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Hayek: Friend or Foe of Reason, Liberty and Capitalism?

I have been accused of taking the Austrian School of Economics out of context.  Rather than range all over the topic, I will address one Austrian economist, Friedrich Hayek, primarily with respect to his epistemology.  However, his sense of ethics follows directly from his epistemology so this will be discussed.  As well, his metaphysics will be touched on.

My criteria of whether Hayek is a friend or foe will primarily focus on whether he is an advocate for reason (logic and evidence) as best defined by Rand and Locke.  I focus primarily on Hayek’s Theory of Cultural Evolution, which lays out his ideas on epistemology.  There are dozens of papers on this subject and below I will provide quotes from a number of papers that analyze Hayek’s theory.


Austrian economist, political philosopher, and winner of the 1974 Nobel memorial prize –[Hayek] spent a good part of his career developing a theory of cultural evolution. According to this theory, rules, norms and practices evolve in a process of natural selection operating at the level of the group. Thus, groups that happen to have more efficient rules and practices tend to grow, multiply, and ultimately displace other groups. The theory, of which Hayek himself was proud, is on all accounts central to his economic, social, and political project. In the present paper, I explore the history of this theory of cultural evolution. (Emphasis Added)

The History of Hayek’s Theory of Cultural Evolution, Erik Angner

Dept. of History and Philosophy of Science


It is clear from the quote above that ethics is a group level, not at the individual level.  The ethics of a group are random and the dominate ethical rules are determined by some sort of evolutionary success.  According to the paper this is not a side issue or something Hayek scribbled out that is separate from the rest of his ideas.

It is hard to believe that Rand or Locke would have been impressed with the idea that ethics are determined by the success of groups.


According to Hayek, reason was not the driving force behind cultural evolution, but rather co-evolved in the course of this process.  (Emphasis Added)

Hayek’s Theory of Cultural Evolution a Critique of the Critiques, by Horst Feldmann


This paper suggests that reason is the result of cultural evolution just like ethics.  It is hard to see Rand or Locke agreeing with this.



Hayek argues, however, that the demand for rational, conscious (“political”) control of the concrete particulars of social life is based upon a misunderstanding of the process of cultural evolution and on a hubristic and dangerous overestimation of the capacity of the conscious reasoning intellect. As we have seen, Hayek contends that civilization is not the creation of the reasoning mind, but the unintended outcome of the spontaneous play of innumerable minds within a matrix of nonrational values, beliefs, and traditions. The desire of modern constructivists to “make everything subject to rational control” represents for Hayek an egregious “abuse of reason” based upon a failure to recognize the limits to reason’s sphere of competence.63 Such limits, again, stem from the fact that reason is confronted by an immovable epistemological barrier: its irremediable ignorance of most of the particular, concrete facts that determine the actions of individuals within society. The constructivist’s main error is the refusal to recognize that reason is only competent in the realm of the abstract. Hayek observes that the “rationalist . . . revolt against reason is . . . usually directed against the abstractness of thought [and] against the submission to abstract rules” and is marked by a passionate embrace of the concrete. He sums up the constructivist error in this way: “constructivist rationalism rejects the demand for the discipline of reason because it deceives itself that reason can directly master all particulars; and it is thereby led to a preference for the concrete over the abstract, the particular over the general, because its adherents do not realize how much they thereby limit the span of true control by reason.”64 (Emphasis Added)

Hayek on the Role of Reason in Human Affairs, Linda C. Raeder, Palm Beach Atlantic University


“Matrix of nonrational values, beliefs, and traditions” are responsible for civilization?  It is clear that Hayek does not think there is anything special about Natural Rights or the United States or any other country or their values.  The best we can say is that it is the best based on its success at this time.

“Rejects the demand for the disciple of reason”?  This sounds like it comes straight from an environmentalist or a modern socialist.  It is clear that Hayek is not just talking about the limits of the knowledge of a central planner, he is attacking reason itself.  The best possible spin is that Hayek is only attacking reason with respect to knowledge of human affairs, i.e., economics, social sciences, ethics, law, political structures, literature and the arts.

It is clear from Hayek’s rejection of reason that he does not agree with an Aristotelian or Objectivist idea of an objective reality that is knowable.  At best Hayek’s metaphysics is consistent with Plato’s theory of forms, where we can only get a vague glimpse of reality.


“The picture of man as a being who, thanks to his reason, can rise above the values of civilization, in order to judge it from the outside . . . is an illusion.”83 For Hayek, morals, values, and reason are entirely natural phenomena, evolutionary adaptations which have enabled man to survive and flourish in his particular kind of world.

Hayek on the Role of Reason in Human Affairs, Linda C. Raeder, Palm Beach Atlantic University


Does the first sentence above sound like Howard Roark or Ellsworth Toohey?  Hayek is pushing the worst sort of collectivism.  It is a collectivist attack on the mind itself, on the independence of the mind based on reason.  Hayek would have stood hand and hand with the Catholic Church in condemning Galileo to death.


For Hayek, the rules of morality and justice are the same as they were for David Hume: conventions that have emerged and endured because they smooth the coordination of human affairs and are indispensable, given the nature of reality and the circumstances of human existence, to the effective functioning of society.87 For Hayek as for Hume the rules of morality and justice are not the products of reason and they cannot be rationally justified in the way demanded by constructivist thinkers. And since our moral traditions cannot be rationally justified in accordance with the demands of reason or the canons of science, we must be content with the more modest effort of “rational reconstruction,” a “natural-historical” investigation of how our institutions came into being, which can enable us to understand the needs they serve.88

Hayek on the Role of Reason in Human Affairs, Linda C. Raeder, Palm Beach Atlantic University


Morality is not based on reason according to Hayek, it is based on convention.  David Hume was the philosopher that came up with the ‘is-ought” problem in ethics that is the basis for moral relativism.  Solving the “is-ought” problem was one of the major accomplishments Rand’s ethics.

Hume also attacked cause and effect and therefore reason, arguing that the best we can say about events is that they are closely related or probablistic.  I consider Hume worse than Kant, partly because he is more understandable than Kant and because he inspired Kant.  Here is what Rand had to say about Hume.

