When you learn that your opponent is unbeatable, you ought to adjust your strategies.
On April 29, 2007, a team of computer scientists at the University of Alberta announced that they had solved the game of checkers (8 x 8 draughts). Human checkers players no longer have any hope of defeating this program and regaining the World Checkers Championship title, which the program has held since 1994.
The Chinook Project, as it is called, began in 1989. Multiple computers worked around the clock, analyzing opening variations and pushing the analysis deep into the middle game in order to produce a database that proves that checkers, assuming perfect play by both sides, is a draw.[1] The Chinook checkers program refers to this proof-tree database during the opening and middle game; it simply refers to its database and finds the correct reply, which has been calculated in advance.
The Chinook program also makes use of an endgame database that contains the win/loss/draw result for 39 trillion positions with 10 pieces or fewer left on the board. In order to reduce the needed disk space, the Chinook program does have to "think" for itself in some variations between the opening proof tree and the endgame database, but all variations in which calculation is necessary lead to either a forced win or a forced draw.
Economists of the Austrian School have been analyzing the science of human action in a somewhat analogous manner to the Chinook Project, for over 200 years. Austrian economists have been using an a priori deductive approach to develop a mature body of economic theory since Menger wrote his Grundsätze in 1871. As with researchers of the Chinook Project, Austrian-school economists (more precisely Misesian Austrians) begin their analysis at a known true starting position—in the Austrian case, with the axiom that "humans act." According to Murray Rothbard,
It is this fundamental truth—this axiom of human action—that forms the key to our study. The entire realm of praxeology and its best developed subdivision, economics, is based on an analysis of the necessary logical implications of this concept.
The whole of economic theory can be deduced from the fundamental axiom of human action, together with a few subsidiary postulates:
What are these propositions? We may consider them in decreasing order of their generality: (1) the most fundamental—variety of resources, both natural and human. From this follows directly the division of labor, the market, etc.; (2) less important, that leisure is a consumer good. These are actually the only postulates needed. Two other postulates simply introduce limiting subdivisions into the analysis. Thus, economics can deductively elaborate from the Fundamental Axiom and Postulates (1) and (2) (actually, only Postulate 1 is necessary) an analysis of Crusoe economics, of barter, and of a monetary economy. All these elaborated laws are absolutely true.
Rothbard’s two additional postulates are that "indirect exchanges are being made" and "that every firm aims always at maximizing its psychic profit."
Like checkers players who now face an unbeatable opponent, politicians also face an infallible and timeless foe—economic law. Eugen von Böhm-Bawerk dealt with this problem in his posthumously published essay, "Control or Economic Law." In this essay, he emphasizes,
It [power] can never effect anything in contradiction to the economic laws of value, price and distribution; it must always be in conformity with these; it cannot invalidate them; it can merely confirm and fulfill them.
In conclusion, Böhm-Bawerk reminds the reader that "the influence of social control does, and must operate through the formulas and laws of pure economic theory."
The rulers of the Soviet Union played a known losing strategy and, as Mises predicted, eventually lost. In 1920, Mises wrote:
Without economic calculation there can be no economy. Hence, in a socialist state wherein the pursuit of economic calculation is impossible, there can be—in our sense of the term—no economy whatsoever. In trivial and secondary matters rational conduct might still be possible, but in general it would be impossible to speak of rational production any more. There would be no means of determining what was rational, and hence it is obvious that production could never be directed by economic considerations.
In America, President Herbert Hoover played a losing move when he signed the Smoot-Hawley Tariff into law. Against the recommendation of "almost all the nation's economists," the enactment of this legislation helped to usher in an era of protectionist policies that would continue and escalate under the Roosevelt administration. Today, many economists consider the Smoot-Hawley Tariff a major contributing factor to the Great Depression becoming deeper and more protracted than it otherwise might have been.
Today, politicians will soon be enacting "change" in Washington, but this change will lead the country in either one of two directions. Change in one direction leads toward socialism; change in the other direction leads to laissez-faire capitalism.
But, does a "third way" exist? Fortunately, a great mind has already devoted attention to this issue. Ludwig von Mises, in a speech given to the University Club of New York on April 18, 1950, addressed this very topic. This essay, Middle-of-the-Road Policy Leads to Socialism, provides the definitive answer that no such "third way" exists:
"The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments."
Economic law is immutable; it will have its way for better or for worse. Politicians would do well to align public policy with what is natural, true, and unbeatable.
Notes
[1] Checkers has been "weakly solved" meaning that both the end result and a strategy to achieve the end result are known but all possible variations have not been computed.
