1. The failure of consequentialism

However, the consequentialist ideal, consisting of believing that it is possible to act by taking decisions to maximize the forecast positive consequences on the basis of given means and costs which are considered to be also known, has ostensibly failed.(1) Firstly, the evolution of economic theory itself has shown that it is impossible to obtain the necessary information on the benefits and costs arising from each human action. This theorem of modern economics is based on the innate creative capacity of the human being, who is continually discovering new ends and means, giving rise, therefore, to a flow of new information or knowledge which makes it impossible to predict the specific future consequences of the different human actions and/or political decisions adopted at any given moment.(2) In addition, the failure of real socialism, understood as the most ambitious social engineering experiment carried out by the human race throughout its history, has meant a shattering blow for consequentialist doctrine. In effect, the immense resources devoted, over a period of almost seventy years, to trying to evaluate different political options in terms of costs and benefits, imposing them by force on the citizens in order to “optimally” attain the ends pursued, have been seen to be incapable of meeting the expectations that had been placed on them, leading to significant economic underdevelopment and, above all, great human suffering.

Although, due to lack of the necessary historical perspective, we are not yet fully aware of the far-reaching consequences that the fall of real socialism will have on the evolution of science and human thought, some very significant effects can now begin to be appreciated. Firstly, attention should be drawn to the development of a new economic theory, much more human and realistic, which, based on the study of the human being as a creative actor, aims to analyze the dynamic processes of social coordination that actually take place in the market. This approach, the predominant driving force of which comes from the Austrian School of Economics, is much less ambitious than the scientistic paradigm that, to date, has filled the economics textbooks and deformed generations of students, creating expectations among the citizens on the possibilities of our science which, logically, it has been unable to meet. Another important consequence has been the formation of an evolutionist theory of social processes, also developed by the Austrian School of Economics. This has shown how the most important institutions for life in society (linguistic, economic, juridical and moral) arise spontaneously, over a very extended time period, on the basis of customs, as a consequence of the participation of a very large number of human beings who act in very varied specific circumstances of time and place. Thus, a series of institutions (moral, juridical, economic and linguistic) appear which involve an enormous volume of information and which are far in excess of the capacity of comprehension and design by a human mind. Lastly, the third effect which should be highlighted is the significant re-emergence of ethics and the analysis of justice as one of the most important social studies research fields. In fact, the theoretical and historical failure of scientistic consequentialism has returned a leading role to rules of behavior based on dogmatic ethical principles, the important function of which as irreplaceable “automatic pilots” for behavior and human freedom is again beginning to be fully appreciated.

Jesús Huerta de Soto
Professor of Political Economy
King Juan Carlos University of Madrid, Spain

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(1). John Paul II (1993, 97-98), in his criticism of consequentialism, states literally that “each person knows the difficulties, or rather, the impossibility of evaluating all the good or evil effects of his own actions: an exhaustive rational calculation is not possible. Therefore, what should be done in order to establish proportions that depend on an evaluation the criteria of which remain in the dark? How could an absolute obligation resulting from such debatable calculations be justified?.”

(2). This theorem was discovered by the theorists of the Austrian School of Economics (Mises, Hayek) and has been articulated and refined in the course of the long polemic on the impossibility of socialism which has taken place in the present century. The Austrians have also brought the serious crisis of the neoclassical-Walrasian paradigm into evidence, together with, in general, the static conception of economics, which presupposes that the ends and means are known and given and that the economic problem is merely a technical problem of maximization (Lavoie 1985, Huerta de Soto 1998).