“If you observe that ever since Hume and Kant (mainly Kant, because Hume was merely the Bertrand Russell of his time) philosophy has been striving to prove that man’s mind is impotent, that there’s no such thing as reality and we wouldn’t be able to perceive it if there were—you will realize the magnitude of the treason involved.”


F.A. Hayek was the chief conduit through which Hume’s moral, political, and social theory entered the mainstream of modern libertarian thought. In his article “The Legal and Political Philosophy of David Hume” (originally presented as a lecture at the University of Freiburg on July 18, 1963), Hayek bemoaned the fact that Hume’s legal and political philosophy had been “curiously neglected.” In addition to being “one of the founders of economic theory” and the greatest British legal philosopher before Bentham, Hume “gives us probably the only comprehensive statement of the legal and political philosophy which later became known as [classical] liberalism.”  Self-Interest and Social Order in Classical Liberalism: David Hume, by George Smith, formerly Senior Research Fellow for the Institute for Humane Studies, a lecturer on American History for Cato Summer Seminars, and Executive Editor of Knowledge Products. Smith’s fourth book, The System of Liberty, was recently published by Cambridge University Press.


This clearly shows that David Hume was a big part of Hayek’s philosophical background.  Bentham is Jeremy Bentham, who is considered the father of utilitarianism and is known for being an intellectual father of the utopian socialist movement in England.


Perhaps no other area of Burke’s and Hayek’s thought is as congruent as their understanding of the role of reason in human affairs; their views are so close as to suggest that Hayek’s thought on this issue is merely an elaboration, although quite an extensive one, of Burke’s theme. Hayek developed several of Burke’s most crucial insights: 1) the priority of social experience (or “tradition”) over reason; 2) the notion that inherited social institutions embody a “superindividual wisdom” 22 which transcends that available to the conscious reasoning mind; and 3) the impotence of reason to ‘design’ a viable social order. (Emphasis Added)

The Liberalism/Conservatism Of Edmund Burke and F. A. Hayek:A Critical Comparison, Linda C. Raeder is Associate Editor of HUMANITAS and a Research Associate at the National Humanities Institute


Here is another attack on reason, an appeal to collective reasoning and another statement that reason is impotent.


Burke and Hayek, then, shared a common enemy as well as a common understanding: Enlightenment rationalism. Perhaps the most characteristic attribute of Enlightenment thought was its cavalier dismissal of ‘irrational’ tradition as mere superstition and prejudice.

The Liberalism/Conservatism Of Edmund Burke and F. A. Hayek:A Critical Comparison, Linda C. Raeder is Associate Editor of HUMANITAS and a Research Associate at the National Humanities Institute

This statement makes it clear that Hayek was anti-reason and anti-enlightenment.


Hayek, by contrast, is a critic of what he calls ―constructive rationalism.‖2 His concept of rationalism is somewhat idiosyncratic, and is not equivalent to Rand‘s conception of reason. Nevertheless, it leads him to claim that ―no universally valid system of ethics can ever be known to us,‖3 which is obviously not consistent with her view. For Hayek, moral rules have a status lying ―between instinct and reason.‖4 (Emphasis Added)

Symposium: Rand and Hayek on Cognition and Trade

Rand versus Hayek on Abstraction

David Kelley The Atlas Society


This is another case discussing how Hayek did not think that ethics were based on reason or that reason could ever tell us anything about ethics.

This case for market freedom is essentially negative. Hayek seems to think that if socialist planning were possible, socialism might be the morally ideal system. But the inescapable ignorance of would-be planners excludes that possibility: ―If there were omniscient men, if we could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty.‖10

Symposium: Rand and Hayek on Cognition and Trade

Rand versus Hayek on Abstraction

David Kelley The Atlas Society


Hayek is not pro-liberty, at best he is pro-tradition, which is why it is not surprising to see so many religious people affiliated with the Austrian School of Economics.  He is anti-reason and specifically bases his justification for ‘free markets’ on the limitations of reason generally and on the inability of reason to create or understand morals.  His defense of the pricing mechanism of free markets is based not on liberty but on the idea of spontaneous order.  More fundamentally, Hayek bases his justification of the pricing mechanism on tradition and utilitarian grounds.

Hayek’s metaphysics appear to be Platonic, which is incompatible with Rand and Locke.  His epistemology is more consistent with Hume or Kant than Rand or Locke.  You might argue that Hayek was only discussing the limits of reason with regard to social sciences, however at the least he applies it to all areas of human interaction, which includes ethics, the law, and the political realm.  This means he is against Natural Rights and Locke, which means he is against capitalism.  Capitalism is the economic system that arises when the law protects people’s natural rights, particularly their property rights.  Hayek does not recognize property rights, at best he recognizes societies’ property conventions, which means he cannot understand capitalism.  This is more than enough for me to damn Hayek as an enemy of capitalism and a foe.

In my opinion, Hayek’s esteem of Hume, Bentham, and Burke point to a much deeper antipathy to reason.  His ethics is essentially majority rules with the modifier of natural selection.  He specifically thinks it is the most absurd folly to think any one person can use reason to judge a society.  This is consistent with his intellectual compatriots Hume and Burke.  Hayek’s ethics is perfectly consistent with the moral relativists that say we cannot judge and an ISIS or a USSR or christianity.  His ethics are antithetical to Rand’s and Locke’s.  Hayek is clear that he does not think Natural Rights can be justified by reason and that Natural Rights cannot claim any special place in the world.  Hayek is not a friend of reason, liberty, or capitalism.  Rand’s estimation of Hayek is similar to mine, although I think I have spent much more time analyzing the issue.





I am willing to entertain any serious evidence that I have mischaracterized Rand or how the sources I am citing mischaracterized his arguments.  I am not interested in unsubstantiated claims that I have misunderstood or mischaracterized Hayek.  Do not complain that my standard is Rand and Locke, I told you that upfront.  I am not interested in arguments that talk about other leading figures in the Austrian School of economics.  Stick to the subject and provide actual evidence.


