Coordination Problem

Spontaneous Order and Road Traffic

John Staddon argues in the Atlantic Monthly that driving in the U.S. is more dangerous than in many places in Europe because of an overuse of road signs and ill-adapted speed limits. The U.S. driver is overly protected by unnecessary rules that do not make him/her safer but potentially make him/her less aware of the dangers around the vehicle. (An argument that has been made before, see here for a previous entry on the subject of traffic lights.)

While Staddon’s article is based only on casual experience, it raises interesting and important questions. I am no specialist of transport economics, so perhaps there’s already a literature on this that I don’t know about. But it seems to me that Austrians would be perfectly placed to study the spontaneous ordering of traffic flows as determined by traffic rules arguing, perhaps, that some rules are more conducive to a spontaneous ordering of traffic than others. The few cases in Europe of towns that have abolished (all?) traffic signs and rules have had interesting results. Whether new rules emerged would be a good question to answer.

Another angle is how alert people are to the traffic around them while driving. According to Staddon, many U.S. traffic rules make people less aware of what’s around them because people have to focus on the signs rather than on the road. Question: what makes people alert to what they should be alert to when they drive? Whether Austrians can say something about this I don’t know, but we have some familiarity with those ideas.

Thanks to Dan Rothschild for the pointer.

Journal of Economic Perspectives

The current issue of the Journal of Economic Perspectives contains two interesting symposia. 

The first focuses on economic development.  Of particular interest is the article, "Where Does the Money Go? Best and Worst Practices in Foreign Aid," by William Easterly and Tobias Pfutze.

The second symposium focuses on the "economics of persuasion" and includes a paper by co-blogger Pete (Leeson).  Pete's paper, "Media Freedom, Political Knowledge, and Participation," focuses on the understanding the relationship between "media freedom from government control and citizens' political knowledge, political participation and voter turnout."

What were you reading 50 years ago, and what are we still reading from then?

Over at Marginal Revolution, Tyler Cowen is discussing what papers from 1958 should be celebrated.  In the comments section Coase's original FCC papers is nominated, and Buchanan's book, Public Principles of the Public Debt has been nominated.  Both are outstanding suggestions --- the Coase theorem had its origins in the FCC paper, and the public choice critique of the Keynesian functional finance model finds its origins in Buchanan's book.  Armen Alchian's "Private Property and the Relative Cost of Tenure" could be another nominee.

Most of the contributions from 1958 listed at Marginal Revolution are very "mainstream", but what would be the most "Austrian" oriented contributions from that period?

On my list I would put the following:

Shackle published Time in Economics; Lachmann wrote an essay on Joan Robinson and the accumulation of capital in the South African Journal of Economics; Mises wrote a paper "The Economic Foundations of Freedom", but it wasn't published until decades after;  Hayek published "Freedom, Reason and Tradition" in Ethics and Murray Rothbard published  "A Note on Burke's Vindication of Natural Society" in Journal of the History of Ideas, which pushed for the reasonableness of anarchism.  Kirzner had received his PhD but his books and articles were not yet in print.

What would be your nominations for a 50th anniversary?

Is Wikinomics Austrian Economics?

I am reading Wikinomics and also Here Comes Everybody at the moment.  Both books are fundamentally about self-organization, and the mobilization of dispersed knowledge.  The books are about creativity, discovery, mutual learning, and social cooperation.  They are about processes which simultaneously achieve (and encourage) autonomy, prosperity, and peaceful social cooperation.  And they are about the expanding of the circle of exchange that is made possible globally by technology.

To the readers of this blog I would like to ask to look at Adam Smith's discussion of the common woolen coat and the social cooperation under the divsion of labor that Smith is describing and the global nature of the social cooperation he describes in the beginning of An Inquiry into the Nature and Causes of the Wealth of Nations. 

On the issue of the changing nature of organizational structure I would just point to Richard Cornuelle's De-Managing of America and Ivan Pongracic's forthcoming book, Employees and Entrepreneurship.  Both books demonstrate that the Google phenomena is (1) not something that has been unthought (see Cornuelle), nor (2) going unstudying by contemporary Austrian economists (see Pongracic).  Finally, I really do think that the sort of arguments about corporate culture for creative enterprise found in Wikinomics and Here Comes Everybody are quite consistent with the lessons for management one reads in Charles Koch's The Science of Success.

