Academic journal article Quarterly Journal of Austrian Economics

Rejoinder to Hoppe on Indifference

Academic journal article Quarterly Journal of Austrian Economics

Rejoinder to Hoppe on Indifference

Article excerpt

Hoppe (2005, p. 87) quite properly starts out his analysis of indifference with a magnificent quote from Rothbard (1997, pp. 225-26) on this subject:

Indifference can never be demonstrated by action. Quite the contrary. Every action necessarily signifies a choice, and every choice signifies a definite preference. Action specifically implies the contrary of indifference. . . . If a person is really indifferent between two alternatives, then he cannot and will not choose between them. Indifference is therefore never relevant for action and cannot be demonstrated in action.

I fully agree with Hoppe's (2005, ibid.) assessment that "This seems to be undeniable, and any attempt to explain why one choses [sic] to do x rather than y with reference to indifference rather than preference strikes one as a logical absurdity, a 'category mistake.'"

But Nozick is having none of this. He says (1977, pp. 370-71):

Indeed, the Austrian theorists need the notion of indifference to explain and mark off the notion of a commodity, and of a unit of a commodity. . . . Without the notion of indifference, and, hence, of an equivalence class of things, we cannot have the notion of a commodity, or of a unit of a commodity; without the notion of a unit ("an interchangeable unit") of a commodity, we have no way to state the law of (diminishing) marginal utility.

My reply (Block, 1980, pp. 424-25) was as follows:

I think that this problem can be reconciled as follows. Before the question of giving up one of the pounds of butter arose, they were all interchangeable units of one commodity, butter. They were all equally useful and valuable to the actor. But then he decided to give up one pound. No longer did he hold, or can he be considered to have held, a homogeneous commodity consisting of butter pound units. Now there are really two commodities. Butter a, on the one hand, consisting of 99 one-pound units, each (of the 99) equally valued, each interchangeable from the point of view of the actor with any of the other in the 99-pound set; on the other hand, butter b, consisting of one pound of butter (the 72nd unit out of the original 100 butter units, the one, as it happens, that he chose to give up when he desired to sell off one of his pounds of butter). In this case, butter a would be preferable to butter b, as shown by the fact that when push came to shove, butter b was jettisoned, and butter a, retained.-Alternatively, we may say that the person was "indifferent" between all 100 units of butter before and apart from any question of choice coming into the picture. But "indifference," in this interpretation, existing only in the absence of human action, would not be a praxeological, or economic category, but a vague, psychological one. . . We can see, then, that with this interpretation, there will be no difficulty with regard to the law of diminishing marginal utility. For one thing, this is because we can have our homogeneity (apart from human action) as well as deny it (when choice takes place). Thus, to the extent that homogeneous units of a commodity are required or the operation and application of this law, there is no problem.

However, while Hoppe (2005) agrees with me that indifference and human action are incompatible, and that the Austrians are correct in cleaving to marginal utility and the concept of the supply of a good, he is less than fully satisfied with this attempt of mine to defend against Nozick (1977.)

Hoppe (2005, p. 89) offers two criticisms, neither of which I accept.

First, his interpretation of indifference as a "vague, psychological" category seems off the mark. Instead, in accordance with Mises, it must be regarded as a rather precise epistemological category implied in the concept of a class of objects and involved in any operation of classification.

Hoppe, I claim, has failed to recognize that "indifference" is a perfectly acceptable word in the English language. …

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