Friday, October 24, 2025

How can Austrian Economics be reconciled with the Neo-Aristotelian philosophy of Freedom and Flourishing?

 This is a guest essay by Dr Edward W. Younkins.


Ed is Professor of Accountancy and Business at Wheeling University, and Executive Director of its Institute for the Study of Capitalism and Morality. He is author of a trilogy of important books on freedom and flourishing: “Capitalism and Commerce”, “Champions of a Free Society”, and “Flourishing and Happiness in a Free Society”. My review of that trilogy is included among references listed among suggestions for further reading at the end of Ed’s essay.

Ed has numerous other publications, including an essay reviewing books by David L. Norton, which was published here in January and a review of Chris Matthew Sciabarra’s book “Total Freedom” published here in July. 

Ed Younkins writes:  

The pursuit of human flourishing—what Aristotle termed eudaimonia—stands as a central concern of both philosophical inquiry and economic science. At first glance, the Austrian economic tradition, with its emphasis on subjective value and methodological individualism, might appear incompatible with neo-Aristotelian philosophies like Ayn Rand's Objectivism and Douglas B. Rasmussen and Douglas J.  Den Uyl's "individualistic perfectionism," which assert the objectivity of human values. Yet, upon deeper examination, these traditions reveal profound compatibilities and complementary insights that provide a more robust framework for understanding human freedom, social cooperation, and the conditions for prosperity. This synthesis offers a powerful intellectual foundation for what could be termed "flourishing individualism"—the view that individuals possess an objective nature whose perfection requires specific social, political, and economic conditions, most notably freedom.


The Austrian School of economics and the neo-Aristotelian philosophy of freedom and flourishing share profound philosophical and methodological affinities. Both frameworks emphasize individual agency, moral responsibility, and the dynamic process of human flourishing in a world of uncertainty and choice. Although Austrian economists such as Ludwig von Mises typically maintain that values are subjective, and neo-Aristotelians assert that values are objective in a moral sense, these positions are not incompatible when understood as operating on different levels of analysis: the praxeological versus the ethical. Both perspectives converge on the centrality of rational agency, the importance of practical wisdom, and the moral necessity of liberty for human flourishing. This essay explores these convergences, demonstrating that Austrian economics and the neo-Aristotelian ethical framework together form a mutually enriching paradigm of freedom and flourishing.

 The Foundations of Austrian Economics

Austrian economics emerged in the late nineteenth century with Carl Menger’s Principles of Economics (1871), which emphasized methodological individualism, subjectivism, and the causal-realistic method. Menger held that value originates in the human mind’s recognition of the usefulness of goods for achieving desired ends. Later thinkers such as Ludwig von Mises (1949), Friedrich Hayek (1948), and Israel Kirzner (1973) expanded this foundation, emphasizing purposive human action (praxeology), the coordinating role of the price system, and the discovery process of entrepreneurship. Mises’s Human Action presents economics as a deductive science grounded in the axiom that “man acts purposefully” (Mises 1949). Human action, for Mises, is always rational in the instrumental sense—it involves the use of means to achieve chosen ends under conditions of uncertainty.

Israel Kirzner added to this framework by introducing the concept of entrepreneurial alertness. Entrepreneurs notice opportunities for profit that others have overlooked, thereby correcting market errors and coordinating dispersed knowledge. Kirzner’s entrepreneur is a creative, forward-looking agent who exercises alertness, judgment, and initiative—traits that closely parallel the Aristotelian notion of phronesis, or practical wisdom (Kirzner 1973). In both frameworks, knowledge, creativity, and prudence are essential for navigating the complexities of real-world decision-making.

Neo-Aristotelian and Objectivist Ethics of Flourishing

The neo-Aristotelian philosophy of Rasmussen and Den Uyl, articulated in Norms of Liberty (2005), The Perfectionist Turn (2016) and The Realist Turn (2020) seeks to develop a liberal political order grounded in the ethics of individual perfectionism. They argue that moral value is objective and grounded in human nature: flourishing (eudaimonia) is the natural end of human beings as rational and social agents. Moral principles are thus derived from the requirements of human flourishing, not from arbitrary preferences. Rand’s Objectivism similarly holds that reason is man’s means of survival, that values are objective, and that rational self-interest is the proper moral code (Rand 1964).

Rasmussen and Den Uyl distinguish between self-perfection—the moral ideal of living rationally and virtuously—and self-directedness, the political condition that makes self-perfection possible. Rights, in their account, protect the liberty necessary for individuals to pursue their own perfection in diverse ways. Their framework, like Rand’s, integrates metaphysics, epistemology, and ethics to yield a view of human beings as rational, volitional agents who must exercise practical reason to flourish.