The Power of Spontaneous Order Thinking

I wanted to say a few words about Jeff's skepticism about spontaneous order theorizing.  It started as a comment, but I decided to make it a separate entry instead.

As Pete B. notes in a another comment, the combination of the "logic of choice" and the concept of "spontaneous order" are the main tools that we, as economists, need to do our job.  Pete's said a lot about the applicability of the logic of choice and I would agree that we have to be very careful in those applications.  But I also agree that we cannot do without it. What I really want to talk about though is spontaneous order theorizing, especially with respect to its persuasiveness to our friends on the left.

For over a decade, I've been teaching an interdisciplinary course on the family.  The first two years were with a radical feminist sociologist and since then with a mainstream left-liberal psychologist/JD.

In a decade of work with Cathy, the psychologist, we have come to know each other's disciplines pretty well.  One of my favorite things is when I hear her use "opportunity cost" or "comparative advantage" in casual conversation, and correctly mind you.  And she finds it equally amusing when I talk about "attachment theory" or "confirmation bias" in the same sort of way.

But of all the ideas or concepts that she's been exposed to in teaching with me, I think she would say that none has caused her to look at the world more differently than the idea of spontaneous order.  It really just never occurred to her (and keep in mind, she is VERY much on the social science end of psychology, including policy issues, as someone who teaches a course called "Psychology and Law") that the way that markets work is that they generate order without design.  Being able to understand the ways in which social institutions emerge unplanned and how markets lead to beneficial social coordination through rule- and institution-guided but decentralized action has led her to be much more respectful of the insights of economics as a discipline and of the accomplishments of markets.  She's no libertarian, nor will she ever be, nor am I in the business of "converting" my colleagues and close friends, but exposure to spontaneous order thinking has moved her intellectually and perhaps a little politically (enough so that she read Randy Barnett's last book on the constitution).

Not only can't we, as Austrian economists, do our job without spontaneous order theory (though we don't need Hayek's history of ideas baggage that goes with it, if he indeed was wrong), it remains, in my experience, a powerful way of shaking up the left's understanding of economics and markets.  (I should note that I've had much smaller versions of the same experience with other colleagues.)  And it is at least as powerful with students.

There's a reason that I start my Econ 100 courses on the very first day, even before I take attendance or say a word about the course, by asking them how many people it takes to make a #2 pencil.  There's a reason I start my spontaneous order lectures at IHS seminars the same way. 

I would argue that our default view, thanks to our evolutionary history, is to think of social outcomes as the product of some person or group's intentions (and as zero-sum games).  If gas prices are high, it must be because of the greedy oil companies.  If some people are poor, it must be because others are rich and thereby caused their poverty.  Spontaneous order theory shakes up those biases and opens minds to the Austrian approach in ways that nothing else can, in my experience. 

And I plan to keep dancing with the one I came with.

The Glories of Contradiction: Using Blog Evidence to Resolve Blog Debates

The past several weeks have given rise to a lively discussion of a number of important topics on this blog. One of the earlier discussions engaged the question of whether or not self-interested (i.e., private) costs and benefits universally influence individual decision making on the margin, or whether they might only do so in the narrow “market realm” or only for certain kinds of people.

Several blog commentators argued that private costs and benefits influence all individuals’ decision making on the margin in both the market and non-market realms. Jeffrey Friedman argued that private incentives and marginal analysis only apply to individual decision making in the market and only for some kinds of individuals. For example, for “self-sacrificing ideologues (such as ourselves),” he wrote, private costs and benefits have no influence on decision making at the margin.

Although contradictions aren’t normally something we applaud, occasionally they teach us something and can help us resolve disagreements. Such was the case today when, after a particularly active back-and-forth with several discussants in the comments section of this blog, J. Friedman wrote the following:

“I have spent a considerable amount of time on this [commenting on the blog], but I am beginning to see what Steve means about opportunity costs, because my wife is now home, and I don't notice that anything I've said has been seriously answered, or even read carefully.”

Not only do J. Friedman’s comments here acknowledge that his non-market decision making responds to changes in private costs and benefits at the margin (wife coming home raised his marginal cost of commenting; people's careless responses to him reduced his marginal benefit of commenting). But in fact, in response to these changes, J. Friedman’s behavior changed precisely as economics predicts it would: He temporarily curtailed his commenting relative to earlier in the day.

