4th Letter from Madrid

by Henrique Schneider*

‘COP25’ – the 25th United Nations Climate Change conference held in Madrid, ended yesterday. Henrique Schneider was on site and represented Switzerland …

Dear counters of beans!

Today, let’s get to the Who is Who. But first this: Climate summits are a progressive science. Our markets made quite a stride. We even managed to get some text going. Text is important, because work is concluded, in this process, by adopting decisions. Decisions are texts, and texts need to be drafted.

What did we agree? We will have a thin decision text stating some principles on how the new markets should work. And we will have annexes developing a work program on what to think about. The question is now, what gets into the decision. Two issues are salient: SoP and OMGE.

SoP means shares of proceeds. The poorest nations want to get money for every transaction in the market; regardless of who is involved. OMGE means overall mitigation in global emissions. This means that regardless of which market transaction, there has to be an additional discount for the atmosphere.

Example: If you reduce one ton, you cannot sell the full ton to another party. You can only sell, say 0.9 ton. But the acquirer pays the full value plus the shares of proceeds on the full ton.
Are you irritated by me calling this a market? You should be! At least, I counter it – in the name of Switzerland – heads on. And am almost decapitated by everyone else.

If you dislike this granularity of discussions, let’s return to the who is who: According to the provisional list published by the United Nations, there is a grand total of 26706 participants registered for COP25.This breaks down into: 13643 people representing specific parties, 9987 from observer organizations – such as those living on government handouts (aka. scientists), the munchers and looters and subvention-addicts (aka. business groups), or various demented or perverted (aka. non-governmental organizations) – and 3076 pursuers of the hermetic arts (journalists).

Overall, that amounts to around 4000 more participants than at COP24 in Katowice last year. The number of party delegates is approximately the same as in Poland, but there are around 2500 more delegates from observer organizations and almost twice as many media. (It’s in Spain, right…?)

The country with the most delegates is, by some distance, Côte d’Ivoire with 348. The Democratic Republic of the Congo (DRC) come second with 293 people. Making up the rest of the Top 5 this year is Spain (with 172 delegates), Brazil (168) and the Congo (165).
Despite the United States’ recent decision to start the formal process of withdrawing from the Paris Agreement, its delegation is 78 people. In Europe, France has 125 people and Germany 102. The European Union’s delegation is 125 people. Switzerland, of which delegation I am a member, has 17. The UK has 48.

It saddens me to observe that Bolivia (the plurinational state of) sends no one this year. Venezuela (the Bolivarian state of) remains quiet. These two have provided us with many hours of bizarreries in the past. They seem caught up in the web they have spun.

I have been reminded to state that I am writing this on my behalf. This and any other issues of Markets in Madrid reflect not the views of the Swiss Delegation, the Swiss Federation of small and medium-sized enterprises, or any other institution. This or any other issue of Markets in Madrid contains no views. Just facts.

Best,
Henri


*Henrique Schneider is a professor of economics at the Nordkademie University of Applied Sciences in Elmshorn, Germany and chief economist of the Swiss Federation of Small and Medium Sized Enterprises in Bern, Switzerland.

3rd Letter from Madrid

Madrid. Source: wikipedia.org
Madrid. Source: wikipedia.org


by Henrique Schneider*

‘COP25’ – the 25th United Nations Climate Change conference in Madrid, ends today, 13 December 2019. Henrique Schneider is on site and represents Switzerland …

Brethren!

No. I am not being condescending. I am just addressing you as I have been addressed today. Ok. The Australian negotiator who used this phrase didn’t actually use it, instead, she put it much more politically correct and gender neutral. She said: Brothers.

This, however, was not the day’s highlight. It was my first time visiting of the Spanish canteen. Dismal, just dismal. A complicated system as one would only expect in Spain. And, as one would expect it here, it invariably leads to no results. Tellingly, a severe discussion broke out whether my broth was a first course or a main dish. At the end, they decided it was neither.

The market negotiations, however, began. We discussed for 10 hours how to adjust correspondingly. The problem is, at the end, simple. A country has a greenhouse-gas inventory. If it reduces, say, one ton of such a gas, it should count -1. But if it reduces and sells that reduction to another country, the reducing country should count +1 (it cannot claim that reduction its own) and the purchasing country can count -1 (it does claim that reduction its own). Good. No?

No! Some countries say, they cannot do it (aka. Pay me for doing it). Others state, they are not willing to do it (aka. Pay me for doing it). And other yet find out miraculous ways of undermining the simple accounting equation of selling and buying.