 Subjective and Objective Value: Distinct Spheres of Analysis

One of the most frequently discussed issues in relating Austrian economics to neo-Aristotelian ethics concerns the apparent conflict between Misesian subjectivism and Aristotelian or Objectivist views about value. Mises maintains that “value is subjective,” meaning that economic value arises from individual preferences and choices; there are no objective economic values apart from subjective evaluations by acting persons. Rand and Rasmussen and Den Uyl, by contrast, hold that moral values are objective because they are grounded in the requirements of human life and flourishing. However, as Kathleen Touchstone (2015) and I (2011) have argued, these positions refer to different levels of analysis and are not contradictory.

This subjectivism is epistemological and economic, not moral. Mises did not claim that values are morally relative; rather, he argued that economics must remain value-free to maintain scientific rigor. Mises’s subjectivism pertains to the preferences individuals express in their actions, not to the truth or falsity of moral claims. Austrian economics thus provides a descriptive account of human behavior, focusing on how individuals allocate scarce resources to achieve their goals.



In the praxeological sense, subjectivity refers to the agent-relative nature of preference: each individual chooses based on his or her own hierarchy of ends. In the ethical sense, objectivity refers to the fact that some ends are objectively better than others for human flourishing. Austrian economists do not deny that there may be objective criteria for human well-being; rather, economics as a value-free science abstains from ethical judgments. Thus, Austrian subjectivism is methodological, not moral. Neo-Aristotelian philosophies,  in turn, concern moral evaluation, not economic explanation. The two frameworks, therefore, are compatible and complementary.

In contrast to the Austrian position, Rand's Objectivism maintains that values are objective, meaning they are "determined by the nature of reality, but to be discovered by man's mind."  Values are not created by whim or social convention but are discovered through rational inquiry into the requirements of human life. As Peikoff (1991) explains Rand's ethics, "the fundamental alternative at the base of value is life versus death. Since human beings do not survive automatically, but by the use of reason, the standard of value is not mere survival, but rational flourishing."  From this perspective, something is objectively valuable if it genuinely promotes human life and flourishing according to man's nature as a rational being.

Similarly, Rasmussen and Den Uyl's individualistic perfectionism, while acknowledging the diversity of flourishing paths, maintains that human flourishing serves as an objective standard for ethics. They define human flourishing as objective, inclusive, individualized, agent-relative, self-directed, and social. A person's flourishing is desired because it is desirable and choice-worthy.  The objectivity resides in the factual requirements for human flourishing, while the specific instantiation varies according to individual circumstances, talents, and choices.

The resolution to this apparent contradiction lies in recognizing that these theories operate at different levels of analysis. The Austrian subjective theory of value explains how economic calculation and market prices emerge from individual preferences in the context of scarcity. The neo-Aristotelian objective theory of value explains how certain goods, virtues, and institutions reliably promote human flourishing given human nature. The neo-Aristotelian sense of value-objectivity complements the Austrian sense of value-subjectivity because personal flourishing on an objective level transcends subjective value preferences.

 Entrepreneurship, Practical Wisdom, and Eudaimonia

The Austrian entrepreneur and the Aristotelian practically wise person share deep conceptual similarities. Kirzner’s entrepreneur acts under uncertainty, perceives opportunities, and exercises judgment and creativity—traits essential to human flourishing. Likewise, Aristotelian phronesis involves rational deliberation about means and ends in the pursuit of eudaimonia. Both require sensitivity to context, adaptability, and the courage to act amidst uncertainty.

Rasmussen and Den Uyl (2005) describe flourishing as a self-directed activity of reason, while Kirzner (1973) and Mises (1949) describe the market process as an open-ended discovery procedure. Both perspectives view human action as purposive and guided by reason. The Austrian view of entrepreneurship provides a dynamic understanding of how individuals realize their plans within institutional frameworks, which aligns with the Aristotelian conception of practical wisdom as context-sensitive, agent-centered reasoning.

Rasmussen and Den Uyl’s Individualistic Perfectionism builds on Aristotelian ethics to defend a liberal political order. They argue that human flourishing (eudaimonia) is agent-relative and pluralistic, requiring liberty for individuals to pursue their own good. Their philosophy emphasizes practical wisdom (phronesis), the capacity to deliberate well about how to live.

Rand’s rational egoism and Rasmussen and Den Uyl’s agent-relative flourishing both affirm the moral legitimacy of self-interest. Austrian economics shows how self-interest, when channeled through markets, leads to mutual benefit. As Kathleen Touchstone argues, “Practical reason can be aligned with self-interest in a way that promotes both personal and social good.” This alignment reinforces the idea that liberty is not only economically efficient but morally justifiable.

This aligns closely with Austrian economists’ view of entrepreneurship. Entrepreneurs exercise alertness and judgment in navigating uncertainty and making context-sensitive decisions. As Benjamin Powell and Rosolino Candela (2014) have shown, entrepreneurial action is a form of practical reasoning, akin to Aristotelian phronesis. Both traditions recognize that flourishing requires freedom, creativity, and contextual judgment.

