There was a cold humor circulating in the Soviet Union: At a conference, Stalin asked: "Is the collective farm system scientific?" One official stood up and replied, "It's certainly not scientific, and if it's science, it should be done on monkeys like scientists." ”
The official's answer was "scientific", first experimenting on monkeys, and then popularizing them to human society after success. But this is clearly an abuse of the scientific method, how can people and monkeys speak the same thing?
However, this absurdity is only a microcosm of the collective madness of humanity in the 20th century.
Social Darwinists try to control the path of human evolution with the "scientific method" – only those with good genes can have children, and those with inferior genes should be completely eliminated. They declared: "From an individual point of view, they perished, but from a human point of view, human beings evolved." ”
Disasters ensued: European and American countries passed the "Sterilization Act", the Nazis massacred Jews, Jeeps, Slavs in the name of "inferior nations"... In the 1920s, Professor Ivanov of the Soviet Union conducted a gruesome "ape hybrid experiment" at the Sukhumi ape breeding base in an attempt to create a tireless, knife-and-gun super soldier.
Utopians in the Soviet Union, Eastern Europe and other places use the "scientific method" to run the economy - the "planned economy" instead of the "market economy" for production and distribution, in the vain hope of building a paradise on earth without crisis, without exploitation, and equality for all. In the end, economic collapse, political turmoil, the destruction of humanity, and the regression of civilization were ushered in.
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Mankind was convinced that science and reason would bring about a paradise of prosperity, but a bloody hell. Hayek wrote in His Book Counter-Revolution in Science that what really brought about the catastrophe of the century was the wrong methodology—"the misuse of the scientific method in the study of human society."
Although experiments such as "social Darwinism" and "planned economy" have gone bankrupt, some of the residual poisons, such as "positivist" economics, have not been dissipated to this day.
The greatest prophecy of the 20th century
In 1920, Mises published a groundbreaking article in which he predicted that utopian experiments were doomed to bring only chaos, want, and slavery. This article was subsequently expanded into a tome, Sozialismus, in which the Soviet planned economy began in 1928.
In 1961, Nobel laureate Samuelson predicted in the world-famous Economics: "The Soviet economy will catch up with the United States in 1997." In 1991, however, the Soviet Union collapsed.
Paradoxically, Samuelson continued to study the Soviet economy and had a wealth of data. Mises, on the other hand, had never been to the Soviet Union, and even before the Soviet Union's planned economy had begun, he was able to draw this prophetic conclusion in his study by mere logical reasoning.
It can be seen that the amount of information and data in hand does not mean that the closer to the truth, if the framework of thinking is wrong, then the fallacy will seize people's minds.
The "positivist" economics, represented by Samuelson, applies the methodology of physics - "hypothesis, observation, analysis, verification" extensively, and tries to summarize the theory by induction.
As a result, the Soviet Union's overwhelming data on economic growth led them farther and farther down the wrong path, and eventually, the illusion displaced the truth.
The Austrian school of economics, represented by Mises, believes that economics is the study of human beings, and economics must be rooted in the study of human nature. Mises's reasoning about the "planned economy" is derived from the self-evident axioms of "subjective value theory" and "human action" in his view, and deduces step by step:
It is necessary to clarify two concepts first:
(1) Subjective value theory: Human subjective feelings cannot be accurately measured
Classical economics holds that commodities have an objective "value" that is not subject to human will, and that price is a phenomenon that fluctuates up and down around "value".
Menger, the founder of the Austrian School, proposed the opposite "subjective theory of value": the "value" of the commodity is given by man, and it can only distinguish between high and low, but cannot measure the specific size of the value.
For example, when you're hungry and you want to eat fried rice most rather than noodles, you know that fried rice is worth more than noodles. But how many times the value of fried rice is noodles, you can't calculate. Because there is no scale that can really measure subjective feelings such as "satisfaction.".
(2) The external material world can be accurately measured
For example, how much volume a bottle of water can be measured in milliliters, how much price can be measured in renminbi, and so on.