What does one do? We devised a menu of 5 different methods for adjusting correspondingly. A series of + and – that is a thing of mathematical beauty.

And we also negotiated the market that already exists, the Clean Development Mechanism. It took us just one hour. Some want to prolong its existence. Some want to kill it right away, because it does not fit within the Paris Agreement. Others remain cryptic.
What does one do? We tasked someone with developing a series of scenarios: killing it, sunset, run-out, zombiedom, and continuation. Of course, these scenarios were correspondingly adjusted into negotiation lingo.

Markets ahoi!
Best,
Henri


*Henrique Schneider is a professor of economics at the Nordkademie University of Applied Sciences in Elmshorn, Germany and chief economist of the Swiss Federation of Small and Medium Sized Enterprises in Bern, Switzerland.

2nd Letter from Madrid

Source: UNEP

by Henrique Schneider*

The 2019 United Nations Climate Change Conference, also known as COP25, is the 25th United Nations Climate Change conference. It is being held in Madrid, Spain, from 2 to 13 December 2019 under the presidency of the Chilean government. The conference incorporates the 25th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC).

Henrique Schneider is on site and represents Switzerland …

Dear friends of contentious issues

 

On the second day, two issues dominated this year’s United Nations’ climate change summit: The Turkey-issue and the Ukraine-issue. Both are indicative of the process in these halls, rooms, corner, and dens.

Turkey is, according to our procedures, a developed country. As such it is a nation with a self-imposed obligation to reduce greenhouse gas emissions under the Kyoto Protocol. So far so good. Back in 2015, Turkey realized that under the then-yet-to-come Paris-regime, being a developed country entails paying hundreds of millions into byzantine structures for financing developing countries. So, understandably, Ankara decided that it is not developed. It wants to be (counted as) poor.

Back in 2015, France’s approach was to promise everything to everyone. Consequentially, La Grande Nation promised to Turkey that Turkey would have an option to switch. Turkey, then, accepted the Paris Agreement (but did not ratify it yet) and all were merry. Now comes the problem: everyone forgot that specific promise. Now that the rules are being set, Turkey demands to be seen, catalogued, and counted as poor, so it may become recipient of disbursements of the rich, rather than a disburser.

The Ukraine is an independent nation in the middle of Europe, or so they claim. Russia invaded parts of the country and controls it through puppet regimes, mafia, and other friendly societies. In the climate process, the Ukraine does not seem to object to that geopolitical hiccup. In fact, the Ukraine and Russia belong both to the Umbrella Group, a group of nations that value their respective independence (other umbrellians are the US, Canada, Japan, Australia, New Zealand, or Norway sometimes).

The problem of the Ukraine is greenhouse gas emissions. More precisely, those emissions being emitted in the occupied / rebellious / uncontrolled part of the country. The Ukrainian position here is that emissions being generated there cannot be attributed to the Ukraine. But rest assured, fellow Ukrainians, the government did not give up those territories, just their emissions.

How does one deal with these issues? In the COP, they become agenda-items. This means, they are negotiated – by 200 or so countries. Everyone can have their say, as for example Tuvalu, which expressed its sincere feelings that Turkey should remain among its rich friends, or South Africa suggesting creating two register-entries for Ukraine, West and East. This is how the niceties begin.
And the markets; how are they doing? After all, that’s why I am here for. In the market-bubble, our group is taking it easy. Three days in and we are discussing how we want to discuss.

More on Markets in Madrid to follow.
Best,
Henri


*Henrique Schneider is a professor of economics at the Nordkademie University of Applied Sciences in Elmshorn, Germany and chief economist of the Swiss Federation of Small and Medium Sized Enterprises in Bern, Switzerland.

Letters from Madrid

by Henrique Schneider*

The 2019 United Nations Climate Change Conference, also known as COP25, is the 25th United Nations Climate Change conference. It is being held in Madrid, Spain, from 2 to 13 December 2019 under the presidency of the Chilean government. The conference incorporates the 25th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC).

Henrique Schneider is on site and represents Switzerland …

Dear friends of the climate

It is again that time of the year… no, I am not talking about Christmas, or Chanukah, or any new-age nonsense. I am talking about the ultimate ritual that puts any Confucian to pale, the United Nations’ climate summit.

Well, technically, it is the conjunction of the following meetings:
COP 25: 25th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC)
CMP 15: 15th meeting of the parties for the Kyoto Protocol
CMA 2: second meeting of the parties for the Paris Agreement.
Of course, these meetings have their own bodies, subsidiary bodies, agencies, working groups, platforms, and so on, of which all are meeting, too.