In both frameworks, success depends on alertness to opportunity—economic or moral. The morally flourishing individual, like the entrepreneur, must remain open to new information, creatively respond to change, and act on rational insight. This parallel suggests that the Aristotelian notion of practical wisdom and the Austrian idea of entrepreneurial alertness describe complementary dimensions of human rationality: moral and economic.

Both traditions recognize that practical wisdom and entrepreneurial judgment are necessary precisely because human beings face genuine uncertainty and operate with limited knowledge. The Austrian emphasis on the market as a discovery procedure for mobilizing dispersed knowledge complements the neo-Aristotelian recognition that human flourishing requires practical wisdom precisely because we cannot have algorithmic certainty about how to live well. As Kathleen Touchstone observes in her comparison of Rand and the Austrians, the recognition of death's inevitability plays a crucial role in establishing life as the ultimate value, highlighting the finitude that makes choice meaningful.  Our limited time and knowledge make both economic and ethical judgment necessary and meaningful.

Liberty as the Political Prerequisite for Flourishing

Both Austrian economists and neo-Aristotelians maintain that liberty is the indispensable precondition for human flourishing. For Mises and Hayek, economic freedom allows individuals to coordinate dispersed knowledge and discover better ways to achieve their goals. For Rand, Rasmussen, and Den Uyl, moral self-perfection requires the freedom to act on one’s rational judgment without coercion. The rule of law and private property thus provide the institutional context within which individuals can exercise moral and entrepreneurial agency.

Many economists have shown that economic liberty correlates strongly with prosperity and well-being, but beyond material benefits, liberty also enables moral growth, Freedom is valuable not only as a means but also as a necessary condition for self-responsibility and virtue. The Austrian and neo-Aristotelian perspectives converge in seeing liberty as both an epistemic and a moral requirement—a framework that respects the dignity of human choice and the moral significance of self-directedness.

The Austrian understanding of the market as a spontaneous order—an emergent pattern of cooperation that results from human action but not human design—provides an economic justification for the political framework defended by neo-Aristotelian philosophers. The result of these combined perspectives is a powerful moral and political framework that answers the challenge of modern pluralism without surrendering the objectivity of value. It is a theory that preserves the ethical centrality of virtue and the reality of human goods while insisting on the primacy of liberty and individual responsibility.

 Human Action, Rational Agency, and the Unity of Knowledge

Austrian economics and the neo-Aristotelian philosophy share a common anthropological foundation: human beings as rational, purposive agents. Mises’s praxeology and Aristotle’s practical philosophy both begin from the recognition that action is purposeful and intelligible. Barry Smith (1990) has argued that Mises’s praxeological categories correspond closely to Aristotelian metaphysical concepts: means, ends, causality, and teleology. This correspondence suggests that Austrian economics, though methodologically individualist, is compatible with a broader realist metaphysics of human nature.

Rand’s Objectivism likewise rests on a realist ontology and a teleological conception of life. Human reason is a means of survival, and moral virtue is the consistent choice to act in accordance with reason. Rasmussen and Den Uyl (2016) extend this insight by emphasizing that the moral self is a “self-perfecting agent” whose flourishing requires both internal rational order and external social liberty. The Austrian theory of the market as a spontaneous order complements this moral vision: both rely on the creative, adaptive rationality of individuals operating within an open-ended, complex world.

Self-Interest, Practical Reason, and Moral Responsibility

In both Austrian and neo-Aristotelian thought, self-interest is rational and morally legitimate. For Mises, self-interest is inherent in human action: individuals act to remove felt uneasiness and improve their conditions. For Rand, self-interest is the moral expression of the objective requirements of human life. Rasmussen and Den Uyl reinterpret self-interest in terms of self-perfection: the pursuit of moral virtue and excellence as expressions of one’s nature as a rational being.

Practical reason (phronesis) guides this pursuit by integrating knowledge, experience, and judgment in concrete circumstances. Similarly, the Austrian entrepreneur uses reason to identify and pursue profit opportunities, which represent the coordination of subjective values through voluntary exchange. This coordination process can be seen as a form of social learning in which individual discovery contributes to mutual benefit. Both frameworks thus ground moral and economic order in the creative, purposive activity of rational agents.

 Harmony Between Ethics and Economics

Austrian economics and neo-Aristotelian ethics are not separate silos but complementary aspects of a unified understanding of human life. Economic science explains how individuals interact within markets to achieve their diverse ends, while ethical philosophy clarifies which ends are worthy of pursuit. Together they yield a comprehensive view of the human person as a self-responsible, rational being whose flourishing depends on freedom, virtue, and creativity.

It could be argued that integrating these perspectives results in a “humanomics” of flourishing—a science of man that recognizes the inseparability of moral and economic dimensions of action. (Rasmussen 2024-25) Freedom provides the institutional framework; virtue provides the moral compass; entrepreneurship provides the practical engine of progress. Each reinforces the others in a mutually supportive system.