March 4, 2015 Posted by | -Economics, -History | , , , , , , , , , , | Leave a comment

The Austrian Business Cycle Debunked

This video, The Austrian Theory of the Business Cycle | Roger W. Garrison, from the Von Mises University does a good job of explaining the Austrian Business Cycle Theory (ABCT).  The key point is that increasing the rate of savings (capital) results in increased economic growth in the future.  The theory was worked out by Von Mises and Hayek.  The foundation of the theory is very similar to classical economics, which held that economic growth was the result of increases in capital.  The video has a number of charts and graphs to make it look more scientific, however no empirical evidence is provided to support the theory.  Other work may provide empirical evidence, but I know of counter evidence as well.

This article will first discuss ABCT of recessions and some small errors in the theory.  Then I will show that ABCT is incorrect about what causes economic growth and its failure to explain economic history, particularly the Industrial Revolution.

Austrians are always focused on showing that Keynes economic theories are wrong, and they are certainly right about this.  Austrians argue that there is a trade between investment and consumption, which they call the sustainable Production Possibilities Frontier.  Keynesian theory would say there is no difference between consumption and investment.  Certainly there is a trade between investment and consumption.  The Keynesians somehow argue that by eating your seed corn you will be wealthier.  However, a minor problem with ABCT is that it equates savings with investment.  The two are not necessarily the same.

ABCT then states that recessions are caused by Central Banks (the Federal Reserve in the US) arbitrarily lowering interest rates below the market rate, which causes mal-investment and reduces the saving rate.  Unless we narrowly define saving as putting money in a bank, savers have a number of choices which are not directly affected by interest rates.  For instance, savers can put their money in stocks or corporate bonds.  The return on stocks and corporate bonds is more related to the success of the underlying company than the interest rate set by the Central Bank, so the disincentive to save is not a strong as suggested by the ABCT.  The second question is why does this cause mal-investment but increased saving does not.  In both cases the investment intermediary is a commercial bank.  Now if we were talking about direct government spending then the case is clear.  In that case the government is not subject to the market.  However, commercial banks are subject to the market.  If interest rates are lower because of additional savings or because the Central Bank set them lower does not change their loan approval process.  In addition, the ABCT completely ignores tax and regulatory policy.  Are Austrians really saying that recessions can only be caused by Central Banks setting interest rates too low?  Why not too high?  This is why Austrians are obsessed with what Central Banks are doing and seem somewhat oblivious to other issues.

These are not my real complaints with the ABCT however.  My real complaints are 1) recessions happened before there were Central Banks and 2) economic growth is not caused by increases in capital.  Central Banks are a fairly new creation and fractional reserve banks did not exist in the world until around 1650s.  The United States did not have a Central Bank until 1913, but there were recessions before that in the US.  There were certainly recessions in the world before there were banks, including one huge one called the Dark Ages.  ABCT fails to explain the source of all recessions, including the recession of 2001.

ABCT is also wrong on what causes economic growth.  Robert Solow did an econometric study of the US economy to determine how much of the growth was due to increases in labor, how much was due to increases in capital, and how much was due to increasing levels of technology.  According to Wikipedia

[This] technique has been applied to virtually every economy in the world and a common finding is that observed levels of economic growth cannot be explained simply by changes in the stock of capital in the economy or population and labor force growth rates. Hence, technological progress plays a key role in the economic growth of nations, or the lack of it

Robert Solow won the Nobel Prize in economics for this work.  (This is not an endorsement of everything Solow says)

I would change the bolded part to state that the only way to obtain real per capita increases in wealth is through increasing levels of technology.  This becomes more apparent if you look over longer timeframes.  If we had the same technology as our ancestors in 1600, even with today’s total capital, would we be any wealthier than our ancestors?  We would not live longer, we would not be able to produce any faster, the only difference might be that we had more savings to fall back on or disseminate existing technologies.  However there was very little technological change at the time, so the increase in technological dissemination would have been small.  As a result, we would be essentially no wealthier than our ancestors.  Our standard of living is defined by our level of technology.  I discuss this in much more detail in my upcoming book, “Source of Economic Growth.”

Note that the ABCT does not account for technological change.  As a result, the theory should hold up in a technologically static world.  However, this is totally inconsistent with economic history.  The Industrial Revolution started in Great Britain and the United States.  There is no evidence that these countries had larger savings or capital stocks than say France or China or Holland or Japan.  The Industrial Revolution was really a perpetual invention machine, driven by inventions not by capital.  The source of all wealth is the human mind.  The application of the human mind to problems of survival is called inventing, which is how we increase our technological level.

Austrian Business Cycle Theory does not hold up under scrutiny.  Austrians have misidentified the source of economic growth and have a defective model for what causes recessions. Naturally they prescribe the wrong medicine.  Austrian Economics is not pro-capitalism, it is not consistent with the enlightenment, reason, and science, which I have described in other posts.



PS: I mentioned above that the Austrians misdiagnosed the recession of 2001.  They love to say that Greenspan created a bubble economy, which implies that in fact there was no real economic growth in the late 1990s.  The narrative that Greenspan created a credit bubble by holding interest rates too low does not fit the facts.  The economic growth of the late 1990s was built on new technologies that have made our life immeasurably better.  Real incomes and industrial production rose significantly in the late 1990s.  In addition, the effective Fed funds rate in the late 1990s was between 5.5 and 6.5%, which looks tight by today’s standards.  The Federal Reserve’s balance sheet was stable.  There was an inverted yield curve in 2000, which happened as Greenspan was increasing interest rates.  The commodities index was falling slightly in 1999 and rose slightly in 2000.  M1 was essentially flat in the late 1990s and M2 was growing slowly.  The evidence is overwhelming that the recession of 2001 was not caused by Federal Reserve “printing” too much money.  In fact the evidence points to the idea that Greenspan was too restrictive and caused an inverted yield curve in his desire to cause the stock market to cool off, which caused the recession.  It is true that the stock market had gotten ahead of earnings, but recent experiments in economics show this is a common with new investors and is not necessarily the result of easy credit.



February 15, 2015 Posted by | -Economics, -History, Innovation | , , , , | 6 Comments

Self-Ownership: A Conservative Conspiracy?