After a hiatus of two years, Switzerland decided to have me back on their official delegation. The reason is simple: this time, it is make-or-break for so-called carbon-markets and Switzerland wants to broker the compromise. This is not the fruit of the love for the earth but the outcome of Swiss realizing that they need international cooperation if they really want to achieve the sublime degree of carbon neutrality. Of course, I don’t partage the Swiss position, but it is my role to watch over a minimal economic realism…
… I mean, as far as realism in a synthetic market can go.

The interesting thing about this conference, however, is not its content – it never is – but its location, Madrid. The COP was supposed to take place in Chile. But since there seem to be unpleasant situations in Chile and climate negotiators need pleasure to advance in their pursuits, the summit has been moved to Madrid.
Officially, the COP is called: COP25 Chile, Madrid 2019. What does that mean? The Chilean made it. Finally. After taking some off Bolivia and a mountainous lake off Argentina, they decided to appropriate Madrid, former of Spain. I suppose that now Catalunya can sneak into freedom / independence / doom (depending on the cosmology of the observer).

More on Markets in Madrid to follow.
Best,
Henri


*Henrique Schneider is a professor of economics at the Nordkademie University of Applied Sciences in Elmshorn, Germany and chief economist of the Swiss Federation of Small and Medium Sized Enterprises in Bern, Switzerland.

On the Misuse of Reason and Science

gottfried-von-haberler-conference-2019
ECAEF/CEPROM Conference, Monaco, Dec 10, 2019


Monaco, December 10, 2019
| This Tuesday, the International ECAEF/CEPROM conference took place in Monaco. The event was planned and organized by ECAEF (European Center of Austrian Economics Foundation) and hosted by CEPROM (Center of Economic Research for Monaco). Topic in 2019: Towards a Viable Alternative – Markets and Entrepreneurship to Protect the Environment.

Professor Hardy Bouillon was one of the speakers at this year’s conference. His speech can be read here.

On the Misuse of Reason and Science


Abstract
| The current environmental debate suffers under serious misuses of both, reason and science. The paper sketches telling examples to highlight some of the most worrisome that impact the well-being of human society. While the misuse of reason is particularly visible in the ignorance of the subjective character of reason, its counterpart in science becomes prominent in the perversion of basic methodological rules in the natural sciences. To show this, we will focus on two phenomena: first, the hubris marking the claim that private vices and public benefits can be identified in a scientific and objective way; second, the improvident use of methodological rules that akin to Friedman’s concept of positive economics.

Introduction | The concern of this paper is mainly methodological. This being said, it should be made clear from the outset what methodologists, or philosophers of science, can and cannot contribute to the topics discussed in this conference. So, let us start with a few pre-emptive remarks!

Philosophers of science are not judges who simply know (or even know better than others) what is scientifically true in any field of knowledge where the problem of theory preference comes up as a result of rival theories contradicting each other. Philosophers of science are nothing of that sort. How could they? In most cases, they are not scientists themselves, they are meta-scientists. They do not possess the knowledge of the competing scientists, i.e., they do not know better what those know. Therefore, in no way do they qualify for the job as chief umpire (1).

Given the high degree of complexities and manifold interrelations among the causal factors in most sciences, a philosopher of science cannot even assess whether a proposed test to settle the dispute among rivalling theories really qualifies as test, or which of the alternative tests is to be preferred (2). Neither can he, for the same reasons, conclude whether any, some or all of the competing theories provide causal explanations or correlations only when shedding light on the phenomena put up for debate. Finally, he cannot – as little as everybody else – decide questions of theory preference by applying any majority rule. Even in cases where allegedly 97% of the experts favor one theory to its competitors, one cannot conclude that the majority is right and the minority is wrong (or vice versa). Similar things hold to reliability issues. A scientific theory is neither true nor false because its adocates have a higher (or lower) degree of reliability or reputation within their scientific community than rivalling colleagues.

Bearing this in mind, it appears that the philosopher of science is a referee who can tell both teams how to play, but cannot intervene when any of the team players plays foul (3).

This being said, what can philosophers of science do, and what can they do in order to correct the above image? A few things are quite obvious and basic, namely explorations on the methodological criteria theories have to fulfill in order to be justly called scientific. For instance, following Popper, theories should be formulated as falsifiable universal statements, namely by allowing for predictions that can be tested independently of the theory. Should the test lead to predictions that contradict the predictions of the theory – by theory we mean theoretical systems, consisting of one or more universal hypotheses and boundary conditions – and should the scientist value the test less problematic than the theory in question, then he has to rate the theory as falsified. That is what methodology tells him. Of course, falsifications are fallible too, hence each falsification holds valid only as long as the abovementioned problem ratio stays positive – i.e., the theory (short for theoretical system) is viewed less problematic than the test statement (4).

