prior probability

Recall from our previous post that Nozick has asked us to keep an open and uncontaminated mind in the opening subsection of Chapter 9. He will need us to keep an open mind because he is going to present an unorthodox thought experiment in the next subsection of this chapter (pp. 280-292), a thought experiment motivated by a special type of “market failure”: the problem of positive externalities.

So, what is an “externality”? In a word (or two words), this is just a fancy term for “side effects.” In particular, a positive or beneficial externality (the subject of Chapter 9 of ASU) refers to the positive side effects that an activity or transaction confers on those parties who are not directly involved in the activity or transaction. Such a side effect can arise either on the production side or on the consumption side. By way of example, a positive production externality includes a beekeeper who keeps bees for their honey. A positive side effect of beekeeping is the pollination of surrounding crops by the bees. (In fact, the value generated by the pollination may be more important than the value of the harvested honey.) Similarly, an example of a positive consumption externality includes an individual who receives a vaccination for a communicable disease, for he not only decreases the likelihood of his own infection, but also decreases the likelihood of others becoming infected through contact with him. Continue reading →

Nozick devotes the first subsection of Chapter 9 (pp. 277-279) to analogical reasoning and to what I like to call “the mental contamination problem.” According to Nozick, one of the problems with reasoning by analogy is our inability to keep an open and uncontaminated mind. Why does this problem occur? Because whenever we are presented with a hypothetical example or with a body of data, we will invariably be tempted to evaluate that example or data through the filter of our theoretical priors, or as Nozick puts it (p. 277, emphasis in original): Continue reading →

Chapter 9 of Anarchy, State, and Utopia (ASU), the penultimate chapter of this classic book, is titled “Demoktesis.” Spoiler alert: according to Wikipedia, demoktesis is a thought-experiment designed to show the incompatibility of democracy (one-man, one-vote) with libertarian theory and with Nozick’s entitlement theory, i.e. Nozick’s defense of the minimal state. So, suffice it to say, we are headed into some real deep waters here! Nozick’s thought-experiment is divided into three subsections as follows:

• Consistency and parallel examples (pp. 277-279)
• The more-than-minimal-state derived (pp. 280-292)
• Hypothetical entities (pp. 292-294)

Nozick begins Chapter 9 by asking, “Is there some way to continue our story of the origin of the (minimal) state from the state of nature to arrive, via only legitimate steps which violate no one’s rights, at something more closely resembling a modern state?” (ASU, p. 276, emphasis in original, citation omitted.) In other words, if Nozick’s minimal state is the only type of state that is morally justified, why does it exist nowhere on earth? We will jump into Chapter 9 in our next blog post.

During a bout of insomnia, we discovered a new genre of literature and storytelling called micro flash fiction. (Hat tip: @ESYudkowsky.) Below is a sample:

Nozick devotes the last three subsections of Chapter 8 (pp. 268-275) to two interwoven tasks: (1) reiterating his conception of a minimal state, and (2) responding to various justifications made in favor of a more extensive state. Recall that, for Nozick, the ideal state is the minimal state, i.e. one that is limited to enforcing contracts, prohibiting fraud and force, and punishing theft. Nevertheless, Nozick identifies two different arguments in favor of a more extensive state. One is that economic equality (via some form of compulsory redistribution) is necessary in order to promote political equality (the political equality argument). The other is that people should have a voice over decisions that affect them (the voice argument). Nozick debunks and discredits both of these arguments as follows: Continue reading →

Nozick begins the eighth section of Chapter 8 of ASU (pp. 265-268) by making a strong case in favor of compulsory redistribution! (Yes, you heard that right. Again, I will summarize Nozick’s argument in my own words.) Let’s assume that I am an altruist and that I want to contribute to a good cause, such as helping the poor. Despite my altruistic inclination, there are two reasons why I may not end up making any charitable contributions. One is the free rider problem. Simply put, why should I make any charitable contributions if everyone else is already contributing to my favorite causes? The other reason is fear of being exploited. That is, I might be more than willing to contribute $n to help the poor, but only if a sufficient number of other individuals were also contributing to my cause; otherwise, I might feel like a sucker if I am the only one giving. Continue reading →

Nozick takes a short detour in the seventh section of Chapter 8 of ASU (pp. 262-265), where he makes a conjecture about the structure of rights to engage in relationships with others. At one point, Nozick states (p. 264): “Rights to engage in relationships and transactions have hooks on them, which must attach to the corresponding hook of another’s right that comes out to meet theirs.” Moreover, according to Nozick (ibid., emphasis in original): “Adults normally will have the right to [establish] a relationship with any other consenting adult who has this right, but the right may be forfeited in punishment for wrongful acts.” This conjecture, however, generates a number of intractable problems: Continue reading →

Nozick accomplishes two tasks in the sixth subsection of Chapter 8 (pp. 253-262). First, he explains why so few business firms are owned or run by workers. But more importantly, he single-handedly demolishes Marxian economic theory. As usual, I will summarize Nozick’s argument in my own words. To begin with, the reason why so few business firms are worker-owned is because of the risks of investment and production, or as Nozick puts it (p. 255, emphasis in original): “It’s risky starting a new firm.” Although Nozick fails to distinguish between risk and uncertainty (see chart below), his larger point is well taken. In Nozick’s words (ibid.): “Some persons don’t want to run these risks of investing or backing new ventures, or starting new ventures themselves. Capitalist society allows the separation and bearing of these risks from other activities.” In other words, one virtue of open markets is that they allow persons to avoid or assume as much or as little business risk as they wish, depending on one’s aversion to or preference for such risk. Continue reading →

Nozick poses a pair of related questions in the next two subsections of Chapter 8 of ASU (pp. 246-253) regarding the organization of business firms. One question is, How could we incentivize business firm to provide more opportunities for meaningful and satisfying work to its employees? The other is, Why aren’t more firms owned or controlled by their employees? These questions are all the more pressing today given recent developments, including David Graeber’s recent critique of bullshit jobs, the Starbucks “ethical sourcing” controversy, and the proliferation of slave labor camps in China (the video below, for example, features Dejian Zeng, an NYU grad student who worked undercover in a Chinese factory, spending 12 hours a day attaching one screw to iPhones). Continue reading →