realize that innocent people will be hassled, arrested, raped, tortured, convicted, and, sometimes, executed by agents of the state to bring you the goods.

Both of them are thinking quite consciously in the language and framework of economics and game theory; of trade-offs, cost-benefit analyses, of cooperation or defection.

If that line of thought is taken to its extreme, then the specific bad things that they mention are not the only costs of the system. In fact, from the economic way of thinking, the whole system is nothing but cost. We want things—food, shelter, entertainment, whatever it may be—and in order to get those things, we need specialization and trade. In order to get specialization, we need the institutions that make it possible. These institutions, in theory, minimize certain costs—transaction costs, as well as the risk of violence or arson which tend to limit the extent of trade.

But the necessity of these institutions is itself a cost (I hastily restate that this is the economic way of thinking; there are others).

Put more plainly, our institutions are the cost we’re willing to pay in order to offset other costs; they’re a net gain in the sense of providing more benefits for less than we would have in their absence (though there may be better alternatives).

So, if I may chastise my fellow Sweet Talkers, it’s not quite right to point to, say, police brutality as the cost of the system (as BF does). Rather, having a standing police force at all, and a military, and legislature, and courts, and law (and yes also property rights), and, well, the whole damn lot of it, is the cost of the system.

So in a very real sense, the cost is  the system, but BF especially seems to focus on costs of a particular kind.

Let’s call it opportunism. Opportunism is something that institutions are very clearly directed at minimizing; through incentives and punishments of various sorts but more directly through norms. The problem, of course, is that the very people who create, implement, enforce, and reform institutions are just as capable of opportunism as people of any sort. They are also capable of dangerous incompetence; sometimes it’s hard to tell which is which, especially from the distance of a news story.

But let’s stick with opportunism, for the sake of this post.

It’s no secret that I’m fascinated by the Amish. When I read up on them a couple of years ago, my friends and family were about ready to strangle me to keep me from talking their ears off about the Amish. Their way of life is so different from ours, and yet they are right in the middle of a thoroughly modern nation, pushing back against it and making compromises in strategic and interesting ways.

But a friend of mine—a true believer in the narrative of liberation—does not approve of such communities. He grew up with a friend who was inside of a highly religious community, and they all looked the other way while the father sexually abused this friend. “If I Google ‘Amish abuse‘, what will I find?” he asked.

Anarcho-capitalists often point to specific episodes in history where some governance arrangement cropped up that did not involve a government that directly used violence against its citizens. There was always some implicit violence in the background—from outside invaders if you didn’t buy into the system, say, or from fellow citizens if you were judged “outlaw” and thus not protected by the community. But let’s put that to the side for a moment. Opportunism still existed even at the furthest distance from such threats.

Risk is a kind of cost, as any economist will tell you. It’s factored right into the price of a commodity, just like labor; a labor-intensive product is relatively higher priced, a product that involves a lot of risk to produce is relatively higher priced.

When the goal is cooperation and community, the greatest alternative to the threat of violence is trust. What the anarcho-capitalists point to are systems that rely far more on trust than on overt or even implicit threats of violence. Sounds great, right?

But my friend is not just carrying a chip on his shoulder about some specific thing he witnessed in his youth. Trust carries risks; hell trust just is going out on a limb on the faith that you won’t be cut down. It’s making yourself vulnerable. And what is opportunism, but the exploitation of vulnerability?

When an institution imparts an enormous amount of trust to people in specific roles, that trust can be abused. And that abuse is no less pretty than the sorts of incidents that BF highlights in his various posts.

It doesn’t seem to me that opportunism is particular to either system. Though systematic cynicism may yield insights, serving as a kind of critical theory for identifying fault lines, I don’t think that’s why we have the systems in the first place. We trust and make laws and enforce them because that’s the cost we have to pay to get what we actually want; which is peace and prosperity in which to flourish.

Part of the cost are the specific fault lines for opportunism that a given institution creates. But that is only part of the story.

An important part, of course. But I don’t think the radicals are right in their belief that it is the most important part.

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Ordoliberalism and the fallacy of Natural Rights

On By Adam BlackstoneIn UncategorizedLeave a comment

My co-blogger Samuel H. wrote a fantastic piece yesterday on Ordoliberalism, its role as true heir of the Scottish Enlightenment, and why Laissez Faire economies are mythical. It’s really a great post, and I encourage you to read it now if you haven’t already. This continuation to the discussion of Ordoliberalism will be here when you’re back.

The first thing I should make clear is that I really disagree with nothing in Samuel’s post. So this isn’t a critique at all. But it is a response to draw out the logic of Ordoliberal and to discuss what Noah Smith called the Markets in Almost Nothing. Namely, that discussion of Ordoliberalism does not stop with economic markets where prices are information, but can be applied to Noah’s Markets in Almost Nothing as well, the things we cannot easily price (such as dignity and satisfaction with life generally), but do know when we see them. And that’s because these un-markets are subject to political arrangements we can vote on, even if we cannot buy and sell them.

To see where this logic leads, let’s look at pensions, a very economic activity with lots of transparent pricing. A believer in laissez faire, or economic “natural rights”, would see no objection to an employee and employer bargaining to include a pension as one of the values exchanged for the employee’s labor. Instead of getting paid a fixed sum today, the employer pays an annuity at some point in the future. Dandy!

An Ordoliberal would look at this arrangement however and ask whether this arrangement is conducive with higher social values, such as the desire for a competitive market with lots of firm turnover and creative destruction. The Ordoliberal would recognize that there are several shortcomings to employer-provided pensions. For one thing, pensions probably aren’t that firm’s specialty, and they might not be good at it. For another, if a very large number of employees (and former employees) were receiving (or expected to receive) pension payments into the future, there would be an intense political pressure to bail out a struggling employer in order to save its pension, rather than allow the creative destruction of the market to unfold in its standard course. It would serve the higher values much better if pension investments were made to, and handled by, a firm other than the employer.

But as I said above, this logic does not stop at the market. We can look to other facets of human life and usefully dispense with talk of “natural rights” in order to make real progress towards higher social values. A good example would be the marriage market. Do people have the natural right to get divorced at will? As an Ordoliberal we can quickly dispense with that question with an easy “No, they do not. Nor do they have a right to get married in the first place. There are no rights, remember? Let’s decide on the society we want, and then decide what is legal or illegal, yes?”

What kind of societies do want? What kind of societies are possible given the limits of human nature? (This second question always trips up the Communists) These questions are difficult to answer even for individuals, and fiendishly difficult to find consensus on, but they do have one great advantage over discussions of natural rights – they are concrete. Anything at all could be a natural right, if we all agree it is, and if we all agree on natural rights being inviolable even in the face of harmful consequences to society, then we will never actually get to live in a society we want to live in. It is far easier for any individual to say “This is good”, or “This is bad”.

We must dispense with this fallacy of natural rights, not just to property and contract, but in all areas of our life – including areas of our personal life and non-contractual society that many people consider deeply personal. They are personal, it’s true, but to the extent these actions create measurable harm to the fabric of society, society has a right to modify them.