Logically, the following takes place. A theoretical system ‘TS’ leads to prediction ‘P’. A corresponding test leads to a test statement implying non-P (¬P). Logically, we can infer that ‘TS’ is false (5).  Formally put:
TS ├ P
¬P
—————-
¬TS or: ¬(H1, H2, …C1, C2 …) via modus tollens (6).

The question is: Where to put the blame? Neither logic nor methodology can tell. All we can say is that at least one element out of TS is false (given ¬P is less problematized). It is up to the scientist to decide how to go on.

In addition, philosophers of science can reflect on methodological differences due to differences in the nature of the sciences, for instance methodological differences among physical and social sciences. Pointing to such differences, they can judge whether a theorist has a proper understanding of the methodological rules in his field; whether a natural scientist follows the rules of the social sciences or (vice versa) a social scientist follows the rules applicable to natural sciences only.

Likewise, a philosopher of science can observe and/or comment when concepts of rationality applied in the social sciences are used in natural sciences and vice versa. Equally basic, a philosopher of science can judge on the nature of scientific recommendations. That is to say, he can tell whether a scientist comes up with a hypothetical imperative (7) only or goes beyond.

Bearing this in mind, we have to correct our first impression of the almost useless referee. A philosopher of science cannot intervene in each and every case when a scientist plays foul, but in a few specific and important cases he can. Hence, let us look at some cases where the methodological referee might be useful in ecological debates. For that purpose let us keep in mind what science is about. It is a process of gaining new knowledge and replacing suboptimal knowledge by improved knowledge via critical assessment of given theories. In other words, we are taking about falsification.

The methodological point of view

In developing his falsificationist methodology, Karl Popper mainly addressed cases in which falsifiable theories are falsified (or corroborated) by tests and subsequent test statements viewed less problematic than the theory itself. His model8 works equally well for testing a single theory or for testing two or more competing theories, provided they allow for opposing predictions (9). In both cases the test (respectively test statement) fulfills a clear purpose, namely it indicates whether a claimed causality between cause and effect exists or not. Corroboration (usually) means it does, falsification means it does not. Of course, both judgments are based on a tertium non datur, i.e. on the fact that the existence of a third option can be excluded. (It may so happen that the test outcome is caused by a (yet) unknown causality.)

How important the tertium non datur proviso is, can be seen particularly well when a third option is given but ignored in the reconstruction of the case (i.e., as if it was not given). This becomes evident when we turn to a charming example once introduced by Wesley Salmon (10).

His example runs as follows:
1. Every man who regularly takes contraceptives will not become pregnant. (H1)
2. John is a man and regularly takes oral contraceptives. (C1)
John is not becoming pregnant. (P)

The pun of the example is obvious: It does not matter whether or not John takes oral contraceptives. We know that. Being male, he cannot become pregnant anyway. 1 and 2 are irrelevant for the truth status of the prediction. Although the tertium is not present in the logical reconstruction, we know that it exists. Hence, tertium datur – a third option of explaining the result is given. As a consequence, we know that John not becoming pregnant does not corroborate the thesis that taking contraceptives has caused his infertility.

This has consequences, not only for John and his family planning, but for another case also often happening in science, namely that competing theories allow for the same predictions, rather than for contradicting ones. Such a case is given in the current global warming debate, a case we are simplifying a bit for illustrative purposes. Under such simplifying conditions, we can argue that at least three competing theories exist, all claiming to explain rises in global mean surface temperature (GMST), all using causal links that are possible in reality. The first blames human carbon emissions, the second bovine methane, and the third solar activities. Now let us assume that predicted increases are measured, leaving aside the controversies regarding the fact itself, methods of measuring, actual size of increases and the percentage each of the suggested sources allegedly causes.

What does the measured increase (or test, for that matter) show? It is possible that the result corroborates one, some, all, or even none of the competing theories. The last option could be the case, given there is a yet unknown tertium datur (11). In any case, the result is by no means apt to give a definite answer. All we can conclude is that none of the rival theories is falsified by the “test”.

Let us make things easier. Let us assume that there is no unknown tertium datur. If so, the situation is comparable to a serial killer case. Assume the inspector caught three suspects. On the basis of the circumstantial evidence, he concludes that suspect A is the murderer. The court shares his view and put the accused into jail. Once he is in prison, the series stops, no more victims. What are we to conclude? Of course, it is possible that the right guy is now behind barred windows. But it is also possible that one of the remaining suspects has been the killer. Happy of not being convicted, he stops his series.