The fact that according to J. Friedman he is a “self-sacrificing ideologue” apparently didn’t matter either. He still responded to changes in private costs and benefits at the margin and modified his behavior as economics predicts.

Without this contradiction, we might not have been able to finally resolve the debate about the applicability or inapplicability of basic economic analysis to “self-sacrificing” individuals engaged in non-market decision making. Because of it, we have.

Eleven Years Later: The Modern Irrelevance of the "Libertarian Straddle"

In 1997 Critical Review editor Jeffrey Friedman published his paper, “What’s Wrong with Libertarianism” in Critical Review. In sum, Friedman argued that libertarians are guilty of lapsing into “philosophical” defenses of liberty when they run into trouble on consequentialist grounds. He called this move the “libertarian straddle.”

Eleven years later, Friedman still seems firmly committed to the relevance of his argument. His comments on this blog attest to this. Here, Friedman suggests that “Rothbardian philosophy” ultimately motivates and characterizes the contributions of younger “libertarian economists,” such as Chris Coyne, Ben Powell, and others.

But are the younger economists really guilty of the “libertarian straddle,” or has Friedman just fallen into the unfortunate habit of seeing the “straddle” everywhere he looks?

The evidence suggests he has and that it’s time let the “libertarian straddle” trumpeting go. For younger “libertarian economists,” who are economists first and foremost and libertarians only second, the “straddle” is irrelevant.

The younger crop of self-described libertarian economists is consequentialist in its argumentation, not natural rights-oriented. Having learned from the generation before them, for which this is also true—economists such as Pete Boettke, Steve Horwitz, Marrio Rizzo, Roger Koppl, and others—the libertarianism of the younger generation is an outflow of their positive economics, which when combined with a normative stance that sees improving standards of living as a “good” thing, makes their worldview “libertarian.” Their argumentation is consequentialist the whole way through. There’s no “straddling” here.

Consider, for example, Chris Coyne’s work on post-war reconstruction. Chris objects to foreign intervention, not because of some principled stance against it, but because he finds the evidence overwhelmingly demonstrates that intervention fails to achieve its ends, often making things worse from the perspective of the interveners’ stated goals rather than better. Notably, Chris does not claim that this is true in all cases. He points to post-WWII Germany and Japan as examples of successful intervention and through positive analysis identifies the factors that made this so.

Benjamin Powell’s work on Somalia is another excellent example. Ben’s argument isn’t that life is good in Somalia because Somalia doesn’t have a government and therefore doesn’t have coercion. His argument is that there’s plenty of coercion in Somalia, but compared to surrounding countries with similar backgrounds that have governments, Somali anarchy has produced greater welfare improvements for Somalia than government has in neighboring countries.

J. Robert Subrick’s and Scott Beaulier’s research on Botswana is another example of straight-up, consequentialist reasoning. Subrick and Beaulier applaud Botswana’s post-colonial embrace of private property rights and limited government, not because of any alleged inherent “goodness” or “rightness” of private property rights and limited government, but rather because private property rights and limited government in Botswana led to the highest economic growth rate in Africa for thirty years.

Through such research, the younger generation of libertarian (“second) economists (“first”) is contributing important empirical work that finds markets tend to do better than governments when it comes to enhancing prosperity.

Ludwig von Mises deserves much credit here, as he has had an impressive influence on these young scholars and the generation that preceded them in this regard. To paraphrase Mises, capitalism is desirable in a normative sense because of its superiority in producing wealth, which economics demonstrates in a positive sense. If socialism were the superior wealth creator, Mises points out, he would embrace socialism instead of capitalism. Many in the younger generation agree wholeheartedly with Mises. Thus, thorough going consequentialism is embedded in the thinking of young economists who work in this tradition.

Ironically, what J. Friedman has called “economic imperialism” also deserves much credit for this. It’s precisely this unswerving devotion to economic logic that has produced an unswerving devotion to consequentialist analysis. “Economic imperialism” means there’s no room for “philosophical” justifications. “Philosophical” justifications are squeezed out by the pure logic of choice.

Most recently, in an effort to rescue the relevance of the “straddle” argument, Friedman has expanded his definition of “libertarian straddling” to include:

1. Analyses of foreign intervention.

2. Analyses of decentralized institutions of order.

Thus, “straddling” under his new and expanded definition refers not only to marshaling “philosophical” arguments when consequentialism puts one in a tough place, but also to a set of specific topics that are themselves “off limits” for some reason—even if their analyses are purely positive and fully consequentialist.

