25
Jul
2016
Eugen Was Not PC
For the History of Economic Thought lecture on Bohm-Bawerk, I came across this passage that I remember reading in grad school:
“How many an Indian tribe, with careless greed, has sold the land of its fathers, the source of its maintenance, to the pale faces for a couple of casks of “firewater”!”
(I have no idea whether this is what it was in the original, or if the translator had some fun with it.)
Not sure why this is funny – I seem to have missed the joke. As an Austrian Austrian (so good they labelled him twice), he presumably believed such trades benefitted all parties, if undertaken freely?
“he presumably believed such trades benefitted all parties, if undertaken freely?”
This is WRONG, with capital letters wrong. And no serious Austrian from Menger to Hayek would have said this. What they all recognized was that, AT THE TIME OF THE TRADE, both parties THINK the trade will be beneficial to themselves. But as Mises said, “Many a slip twixt cup and lip”: after the fact, one (or even both) party may easily realize the trade was a TERRIBLE idea.
And Bohm-Bawerk is clearly recognizing this fact in the quote above. (Menger, in fact, has a long discussion of “false goods.”)
Not quite. There is a third aspect here, one that is within the scope of Austrian theory, namely the mutual benefit in the act of exchange itself. The so called constitutive means which is itself a source of utility.
What you are talking about is the subsequent utility considerations associated with owning the new good, whereby the ex ante expected utility happens to be less than ex post actual utility. A perceived loss.
To be sure, it is as you say the case that free trade consists of both parties expecting to benefit, where “benefit” here means after the fact, in owning the good. However, it is also the case that the act of the trade itself garners a benefit to both parties.
Free trade, therefore, benefits both parties in the act of trade itself, AND there is an expected benefit in the future with ownership of the new goods.
Free trade in Austrian theory is actually less about owning the goods and more about the exchanges. Catallactics, etc.
And from another perspective, it really can be said that free trade benefits all parties, beyond the exchanges themselves. Free trade has historically allowed people to improve their lives. This is demonstrably true. People really are better off because of free trade. Free trade cannot at this point in history be viewed as only about expecting to benefit over time. It really is the case that people are doing more than expecting to benefit. They are in fact benefiting.
What Harold said is not “wrong with capital letters.” Sure, when it comes to “Menger and Hayek”, neither would have focused on the benefits associated with the acts of exchanges themselves. But what Harold said has validity.
It is largely through interaction with MF that I arrived at the view of Austrians I expressed above, so not unreasonable that he should find at least some validity. MF may not represent the mainstream. It is a while since I conversed about this, so I may have forgotten something.
If we take Gene’s perspective, then we can say the parties THINK they will benefit, but we have no way to know if they will actually benefit.
From Praxeology, everything arises from consideration of the action of the parties. If it turns out that that action has no relation to benefit, as Gene’s comment suggests (at least to me), it seems there is little reason to think Praxeology will be of much use in discussing benefits.
I think that the praxeologist would also make no such claim, and say the approach only describes the immediate satiation of the unease that results in action. If this is the case, there is no required connection between action and benefit.
Since most of us, and I think many people that describe themselves as economists, regard benefits as the principle concern, then why should any system based on Praxeology concern us at all?
There’s been long arguments in Australia whether the Aus government should allow farmland and other property to be sold to Chinese citizens.
Basically, a lot of agricultural produce goes from Australia to China (plenty of good land in Australia, many mouths to feed in China), and in return a lot of manufactured goods go from China to Australia (cheap labour, no union agitators, weak environmental regulations). That’s global trade, and for the most part everyone is happy with it. Next step: hot Chinese money is seeking safe havens outside China (expecting the worst no doubt) and they favour the purchase of land and real-estate type property, particularly farmland and residential housing. I will note that Australians cannot just purchase these items inside China.
It’s become a bit of a controversy, the current land owners claim they should always be allowed to sell regardless of the buyer, but the implication of “ownership” of land within a nation/state is that every citizen is obliged to defend that land should there be a war in future. Anyway, it’s a topic that comes up often. Personally I’m highly uneasy about one-directional trade agreements. Sure, the Chinese might put investment into land improvements, but equally they might just sit on the asset.
Should the people who own land inside a nation be limited to those who are loyal to that nation and have committed to living there and being citizens? How to enforce this in a world of offshore shell companies?
How to solve the mystery:
A. Someone spend the big money for das Buch in Deutsch and study the original text;
https://www.amazon.de/Kapital-Kapitalzins-Abteilung-Positive-Kapitals/dp/3863832000/ref=oosr
B. Someone call the guy who did the English translation in 1930.
TRANSLATED WITH A PREFACE AND ANALYSIS BY WILLIAM SMART, M.A. LECTURER ON POLITICAL ECONOMY IN QUEEN MARGERET COLLEGE, GLASGOW
Otherwise, Lord Keynes will show up and call us ALL a bunch of racists.
Found it:
“Wie mancher Indianerstamm hat in sinnloser Genussucht für ein paar Fässer “Feuerwasser” das Land seiner Väter, die Quelle seines Unterhalts, den Bleichgesichtern verkauft!”
https://books.google.com/books?id=6Y1xAAAAIAAJ&lpg=PA267&ots=URee5zGWkj&dq=Eugen%20Bohm%20bawerk%20wie%20viele%20indianer&pg=PA267#v=onepage&q=Eugen%20Bohm%20bawerk%20wie%20viele%20indianer&f=false
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Seems like a pretty accurate translation, including the term “palefaces” (Bleichgesichter)
Nice, thanks for finding that!
Great find. I don’t need to read German to know what “Feuerwasser” is! Something about this post is making me thirsty.