That is to say, even if all emitters of carbon dioxide would stop or drastically reduce their emissions, whereupon temperature would decrease, we could not conclude which of the three theories has been corroborated. Likewise, if we would stop or drastically reduce husbandry, whereupon temperature would decrease, we could not conclude which of the three theories has been corroborated.
Interestingly, all those who believe that none of the two theories claiming anthropogenic global warming (AGL, for short) is true should have a scientific interest in falsifying those theories. This appears to be quite ironic, for the best “test” would be to reduce or stop cattle raising and/or industrial carbon dioxide (12).

Certainly, the search for truth is the main ideal of each scientist. And the appropriate hypothetical imperative a scientist could give here would be: “If you want to falsify the two mentioned theories, then you have to test them by reducing or stopping cattle raising and/or industrial carbon dioxide.”
However, neither advocates nor repudiators of AGL-theories would seriously ask to cover the costs of such a test for reasons of scientific curiosity. Advocates ask to cover the costs for a different reason (13). They believe that the costs will be compensated by the expected gains of “saving the planet”. Repudiators, not sharing such expectations, refuse the test as useless and by far too costly. To them, reductions in carbon emissions are a waste of resources and as useful as oral contraceptives distributed for free to each juvenile and grown up male.

Such we face a very unusual situation in science. The regular case is that scientists are rather reluctant to expose their theories to hard testing, in particular after having invested a lot into them, fearing losses in reputation, future funding, etc. Their critics, interested in their own reputation and economic well-being, work hard to test their opponents’ theories and hope to falsify them. In the climate debate it is the other way round. The critics are not interested in testing, while the advocates are (14). Of course, there is an explanation to this apparent pervert situation.

The concepts of rationality differ. In the natural sciences the objects are physical entities and data regarding those objects are more or less objectively given and also relatively stable over time. In the social sciences the objects are human beings and the data are, as Hayek has put it, “opinions of those whose actions produce the object of the social scientist. … beliefs … we cannot directly observe in the minds of the people but which we can recognize from what they do and say merely because we have ourselves a mind similar to theirs.” (15)  Scientists are not physical objects. They are human beings and behave as all other humans. That is to say, they follow their natural drives within universal boundary conditions; i.e., facing limited resources, they have to economize on their means in order to pursue their individual competing goals.

Against this background, it does not come as a surprise to us that advocates and repudiators have something in common. Although reasoning in different directions, they argue in terms of efficiency (saving planet, saving wealth). By doing so, they appeal no longer to the mind set of the natural scientist, but to that of the economist or political economist. Of course, it is perfectly legitimate to change places. But when you change from natural sciences to social sciences, then you face different methodological rules.

What this means in practice becomes evident when we look at what governments do and cause when picking up the results of scientists. They do not pick up on hypothetical imperatives scientists can give, but on political recommendations some scientists give ignoring the methodological limits of their field of knowledge, or on political recommendations they read into the results of some AGL-advocates.
Doing so, they misuse both science and reason.

Changing places and abuses of reason

Let us take Germany for example. Among the producers of territorial fossil fuel CO2 emissions worldwide in 2017, based on the share of global CO2 emissions, Germany ranks 6th (see table). It has a share of 2.21% and plans some drastic reductions, say about 1/3. Should this come true, the overall reduction of global CO2 emissions would be 0.7%.
Largest producers of territorial fossil fuel CO2 emissions worldwide in 2017, based on their share of global CO2 emissions

Source: Statista.com

If we would live in a world guided only by the rules of natural sciences and filled with individuals whose rationality would be akin to that of physical objects in terms of reacting always in a given predetermined way and thus following universal laws, how then would we interpret such government behavior? Probably we would say something like this: The German government reduces the global CO2 emissions by 0.7%. By doing so, they react to the thesis that the current level of CO2 emissions is detrimental to good living conditions on earth. They reduce the part which is under their control and hope this will have an impact on global climate.16 If science should show that 0.7% does not matter at all, then the German government would view their initial hypothesis as being falsified and thereafter would resign from their reduction plans. If they would not do so, their behavior would be irrational.

However, it is very unlikely that the German government will give up their reduction plans. How do we have to interpret such behavior? Are they irrational? Probably not! The point is that individuals do not behave like physical objects. Governments, and politicians in general, are subject of the social sciences. Hence, when building hypotheses about their behavior we have to take this into account. As Hayek would have it, we have to explain their “beliefs … which we can recognize from what they do and say merely because we have ourselves a mind similar to theirs.”

