It is a mistake to associate with the notion of free banking the image of a state of affairs under which everybody is free to issue banknotes and to cheat the public ad libitum. People often refer to the dictum of an anonymous american quoted by Tooke: "Free trade in banking is free trade in swindling." However, freedom in the issuance of banknotes would have narrowed down the use of banknotes considerably if it had not entirely suppressed it.Rothbard was quoting out of context in the blameworthy sense, and this post shows how to make that claim properly: show the context that changes the meaning of the quote!
An especially pretentious conceit of the modern macroeconomics of the last 40 years is that the extreme assumptions on which it rests are the essential microfoundations without which macroeconomics lacks any scientific standing. That’s preposterous. Perfect foresight and rational expectations are assumptions required for finding the solution to a system of equations describing a general equilibrium. They are not essential properties of a system consistent with the basic rationality propositions of microeconomics. To insist that a macroeconomic theory must correspond to the extreme assumptions necessary to prove the existence of a unique stable general equilibrium is to guarantee in advance the sterility and uselessness of that theory, because the entire field of study called macroeconomics is the result of long historical experience strongly suggesting that persistent, even cumulative, deviations from general equilibrium have been routine features of economic life since at least the early 19th century. That modern macroeconomics can tell a story in which apparently large deviations from general equilibrium are not really what they seem is not evidence that such deviations don’t exist; it merely shows that modern macroeconomics has constructed a language that allows the observed data to be classified in terms consistent with a theoretical paradigm that does not allow for lapses from equilibrium. That modern macroeconomics has constructed such a language is no reason why anyone not already committed to its underlying assumptions should feel compelled to accept its validity.It is always possible to depict any situation as an equilibrium of some sort or other: we can just take whatever phenomena that seem to imply disequilibrium and simply posit some counteracting factor that shows the situation actually is an equilibrium: price controls don't create a disequilibrium, they just create an equilibrium in which queueing time plus price equilibrates supply and demand.
Here's the basic structure of the situation. If you're a politically ambitious commander like Petraeus, you want good advice. But you also want to make sure that you and your decisions are portrayed in a positive light. So you invite some well-connected civilians to visit your operation, and you make sure you select people who aren't known for being critical of the war and who will be easy to co-opt if need be. And when the consultants come to visit for a few days or weeks, you make sure they receive briefings that give the impression things are going well even if they are not.Correctly analyzing class interests often explains what might otherwise be understood only as a conspiracy, a insight for which we can thank Marx.
Next, consider how this looks from the consultants' perspective. If you're an inside-the-Beltway think-tanker (and especially if you're someone who depends on soft money), it's a big deal to be invited to go to Afghanistan or Iraq and advise the commander. It makes you look more important to your colleagues, your boss, and your board, and you can go on TV and radio and write op-eds invoking your "on-the ground" experience. If you have to debate somebody on U.S. policy, you can sit up straight and pontificate about "what I saw when I was in Kabul," or "what General Petraeus told me when we were discussing COIN strategy," or whatever. Then you (or your organization) can write fundraising letters or grant proposals touting your connections and deep on-the-ground experience. And let's not forget the role of ego: it's just plain flattering to think a four-star general wants your advice.
The question is whether they can reject reductionism consistent with maintaining a position that can in any interesting sense be called “naturalistic.” In particular, non-reductionistic versions of materialism have a tendency to collapse into either property dualism -- the sort of view defended by Chalmers -- or a quasi-Aristotelian commitment to formal and final causes -- which (as I noted in my own review of Nagel) is essentially what Nagel is defending. So, if one rejects both Chalmers’ and Nagel’s views (as, of course, Dupré does) it is no good to note that most naturalists are no longer reductionists, and leave it at that. One needs to show that this anti-reductionism doesn’t effectively put these naturalists precisely into either Chalmers’ camp or Nagel’s; and Dupré does nothing to show this.Note: This is Feser's response to John Dupré's complaint that Nagel shouldn't be addressing reductionism, because, Dupré says, no one in the philosophy of science takes reductionism seriously anymore. So any reductionist citing Dupré and claiming "See, here's a prominent philosopher who agrees with my rejection of Nagel," is taking an odd stance since, in fact, Dupré criticizes Nagel for writing a book rejecting your position because, he says, essentially everyone in the philosophy of science now rejects your position, so what's the point of criticizing something so obviously wrong?