The Depclaration of Independence and Individual Rights are generally assumed to be based on the concept of self-ownership.  For instance, the article Who are the Real Liberals? in the American Thinker states “self-ownership entails an inviolable right to our lives, liberty, and property, which at the same time entails a prohibition from violating the rights of others.”  According to the Article Jefferson was even accused of plagiarizing John Locke in writing the Declaration of independence.  According to Nathaniel Branden in an article entitled Reflections on Self-Responsibility and Libertarianism argues that the United States stood “Freedom. Individualism. Private property. The right to the pursuit of happiness. Self-ownership.”  And Walter Williams, the conservative economist states “That Americans have joyfully given up self-ownership is both tragic and sad” in an article entitle AMERICANS HAVE GIVEN UP SELF-OWNERSHIP.  But now Leonard Peikoff, of the Ayn Rand Institute, says we got it all wrong and the idea of self-ownership is dangerous.  This issue goes to the source of all property rights.

Leonard Piekoff, the founder of the Ayn Rand Institute and a philosopher, in a podcast asks if there a difference between the principle of self-ownership and the principle of individual rights?  He first restates the questions as is there a difference between someone being the owner of their life and that he has a right to life?  His answer is yes there is definitely a difference. Peikoff argues that ownership is a relationship between you and some external object. As a result it makes no sense to say you own yourself. Next he suggests that ownership is about possession. Finally, he says this whole idea of self-ownership is some sort of Conservative conspiracy and a bad idea. Others have argued against self-ownership because if you can own yourself then it implies that you can be owned by others.

The conservative that Peikoff seems to be arguing with is John Locke, the 18th century philosopher responsible for the idea of Natural Rights that underpinned the US Declaration of Independence.  Locke stated “every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his.” (Second Treatise on Government, Ch. 2, Sect.27.)  Now some people have argued the preposition ‘in’ here does not imply self-ownership. This is based on a misunderstanding of property rights. A property right is a moral and/or legal claim to a right of action. Or as Ayn Rand, the philosopher and author of Atlas Shugged, states it “Bear in mind that the right to property is a right to action, like all the others: it is not the right to an object.[1]”  Self-ownership then is the right to action with respect to oneself. Peifoff has used the wrong definition of property and variously confused property with possession and only applying to external objects. Possession may be one right that comes with property rights, but you may own a house and then lease it to someone else. If you do that you have traded your right to possession. Property is often confused with the object itself or with possession of the object, but as Rand’s definition makes clear this is conflating different concepts.

Peikoff also provides no justification for his idea that property only relates to external objects. This inconsistent with Ayn Rand’s definition and is inconsistent with how we use ownership in normal language. For instance Rand variously states:

Money rests on the axiom that every man is the owner of his mind and his effort. (For the New Intellectual, p. 89.


“What greater wealth is there than to own your life and spend it on growing?”

–Ellis Wyatt, Atlas Shrugged, Pt. 3 of book.


“For centuries, the battle of morality was fought between those who claimed that your life belongs to God and those who claimed that it belongs to your neighbors — between those who preached that the good is self-sacrifice for the sake of ghosts in heaven and those who preached that the good is self-sacrifice for the sake of incompetents on earth. And no one came to say that your life belongs to you and that the good is to live it.”

–John Galt, Atlas Shrugged,,_the.html


“There is only one fundamental right (all the others are its consequences or corollaries): a man’s right to his own life.”

Ayn Rand Lexicon, Man’s Rights, The Virtue of Selfishness, 93


Without property rights, no other rights are possible.

Ayn Rand Lexicon, Man’s Rights, The Virtue of Selfishness, 94


Now it is true that Rand also said that “The right to life is the source of all rights.”  (The Virtue of Selfishness, 93), but given all her other statements I think it is clear that she is talking about the right to one’s own life, not a disembodied right to life.

Neither Rand nor Locke argued that self-ownership was an axiom. Some people say Locke based self-ownership on god, but then why did he spend so much time explaining what rights we had a in a state of nature. As explained in Wikipedia, State of Nature:

For Locke, in the state of nature all men are free “to order their actions, and dispose of their possessions and persons, as they think fit, within the bounds of the law of nature.” (2nd Tr., §4). “The state of Nature has a law of Nature to govern it”, and that law is Reason. Locke believes that reason teaches that “no one ought to harm another in his life, liberty, and or property”

Clearly, Locke was not relying just on a deity for his support of self-ownership.

Rand’s genius in ethics was to show that self-ownership was the result of the unique nature of man, namely that he is a rational animal. His survival requires his ability to exercise his own reason and when others attempt to limit his ability to use his mind, they are acting in a way that is inconsistent with his survival.

Peikoff argues that being the owner of your life is different than the right to life and I agree. If you are the owner of your life you not only have the right to life, but you have the right to create property, the right to free association, the right to travel freely, and on and on. A naked right to life does not provide any of these things. Peikoff might argue that the right to life includes those things necessary to sustain that life. But if you are being provided food and shelter enough to be alive, your right to life is being observed even if you are a slave or in a prison.

Ownership of oneself is absolutely vital to Rand’s and Locke’s idea of the origin of property rights. If you own yourself then you own those things your produce, but if you do not own yourself then there is no reason why the things you produce would be your property. Image an unowned robot that produces furniture or cakes. Without self-ownership, there is no reason for the robot to own those things he produces.

Self-ownership is not the axiom on which individual rights are built, it is a derived intermediate concept. However, it is a common starting point in a conversation about individual rights because it is easy to comprehend and is familiar to people who grew up in the United States or most common law countries. The idea of self-ownership is incorporated into the Declaration of Independence and in common law. Sir William Blackstone’s Commentaries was the most important treatise on common law in the 19th century. Locke’s idea of self-ownership permeates Blackstone’s Commentaries. Starting with the idea of self-ownership one can build a logical system that is almost as exact as Euclidean geometry. That system explains why we have property rights, how they arise, and who is the rightful owner of the property.[2]  It also explains why murder is illegal, why slavery is illegal, why theft is illegal, in fact most of our common law criminal law. It also explains contract law, why we have a right to free association, right to self defense (including the right to bear arms), right to free speech and on and on. It is an extremely powerful tool.

Does self-ownership open up the possibility of you being owned by someone else?  If so this would be a powerful reason to avoid the concept of self-ownership. The default position is that you own yourself (morally) under self-ownership, so to be owned by someone else you would have to sell yourself. This means you would have to enter into a contract. But a contract requires two people who are able to enter into and fulfill it. Someone who does not own themself is not competent to enter into or fulfill a contract. The second you enter into a contract to sell yourself to someone else you no longer have the capacity to contract so the contract is invalid. In addition, for a contract to be valid it is necessary that both parties provide consideration. When you sell yourself into slavery you are not receiving any consideration, since you have no right to anything as a slave. Attempting to sell yourself into slavery is a logical contradiction. Self-ownership does not lead to the idea that you can be owned by others, but the exact opposite.