Conclusion: Toward a Paradigm of Freedom and Flourishing

The intellectual convergence between Austrian economics and neo-Aristotelian philosophy represents more than an academic curiosity. It offers a comprehensive framework for understanding human flourishing under conditions of freedom that integrates insights from ethics, economics, and political theory. Their complementarity arises from addressing different but interconnected aspects of the human condition: the Austrian tradition explaining how social cooperation emerges from individual choices under specific institutional arrangements, and the neo-Aristotelian tradition explaining what constitutes a well-lived life for the individual choosing agent.

Rand admired Mises and the Austrian school, praising their defense of capitalism and critique of central planning. She ranked Mises among history’s intellectual giants and featured favorable reviews of his works in her publications. However, she rejected Mises’s value subjectivism, insisting that values must be grounded in objective reality. For Rand, values are not arbitrary preferences but facts of reality that reflect the requirements of human life.

Yet, as scholars like Robert Tarr have noted, this apparent conflict dissolves when we recognize that Mises and Rand operate at different levels of analysis. Mises’s subjectivism pertains to economic behavior, while Rand’s objectivism addresses moral philosophy. As Tarr puts it, “The Austrian and Objectivist views of value are not contradictory but complementary when properly contextualized.” Austrian economics describes how individuals act; Objectivism prescribes how they ought to act.

The resolution of the apparent conflict between subjective and objective value through different levels of analysis enriches both traditions, allowing economists to acknowledge the purpose-serving nature of market activity while enabling philosophers to recognize the institutional prerequisites for virtue. The connection between entrepreneurial judgment and practical wisdom highlights the moral dimension of economic creativity while acknowledging the cognitive demands of both economic and ethical excellence. The defense of political and economic freedom as essential for human flourishing provides a shared normative foundation for evaluating social institutions.

This synthesis finds eloquent expression in the work of scholars who explicitly aim to forge an understanding from various disciplines and to integrate them into consistent, coherent, and systematic whole. The goal is to have a paradigm in which the views of reality, human nature, knowledge, values, action, and society make up an integrated whole. This integrated perspective acknowledges what Rasmussen and Den Uyl (2016) identify as the "tethered character of political philosophy" to deeper metaphysical and ethical frameworks.

Perhaps most importantly, this integrated perspective reminds us that economics and philosophy ultimately serve the same end: understanding and promoting the conditions for human flourishing. The economic creativity unleashed by markets and the ethical excellence cultivated through virtue represent complementary aspects of what can be identified as flourishing and happiness in a free society.  By recognizing their compatibility and complementarity, we can move closer to an integrated understanding of human freedom that enables individuals to realize their highest potential through reason, practical wisdom, and voluntary cooperation.

The convergence of Austrian economics and neo-Aristotelian perfectionism reveals a coherent philosophical paradigm that integrates economics, ethics, and politics around the concept of rational human agency. Austrian economics contributes a dynamic, subjectivist understanding of market coordination and entrepreneurial discovery. Neo-Aristotelian and Objectivist ethics provide an objective, normative account of human flourishing and moral responsibility. Far from being incompatible, the subjective and objective dimensions of value illuminate different aspects of the same reality: human beings as valuers and choosers in a world of possibilities.

By recognizing their compatibility, scholars can move toward a richer, interdisciplinary synthesis—one that unites Misesian praxeology with Aristotelian virtue ethics, Kirznerian entrepreneurship with practical wisdom, and Randian self-interest with moral responsibility. This synthesis provides a powerful conceptual framework for understanding human life as a process of rational self-direction within a free society. It is, ultimately, a paradigm of freedom and flourishing.



 Recommended Reading

Bates, Winton. 2024. “The Vision of Ed Younkins’s Trilogy on Freedom and Flourishing” The Savvy Street.  (May 15).

Block, Walter. 2005. “Ayn Rand and Austrian Economists: Two Peas in a Pod” The Journal of Ayn Rand Studies Vol.6 No 2; 259-269.

Boettke, Peter J. 2019. “Mises, Rand, and the Twentieth Century” in Gregory Salmieri and Robert Mayhew, Foundations of a Free Society: Reflections on Ayn Rand’s Political Philosophy.  Pittsburgh: University of Pittsburgh Press.

Candela, Rosolino A. 2018. “The Socialist Calculation Debate and its Normative Implications in Austrian Economics” The Next Generation: 29-44

Den Uyl, Douglas J. and Douglas B. Rasmussen. 2016. The Perfectionist Turn: From Metanorms to Metaethics. Edinburgh: Edinburgh University Press.

Ebeling, Richard M. 2021. “The Case for Freedom in Ludwig von Mises, F.A. Hayek, and Ayn Rand”.  Future of Freedom (January).

Johnsson, Richard C. B..2005. “Subjectivism, Intrinsicism and Apriorism: Rand Among the Austrians”. The Journal of Ayn Rand Studies Vol.6 No.2: 317-335.