Following Hayek, we would hypothesize that the German government will not resign from their plans and that this is not so because they were irrational, although this is an option (17). To the contrary! Our working hypothesis would be built on the assumption that their behavior is either rational or could be reconstructed as if it was rational. We would look for the limited resources they face and for the ways to economize on their means in order to pursue their competing goals. This being said, one would set up a set of working hypotheses, some of which might even be complementary. For instance, we would assume that they expect additional votes in the coming elections or a distraction from areas of political decision taking where decisions are more risky in terms of political losses. We might also assume that they expect additional resources to increase bureaucracy and future loyal voters by taxing CO2 emissions more than in the past in order to subsidize replacement technologies emitting less CO2.

Assuming governments to be rational, we would exclude that they act the way they do because they expect other countries to follow, for that would be rather an irrational or naïve expectation, closely linked to what Garrett Hardin called “Tragedy of the Commons” (18). Tragedy of the commons is a well-established term to describe an over-consumption of a good caused by a lack of assigning private property rights to it, for the absence of property rights prevents setting limits to access. A meadow accessible to all shepherds and their herds nearby, thus facing too many sheep, is likely to be overgrazed, for everybody has an incentive to come and get the grass for free before it is used up. In the case of a meadow the maximum use is determined naturally by the amount of grass available for grazing. In the case of CO2 emissions the maximum is determined artificially by an authority. If the authority is universally accepted, the “overgraze” effect can be avoided, at least in principle. If it is not, the tragedy (or, what is rated as tragedy by the authority) is likely to take place. In any case, following the logic of the tragedy of the commons, one cannot expect a local reduction of CO2 emissions to cause an overall (global) reduction of CO2 emissions.
To the contrary! One should expect that among the nations, accepting the authority, one or the other will use up what the reducing nation has left over. In other words, the reducing country will drive out investment in CO2 production to other areas respectively nations. Even worse! Unilateral reductions of CO2 emissions encourage countries not accepting the standard decided by said authority to increase their emissions and be quicker than one of the countries accepting the standard.

Tragedy of the artificial commons

As described above, the causes of the tragedy of the commons can be either natural or artificial. The natural cause is quite simply. It comes up once the demand for an available free natural good is higher than its natural supply. The conventional solution to the imminent overgraze effect of such goods is privatization.
If the cause is artificial, then the conventional solution is regularly a different one. The scarce free good is declared to be a common good. In fact, for a free good to become a common good it does not need to be naturally scarce. It is sufficient that its scarcity is assumed or artificially determined. This fact has a huge impact on the future (tragedy) of the common good. Free goods are cheap production factors. They disappear or become artificially expensive once they are declared to be commons. This leads to future losses in efficiency.
Turning a formerly free good into a common good causes not only losses in efficiency. It also creates an artificial standard for market options that replaces the standards given by nature and by the spontaneous outcome of market activities. It is an expression of a hubris claimed by the authority liable for the artificial standard, for it implies a monopoly, given to an authority to decide on the definition, control, use, and even on the quality of the common good.
The “Global mean surface temperature” (GMST) is such an artificial common good declared by the IPCC. The IPCC, claiming authority, declares the contemporary temperature increases a common evil and its reduction a common good. As they put it: “With clear benefits to people and natural ecosystems, limiting global warming to 1.5°C compared to 2°C could go hand in hand with ensuring a more sustainable and equitable society.” (19)
When it comes to the nature and proper use of rationality, artificial commons – different than natural commons – face a serious problem, in particular when established on a global level. Artificial commons cannot but ignore the subjective and individual character of human reason use by individuals when pursuing their own goals. If you limit an expected rise in temperature from 2°C to 1.5°C, you willy-nilly favour those who share your artificial standard while you force those who would have opted for the non-reduced natural or spontaneous standard.
As a free good, the quality of a good is determined by nature. As a common good it is determined by authority. If the authority asks you to use reduced temperatures in Central Europe, then you have to, although you might have preferred slightly warmer temperatures with all its consequences.
Generally speaking, the problem with artificial commons on a global level is that you have no exit option. If you declare a local meadow a common good and regulate its use, then everybody is free to look for an alternative meadow or a substitute on the market. If you declare a global source a common good and regulate its use, then you monopolize on each and every unit of a formerly free good and exclude everybody from alternative usages of any quantities of that good; and by doing so you make it impossible that alternative usages possibly give rise to more efficient and innovative treatments of the given resource.
As a consequence, the claim that private vices and public benefits can be identified in a scientific and objective way turns out to be a hubris.