Some might complain that this argument is too legalistic. But we are talking about property rights and contracts and therefore the philosophy of law applies. Property rights and contracts have definitions and logical conclusions and one of those logical conclusions is that you cannot sell yourself into slavery because it is an invalid contract.

Self-ownership is not the axiom on which individual rights are built, but it is an intermediate concept that is consistent with individual rights. When starting from an intermediate conclusion it is always important to be aware of the underlying fundamentals to avoid making a mistake. Self-ownership means that you have a property right in your life and property rights are a right to action. This means that self-ownership encompasses the right to life, but it encompasses so much more.



[1] Ayn Rand Lexicon, Man’s Rights,” The Virtue of Selfishness, 93

[2] As opposed to the in vague idea that property rights are the result of scarcity.

December 10, 2014 Posted by | -History, -Legal | 2 Comments

Charles Brush and Ice Dynamos

This is an excellent post on the inventor Charles Brush from the excellent blog Ice Dynamo.

Charles Francis Brush was born March 17, 1849 on his family’s farm – a farm not so different from those sprinkled across Bainbridge. You can imagine the bemusement of his parents – both farmers – when seemingly from infancy Charles showed an insatiable interest in electricity. He was a mere twelve when he built his first static electric machine.

He graduated college when he was twenty, and immediately went to work repaying his student loan, granted to him by his uncle. Charles spent his days selling iron ore and his nights devising a new dynamo – an early version of the electric generator. He was twenty-eight when his tireless efforts earned him his first patent.

As abundant and reliable as electricity is for us today, it’s hard to imagine what Brush’s dynamo meant for nineteenth century Americans. At the time, electricity was so inefficient and uneconomical that it little more than a novelty; what lighting existed was almost exclusively in the form of kerosene lamps.

The dynamo was a great achievement, but for Charles Brush, it was just a stepping stone. He envisioned a world lit by arc lights (a technology similar to light bulbs). That vision required not only economical electricity, but efficient and reliable arc lights. Once he’d completed his dynamo, he turned his focus to arc lights, and received his first of four patents in 1878.

Charles Brush loved his own life too much to relegate himself to thankless toil in an obscure lab. He was eager for the world to benefit from his genius, and wanted to be remunerated for his effort. Thus, in 1880 he established the Brush Electric Company. It was a herculean undertaking; he competed directly with Thomas Edison’s titan of a company, General Electric. Nevertheless, in a few short years Brush’s arc lights illuminated the streets of cities such as San Francisco, Montreal, Boston and New York. His hydroelectric power plant in Minneapolis was one of the first in the United States to generate electricity from water.

When Brush was 42, he merged his company with General Electric and retired to the mansion he’d built in Cleveland. His home included a private laboratory in the basement and the world’s first automatic wind turbine generator. Even in retirement, he never stopped investigating scientific phenomena.

Charles Brush’s inventions – such as his dynamo – were incredible machines, but they were so much more. Those inventions were the product of a child who was born with a singular purpose, and never let being an iconoclast stop him from pursuing that purpose. They are the result of a young man’s inexhaustible dedication to his work, and an industrialist’s fearless determination to bring light to the world.

Which brings us to the article’s title. My favorite author described machines as “the frozen form of a living intelligence.”

July 19, 2014 Posted by | -History | | Leave a comment


The authors (Sven Bostyn and Nicolas Petit) of this paper, PATENT=MONOPOLY – A LEGAL FICTION,  argue that patents are not a monopoly based on standard antitrust analysis.  It is very unusual for an academic paper to take such an unpopular position.  They must have not got the memo that the goal of all academics is to vilify inventors, patents, and property rights.  Below are some the lines I thought were interesting and my comments are below.

“No other IPR is so thoroughly examined and evaluated as a patent.”

No other property right is so expensive, time consuming and expensive to obtain title to.

“In 2011, approximately 1,000,000 patents were granted across the globe.  This would mean that 1,000,000 monopolies would have been created worldwide. This clearly, cannot be true.”

“Competition is very valuable, but innovation is probably equally, if not more, valuable.”


My main critique is that they did not explain how patents are a property right or the history of property rights and patents.  Under Locke’s theory of property rights, patents and copyrights are property rights – they are granted because of the creative effort (labor) of the inventor/author.  This was picked up by Sir William Blackstone in his Commentaries, where he affirms that patents and copyrights are property and therefore natural rights.  This was enshrined in the constitution as “securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

January 5, 2014 Posted by | -Economics, -History, -Legal, -Philosophy, Innovation, Patents | , , , , | Leave a comment

Gary Boone Inventor of the Microcontroller Dies at 68

Gary Boone invented the microcontroller while working at Texas Instrument in the early 1970s.  I had the good fortune to know Gary Boone in the later part of his life, he had a brilliant mind and was a good friend.  It is sad day for the electronics industry and my heart goes out to his family.

IEEE did an Oral History with Gary that was lost for over a decade. You can see the agility and brilliance of this great inventor’s mind in the interview.  Please read the whole oral history.  Mr. Boone has a number of interesting insights in the interview.  For instance, he states that he invented microcontroller while at Texas Instruments because of boredom.  He was working in a group designing custom Integrated Circuits (ICs).  While designing these chips he began to feel “I’m tired of doing this.  I’m working long hours.  My family is not happy.  I have to find a better way of doing this.”  He also noticed that the basic requirements for all these projects were similar and this led to the idea that a general chip that was programmable could solve multiple customers’ requirements.  He also discusses the resistance in the community to this innovation.

After inventing the microcontroller, he moved to a start-up company, Litronix, that made handheld calculators.  The company was not aggressive about filing patents.  An overseas competitor was able to drive Litronix out of the market because of the differential tax rates, U.S. regulatory rules on consumer warranties, and their weak patent portfolio.