Kirzner, Israel M. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press.

Menger, Carl. 1871. Principles of Economics. Vienna: Wilhelm Braumüller.

Mises, Ludwig von. 1949. Human Action: A Treatise on Economics. New Haven: Yale University Press.

Pauls, Theodore N. 2025 “What Do Neo-Aristotelian Perspectives tell us about Flourishing Individualism?” Freedom and Flourishing (June 24).

Peikoff, Leonard. 1991. Objectivism: The Philosophy of Ayn Rand. New York: Dutton

Powell, Benjamin and Rosolino Candela. 2014. “Markets as Processes of Moral Discovery” Studies in Emergent Order. Vol.7: 258-272.

Rand, Ayn. 1964. The Virtue of Selfishness. New York: Signet.

Rasmussen, Douglas B. 2024-25 “Homo Agens and Homo Moralis in Humanomics”. The Independent Review. (Winter).

Rasmussen, Douglas B., and Douglas J. Den Uyl. 2005. Norms of Liberty: A Perfectionist Basis for Non-Perfectionist Politics. University Park: Pennsylvania State University Press.

Rasmussen, Douglas B. and Douglas J. Den Uyl. 2020, The Realist Turn: Repositioning Liberalism Palgrave Macmillan.

Smith, Barry. 1990. “Aristotle, Menger, Mises: An Essay in the Metaphysics of Economics.” History of Political Economy 22 (3): 683–706.

Tarr, Robert. 2019."Economic Theory and the Conceptions of Value: Rand and the Austrians versus the Mainstream”. In Gregory Salmieri and Robert Mayhew, Foundations of a Free Society: Reflections on Ayn Rand’s Political Philosophy. Pittsburgh: University of Pittsburgh Press, 327-380.

Touchstone, Kathleen. 2015. “Rand and the Austrians: The Ultimate Value and the Non-interference Principle”. Libertarian Papers. 7 No.2, 169-204.

Touchstone, Kathleen. 2020.  Freedom, Eudaemonia, and Risk: An Inquiry into the Ethics of Risk-Taking.  Lanham, MD: Lexington Books.

Younkins, Edward W. 2005. ‘Menger, Mises, Rand, and Beyond” The Journal of Ayn Rand Studies 6 no.2 Spring: 337-74.

Younkins, Edward W. 2011. Flourishing and Happiness in a Free Society: Toward a Synthesis of Aristotelianism, Austrian Economics, and Ayn Rand’s Objectivism. Lanham, MD: Lexington Books.

Tuesday, October 14, 2025

What does Gerald Gaus tell us about the implications of the knowledge problem for political entrepreneurship?

 


This essay is the latest in a series that I have been writing about political entrepreneurship. It is the second that I have written on the implications of the knowledge problem for the plans of entrepreneurs who seek to improve economic and social outcomes. The first essay discussed Don Lavoie’s contribution to our understanding of the implications of the knowledge problem in that context.

The Complexities of the Open Society


This essay is based on my reading of Gerry Gaus’s final book, The Open Society and its Complexities. Gaus was a prolific author. This book, published in 2021, has been described by Chandran Kukathas as “his most ambitious work”. Gaus adopted an interdisciplinary approach to political philosophy and saw himself as being in “the truth business” rather than a proponent of any ideology. Nevertheless, it is obvious from the book that he valued the norms of liberty of the Open Society and detested authoritarianism and totalitarianism.

Like Don Lavoie, Gerry Gaus was strongly influenced by F. A. Hayek. In The Open Society, Gaus re-considers some of Hayek’s views in the light of developments over the last 20 years in theories of evolution and analyses of societies as complex systems. He focuses on the following three challenges based on his interpretation of Hayek’s views:

  • First, do “our evolved moral sentiments constantly cause us to rebel against the Open Society and resort to a “tribal” moral outlook”?
  • Second, given that “an evolved complex culture requires fidelity to … evolved norms, what type of justification” of the norms of the Open Society is open to us”?
  • Third, has the Open Society “evolved beyond our governance”?

I will provide here just the briefest possible summary of Gaus’s responses to the first two questions.

First, humans “are certainly not inherently groupish creatures”. Humans are “fit for the Open Society”. However, they have not been optimized for it or any other social order, including tribal society.

Second, because the diversity of moral perspectives is fundamental to the moral life of the Open Society, the existence of increasingly diverse moral perspectives can enhance justification of the Open Society. The Open Society is characterized by self-organized social morality, entailing moral rules that lead toward extended cooperation rather than conflict and division. Public justifications of those moral rules must be as accommodating to diversity as possible. Effective governance requires widely justified norms and policies.

Knowledge required for governance

In this essay I focus on the Gaus’s view of the knowledge problem in his discussion of the question of whether the Open Society has evolved beyond “our” governance. He alludes to the knowledge problem when he observes that “we seek to devise policies to improve” the functioning of the Open Society. However, “we do not have the knowledge and competency to do so, hence we are constantly disappointed by the last round of interventions and we blame the last government for its failures and broken promises” (p. 13).

