I am proud to announce that I’ve joined the Conjecture Institute as a Fellow!
Unless you’re very new to my mailing list, you are probably aware of my passion for the work of Karl Popper and David Deutsch. There are over a dozen articles in my blog’s archive in which one or both of them is quoted, and many more that draw upon their work as indirect sources of insight.
The Conjecture Institute was founded a couple of years ago to deploy and build upon their ideas. The Institute’s mission statement reads:
Understanding how knowledge grows—the central concern of epistemology—is one of humanity's most fundamental questions. Knowledge shapes every endeavor, such as science, politics, artificial intelligence, parenting, and entrepreneurship; mistaken theories of knowledge send us down blind alleys in all of these fields. Karl Popper, David Deutsch, and others identified a better account: knowledge grows through conjecture and criticism.
This institution is well aligned with the goal of Knowledge Maximalism, and I intend to work with them to produce articles and books about the self-improving nature of the Enlightenment and the long-term growth of knowledge.
I recommend reading the Conjecture Institute handbook, which is a very good primer on Popperian epistemology and its many applications to real-world problems.
Here is a section about the self-corrective characteristics of Western civilization:
Any innovator will tell you how many mistakes they make before finding success. Counterintuitively, the successful innovator will have made more mistakes than the person who chooses a predictable, safe path in life. The same goes for societies: those that make the most progress make the most errors. Ancient Egypt, impressive though its pyramids may be, scarcely improved over thousands of years—the errors of its early years were practically the same errors of its later years. Meanwhile, because the West continues to make progress, it necessarily makes entirely novel mistakes on ever-shorter timescales. For example, the United States made mistakes during Reconstruction, but those mistakes would not have even been possible had it not first corrected the error of slavery. Anti-Western critics think that the long list of Western errors is an argument in their favor. On the contrary, it points to the sheer dynamism of the West relative to all of the stagnant cultures that fail to solve problems and thereby make new errors.
The distinguishing characteristic of the West, then, is not a simple accounting of achievements and failures, as non-Western cultures can be more advanced in certain areas, or have avoided this or that failure. What distinguishes the West is that it corrects errors far better than any historical or contemporary culture.
The means of error correction, whether within a single mind, the society’s culture, a private organization, or a political institution, consist of processes that can resolve, improve, or ameliorate an arbitrary sequence of errors.
Each of the West’s means of error correction themselves have different attributes, as each evolved to solve a particular problem or collection of problems. The institution of science has peer review, an openness to novel hypotheses, and a university system that, at its best, facilitates both. … The institution of cultural norms like freedom of expression, freedom of lifestyle, and freedom of life trajectory facilitate individuals making their own mistakes, learning from them, and changing their minds and choices accordingly. The institution of the market facilitates the allocation and reallocation of scarce resources, as entrepreneurs and consumers alike continuously sell and buy, respectively.
Here is a section on the growth of knowledge facilitated by markets:
In a monetary economy, consumers bid for various goods, the prices of which are determined by the consumers’ demand for and the producers’ (entrepreneurs or their associates) supply of them. These producers don’t necessarily transform raw materials into their final consumer products: a restaurant owner might purchase utensils from a firm that specializes in the production of forks and knives. This firm, in turn, might buy the raw materials that are required in order to create utensils in the first place. For example, maybe they buy stainless steel from an owner of land who mines minerals solely in order to sell them. Physically, the production process of this example runs according to the following recipe: minerals are extracted from the earth by the landowner, then the fork-and-knife firm transforms the minerals into utensils, then the restaurant owner ‘transforms’ them into a presentable meal, and finally the patron of the restaurant ‘consumes’ the presentable meal (part of which is the utensils). Economically, however, this entire production process flows backwards from the consumers’ demand for consumer goods: the more patrons the restaurant owner serves, the more he, in turn, demands utensils from the fork-and-knife firm, which then demands more minerals from the landowner. This is what is meant when economists say that ‘consumer is king’.
But the restaurant owner is not the only entrepreneur bidding for utensils—he is competing with homeowners, collectors, other restaurant owners, and speculators. Just as prices emerge on the consumer goods market between consumers and the entrepreneurs selling such goods, so too does a producer goods market between entrepreneurs and sellers of producer goods generate prices of producer goods. This is true for all stages of production, and again, this entire network of prices is ultimately driven by the consumers’ demand for consumer goods.