Because Mr. Boone was the inventor of the microcontroller, he ended being involved in numerous patent lawsuits.  This has caused him to have a unique perspective on the patent system.  One of the most interesting points he makes is that design teams often fail to review the patent literature before starting the design process.  Because of this, they often reinvent designs and reviewing patent literature results in better designs.

Gary will be missed by all that knew him.

December 13, 2013 Posted by | -History, News | , | Leave a comment

Patents are Natural Rights

I have often pointed out that patents are a natural right under Locke’s theory of property rights.  Locke stated, in modern language, that you own yourself so you have the right to those things you create.  Many detractors have suggested that this absurd.  According to Locke the three chief natural rights are life, liberty, and property.  Locke states that protecting property rights is the main reason for forming governments.

Sec. 124. The great and chief end, therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of their property.[1]

Inventions are the result the inventor’s labor and therefore property under Locke.  Property is a natural right, so patents are natural rights.  Despite this logical connection, many people have continued to deny that patents (property rights in inventions) are a natural right.

Locke’s ideas were incorporated in the law of the United States by William Blackstone’s Commentaries on the Laws of England.  This treatise became the basis of common law in the US.  Here is what Blackstone said about patents and copyrights (intellectual property).  Note that he cites Locke’s ideas on property rights for his explanation for why intellectual property is Property.

There is still another species of property, which (if it subsists by the common law) being grounded on labour and invention is more properly reducible to the head of occupancy than any other; since the right of occupancy itself is supposed by Mr. Locke, and many others, to be founded on the personal labour of the occupant. And this is the right, which an author may be supposed to have in his own original literary compositions; so that no other person without his leave may publish or make profit of the copies. When a man by the exertion of his rational powers has produced an original work, he seems to have clearly a right to dispose of that identical work as he pleases, and any attempt to vary the disposition he has made of it, appears to be an invasion of that right.

Now the identity of a literary composition consists entirely in the sentiment and the language: the same conceptions, clothed in the same words, must necessarily be the same composition: and whatever method be taken of exhibiting that composition to the ear or the eye of another, by recital, by writing, or by printing, in any number of copies, or at any period of time, it is always the identical work of the author which is so exhibited; and no other man (it hath been thought) can have a right to exhibit it, especially for profit, without the author’s consent.

This consent may perhaps be tacitly given to all mankind, when, an author suffers his work to be published by another hand, without any claim or reserve of right, and without stamping on it any marks of ownership; it being then a present to the public, like building a church or bridge, or laying out a new highway: but, in case the author sells a single book, or totally grants the copyright, it hath been supposed, in the one case, that the buyer hath no more right to multiply copies of that book for sale, than he hath to imitate for the like purpose the ticket which is bought for admission to an opera or a concert, and that, in the other, the whole property, with all it’s exclusive rights, is perpetually transferred to the grantee.

On the other hand it is urged, that though the exclusive property of the manuscript, and all which it contains, undoubtedly belongs to the author, before it is printed or published; yet from the instant of publication, the exclusive right of an author or his assigns to the sole communication of his ideas immediately vanishes and evaporates; as being a right of too subtile and unsubstantial a nature to become the subject of property at the common law, and only capable of being guarded by positive statutes and special provisions of the magistrate.

The Roman law adjudged, that if one man wrote any thing on the paper or parchment of another, the writing should belong to the owner of the blank materials meaning thereby the mechanical operation of writing, for which it directed the scribe to receive a satisfaction; for in works of genius and invention, as in painting on another man’s canvas, the same law gave the canvas to the painter. As to any other property in the works of the understanding, the law is silent; though the sale of literary copies, for the purposes of recital or multiplication, is certainly as antient as the times of Terence, Martial, and Statius. Neither with us in England hath there been (till very lately) any final determination upon the right of authors at the common law.

But whatever inherent copyright might have been supposed to subsist by the common law, the statute 8 Ann. c. 19 hath now declared that the author and his assigns shall have the sole liberty of printing and reprinting his works for the term of fourteen years, and no longer; and hath also protected that property by additional penalties and forfeitures: directing farther, that if, at the end of that term, the author himself be living, the right shall then return to him for another term of the same duration: and a similar privilege is extended to the inventors of prints and engravings, for the term of eight and twenty years, by the statute 8 Geo. II. c. 13, and 7 Geo. III. c. 38, besides an action for damages, with double costs, by statute 17 Geo. III. c. 57. All which parliamentary protections appear to have been suggested by the exception in the statute of monopolies, 21 Jac., I. c. 3, which allows a royal patent of privilege to be granted for fourteen years to any inventor of a new manufacture, for the sole working or making of the same; by virtue whereof it is held, that a temporary property therein becomes vested in the king’s patentee. (emphasis added)


The idea that patents are a natural right is incorporated in early American law as the quote below shows.

“we protect intellectual property, the labors of the mind, productions and interests as much a man’s own, and as much the fruit of his honest industry, as the wheat he cultivates, or the flocks he rears.” (Davoll v. Brown, 7 F. Cas. 197, 199 [C.C.D. Mass. 1845].)

It is just obstinance or disingenuousness to suggest that patents are not part of natural rights.


[1] The Second Treatise of Civil Government; 1690; John Locke; CHAP. IX., Of the Ends of Political Society and Government.

December 9, 2013 Posted by | -History, -Law, -Legal, -Philosophy, Patents | , , , , | Leave a comment

John Locke vs. Ayn Rand

This paper is exploratory not definitive.  Comments and input is greatly appreciated.  My interest in the comparison between Rand and Locke started when I wrote my book The Decline and Fall of the American Entrepreneur.  My investigation was spurred on by reading the excellent book The Power and the Glory: The Key Ideas and Crusading Lives of Eight Debaters of Reason vs. Faith, by Burgess Laughlin.  In my opinion, John Locke is often misrepresented by both his supporters and detractors.  I admit that I do not have the time or energy to review Locke’s original writings in depth at this time.  Your input is appreciated.

Charles Murray has suggested that Ayn Rand’s ideas are just a rehash of Locke, Nietzsche, and Adam Smith.[1]  I reject this out of hand.  Nietzsche’s uberman influenced Rand’s fictional characters, but she rejected Nietzsche as her philosophical ideas matured.  Adam Smith’s book Theory of Moral Sentiments is not consistent with Rand’s ideas at all.  He wrote this book before he wrote The Wealth of Nations and the two do not appear to be entirely consistent with each other.  As a result, it is hard to pin Smith down on his ethics and epistemology.  The differences between Rand and Locke are more subtle.