The passage quoted in the epigraph is from page 244, a point in the book where Gaus was summing up his argument. After noting that the passive population model often supposed that people would act against their own judgments, Gaus adds:

Unfortunately, this view has been resurrected by those elites who continue to believe that the public is too ignorant to make its own decisions, and so should submit to “epistocracy,” or rule by those who know (aka, them). Not only, however, is such expertise essentially nonexistent in complex systems, but most actual agents in the Open Society are anything but passive materials to be guided by the elite: they are active, reflexive agents who make their own choices. When citizens do not endorse a policy, many will employ their resources to evade it.”

In considering whether the Open Society has evolved beyond our governance, Gaus introduces the concept of “self-governance”.  Self-governance is not the same as spontaneous self-organization, although Gaus suggests that the two concepts are not necessarily incompatible.

Self-governance requires that there be a “controller” who collects information at the system level and then uses that information to fuel a decision procedure that plays a role in guiding the systems behaviour.

Gaus refers to those aspiring to be controllers as governors. The roles that governors seek to perform may include the functions of political entrepreneurs. As I have discussed elsewhere, that function includes listening to the discourse of potential customers (supporters) to sense what they are likely to find attractive, and on that basis producing new products (policy proposals) and selling them persuasively.

Gaus considers three levels of governance – macro, meso, and micro- and three dimensions of governance – goal directed, strategic, and rules-focused. A goal-directed governor identifies preferred states and seeks to move society toward them. A strategic governor seeks to solve strategic dilemmas to assist citizens to secure outcomes they all want. A rules-focused governor seeks to structure some of the rules of self-organization.

Gaus’s analysis leads to the following conclusions:

  • There is little prospect for a governor to successfully pursue macro-level goals in a complex society. For example, efforts to promote development in particular societies are often unsuccessful because institutions cannot readily be transferred from on society to another.
  • Attempts to structure the “rules of the game” at a macro level are more promising. In cooperation with the self-organized normative framework of society a governor may effectively shape the rules of self-organization e.g. via civil rights legislation.
  • Goal pursuit at the meso level is a dubious enterprise. Pursuit of environmental, economic and welfare-targeted variables is a hit-and-miss affair because our social world is a complex system. It is not linear and determinate, as is often assumed. Successful goal pursuit in a complex world is usually a matter of “muddling through” (sometimes described as learning-based governance).
  • Polycentric governance studies show that a focus on problem-solving tends to facilitate effective governance when publics share pressing strategic dilemmas.
  • There may be grounds for more optimism about the prospect for micro governance than governance at other levels.

In writing about micro governance, Gaus makes a favourable reference to the work of Abhijit Banerjee and Esther Duflo. Gaus justifies his optimism about micro governance as follows:

 “When changes come up from the more micro levels, not only are they apt to garner the moral endorsement of actual citizens, but the Open Society will possess a diversity of normative networks. Because what works today may be dysfunctional tomorrow, a diversity of approaches is always critical. This itself upsets the moralist, who believes she speaks for the truth about justice, and sees most deviations from her plan as shades of immorality. But many of the diverse publics will not take up her solutions—many citizens will see different problems and possibilities, and their normative beliefs will lead them to different solutions. (p. 240)

Summing up

In The Open Society and its Complexities, Gerry Gaus provided insights about the circumstances in which political entrepreneurs may be successful in pursuing goals.

Gaus was highly critical of the passive population model which assumes that people will follow policies dictated by governments rather than acting as self-governing agents. Such considerations made him highly skeptical about pursuit of goals at a macro level in a complex society.

He viewed pursuit of environmental, economic and welfare goals as problematic but acknowledged that some success may be achieved by “muddling through” i.e. adjusting policies in response to outcomes.

He was more optimistic about cooperative efforts to modify the “rules of the game” in which self-organization occurs. He also acknowledged that a focus on problem-solving tends to facilitate effective governance when people are confronted by pressing strategic dilemmas.

Gaus seems to have been most optimistic about micro-level governance that is able to garner the endorsement of “actual citizens”.


Saturday, October 4, 2025

Why did Aristotle view leisure as a fundamental aspect of a well-lived life?

 


Leah Goldrick answers the question posed above in this guest essay. The essay was first published on Common Sense Ethics, Leah’s excellent blog.

Leah writes:

I've just finished reading Aristotle's Way: How Ancient Wisdom Can Change Your Life, by classicist Edith Hall. It's a great book that I would recommend for my readers, as Hall capitalizes on popular interest in ancient philosophy and substantive self-help. Aristotle addresses the issue of how to live a good life in his Politics, and Nicomachean Ethics, written in the fourth century BC. In Aristotle's Way, Hall codifies Aristotle's most important ideas on how we should live, addressing topics such as happiness, love, communication, and mortality, among others. 

