Misesian Efficiency as Subjective Moral Optimization

• John Vandivier

This article makes a moral argument for polycentrism from Misesian efficiency. This article argues that rational action under a Misesian framework can be interpreted as a revealed subjective moral preference.

As a result, a free market composed of rational actors will optimize at a position which is not only efficient from the viewpoint of real production or utility, but also from the viewpoint of subjective moral analysis. Subjective moral optimization is the same type of optimization which justifies policy action in a <a href="https://en.wikipedia.org/wiki/Representative_democracy">Representative Democracy. Optimal social policy is better designed by a market in comparison to a representative democratic political structure.

The view that the free market is morally optimizing seems compatible with several schools of economic thought, but not in the same sense. Other schools of economic thought might see morality as a good or a component of a good, as an externality, as an indulgence, and so on, then proceed to demonstrate that a free market optimizes the supply and demand of such a good. Austrian Economics, as I understand it, entails subjective morality to be an intrinsic characteristic of action.

Misesian efficiency as I am using the term refers to the outcome on a free market, as described by <a href="https://mises.org/system/tdf/Human%20Action_3.pdf?file=1&type=document">Ludwig von mises in Human Action. Mises defines human action tautologically as <a href="https://en.wikipedia.org/w/index.php?title=Teleology&oldid=736671268#Teleology_and_economics">teleological and necessarily rational. Mises gives a few requirements for human action, as presented by <a href="http://www.ccoyne.com/">Dr. Chris Coyne:

  1. A certain felt uneasiness
    1. One must feel displeasure with the status quo
  2. An imagined preferred state of affairs
    1. One must perceive a state of affairs that improves upon this uneasiness
  3. Expectations about the means available
    1. One must believe that the means to bring about the preferred state are available
  4. Time
    1. One must have an understanding of past, present, and future in order to recognize a preferred state of affairs
  5. Uncertainty
    1. One must believe that the future is not predetermined
  6. Causality and Causal Relations
    1. One must believe that action will achieve (i.e., “cause”) the imagined, preferred state of affairs
Tangentially, I don't find #5 to be necessary for action, but it is certainly an important component of consideration.

It is #2 in particular which allows us to interpret teleologically optimal action as <a href="https://en.wikipedia.org/wiki/Revealed_preference">revealed preference for some subjective moral position.

A moral position is a value statement, judgement, normative statement, and so on, in contrast to a mere observation or positive statement.

As a rule of thumb, any statement like "X is good," "X is better than Y," or "X should be" is a normative statement, and accordingly also a moral statement, judgement, etc.

By imagining a preferred state of affairs and desiring such state of affairs, in particular to the point of action, an individual has revealed that they judge the sought end state to be better than the status quo.

Here are some objections to this notion, along with my responses:

  1. People frequently identify a particular moral code as optimal, but then, in particular cases, violate that moral code.
    1. Then they have revealed through action, which I trust more than survey, that their moral code is consequentialist, even though they thought it was categorical.
    2. This is not inconsistent with holding some category in generally high regard, but making exceptions where the cost is particularly or impracticably high.
  2. People's actions often vary in the context of differing costs and environments
    1. I reiterate the answer from point 1.
    2. While a true assertion, is does nothing to undermine the fact that such actions are revealing a moral preference, it simply indicates the moral code is a consequentialist one.
  3. The way I employ the concept of morality is not the ordinary way most people use the term when talking casually.
    1. True, and I don't take that as a criticism. The way I employ the term is the technical way in which economists discriminating between positive and normative assertions use the term, and also the way moral philosophers and others use the term.
  4. Exacting policy per se is immoral due to the immorality of the coercive nature of the state. Therefore even to advocate free market policies is an immoral act.
    1. This logic doesn't follow due to the fact that free market policies reduce and ultimately eliminate the state as a monopoly on the use of force.
    2. If state coercion is defined as immorality, then free market policies are correspondingly de facto pro-moral.