My book mainly discusses patent law in terms of Natural Law or Locke, because that is the historical basis for the founding of the US and US patent law.  Readers of my blog State of Innovation  may wonder what this has to do with patent law.  My answer is everything, since this is about the fundamental basis of property rights.



In my opinion all philosophers fall either into the camp of Aristotle or Plato.  Aristotle’s metaphysics is that we can trust our senses and there is only one universe or as Rand stated it A is A.  Plato’s metaphysics is that there is more than one world and our senses cannot be trusted to understand them or that our senses only give us a vague impression of the real world.  Rand and Locke are both Aristotelian in the realm of metaphysics.

Some people may object that Locke advocated there was a deity.  Locke did appear to make somewhat contradictory statements on god and faith, but he was writing at a time in which you could have your head cut off for being on the wrong side of a religious debate.  Locke appeared to be a deist and believed;

His philosophy on human progress proposed the following: a) human beings can progress by acquiring knowledge, b) reason and action are subject to natural law, and c) the mind (as consciousness) is subject to scientific inquiry (Smith, 1997).[2]

A Deist believes in god or a deity that created the laws of the Universe and has no effect thereafter.



John Locke’s epistemology was Reason.  Reason is the means of integrating and conceptualizing perceptions by means of logic.  It is distinguished from rationalism which starts with reveled truths and then applies a logical system derived from these assumptions.  This is distinguished from empiricism which holds that man’s only source of knowledge is his senses without any recourse to concepts.  The logical positivists did us one favor in showing that all logical systems are based on either an assumption, such as the Euclidean geometry’s idea that a straight line goes on forever and two parallel lines never intersect, or based on an observation.

Some people argue that Locke was an empiricist.[3]  Locke was attempting to use the techniques of science to analyze ethics and political philosophy.  (Note that he also defined the metaphysics and epistemology used by science.)  People who argue that Locke was an empiricist usually argue that modern science is based on empiricism.  This is incorrect based on the definition given above.  Science builds on observation, but it is highly conceptual and many discoveries in modern physics derive from following the logical consequences of theory.  For instance, the Higgs Boson particle was first predicted by following the math of field theory and now may have been verified by experiment.  Locke was not an empiricist either, based on the definition given above.  He is widely quoted as having said “logic was the anatomy of thought”, which would be inconsistent with empiricism.

Rand’s epistemology was Reason also.  One difference is Rand’s refutation of Kant’s epistemology that emotion is a valid path to knowledge and his attempts to limit reason.  However, Locke came before Kant and therefore could not have commented on Kant.  Ayn Rand spends a lot of time explaining how concepts are formed and how they relate to the real world or specific instances.  An example is reproduced below:

The same principle directs the process of forming concepts of entities—for instance, the concept “table.” The child’s mind isolates two or more tables from other objects, by focusing on their distinctive characteristic: their shape. He observes that their shapes vary, but have one characteristic in common: a flat, level surface and support(s). He forms the concept “table” by retaining that characteristic and omitting all particular measurements, not only the measurements of the shape, but of all the other characteristics of tables (many of which he is not aware of at the time).[4]

It is my understanding that Rand is explaining in modern language the concepts of Aristotle or refining them.  This seems consistent with John Locke’s epistemology.



This is where we see the major differences between Rand and Locke.  In my brief survey of Locke’s ethics, I found two competing concepts for Locke.  One is his ideas about Natural Rights and the other is a hedonistic perspective on ethics.  Locke’s hedonistic perspective on ethics is in conflict with Rand’s selfishness and I would suggest in conflict with Natural Rights.

Locke’s hedonistic ethical views start with the idea that people naturally want to maximize their pleasure and minimize their pain.  Locke’s Natural Rights starts with the idea that moral laws are divine, but he does state these divine laws are discoverable by reason.  This second part makes it consistent with his deist metaphysics.  He does not seem to reconcile these two competing ethical systems.[5]  I will focus on Locke’s Natural Rights ethics.

Locke’s formulation of Natural Rights starts with his concept of man’s rights in a state of nature.[6]  In a state of nature a man owns himself.  Since he owns himself he has a right to defend himself.  Man also has a right to those things he creates, which is where the right to property comes from.  From these concepts the moral repugnancy of slavery follows as well as most of traditional criminal law, contracts, and property law.  Locke does not explicitly state that man is an end in himself like Rand, however ownership in one’s self certainly implies this.  To the extent we focus on Locke’s Natural Rights, Rand and Locke are not in conflict and I would suggest Rand’s ideas are a refinement and provide a deeper insight.  Like Relativity and Quantum Mechanics expand our knowledge over Newtonian physics, but are not in conflict with it.[7]

Ayn Rand’s ethics starts with idea that human life has value and ethics is the actions necessary to allow man to live.  By live she does not mean mere existence, but thriving.  Everything else she derives from an evolutionary point of view.[8]  In Galt’s speech she states,

There is only one fundamental alternative in the universe: existence or nonexistence—and it pertains to a single class of entities: to living organisms. The existence of inanimate matter is unconditional, the existence of life is not: it depends on a specific course of action. . . . It is only the concept of ‘Life’ that makes the concept of ‘Value’ possible. It is only to a living entity that things can be good or evil.

From this she focuses on man and his unique tool of survival, which is his mind.

In order to sustain its life, every living species has to follow a certain course of action required by its nature. The action required to sustain human life is primarily intellectual: everything man needs has to be discovered by his mind and produced by his effort. Production is the application of reason to the problem of survival.[9]  (Emphasis added)

It is reason that requires an ethics of individuality, where each person’s life has value separate from the species.  This is not true of other organisms.