Second, just a small story is needed to get to the heart of the matter:
Even if there is an omnipotent organization that can control the factors of production of society as a whole, such as steel, labor, etc., it can plan to produce any goods and services to meet the demands of the people. When it asks about the needs of the people, everyone ranks the importance of goods and services in their minds – some want bread, some want housing, some hide their true thoughts, and so on.
When the economic activity is over, due to the lack of price signals, it can only count how many tons of steel, how much labor, etc., but it cannot calculate what the total cost is.
Since each person's inner world is unknowable, it has no way of knowing whether everyone's needs are being met – the total return on economic activity cannot be calculated. When costs and benefits cannot be calculated, it is impossible to determine whether scarce resources are being used efficiently.
In the end, the whole society fell into want and chaos, at first there were potatoes, bread and cabbage to choose from, then only potatoes and cabbage, then only potatoes, and finally, nothing...
Mises argues that the crux of the matter lies in the lack of a bridge between "immeasurable human subjective perceptions" and "measurable objective material worlds," and that the "real prices" traded by the market are, to be precise, monetary-based economic calculations. In the utopian heaven on earth, since there is no private property rights, there is no free trade, so it is impossible to generate "prices", and it is impossible to make economic calculations, and in the long run, the economy is bound to collapse.
The logic of "positivism": what is wrong is not the theory, but the real world
The advantages and disadvantages of the two methodologies are not only reflected in the judgment of specific problems, but also in the proof of the laws of basic economics.
In 1845, the Englishman Giffin found in Ireland that the price of potatoes had soared due to the ongoing famine, but the demand for potatoes was still very large. This is a clear violation of the foundation of the economic edifice – the "demand theorem": the higher the price, the less demand there is. This is known as the "Giffen Commodity Conundrum".
Faced with this difficult problem of shaking the foundations of economics, "positivist" economics and Austrian Pai immediately began to act - we can see the major differences in methodologies between the two sides through the research and demonstration of this problem.
"Positivist" economist Jason and Miller went to Hunan to conduct an experiment in which they randomly handed out rice shopping vouchers to the local poor, and they found that the "Giffen commodity problem" did exist - subsidies caused rice prices to fall, poor people needed less, and after the subsidies were removed, people began to buy rice urgently.
They immediately fell into confusion: Is the "demand theorem" wrong?
In the Austrian school's view, the problem can be solved by reasoning about human nature alone. They argue that "human behavior is based on the order of importance to one's various desires." People first have to meet basic physiological needs: to eat and wear warmly, and other desires are secondary in comparison. Under normal circumstances, after a person's basic physiological needs have been met, the rest of the goods will be "the higher the price, the less the demand" as demonstrated by the "demand theorem". In Ireland, due to the great famine, "living" became the first need of man, as long as there is money, the first thing to buy is potatoes, and people's demand for potatoes is bound to decrease - in the past, a full meal required 3 potatoes, and now as long as you can eat half a potato, it is satisfied. So the "demand theorem" still holds.
Ironically, the hugely successful Olympic economics continues to be marginalized and even criticized for "derailing" from reality, a magical reality that is simply ridiculous.
In addition to predicting the inevitable failure of the planned economy, Mises also successfully predicted the Great Depression of 1929, and he not only preserved his wealth, but also successfully saved the Austrian economy.
Keynes, the "father of macroeconomics", and Owen Fisher, the "first-generation monetarist", continued to study the US economy and stock market trends, and as a result, the two suffered heavy losses in the Great Depression - half of Keynes's wealth was in vain, and Owen Fisher not only lost all his wealth, but also owed huge debts and died of poverty.
Not only was the Great Depression of the 20th century a testament to Opal's foresight, but the 2008 global financial tsunami we experienced firsthand a decade ago was no exception: Wall Street investor Peter Schiff deduced the 2008 financial crisis based on Opal's theory. U.S. Congressman, Opai economist Ron Paul warned back in 2001 that a bubble in the housing market would trigger a Great Recession. In the face of the Queen's reproach of the Queen of England, "Why didn't you predict the financial crisis?", "What is wrong is not our theory, but the real world." ”
In his book Counter-Revolution in Science, Hayek lamented: "Positivist "economics" regards man as a lifeless atom, trying to describe man in terms of unpredictable mathematical models. "This is typical of the abuse of the scientific method.