More systemically, these relative price effects increase the epistemic burden on market actors as prices become less reliable signals of underlying consumer preferences and opportunity costs, thanks to the temporary pushes and pulls from the injection of excess supplies of money. People are simply more likely to guess wrong about what a price movement means, and are thereby more likely to make irreversible (at least to some degree) decisions with respect to investments in human and physical capital.Aren't injections of money into the economy by the central bank much like the landing of our gold meteors? Now, I am very sympathetic to the argument that there is an issue of equity here: the meteors' landing spots are outside of human control, but the central bank deliberately places these golden meteors, say, in the vaults of the big investment banks, and that is unjust. But, given that it has done so, why doesn't the market simply adjust to such real changes in effective demand just as it would to the discovery of our gold meteors? Given that certain consumers really are wealthier after the injections, and opportunity costs really have changed, doesn't the new constellation of prices simply reflect this new reality in the same way it would after Farmer Joe discovered his gold meteorite?
Now, Nagel’s point is not that there is something wrong per se with overthrowing common sense in this way (as Galileo, Descartes, Newton, Locke etc. did). It is rather that whatever value this method has, it cannot coherently be applied to the explanation of conscious experience itself. If the reductive method involves ignoring the appearances of a thing and redefining the thing in terms of something other than the appearances, then since our conscious experience of the world just is the way the world appears to us, to ignore the appearances is in this case just to ignore the very phenomenon to be explained rather than to explain it. Consciousness is for this reason necessarily and uniquely resistant to explanation via the same method scientific reductionism applies to everything else. For the application of the method in this case, writes Nagel, “does not take us nearer to the real nature of the phenomenon: it takes us farther away from it.” To treat the appearances as essentially “subjective” or mind-dependent is precisely to make them incapable of explanation in entirely “objective” or mind-independent terms.
Hence “in a sense,” Nagel continues, “the seeds of this objection to the reducibility of experience are already detectable in successful cases of reduction.” As I have put it myself in several places, the reductive method in question is like the method of getting rid of all the dirt in the house by sweeping it under a certain rug. While this is a very effective way of getting rid of the dirt everywhere else, it is not a strategy that could possibly be used to get rid of the dirt under the rug itself. On the contrary, it only makes the problem of getting rid of that dirt even worse. And that is exactly why the mind-body problem as it is understood today essentially came into existence with Galileo, Descartes, and Co. and has remained unsolved to the present day. What these early modern thinkers wanted (for certain practical and political ends) was a completely quantitative, mathematical description of the world. Irreducibly qualitative features -- secondary qualities, final causes, and the like -- since they would not fit this model, were thus essentially defined away as mere projections, “swept under the rug” of the mind as it were. But that only makes the idea of dealing with the mind itself in the same manner even more hopeless. For these early moderns, the mind just is, you might say, the holding tank for everything that doesn’t fit their quantitative method. Naturally, then, that method cannot coherently be applied to the mind itself.
Now the lesson Nagel drew from this in the 1974 article was not that physicalism is false so much as that “physicalism is a position we cannot understand because we do not at present have any conception of how it might be true.” But the early moderns who inaugurated this conceptual revolution tended to draw the stronger conclusion. Indeed, writers like Cudworth and Malebranche saw that the method in question can be used to argue for a kind of mind-body dualism. For if you maintain that color, sound, heat, cold, odor, taste, etc., as common sense understands these features, do not exist in matter, then they do not exist in the brain or body any more than they exist in the material world external to the brain and body. If they do exist in the mind, though, then the mind must not be material. Dualism can hardly be refuted by the reductive method, then, precisely because dualism follows from that method.
Now that conclusion is actually a bit too strong, though the Cudworth/Malebranche style of argument has had defenders down to the present (e.g. Richard Swinburne in The Evolution of the Soul). For one could argue instead, as Berkeley did, that only the qualities we know of in conscious experience are real and the mathematically-redefined material world is a mere fiction -- idealism rather than dualism. Or one could argue, as Russellians do, that the sensory qualities presented to us in conscious experience are what “flesh out” the abstract structure described by physics -- thereby putting something like color, sound, etc. as common sense understands them back into matter after all, but in a way that is very different from the way common sense supposes them to be there. (As David Chalmers suggests, though, this really amounts to a kind of riff on property dualism.) And of course, we Aristotelian-Thomistic philosophers would reject the assumptions that lead to this tangle in the first place, dismissing Cartesianism and materialism alike as riffs on the same fundamental error of treating what are really just physics’ useful mathematical abstractions from concrete material reality as if they were the whole of concrete material reality.
What you cannot coherently be, consistent with the reductive method described, is any sort of reductive materialist, which has been at least historically the standard form of materialism. And this, I would say, is why materialism was so rare in modern philosophy before the late twentieth century. It takes real historical ignorance seriously to think that the scientific revolution somehow supports reductive materialism and that Descartes, Locke, Berkeley, et al. were non-materialists merely because they didn’t have the courage and/or foresight to follow out the implications of that revolution. In fact, they were the ones who were consistently following out those implications, while materialists like Hobbes were the wishful thinkers. Perhaps the proud ignorance of the history of philosophy that some (though by no means all) of the early analytic philosophers exhibited made it possible for materialism widely to come to seem plausible by the 1960s.