When the entrepreneur sells a good to a consumer, the price of that consumer good is his revenue. In our example, this would be the restaurant owner selling a steak dinner to a patron for twenty dollars. But entrepreneurs do not pursue revenue, but rather profit. In order to calculate whether or not he’s earned a profit, the restaurant owner must subtract the cost of producing the meal from the price at which he sold the meal. But what is that cost? It is the price of the producer goods that he purchased in order to create the meal in the first place—in our example, this includes not only the abovementioned utensils, but also whatever other producer goods went into the production of the meal. So, if the price of the sum of the producer goods exceeds the price of the final consumer good, the entrepreneur has incurred a loss. If the reverse is true, he’s earned a profit.
Under voluntary conditions (a free market), profits and losses are signals—a profit indicates that the entrepreneur is satisfying consumers in transforming producer goods into consumer goods that they demand. A loss indicates consumer dissatisfaction with that particular line of production. In either case, the entrepreneur may adjust his activities. In the first, he might demand more producer goods in order to try to earn even greater profits, while in the second, he might abandon his project in order to cut his losses. No matter what the entrepreneur does next, his decision will take in knowledge about what consumers want, and then transmit this knowledge ‘backwards’ to owners of producer goods. Without the ability to calculate his profit/loss, the entrepreneur cannot know what to do next in order to better satisfy consumers.
Prices emerge on the producer goods market precisely because 1) these producer goods are privately owned, 2) entrepreneurs bid for them according to what they think consumers demand of their (the entrepreneurs’) final consumer products, and 3) money is sound. Under centralized control of the means of production, there is no producer goods market. So the socialist institution has no idea what the prices of these producer goods are, and therefore has no profit/loss mechanism. Economic waste, such as shortages, surpluses, inefficient choices of which particular producer goods to employ in the creation of consumer goods, and reduction in total wealth (called economic regression) are all inevitable under a socialist order.
No matter how superhuman the “New Socialist Man” might be, no matter how selfless and communitarian, he will never overcome this calculation problem. The knowledge encoded in the profit/loss system that emerges in a free market cannot be recovered by a socialist Leviathan. Counterintuitively, it is centralized, coercive planning that causes destructive economic chaos, rather than an unplanned, voluntary system.
But is that really true? Had Mises shown that, following deductively from first principles, collective ownership of producer goods forces the socialist institution to provide consumer goods in wildly erroneous proportions relative to its decentralized, free market counterpart? The socialistic institution could always get lucky, and provide exactly what would’ve been provided in a free market. But then, a cow could similarly ‘get lucky’ and appear spontaneously in deep space. In neither case would we have a good explanation for why these seem to be regularities of nature.
A physical transformation is impossible if, no matter how much knowledge is brought to bear, it cannot be achieved. For example, building a generic spaceship out of raw materials is evidently possible, given that it has happened. However, building a particular spaceship that can travel faster than the speed of light is impossible in principle, since the laws of Einstein’s special relativity forbid any massive object from traveling at such a speed. No matter how much more knowledge civilization acquires, we will never be able to violate the laws of nature.
The converse is also true—if no law of nature explicitly forbids a particular transformation from being achievable, then people are capable of causing said transformation, given the requisite knowledge. This implies that what we intuitively think of as wealth is more fundamentally about knowledge than about the particular resources a person owns. For example, a farmer who owns the raw materials of land and seeds is capable of transforming them into edible crops, while a professor of history may not know what to do with those same resources. Furthermore, a person can grow wealthier without acquiring any new resources by instead acquiring more knowledge. The value of land with oil reserves only shot up in value after people learned how they could employ oil to their advantage, and not a moment before that. So the set of all possible transformations that the same scarce resources may undergo depends on what their owner knows what to do with them.
An economy is a particular way that knowledge is arranged in the universe, distributed across the minds of creative people. As we’ve seen, this knowledge can grow (or shrink, as when civilization regresses), causing a concomitant increase in economic wealth. Can we express this more exactly? Are there laws of nature that govern, constrain, and explain changes in the growth of knowledge and wealth?
There are many other sections of interest, including ones about education, AI, and morality.
Stay tuned for the work I’ll be doing with the Conjecture Institute. You can subscribe to their Substack here. They also have an exciting online conference scheduled for January 13, 2027, Defend the West, which you can register for here. It boasts an amazing lineup of speakers, including Steven Pinker, David Friedman, Stephen Hicks, Yaron Brook, Alana Newhouse, Johan Norberg, Deirdre McCloskey, Michael Shermer, Brett Hall, Jason Crawford, Nadine Strossen, Peter Boghossian, Nick Gillespie, and Maarten Boudry.