Yielding meaningful predictions

So far we focused on peculiarities of the climate debate that rest on methodological differences of the natural and social sciences. However, there are also particularities when we look at traits both types of sciences share. One of those common traits is based on the fact that many phenomena studied in either natural or social sciences are very complex, while the theories available shed light only on specific aspects of the studied phenomenon. In such situations scientists are exposed to the temptation of concluding more than the premises of their theories admit. If they don’t resist this temptation they run into an improvident use of methodological rules that are akin to Milton Friedman’s concept of positive economics (20).
Following Friedman, “The ultimate goal of a positive science is the development of a ‘theory’ or ‘hypothesis’ that yields valid and meaningful (i.e., not truistic) predictions about phenomena not yet observed.“ (21)  Concerning assumptions he explains, “… the relevant question to ask about the ‘assumptions’ of a theory is not whether they are descriptively ‘realistic,’ for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions.” (22)
Even as-if-hypotheses that are not realistic at all may lead to sufficiently accurate predictions, according to Friedman, and he gives three examples to illustrate his view. One is about falling leaves, another about billiard players, and yet another about businessmen expecting returns. Let us look to the first one, if only because out of the three examples it is closest to environmental issues.
“Consider the density of leaves around a tree. I suggest the hypothesis that the leaves are positioned as if each leaf deliberately sought to maximize the amount of sunlight it receives, given the position of its neighbors, as if it knew the physical laws determining the amount of sunlight that would be received in various positions and could move rapidly or instantaneously from any one position to any other desired and unoccupied position.” (23)  Of course, Friedman does not believe that the hypothesis really explains the behavior of leaves. The hypothesis is clearly marked as an ‘as-if-hypothesis’: “the hypothesis does not assert that leaves do these things but only that their density is the same as if they did. Despite the apparent falsity of the ‘assumptions’ of the hypothesis, it has great plausibility because of the conformity of its implications with observation.” And Friedman even concludes: “The constructed hypothesis is presumably valid, that is, yields ‘sufficiently’ accurate predictions about the density of leaves, only for a particular class of circumstances.” (24)
From a methodological point of view – at least from a Popperian perspective – Friedman’s position is untenable (25). As-if-hypotheses are not hypotheses at all. They do not provide any cause-effect relation which we – on the basis of the current state of knowledge – could expect to be exemplified in reality. From all we know we have no reason to assume that leaves deliberately seek to maximize the amount of sunlight they receive or that they “know” the physical laws determining the amount of sunlight that would be received in various positions.
In contrast, although we might have good reasons to disagree with AGL-theories, we know that human activities (husbandry, CO2-emission producing industries) in principle can cause global warming. Likewise, although one might have good reasons to agree with AGL-theories, we know that solar activities and other natural factors in principle can cause global warming.
The point is not – as it is with as-if-hypotheses – that we have no real hypothesis. To the contrary, we have many, but none of them seems to reflect the entire complexity of the studied phenomenon. All of them – so it seems – are insufficiently complex. As-if-hypotheses and insufficiently complex theories have something in common. In both cases (leaves and temperature) we have good reasons to assume that the causal factors and the final causality resulting from their interrelations are far from being fully disclosed by contemporary scientific discoveries. Hence, rather than saying, “Sorry, we don’t know yet enough about the topic, so our predictions have to been seen under the known caveats”, it is tempting to replace the validity of a theory by its capability to yield “fruitful” predictions; predictions that result from theories that are either not realistic at all (as-if-hypotheses) or imply only a fraction of the reality currently known to science (insufficiently complex theories).

Summary

We started by looking at the competences and limits of philosophers of science or methodologists. Philosophers of science are not chief umpires who can ultimately solve scientific disputes. However, they can analyze to which extent scientists move within or outside the methodological rules of their discipline and to which extent their political recommendations are within or beyond the limits of scientific hypothetical imperatives. It turned out that much of their behavior cannot be explained in terms of rational behavior in natural sciences, but much in terms of rational behavior in social sciences. We also looked at some erroneous conclusions when it comes to the falsification of theories and to the “corroboration” of competing theories with non-different predictions.
We then looked at two types of commons and their tragedies, namely natural and artificial commons. We further distinguished artificial commons on the local level, where exit options exist, from artificial commons on the global level, where such exit options are absent, as is the case of GMST (Global mean surface temperature). Finally, we compared as-if-hypotheses and insufficiently complex theories and the general risk they share, namely to conclude more than their premises admit.


(1) However, exceptions to the rule may exist, in particular when the methodologist is a scientist in the field in question at the same time.

