Efficiency of What?

From the American Conservative:

In 1947, two titans of 20th-century economic theory, Ludwig von Mises and Wilhelm Röpke, met in Röpke’s home of Geneva, Switzerland. During the war, the Genevan fathers coped with shortages by providing citizens with small garden allotments outside the city for growing vegtables. These citizen gardens became so popular with the people of Geneva that the practice was continued even after the war and the return to abundance. Röpke was particularly proud of these citizen farmers, and so he took Mises on a tour of the gardens. “A very inefficient way of producing foodstuffs!” Mises noted disapprovingly. “Perhaps so, but a very efficient way of producing human happiness” was Röpke’s rejoinder.

An interesting debate. In a free society, what efficiency wins out? Do we assume that all individuals are ultimately rational and economical beings? I don't think any branch of the study of humanity would support that idea, not even economics. So would we see people making "rational" choices to enjoy leisure time? To find ways to make themselves happy, even if it cuts into the bottom line?

Human happiness is a very valuable good. Beyond the bare necessities of food, water, and shelter, people see happiness and entertainment. If we didn't think leisure was so important, why would we ever pay for entertainment?

Also if you've ever studied economics before the utility function that decides how long people work in a day, people value leisure. Of course each to according to his own taste. Some people value leisure time more so that others. What might seem irrational to one person would be perfectly rational to another. I think this is why so many economic authoritarians believe people act "irrationally" and that they have to somehow help these people behave properly.

I do think efficiency wins out, and that's why the market and free choice is best for everyone.

I thought Mises was a subjectivist (at least, many of his students were subjectivists). From that perspective, it should be easy to say "different strokes for different folks". On top of that, you ask the question of what happens to the resource if it is not used at all? So we're faced with using a resource (labor or land) inefficiently, or not using it at all--it sounds like Mises is suggesting that we just shouldn't use it (or we should be using it for investment, perhaps).

Anyway, the "Mises" in this story seems to be unrealistically narrow-minded, so I'm skeptical of the truth of this story. However, it does seem to reflect the common mindset that activities are either productive or enjoyable, and never both. It may also reflect the dour capitalist mindset that all of our time should be spent building more capital. Finally, it may reflect the parasite's mindset that all activities should produce a surplus that can be siphoned off by the parasite himself.

Interesting point, I hadn't thought to question if the story was real or not.

Doing a quick web search, the earliest documentation of the story that I could find was from 1992, in Russell Kirk's The Social Crisis of Our Time. I wonder who originally reported this exchange between the economists.

The reference comes from the Reactionary Radicals blog, which seems to be defunct now.

Only thing I'd ask about these gardens would be whether they were forced to continue the practice or if it was the idea of the citizens. If they kept the gardens because they wanted to, then as far as efficiency the human response is "who cares?".

I think where some people go wrong is in assuming that the rational & the economical are completely one in the same -- and by extension defining acts that don't focus on economic outcome as "wrong" somehow. Naturally there are times where just because something could produce an economic gain doesn't mean you do it.