This is a curious way to redefine “straddling.” Indeed, if taken seriously, this redefinition would have the bizarre effect of making the sizeable number of *explicitly non-libertarian* social scientists who analyze the topics J. Friedman points to guilty of “libertarian straddling.” (See, for instance, the important work of Jack Hirshleifer, Avinash Dixit, Avner Greif, Robert Ellickson, Lisa Bernstein, and Karen Clay, among other top-flight scholars).

If this is what it takes to save the relevance of the “libertarian straddle” argument, its modern irrelevance could hardly be plainer. It’s time to put the “straddle” argument to bed.

New Op-Ed on Expanding the Fed's Regulatory Powers

The Cato Institute has just published an op-ed of mine titled Giving the Fed New Powers Ignores History.

Summary:

Like the child who murders his parents and then asks for pity because he's an orphan, the Federal Reserve has a long history of asking for more regulatory powers to clean up messes for which its action or inaction is the primary cause….

The history of banking in the United States and elsewhere does not show that the industry is beset by market failures that require regulatory intervention. To the contrary, almost every major crisis faced by the banking system has been the consequence of already-existing regulations, many of which came about as responses to previous crises caused by older regulations. Countries, like Canada, where some of the worst of these regulations were absent, have not had the same history of crises as has the United States. Perhaps this time we will learn from history and avoid a new regulatory regime that will create new threats to an already somewhat shaky U.S. financial system.

Cross-posted at Liberty and Power.

The Enlightened Economy

One of the most intellectually stimulating ventures I have been involved with since I moved to GMU in 1998 is a series of book manuscript conferences sponsored by the Mercatus Center. The initiative started with a series of conferences centered around Douglass North's Understanding the Process of Economic Change.  When I was teaching at NYU, Doug North came to give a seminar and three things stick out in my mind about that visit: (1) none of the non-Austrian faculty wanted to meet with North despite the fact that he has just won the Nobel less than a month before (during one faculty meeting during my time at NYU the topic of hiring an economic historian came up and one of the senior faculty actually said that there was not a single economic historian in the profession who would warrant tenure at NYU let alone full professorship --- ugh!); (2) North carried the CVs of his students in his coat pocket and during his time in NY met with faculty at a variety of universities and passed along those CVs; and (3) in response to a question from me on how to puruse a scholarly career in economics, he told me to always make sure I was the dumbest guy in the room and that way I would constantly be learning throughout my career.

When Mercatus launched the book manuscript conferences, North put this third piece of advice into action.  He wanted to work on cognitive science issues in the book, so he went out and got the best people in the field to attend the conference and read his first drafts; he wanted to talk about the Soviet case, so he asked  the best Soviet economists from Gregory Grossman to Andrei Shleifer to discuss his work; and he was working on institutions and long term economic growth so in the room were North's colleagues in economic history, political economy and New Institutionaism.  In North's case, there was a series of conferences over a two year span.

Other book manuscripts followed --- Avner Greif's Institutions and the Path to the Modern Economy was next on the list.  Again the audience organzed by North (along with Paul Edwards and Brian Hooks at Mercatus) and included most of the top people in NIE and economic history.  John Nye's War, Wine and Taxes was next, followed by Jack Goldstone's Happy Chance.  In the last year, drafts of book manuscripts by North, Weingast and Wallis; Timur Kuran; Deirdre McCloskey; and Bob Cooter have been vetted in a similar fashion (though now these conferences are organized by Claire Morgan).

Earlier this week, I attended the most recent one on Joel Mokyr's The Englightened Economy: An Economic History of Britain, 1700-1850.  The book will be published next year by Yale and Penguin, and it is an absolutely brilliant book.  Mokyr's main argument is that the "Enlightenment changed the outlook of people in key positions on the way the economy (and society at large) functioned ..."  This impacted economy, society, polity and in essence opened up space for science and commerce to combine powers to transform society.  This theme is not new to Mokyr's work, his earlier works such as The Levers of Riches and The Gifts of Athenia also talk about ways in which the rules of social intercourse free up inquiry and transform scientific advances into useful knowledge which in turn fuel growth and commercial development, which in turn improve the lives of individuals in a variety of ways.  Mokyr is a talented writer and a wonderful thinker in economic history.