Chapter Seven of Aristotle’s Way is all about Aristotle’s philosophy of leisure, which I think is one of the most interesting chapters, and that's what I'll be writing about in this post. If you want to read a review of the entire book, I recommend this one by Donald Robertson, since I'm focusing on only a part of it here. 

Aristotle’s philosophy of leisure is tied to his broader understanding of human flourishing. Aristotle thought that most people tend to misuse leisure time if they haven’t learned how to spend it meaningfully, preferring instead to spend their non-working hours on trivial pleasures and amusements. However, learning to use leisure time for growth oriented pursuits can greatly improve our lives. Let's examine that idea in depth in the next sections.  

What is Aristotelian Leisure?

Aristotelian leisure encompasses not just what we might think of as recreational activities today like hobbies and sports, but rather, everything broadly we do outside of work. This includes relaxation after work, eating and fulfilling other bodily functions, and amusements to avoid boredom. It also includes forming relationships with others, enjoying the arts, spending time on exercise and intellectual contemplation, crafts, civic association, and other beneficial and meaningful activities. For Aristotle, leisure isn’t simply about taking breaks or escaping from work; it's a fundamental aspect of a well-lived life.

At the core of Aristotle’s ethics is the concept of eudaimonia, translated as "flourishing" or "well-being." The ultimate human goal is living in accordance with reason and achieving a life of virtue. To reach eudaimonia, one must engage in activities that are fulfilling, meaningful, and promote personal growth. Leisure, in this context, is not a passive activity but is deeply connected to the active cultivation of one's intellect and virtues. In the Nichmeachean Ethics (Book X, 1176b) Aristotle writes: “To be always seeking after amusement is a sign of levity and not of a serious purpose.”

In today’s world, where leisure is often viewed as idle entertainment or seen merely as a break from work, the concept of Aristotelian leisure offers a richer and more profound understanding of what we should be doing with our time; leisure involves reflection, growth, and the pursuit of intellectual and moral development, not just passive distraction. Aristotle argues that leisure is the time in which we can engage in these activities, which allow us to connect to the highest aspects of our human nature. This could include philosophical conversation, artistic creation, or scientific inquiry. These activities are seen as valuable in themselves—not just as means to an end.

In essence, Aristotle’s view of leisure encourages us to think of it as time for self-improvement, exploration, and the cultivation of virtues, rather than merely a time to "rest" from work. Aristotle also believes that leisure is essential for cultivating friendships, which are vital for living a good life. In a sense, leisure time allows for the development of meaningful relationships, as people have time to engage in shared activities that promote mutual flourishing.

Work, Leisure and the Good Life

Aristotle obviously acknowledged that work and productive labor are necessary for survival, and most people in the ancient world that Aristotle inhabited worked tremendously hard. Aristotle also thinks that work can be virtuous if done with the right intentions.

Still, work is secondary to leisure in the Aristotelian sense. Moreover, work should not dominate a person’s life to the point where there is no room for leisure, because without leisure, a person is unable to engage in the activities that lead to personal fulfillment and virtue. Thinking about leisure this way can be a helpful antidote to the burnout many experience in the modern, work-centered culture.

From an Aristotelian perspective, you need not be defined by your job or career, but rather by what you choose to do with your non-working hours. This is good news for several reasons. First, the reality is that only a minority of people are lucky enough to be able to make a living doing what they love. Most of us will have work to get by, but it’s leisure that is truly important for a good life. So, it doesn’t matter if you aren’t totally satisfied with your career.

Best of all, even if you work a lot, you likely have more leisure time available to you than the average person in Aristotle's day. In ancient Greece, everything, even basic chores, had to be done by hand. By contrast, most people in the developed world today enjoy access to modern appliances and conveniences which free up more of our time for meaningful leisure.  

To wrap up the post here, Aristotle thought that how we spend our non-working hours defines who we are, the kind of life we will have, and the type of society we build. From this perspective, our leisure choices are more significant than we may realize. Spending our leisure time meaningfully helps us make sense of the world, experience growth, and contribute to something larger than ourselves. 

If you'd like to learn more about Aristotle's ideas on how to live well, I highly recommend reading Aristotle's Way.  

Wednesday, September 24, 2025

What does Don Lavoie tell us about the implications of the knowledge problem for the plans of political entrepreneurs?

One of the questions that I have been contemplating in recent months is whether the tariff policies of President Trump could be part of a coherent economic plan. Can his policies be rationalized in terms of revenue raising objectives, the optimum tariff argument, provision of appropriate incentives to manufacturing industries to meet defence or employment objectives, or the pursuit of foreign policy objectives? Is it possible that he is assigning policy instruments to objectives in a manner consistent with a rational plan?