Man’s mind is his basic means of survival—and of self-protection. Reason is the most selfish human faculty: it has to be used in and by a man’s own mind, and its product—truth—makes him inflexible, intransigent, impervious to the power of any pack or any ruler. Deprived of the ability to reason, man becomes a docile, pliant, impotent chunk of clay, to be shaped into any subhuman form and used for any purpose by anyone who wants to bother.[10] (Emphasis added)

Thus Rand ends up with an ethics in which each individual person is their own end.  The exercise of their mind is the means by which they attain values to live.  In order to achieve their values they must not only think but act.  In order for this to be true, man must own himself, which is the starting point of Locke.  The main difference between Locke and Rand is that Rand starts with a scientific or metaphysical basis of the nature of man to derive her ethics.  Locke starts with the assumption that each man owns themselves, but Rand proves why this must be true.  Her starting point is that every living organism must value its life or go extinct.  Note there are ethical systems that do not value human life, so this cannot be taken as a given.  We will explore these more later.  The second biggest difference between Rand and Locke is she shows the central place of reason and the mind in man’s existence.  Evolution had not been discovered at the time of Locke, so he could not use it to develop his ethics.  Another major achievement of Rand was to debunk the supposed is-ought dichotomy.

In answer to those philosophers who claim that no relation can be established between ultimate ends or values and the facts of reality, let me stress that the fact that living entities exist and function necessitates the existence of values and of an ultimate value which for any given living entity is its own life. Thus the validation of value judgments is to be achieved by reference to the facts of reality. The fact that a living entity is, determines what it ought to do. So much for the issue of the relation between “is” and “ought.”[11]

This issue was supposedly first raised by David Hume who lived after John Locke died.  As a result, this was not a problem which Locke could address.  In fairness to Hume, Rand starts with one assumption or observation in order to solve this problem, mainly that a living entity has to value its own life.  As I pointed out earlier it is impossible to have a logical system that is not based on at least one assumption or observation.[12]

I have suggested that a deeper understanding of these issues can be had by understanding that evolution is the application of the second law of thermodynamics (entropy) to living organisms.  Note I am not the first person to suggest that evolution and entropy are related.  Applying entropy concepts to living organisms is fraught with potential logical errors.  I have attempted to avoid them in my writings, but in passing these around I have found that even my most ardent supporters found them a little difficult to get through.  My most well received post along this line is Sustainability isn’t Sustainable.  My other posts on point can be found below.[13]

Life is a fight against entropy.  Entropy as applied to economics is the concept of diminishing returns.  It shows that inventions are the only way to overcome entropy – production without invention leads to the Malthusian Trap.  As a result, this idea is consistent with Rand’s idea that the mind and reason are the primary means of survival but refines this to the understanding of the critical role of inventions.

Why is this important?  Because the intellectual battle today is against those people who have combined an incorrect interpretation of entropy with Kant’s emotion driven epistemology.  These people do not believe human life is valuable, in fact they believe humans are evil because they believe we accelerate the entropy of the Universe.  Other living species do not harness and use energy (outside their physical body) so they do not accelerate the entropy of the universe and therefore are not evil.  These people advocate the death of at least five billion people as a moral good.  The basis of their morality is founded on a flawed understanding of entropy and physics.  For more information see The Pseudo Scientific Basis of Environmentalism.  Defeating this evil philosophy intellectually is vital to anyone who values human happiness.


Property Rights

Locke formulation of property rights is based on the Labor Theory of Property, which is commonly stated as when you mix your labor with natural resources you obtain property rights in your creation.  This has been purposely mischaracterized and attacked by Locke’s opponents.  Adam Mossoff has an excellent paper on point entitled Locke’s Labor Lost.  Locke’s concept of property is that your productive effort crates a property right in the thing you created.  One problem or misinterpretation of Locke’s theory of property rights is that labor means physical labor.  This is most likely a mischaracterization, but leaves open the question of whether intellectual property such as patents is property.

Rand’s theory of property rights is that they derive from your right to life.

The right to life is the source of all rights—and the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave.[14]  (Emphasis Added)

But Rand’s understanding that man’s mind is the most important tool for survival causes her to put intellectual property rights as primary.

Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.[15] (Emphasis Added)

Ayn Rand’s more detailed understanding of man leads to the primacy of man’s mind and reason as his tool of survival.  This leads to a deeper understanding of property rights and the primacy of intellectual property rights.  My refinement of Rand’s ideas leads to the primacy of property rights for inventions.



Locke and Rand are not in conflict philosophically, but Rand provides a coherent ethics based on the fundamental nature of man and living organisms, which Locke did not.  Rand’s main difference in her epistemology is to dispense with the need for a deity, even one whose only effect was to create the world and her tackling of Kant’s emotion is a path to knowledge.  I see the relationship between Rand and Locke as the difference between Newton and Einstein or Algebra and Analytic Geometry; refinement not opposition.  I believe that Rand’s ethics can be further refined by understanding how entropy and evolution are related.  This leads to a slightly different understanding of property rights, but more importantly provides a direct argument against the religion of environmentalism and the related “we are running out of natural resources” Malthusian economic argument.


[1] Ayn Rand’s Critics, Capitalism Magazine, by JAMES VALLIANT,, accessed 3/20/13.


[4] “Concept-Formation,” Introduction to Objectivist Epistemology, 11–12

[5] Locke’s Moral Philosophy, Stanford Encyclopedia of Philosophy,, accessed 3/20/13.

[6] The state of nature concept has been much maligned by Marxists and others.  They have purposely distorted his argument into an anthropological statement.  This clearly was not Locke’s intent and shows an intellectual dishonesty on the part of Marxists.

[7] For those people who do not know, Relativity and Quantum Mechanics are in complete agreement with Newtonian physics except in the realms of very fast systems, very high gravitational fields, and very small distances.  This is part of how we know they are correct.

[8] It is surprising that Rand was indifferent on the idea of evolution.  Her ethics is clearly based on the same concepts.  I believe the reason for this is she was worried it would lead to erroneous ideas about Determinism.

[9] What Is Capitalism?” Capitalism: The Unknown Ideal, 16

[10] The Comprachicos,” Return of the Primitive: The Anti-Industrial Revolution, 84

[11] “The Objectivist Ethics,” The Virtue of Selfishness, 17

[12] This is a favorite argument of Christians.  They believe it shows morality is impossible without god.  This is inconsistent with both Locke and Rand.

[14] “Man’s Rights,” The Virtue of Selfishness, 93

[15] Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 130.

March 22, 2013 Posted by | -History, -Philosophy, Innovation | , , , , , | 5 Comments


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