Austrian economics is the opposite of "positivist economics":
(3) Firmly anchor the core issue of "man".
Austrian believed that the foundation of economics must be radical "individualism"—any abstract "state, society, nation" is composed of concrete and vivid people, and abandoning concrete "people" and studying abstract "states" is tantamount to putting the cart before the horse.
Closely follow Kant's teachings of the philosophical line of "a priori knowledge."
Kant argues in the Critique of Pure Reason that there is another source of human knowledge in addition to experience, and that is human reason. The human mind has unique structures, and the knowledge derived from these structures is called "transcendental knowledge" or "science of forms", such as mathematics and geometry.
Kant believed that human beings relied on "a priori knowledge" to understand the external world. "Prior knowledge" is the underlying operating system of human beings, while "empirical knowledge" is only the data entered into the operating system.
Mises added a new branch to Kant's "transcendental theory" through Man, Economy, and the State, and Rothbard, namely economics. In these two tomes, they reconstruct the edifice of economics step by step, starting from several self-evident axioms.
In the framework of Austrian economics, we do not need to memorize complex theorems or the complex changes of higher mathematics. With a logical brain and an empathy for understanding human nature, the economic edifice will magically stand in your mind like magic. This is the fascinating magic of Austrian economics.
Rights cannot be calculated and traded
The contest between "positivist" economics and Austrian economics in the field of human ethics and morality is equally fierce.
In 2016, a strange thing happened in Leshan, China: 30,000 bees stung three cows, and as a result, all the bees died because they lost their needles. So the beekeeper and the cattle herder confronted the court – the cattleherd accused the beekeeper of stinging the cow and demanded compensation, while the beekeeper accused the cattleherder's cattle of killing their own bees and demanded compensation.
Those familiar with mainstream economics must think of the "Coase Law": who is the victim depends on the total cost of society, and the judge should arrange the boundaries of property rights according to the total income of society. For example, if the market price of beef is higher than honey, the beekeeper has to compensate the cattle herder.
Mainstream economics believes that Coase's theorem emphasizes the "efficiency of allocation of scarce resources", and such a judgment reduces the "total cost of society", which is a good thing for the benefit of the country and the people.
However, the Austrian school disagreed, and Hoppe argued in The Economics and Ethics of Private Property that Coase's Theorem was a serious violation of private property rights— and if it operated according to Coase's theorem, the judge's decision would be reversed and the boundaries of property rights blurred. The reason is very simple, the cost and market price of goods are constantly changing, today the price of beef is high, cattle are stung to death, is the responsibility of beekeepers. But what if the price of honey is higher tomorrow than beef? Does this mean that the judge's judgment will change at any time according to the market price?
This will lead to the absence of stable property rights expectations in society. Private property rights are the foundation of a market economy, and there will be no prosperity in a country with unstable property rights.
Coase's theorem holds that whoever is less costly is liable. But the cost here is only the "cost of money", but if there is a psychological cost in the form of non-monetary, how to calculate it? For example, the cow that the bee stung to death, raised jointly by the farmer and his wife, bears witness to the love of a couple, which is "priceless" to them.
As the saying goes, "The wind can go in, the rain can go in, and the king can't go in." "The king cannot infringe upon my private property rights, so why can the infringement be justified in the name of the general interests of society?"
Is Coase's theorem really justified the sum of each person's property rights as a whole? For example, Xiao Wang and Xiaoming's salaries are both 10,000 yuan. Now Xiao Wang and the boss negotiated, turning Xiaoming's salary into five thousand yuan, his own salary into twenty thousand yuan, and the overall income of the two changed from twenty thousand yuan to twenty-five thousand yuan, and the overall interest increased. Will Bob agree?
The value of different people cannot be summed up as a whole.
