The foundation of liberal (in the classical sense) thought is freedom, for the purpose of the maximization of the happiness of man. Unfortunately happiness isn’t exactly a cut and dry concept. Libertarians of the Subjectivist school (Mises and his followers) believe happiness is maximized when man is free to do as he pleases: value, something’s utility for effecting the happiness of the doer or posessor, is entirely subjective, and cannot be judged by any outside standard. The government has no place in telling man what will make him happy.
Plato, on the other hand, conceived of a benevolent philosopher king, because people do not know what makes them happy: such questions he regarded as objective. People may have notions that this or that will make them happy, but they are most often wrong and ineffective for such ends.
Though it may seem that an objectivist theory of value would lead one to statism/utopianism under this philosopher king, there is actually a strong Libertarian Objectivist contingent, the progeny of Ayn Rand’s thought. George Reisman summarizes Rand’s argument in the following criticism against subjectivist value:
If all ultimate ends are in fact arbitrary and subjective, then they are all equally valid. Thus the satisfaction a socialist dictator derives from the murder of his victims, or the pleasure another monster derives from the torture and murder of children, are just as valid as ultimate ends as the satisfaction a physician derives from saving lives, or a scientist derives from the discovery of truth, or a businessman derives from the profit he makes on the introduction of a great new product.
And along the same lines, modern Western civilization is of no greater objective value than the culture of a primitive jungle tribe. The concept of economic progress is arbitrary and subjective. Capitalism is of no greater objective value than socialism.
From Wirkman.net
The source article also gives a defense of subjectivist value by constructing the categories of other-compatible, other-competitive, and other-destructive values, representing values that result in cooperation, competition, and harm, respectively. In such a model the first two are acceptable and the last is not. However, such a division of values has no marked qualitative boundary: there is a gradient between cooperation and competition, and a further gradient between competition and harm. It is not a difference of quality among them, but of degree. Ultimately there is no need for recourse to such distinctions. Furthermore knowing that utility/happiness/joy can be objectively maximized/fulfilled by the knowledge of God should cast further doubt on subjective value as an ultimate given, as Mises puts it.
So how does one reconcile a subjective theory of economic value – the foundation of market economics – with an objective theory of absolute utility – the foundation for Christian ethics? The first thing we have to do is distinguish between utility and expected utility: man acts not to maximize his utility given the constraints of life – this would be is impossible. There is uncertainty in the world: man acts to maximize his expected utility.
Subjective value cannot be the philosophical ultimate given, for these valuations do not derive from thin air: they are grounded in belief. Not necessarily correct belief, but belief nonetheless. The man who believes “let us eat and drink for tomorrow we die” will have a much shorter utility horizon than one who believes in steadfastly preparing for the future. He will choose short-term pleasures over long-term pleasures, even greater long-term pleasures, because he believes his mortality is more immediate than does the second man. This informs his expectations of future utility, which in turn guides his behavior.
Subjective value then derives from expectation of utility. Prices derive not from subjective utility, but subjective expectations of utility: market bubbles (such as the housing one that just popped) arise because expectation differs wildly from reality. For another example, people buy into Nigerian royalty scams not because they derive personal pleasure from falling prey to swindlers, but because they have imperfect knowledge of the risks. The objective payoff is always negative, but people still buy into it on the (faulty) expectation of a substantial positive payoff. In the same way, people may aim for happiness in any number of things – money, sex, acclaim – succeed in getting them, and still find themselves unhappy. The story is not an uncommon one: the belief in the final satisfaction of the ends aimed at was faulty.
Subjective value works well within the world of economics, for it deals with the reality of imperfect knowledge: as far as catallactics and the formation of prices are concerned, this imperfect knowledge supersedes the import of an objective reality of value. It is not that there is no objective value at all, but that the objective value is only relevant to the study of economics so far as people know or expect it. But objective value suddenly becomes much more relevant when the individual is faced with the question of how to maximize his own utility.
Happiness may only have recourse to two things: the body and the mind. One may choose strawberry ice cream over vanilla, to use an example from long ago, because one believes that strawberry will provide greater bodily pleasure to the tongue than vanilla. On such matters people are generally correct in their valuations. The value of means to bodily pleasure – food, sex, shelter – can be said to be rooted in biology, and thus may be actually subjective from individual to individual. For all we know, the preference of strawberry over vanilla may be an inherent biological quality of the tongue.
But nothing of economic value is rooted purely in biology. There are always mental and social implications. For example, one may refrain from coughing in a movie theater despite the relief of the throat’s discomfort that would be provided thereby because of the social stigma of being loud in a theater. Ultimately biological pleasures are a subset of and subservient to mental pleasures, for reading a book could be said to be a mental pleasure that satisfies no biological desire.
Maslow had a similar idea with his hierarchy of needs, but we will only need these two levels, for this is the only qualitative distinction among pleasures that can be drawn. Biological pleasures (needs, in Maslow’s conception) are at the same time the basest yet most urgent. The Westminster Catechism states that “the chief end of man is to glorify God and enjoy Him forever”. End being taken to mean fulfillment as Mises would regard ends and means, this can be reworked to say that the highest pleasure of man is in the apprehension of the beauty and glory of God – a distinctly mental pleasure. In fact, it may be said that the defining feature of all mental pleasure is the apprehension of some beauty – the apprehension of the beauty of God being the highest form thereof. The existential angst of the educated man is a result of the realization of the futility of his previous mental exercises in bringing about such apprehension.
Thus we can say that happiness, though we now describe it relative to the maximum happiness we have so far experienced (quantitatively higher pleasures have a tendency to cast a pall over things one previously enjoyed), can be measured absolutely, or relative to an absolute standard: the apprehension of the highest beauty. Value towards happiness itself is objective: it is imperfect knowledge, belief, and expectation that give rise to the subjective element therein.
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