(2) One of the telling examples in the current climate debate is the question whether or not (respectively to which extent) sulfates have a cooling impact on CO2 induced warming.

(3) Of course, he could intervene when players misbehave and use unscientific statements, valuations and/or characterizations when commenting on competing theories and their advocates. Willingly ignoring critical comments, giving them no access to journals and periodicals or labelling opponents “lobbyists” etc. are simply expressions of bad manners. It does need a methodologist to referee such fouls.

(4) In case one or more of the competing theories appear to be incommensurable, one has to look for additional hypotheses to be added to each of the theoretical systems in order to achieve commensurability. On this, see Gunnar Andersson, Criticism and the History of Science, Leyden: Brill 1994.

(5) Of course, this holds only if the premises are true.

(6) ‘Modus tollens’ is an inference rule known from propositional logic. It asserts  that the inference from TS  implies P  to  the negation of P implies the negation of TS  is valid.

(7) Hypothetical imperatives are used here in the Kantian sense. See Immanuel Kant, Groundwork for the metaphysics of morals, edited and translated by Allen W. Wood, New Haven: Yale 2002, p.  31: “Now all imperatives command either hypothetically or categorically. The former represent the practical necessity of a possible action as a means to attain something else which one wills (or which it is possible that one might will).” Thus, and for our purposes, a hypothetical imperative is a technical and prudential recommendation of the sort: “If you want to achieve X, you should use Y.” If a scientific theory admits to conclude a viable way to achieve X and is in competition with one or more rival theories, each allowing to conclude alternative viable ways, a second order hypothetical imperative is necessary in order to take a reasonable decision among the alternative options.

(8) Often called the Hempel-Oppenheimer model or the deductive-nomological model.

(9) In the first case, both, falsification and corroboration, allow for definite conclusions regarding the truth value of the theory (theory is rated either true or false, of course, on the proviso of general fallibility). In the second case (predictions not different), the conclusions regarding the truth values of the competing theories are not definite in each instance.

(10) Wesley Salmon, Statistical Explanation and Statistical Relevance. Princeton: Princeton University Press 1971.

(11) In fact, there are many theories, or theoretically founded objections that could be given the status of a tertium quid in the debate; most, if not all of them, refer to some scientific procedures deemed inappropriate. Among those we find: the view that computer simulations are based on inappropriate conditions and assumptions on how these are interrelated; the understanding that the temperature changes in question fall within the range of natural temperature divergences caused by interrelations of natural phenomena not yet fully understood; the view that some of the used measurement techniques are inappropriate for the pursued purpose, giving too much weight to measuring stations in (hot) human habitats and too little to satellite measuring data, etc.

(12) Of course, changing solar activities is not within our reach, hence no test option.

(13) This is one of the rare cases in science where advocates seem to have little incentives to immunize their theory against criticism, one reason being that the repudiators do the job, hence active immunization on their part is superfluous. For “immunization strategies” in science see Hans Albert, Traktat über kritische Vernunft, Tubingen: Mohr 19915, pp.  219ff.

(14) The theory of anthropogenic global warming is one of the rare cases in science where the test necessary for falsifying the theory goes hand in hand with the political recommendation shared by many advocates of the theory. This might explain, at least to some extent, why those advocates have a keen interest in testing their preferred theory.

(15) Friedrich A. von Hayek, The Counter-Revolution of Science, Indianapolis: Liberty Fund 19792, p.  47.

(16) This is not an irrational assumption, for it is logically possible that 0.7% is the “tipping point”. However, a logical possibility is not more than a logical possibility.

(17) Following Public Choice Theory, politicians don’t differ from median citizens regarding intellectual, moral and other capacities. It is by far more likely that leading politicians rank high in many of those regards within their community.

(18) Garrett Hardin, The Tragedy of the Commons, in: Science, New Series, Vol. 162, No. 3859 (Dec. 13, 1968), pp. 1243-1248.

(19) Garrett Hardin, The Tragedy of the Commons, in: Science, New Series, Vol. 162, No. 3859 (Dec. 13, 1968), pp. 1243-1248.

(20) Milton Friedman, “The methodology of positive economics”, in: Friedman, Milton (Ed.), Essays in Positive Economics, Chicago 1953, pp. 3-43.

(21) Ibid., p. 7.

(22) Ibid., p. 15.

(23) Ibid., p. 19.

(24) Ibid., p. 20.

(25) If we still hold the aim of science to be the search for truth, then as-if-hypotheses are not at all conducive to that aim. Scientists are not soothsayers. A theory is valid because of its truth content, and not because it yields sufficiently accurate predictions.