Austrian Economics and Complex Systems with Rahim Taghizadegan (WiM376)
Oct 9, 2023
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Rahim Taghizadegan, economist, author, physicist, philosopher, investor, and entrepreneur, discusses the commonalities between Jungian psychology and Austrian economics, the problem with deterministic worldview, incentives' role in shaping human behavior, and whether Bitcoin is a fundamental innovation. They also explore the impact of technological change, distinguish between discovered laws and legislation, and discuss the importance of validation, replicability, and the relationship between language, math, and money.
Hayek emphasizes the need for a different approach in understanding complexity of social phenomena compared to natural sciences.
Understanding human beings as storytelling creatures can help navigate through false ideologies and demagoguery.
Positive change often arises from technology, discovery of patterns, and coping with life's challenges, rather than through politics.
Bitcoin is a discovery that combines previous innovations in a new way and its adoption and success relies on peer-to-peer discovery and individual fit.
Incentives, beyond material interests, encompass social, psychological, and moral factors, and play a key role in shaping behavior and creating systems for positive change.
Deep dives
The distinction between simple and complex phenomena
Hayek discusses the distinction between simple and complex phenomena, arguing that the natural sciences focus on simpler phenomena while the social sciences deal with the complex. He highlights the limitations of applying the methods of the natural sciences to social phenomena and emphasizes the need for a different approach in understanding complexity.
The role of epistemology in understanding knowledge
Hayek explores the field of epistemology, which deals with how knowledge is acquired and understood. He emphasizes the importance of distinguishing between simple and complex phenomena in shaping epistemological stances, and notes that the success of natural sciences led to a skepticism towards other branches of philosophy.
The need for guiding narratives and mythologies
Hayek argues that as traditional religious institutions crumble, societies seek new guiding narratives and mythologies to provide meaning and structure. He suggests that understanding human beings as storytelling creatures who are shaped by their tools and technologies can help in navigating through false ideologies and demagoguery.
The limitations of politics in bringing about positive change
Hayek expresses skepticism towards politics, viewing it as a means of imposing top-down control and disrupting the organic order of society. He suggests that positive change often arises from technology, discovery of patterns, and being a good example in coping with life's challenges.
Bitcoin as a Discovery
Bitcoin is seen as a discovery rather than an invention, as it combines previous innovations in a new way. It is a carrier technology that opens new possibilities. Its adoption and success depends on peer-to-peer discovery and individual fit with ends and means. Bitcoin's importance lies in its monetary protocol, which bridges people and fosters cooperation and communication. It is a useful tool for economic change and cultural progress. Its significance can be compared to other historical innovations, although its ultimate impact remains to be seen.
The Role of Incentives
Incentives are a powerful force that influences human action. They can shape behavior by aligning interests and motivations. However, it is important to note that incentives are not solely driven by material interests. They also encompass social, psychological, and moral factors. Incentives are a key leverage point for engineering efforts, as they can provide the guiding framework for desired outcomes. Understanding and aligning incentives can help create systems and structures that promote cooperation, productivity, and positive change.
The Importance of Money
Money plays a crucial role in connecting individuals across space and time. It serves as a protocol for economic interaction, facilitating cooperation, trade, and the exchange of value. Sound money protocols are essential for economic calculation and long-term planning. By preserving purchasing power and reducing the impact of depreciation, money with stable value incentivizes saving and investment over immediate consumption. The nature of money and its incentives has a profound influence on economic activity and can shape society at large.
Incentives and Human Action
Incentives are drivers of human action, but their influence extends beyond material interests. Human behavior is complex and influenced by a variety of factors, including social, psychological, and moral incentives. While incentives play a significant role in shaping behavior, they do not provide a complete understanding of human action. Other factors, such as individual values, beliefs, and cultural norms, also contribute to the choices people make. When engineering systems and structures, it is important to not solely rely on incentives, but to consider the broader context and motivations behind human actions.