My major "criticism" of the book at the moment is that it is a relatively thicker history, but a rather thin intellectual history --- but Mokyr is claiming to intellectually arbitrage between enlightenment thought and the historiography of the Industrial Revolution.  In short, he has to shoulder the burden of proof on the intellectual history side of his argument just as he has on the economic history side and at the moment I think he falls a little short.  Moreover, if I was to offer another "critique" it would be that he doesn't really exploit his chapters on organizations (business firms) and institutions (formal rules in politics and law) to explicate the precise mechanisms by which ideas are translated into actions.  In short, he has to work hard to explain the "relative price" effects on the changes in organizational forms and institutional structures, and how they guide behavior in one direction rather than another. 

In fact, I would say the conference highlighted to me the importance of Mises's economic calculation argument because the point is still not well understood by economists let alone historians and political scientists as to how commerce enables us to sort out from amongst the numerous array of scientific and technological studies those that are economically feasible.  It is through this process of economic calculation that Mokyr's "useful knowledge" is discovered, communicated, and utilized by individuals within the society.  Reading Mokyr also made me realize how important Hayek's The Constitution of Liberty is to any of these discussions --- especially his differentiation between the Scottish Enlightenment and French Enlightenment, and his discussion of what unleashes the creative powers of a free civilization.  Though Joel Mokyr might deny it, the political economy upshot of his argument is Hayekian.  So if you want to know the contemporary relevance of the Mises/Hayek research program for modern economics and political economy, a good place to start would be reacting to the arguments and presentation in Mokyr's The Enlightened Economy (and/or Greg Clark's or Deirdre McCloskey's latest books --- what is missing in Clark, and what is the subcontext of McCloskey's stories is the sort of themes one reads in Mises and Hayek --- and also found in Richard Swedberg's discussion of the rise of the west in Max Weber and the Idea of Economic Sociology.

That much said, the book is amazing and Mokyr is one of the most enthusiastic scholars of economics and political economy I have ever met.  He is an engaging conversationalist and he cares about quality teaching of economics, and serious scholarship in economics and history.

And during this conference he used a great analogy that I will from now on use myself to explain my position when confronted with the complexity of multiple potential causes of a phenomena.  He asked what drives a car the engine or the steering wheel.  His argument is that what drives the car is the engine, but what steers the car in this or that direction is the steering wheel.  He then asked the same thing about the economy and he contrasted the source or engine of growth, with the particular direction that growth leads.  His basic idea is what drove the Industrial Revolution was the Enlightenment --- it was the engine, but what steered it in this or that direction was resource availability, technology, etc --- it was the steering wheel and signaled which direction to go based on relative price movements.  Most of the existing explanations of the Industrial Revolution miss out on the engine, and instead focus on the steering wheel.  He doesn't want to under emphasize the importance of the factors steering the Industrial Revolution in Britain (e.g., coal), but just wants to insist that we pay attention to the engine.  In forces his readers to pay attention to the Enlightenment Project and its impact on the economy, society, and polity in that time and in that place, Mokyr's book is potentially one of the most important statements one will find on the relationship between ideas and institutions, and institutions and economic development and growth in the context of the evolution of the Western world.

The crowd involved included intellectual heavy hitters: Peter Temin, Avner Greif, Jack Goldstone, Maxine Berg, Margaret Jacob, Greg Clark, Murat Iyigun, Nicholas Crafts, Deirdre McCloskey, John Nye, Daniel Headrick, Phil Hoffman, and the discussion leader was John Wallis and the organizer/participant was Claire Morgan. 

Let me just add one more point about the value of these sort of conferences.  As an undergraduate my most intellectually stimulating experiences outside of the classroom of 3 professors came at the Foundation for Economic Education, as a graduate student they came in my classes and at seminars  at GMU, and workshops organized by the Institute for Humane Studies, as a university faculty member they have come more from conferences organized by Liberty Fund than from professional society meetings and even the typical departmental seminar presentation. 

In fact, my approach to academic life in terms of workshops was shaped significantly by a visit from Arjo Klamer and D. McCloskey during my first year in graduate school.  Don Lavoie brought both of them in to not only talk in his workshop, but also to meet and interact extensively with his students and to actually enlist them in the development of his students.  Klamer told me that traditional graduate school was all about learning to perform as a 'truffle hound at academic dog shows' (a quote he got from Jacob Viner).  I did take his advice to heart and learned how to perform at those dog shows and up until 1996 (when I lost out at the last second on a dream job at Boston University) I worked very hard to be able to give presentations that fit conventional expectations but were more 'lively' than others because I embraced my differences from standard practice.

