Friday, October 28, 2016

Max Weber and the End of the German Miracle

We have all been taught to believe that Germans are Nazis and anti-semites, potential Teutonic brutes every one.

So it has taken me a lifetime to build a full appreciation of the Germans. The fact is that after the Brits maxed out with David Hume and Adam Smith in the late 18th century, it was the Germans that took over and invented the modern world: not just in philosophy but in automobiles, diesels, relativity, quantum mechanics.

Hume said that we cannot prove causation, only correlation. But it was Kant that made sense out of that and proposed that even though we can't prove cause and effect we operate in the world create a mental model of the world in our brains, in concepts by intuition and concepts of understanding. By proposing that the world outside could be different from the world inside the brain, I think that Kant laid the foundation for the German-led physics revolution in the early 20th century. Then Fichte proposed that the entity building the mental model of the world was das Ich, the Ego, and we were off to Freud and modern psychology.

Adam Smith started economics on its modern journey, but it was mostly Germans like Karl Menger that solved the problem of the dual track of use value and exchange value in the marginal revolution of 1870 -- which Marxists have still not dealt with.

The last two bright stars in the German firmament were Georg Simmel and Max Weber, sociologists that died in 1918 and 1920 and that did their best work in the years before World War I. If they had lived... Well the world might have been very different. Or maybe, like the rest of the German intelligentsia, they would have been forced to flee to Britain and the US.

Right now I am reading a translation of Max Weber's introduction to his sociology, titled The Theory of Social and Economic Organization. It is part of the work that was unfinished at the time of Weber's death, so it tends to be fragmentary and sometimes confusing.

But Weber's work is clearly post-Marxist. He has read and understood Marx, but knows that Marx is stuck in a time-warp of pre-marginal economics. In Weber's Theory he fully understands the marginal revolution of 1870 and entertains and discusses the theory put forward by Dr. Otto Neurath about the possibility of economic calculation under socialism. There is a footnote about Ludwig von Mises' paper of 1920, "Economic Calculation in the Socialist Commonwealth" that denied the possibility of economic calculation under socialism and that developed into Mises' book Socialism.

It makes you think: what if Weber had lived and put his encyclopedic authority on elite German thought in the 1920s?

All that stuff went into the shadows in the inter-war years, and only flourished again when German refugees like Mises and Hayek got noticed in the Anglo-Saxon world after World War II. Meanwhile, the biggest contribution we got from Germany has been the identity politics of race and gender ginned up by the Frankfurt School as a substitute for the failed class politics of Marx.

Yet there is hope, and today you can read about a successful entrepreneur like Bob Luddy, CEO of CaptiveAire, talking about learning Austrian economics and unlearning Galbraith.

In recent years we have heard a lot from liberals talking about settled science and the deniers that deny it. Only, of course, climate science is a very new science and is full of uncertainties and dueling theories. It isn't settled, and the proof is that the climate models can't model the climate.

But our liberal friends are remarkably uninterested in any science that challenges their faith in top-down administration of society by a corps of unelected experts. Who would guess that the science is settled on most of this. We know that top-down government-administered programs are a nightmare. Government programs can't adapt to changing situations, and they cannot be reformed short of disaster. And they are brutally wasteful, both of human talent and national treasure. And that is because of the German ideas that socialism cannot work because it cannot compute prices, and bureaucratic government cannot work because it just does not have the bandwidth to, e.g. administer the whole health-care system.

The point of knowledge, I feel, is that it offers a more efficient model for human action than raw trial-and-error. When you ignore or deny knowledge, you are insisting on doing it the hard way, in war, and famine, and revolution.

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