The concept of "the sanctity and inviolability of private property rights" is deeply rooted in the West, so why can absurd concepts such as "Coase's theorem" infringe on individual private property in the name of "total social gains" and "collective interests" still be sought after by mainstream economics? What are the consequences?
Hayek's answer in Counter-Revolution in Science is deafening: "Since scientific methodology dominated the field of humanities and social sciences, the deadly conceits have been constantly addicted to abstract concepts - social 'state' and 'class', they describe living people as 'inanimate free atoms', they dissolve ethics and morality, they pursue value neutrality, they expel value judgments, and finally lead human society to the road of enslavement." ”
It is relatively easy to recognize the wrong currents of thought
Eradicating false methodologies is extremely difficult. Hegel said: "The only lesson that mankind has learned from history is that it has not learned any lessons from it. "In the 20th century, the blind worship of advanced technology and the abuse of the scientific method caused a whole century of human disasters, which still make people feel uneasy. But unfortunately, the catastrophe did not bring about a great awakening - the rapid development of blockchain, internet of things, artificial intelligence let mankind see the dawn of the fourth industrial revolution, but mankind has once again fallen into a fatal conceit: whether it is East Asia or Europe and the United States, there are constantly scientific and technological elites who propose to resurrect the "planned economy" with "big data + artificial intelligence".
The maturity of gene editing technology has given mankind a new hope for curing terminal diseases such as cancer, but "social Darwinism" has also re-emerged: human beings can get rid of genetic restrictions through technology, design themselves at will, there will be no more diseases in the world, and human IQ will increase by hundreds of times, which can eliminate poverty and injustice and accelerate human evolution.
"Positivist" economics is getting deeper and deeper on the wrong path, unable to extricate itself from the fatal conceit, and still fantasizing about the complexity of human society with a few abstract functional models.
Why has the bloodstains of history failed to awaken humanity? In the final analysis, we have only cognitively discarded erroneous trends such as "Nazism" and "social Darwinism", but the real promoter of these trends of thought, the methodology of scientism, is still eager. The use of wrong methodologies to criticize erroneous currents of thought has resulted in the repeated transformations and resurgence of those erroneous currents of thought.
It is relatively easy to recognize erroneous currents of thought, but it is extremely difficult to eradicate false methodologies, which is hayek's original intention in writing Counter-Revolution in Science: The Curse of the Abuse of Reason. In the book, Hayek calls those who try to use the scientific method to discover eternal and unchanging "social laws" and are directly controlled and applied by a very small number of elites as "scientists" who are "scientific."
These people are unaware of, or deliberately ignore, the fact that the objects of scientific research are objects with definite, specific properties, such as the earth, the moon, iron, and so on. Under certain observational conditions, their properties and properties do not change, which is the fundamental premise of science.
However, the world of social science is the subjective world of human beings, the object of study is fundamentally the human mind, human nature is complex and changeable, human behavior will change at any time due to the influence of different concepts, and human society is a bottom-up "emergent phenomenon", which is fundamentally unpredictable.
The ingenious model constructed by the "scientists" ignores the basic premise of science and is precisely the "counter-revolution" of science.
Teacher Liu Yejin said: "As long as the glory of scientific progress continues, the human rational conceit of organizing the human cooperative order with 'scientific and engineering thinking' will never be inevitable, so Hayek's book "Counter-Revolution of Science" will have eternal value." ”
Some people mistakenly think that "Scientific Counter-Revolution" is ostensibly concerned with "which way should economics go", but in fact, it is wary of "the abuse of reason", and the real concern is the major question of which path human beings will take between freedom and slavery.
The book was once out of print, selling for as much as 300-500 online. Prophet Bookstore is well aware of the value of this book, together with Yilin Publishing House and Professor Feng Keli, a first-class translator in China, has the honor to resurrect this book, identify the QR code in the following figure, and can be collected exclusively. (You can also choose to buy hayek's other works, as well as the "classic works" written by Mises, Hope, and Rothbard, which have been recommended many times in this article.)
Source: Wen: Yu Jia Editor: Prophet Bookstore Manager, Bai Guo.