McCloskey, on the other hand, explained that workshop comments could be divided into basically two types: Stigler type and Friedman type.  Stigler tried to cut a presentor down quickly and based on arguments outside of the purposes of the author; Friedman on the other hand tried to help the author improve their argument whether he agreed with it or not.  McCloskey then added that it was the Friedman type comments that were worthwhile, not the Stigler ones.  Of course, the problem is that to perform as a 'truffle hound at academic dog shows' the Stigler type criticism won more points --- cleverness with an edge. Whereas the Friedman type ccomment -- helpful, seeking mutual understanding, improvements in writing are more patient and ploding along.  However, both the Austrian colloquium (run by Rizzo) and my PPE workshop are organized as "writers workshops" and inspired by the Friedman type comment and the Stigler type comments are kept to a minimum.

The manuscript conferences --- at their best --- are designed to be Friedman like and not Stilger like.  Get the best people willing to attend, get them to read and reflect, and get them to buy into the general project that the discussion in not about trying to prove how smart they are, but to discover ways to improve the argument of the author on their terms (not yours).  Claire Morgan is a master at organizing and contributing to such discussions, as she did at Liberty Fund before, and as she is now doing at Mercatus.  And if truth be told I first saw Claire's wonderful skills in this regard on display when she was still a graduate student at an IHS conference over a decade ago where she led a discussion on Jeff Friedman's "What is Wrong with Libertarianism?"  She was brilliant in the way she steered the discussion that day in a true Socratic style, and she has done an amazing job in promoting that sort of dialogue for mutual learning and understanding with these manuscript conferences at Mercatus and in her role as the Director of the Social Change project at Mercatus.  In fact, I'd like to get back to that sort of Socratic seminar experience with Claire with our graduate students at GMU in a reading group if possible.

Anyway, good luck to Joel Mokyr on the revisions, and thanks to Claire and Mercatus (and the participants in these book manuscript conferences) for providing me with the opportunity to continually be, as North put it, the dumbest guy in the room and thus to keep learning so much from others.  What a fortunate life we academics live -- we actually get paid to do this!!!

Two Liberalisms: A practice in search of a theory; a theory in search of an application

Russell Hardin over a decade ago proposed two propositions which I think might go a long way toward resolving some of the confusion/disagreement in the comments section.  First proposition --- no significant and good political theory has ever been done by those not engaged in actual political struggle.  In Hardin's mind those who did political philosophy through idle speculation in the nature of "good societies" did little more than idle speculation.  Instead, Hardin would point to the Federalist papers as serious political theorizing, not Rawls.  What do people think about this proposition?

Second proposition from Hardin --- economic liberalism is a practice in search of a theory, while political liberalism was a theory in search of an application.  In other words, if you took away all the economists in the world, there would still be mutually beneficial exchange, production through division of labor, and distribution through expected marginal product.  Economic life, in short, exists whether we study it or not.  Economic association through exchange and production is part of the mundane existence of the everyday life of man.  As Adam Smith put it, dogs don't bargain over a bone, but people in all walks of life and in all societies do bargain and trade --- we humans have a natural propensity to truck, barter and exchange as a way of interacting.  The experience of economic life exists prior to our effort to study it, understand it, and argue about it.

On the other hand, political liberalism, i.e., the idea of constitutional democracy, is largely a theory in search of an application.  Individuals think abstract thoughts about autonomy, freedom, liberty, responsibility, obligation, legitimation, etc., and these are forged into a political doctrine through writing, dialogue, and debate.  Political theories exists prior to political practice based on them.  Thus, Hardin highlights a fundamental difference between economic theory and political theory.

But do Hardin's propositions contradict one another?  Can it be the case that the only good political theory is done by those engaged in political struggle themselves, and yet that political liberalism is itself a theory in search of an application?  I don't think Hardin is in contradiction at all.  The fundamental point of the second proposition remains --- economic life exists prior to economics as a discipline of study in a way that poliical life does not.  Also, the first proposition is boils down to a serious warning against philosophizing from a vantage point of disengagement.  It is ultimately about the discovery and use of practical knowledge in the world of affairs.

However, I would like to hear what others have to say on these propositions and their importance for political economy and in clarifying some of the issues raised by Steve, Pete, Fred and myself in our respective entries and comments.