The presumption underlying such questions is that it is preferable for political entrepreneurs to endeavor to ensure that their economic plans are coherent rather than unprincipled, unpredictable, and capricious. Although that may be a reasonable presumption, there is another other option that should be considered. Perhaps it is appropriate for political entrepreneurs to refrain from engaging in economic planning.


I was reminded of that while reading Don Lavoie’s book, National Economic Planning: What is Left?  Don Lavoie was an economics professor at George Mason University, where he taught from 1981 until his death in 2001. This book was originally published by the Cato Institute in 1985 and was reprinted by the Mercatus Center in 2016.

In this book Don Lavoie explains, among other things, that political entrepreneurs are confronted with a fundamental knowledge problem when they seek to plan economic activities, The epigraph quoted above (from page 181) encapsulates an important implication of the knowledge problem.

Lavoie’s explanation of the information problem begins with the insights of F. A. Hayek. The data that a planning agency would require to engage in rational economic planning resides in the separate minds of millions of people. The data exists only in a dispersed form that cannot be fully extracted by any single agent in society. The only way that knowledge can be used effectively is by relying on competitive struggles in a market system.  (p. 56)

The most obvious implication is that it is impossible for markets to be replaced by comprehensive economic planning. However, more modest attempts to steer the market towards particular outcomes also obstruct the source of knowledge which is essential to rational decision-making. (p. 56-7)

Lavoie points out that the only way we can know whether we are squandering resources by over- or underinvesting in microprocessors or steel, for example, is via “the messages contained in the relative profitability of rival firms in these industries”. He adds:

“But this is precisely the information we garble when we channel money toward one or another of the contenders. Deprived of its elimination process, the market would no longer be able to serve its function as a method for discovering better and eliminating worse production techniques. Without the necessity of responding to consumers’ wants or needs, businesses would never withdraw from unprofitable avenues of production.” (p.181)

Lavoie notes that advocates of industry policy disagree on the directions in which the market should be steered. For example, Felix Rohatyn wanted to funnel aid to sunset industries while Robert Reich wanted to funnel it to sunrise industries. He sums up:

“It is the main conclusion of the argument that I have called the knowledge problem … that there are no rational grounds on which Reich could ever convince Rohatyn or vice versa on such matters as are involved in economic change. As a result, such battles are sure to be fought with weapons other than carefully reasoned argument.” (p. 200-201)

Lavoie notes that Rohatyn and Reich both argued that it is the responsibility of a strong leader to coordinate the actions of the rest of us. (p.190) The coordination they had in mind seems to be more akin to the coordination that military leaders impose by giving orders to subordinates than the coordination among individuals that occurs voluntarily and spontaneously in a free market.

Lavoie argues that economic planning is inherently militaristic: “The practice of planning is nothing but the militarization of the economy”. In making that point he notes that the theory of economic planning was from its inception modeled after feudalistic and militaristic organizations. (p. 230)

Some would argue that a degree of militarization is a price worth paying, or even desirable, to achieve a range of national objectives. Indeed, the conventional theory of democracy seems to entail top-down direction. Prior to elections, political leaders tell voters about their plans for education, health, social security etc. and are expected to implement those plans after they are elected.  

I am not aware of anything that Lavoie wrote that discusses the legitimacy of the concept of national objectives and the question of whether planning (and militarization) may be necessary in the pursuit of social objectives. However, he provided a highly relevant discussion of the concept of democracy in a book chapter entitled, ‘Democracy, Markets, and the Legal Order: Notes on the Nature of Politics in a Radically Liberal Society’. (The book is: Ellen Frankel Paul, Fred D. Miller, Jr., and Jeffrey Paul (Eds.) Liberalism and the Economic Order, Cambridge University Press, 1993.)

In that chapter Lavoie notes that Western liberals tend to view democracy and markets “as in some sort of necessary tension with one another”. We tend to think that “taking democracy too far undermines markets and that taking markets too far undermines democracy”. He attributes that view to “liberalism’s gradual drift into compromises with conservatism and socialism”.

Lavoie argues that liberalism needs to reinterpret its notions of markets and democracy so that they are seen to be essentially complementary. Our economics needs to take account of the cultural underpinnings of markets and our politics “needs to move beyond the model of the exercise of some kind of unified, conscious democratic will and understand democratic processes as distributed throughout the political culture”. The force of public opinion is best perceived as the distributed influence of political discourses throughout society rather than as “a concentrated will”.

Lavoie suggests that what we should mean by democracy is a distinctive kind of openness in society rather than a theory about how to elect the personnel of government:

“Democracy is not a quality of the conscious will of a representative organization that has been legitimated by the public, but a quality of the discursive process of the distributed wills of the public itself.” (p.111).

It seems to me that those who see merit in Lavoie’s view of democracy have good reasons to be skeptical about the worth of top-down planning to achieve national objectives. Individuals have different priorities and objectives that deserve to be recognized. National plans cannot solve the knowledge problem entailed in giving appropriate recognition to individual differences.