The importance of private property and responsibilities
Private property is seen as a protocol that facilitates social cooperation and is characterized by the concept of responsibility. It allows individuals to say no to certain things, fostering efficiency and win-win situations. It keeps producers honest and ensures fair negotiations. The entrepreneurial promoter becomes an important change agent within the framework of private property. Additionally, private property is a check against the violation of property rights, which can drive moral decay in society. Bitcoin, with its strong emphasis on property rights, offers an example of a system that optimizes social cooperation and enhances individual responsibility.
The role of culture and gradual change in societal transformation
Long-term change and societal transformation occur due to cultural shifts and gradual processes. It involves finding a match between personal values and the existing world, rather than attempting to radically change everything. The importance of ridicule and openly questioning prevailing narratives is emphasized, rather than attempting to convince the majority through logical arguments alone. While change may start with small steps and entrepreneurial actions, cultural shifts require time and the acceptance of responsibility for change. Bitcoin, with its focus on responsibility and potential for cultural change, offers an avenue for incremental transformation.
Rahim Taghizadegan joins me to discuss what Jungian psychology and Austrian economics have in common, the problem with the deterministic worldview, the nature of incentives, and whether Bitcoin is a fundamental innovation.
Rahim Taghizadegan is an economist, author, physicist, philosopher, investor, and entrepreneur. He is the last Austrian economist of the Austrian School in the direct tradition.
// OUTLINE // 00:00:00 - Coming up 00:00:44 - Intro 00:02:17 - Helping Lightning Startups with In Wolf's Clothing 00:03:03 - Introducing Rahim Taghizadegan 00:03:47 - Rahim's Journey from Austrian Economics to Bitcoin 00:05:20 - Switching the Field of Interest 00:07:10 - Recommended Books 00:08:35 - Jungian Psychology & Austrian Economics 00:11:37 - The Complexity Theory 00:13:38 - Behavior vs. Action 00:18:19 - Praxeology 00:19:17 - Distinguishing Human from Animal 00:23:11 - 20th Century Crisis 00:30:10 - Innovation Led to Social Change 00:36:14 - Fighting Against the Demagogues 00:42:28 - Preservation of Privilege 00:43:24 - Guiding Light and the Narrative of Mythology 00:45:44 - Human Capability of Rational Argumentation 00:47:30 - Following the Leader 00:51:35 - Rules vs. Regulation 00:53:10 - Differentiating Epistemology & Philosophy 00:55:16 - Replacing Philosophy with Science 01:01:05 - Simplicity vs. Complexity 01:02:23 - Secure Your Bitcoin Stash with the iCoin Hardware Wallet 01:03:19 - Mismanagement of Science 01:07:07 - Science is Not the Only Answer 01:10:38 - DDT Pesticide Disaster 01:12:53 - The Line Between Proper Intervention and Abuse 01:16:02 - From Newtonian Theory to Einsteinian Theory 01:19:41 - Problem with the Newtonian Worldview of Human Beings 01:22:29 - Difference Between Theory and Observation 01:26:43 - Attributes of Real Science 01:29:04 - Tradition of Speculation & Exaggeration 01:33:38 - Choosing the Right Facts 01:35:23 - Verifying the Ideals 01:38:13 - Spotting the Irregularities and Discussing Metaphysics 01:43:27 - Axiom of Action 01:46:11 - Predicting Human Behaviour 01:49:22 - The Freedom to Choose 01:52:31 - The Metaphor of Language & Money 01:55:28 - Bitcoin is an Idealized Money 01:57:46 - Is Bitcoin Discovered or Invented? 02:00:17 - Take Control of Your Healthcare with CrowdHealth 02:01:18 - A Bitcoin Wallet with Privacy Built-In: Wasabi Wallet 02:02:10 - Bitcoin a Fundamental Innovation 02:03:42 - Can Bitcoin Be Established in Today’s World? 02:07:40 - The Nature of Incentives 02:11:06 - How Incentives Influence Action 02:17:32 - Fiat Currency Incentivizes Debt 02:21:09 - How Incentives Interact with Morality 02:25:25 - Restructuring the Incentives 02:29:13 - Private Property & Social Cooperation 02:32:20 - Being an Entrepreneur of Change 02:37:02 - Bitcoin Enhances Private Property 02:39:33 - The Feedback Loops of Bitcoin 02:41:27 - How to Find Rahim's Work
