I received this question a while back, and thought it was worth reviving it.
How do I respond to presuppositionalist's claim that circular logic is not fallacious? Because presuppositionalists say that since every worldview commits this fallacy. It leads to the absurd conclusion that every worldview is invalid (I am applying the principle of charity here, which means that the argument they present is actually weaker). Presuppositionalism is a school of Christian apologetic whose adherents think that the Christian god is the only thing that can account for the "existence" of logic, truth, science, morality... (I could keep on going). To be fair, they only do this to respond the fact that someone pointed out that presuppositionalism commits the circular logic fallacy.
As much as it pains me to say this, presuppositionalists do have a point here—kind of.
First your point about absurdity. This is based on the assumption that worldviews containing fallacies must be invalid. In argumentation terms, "invalid" does not mean "not true." Remember that just because something is fallacious, does not mean it is not true. For example, "Apples are good for us because they are all natural." The premise that "apples are good for us" is true, although the fallacious reasoning that follows does not make it true. Likewise, the fact that one might justify their worldview with circularity does not require the worldview to be false; it just means that their justification of it is problematic.
A trick of the presuppositionalists is to hold others to impossible standards while using special pleading to excuse themselves from such justification. One cannot use reason to justify reason (that would be a form of circularity), but that is what the presuppositionalists demands. Words such as "justification," "account for," and "explain" all are part of the reasoning process. So when the presuppositionalist asserts that "God" is the foundation for everything (including reason), they are using "reason" to make this assertion, thus circular.
To escape this circularity, we don't justify—we accept. We accept certain self-evident truths provisionally until we have good reasons not to. We accept the fact that we exist, yet by playing word games we can make it impossible for someone to prove their own existence by using impossible standards. These word games cause people to cast doubt on what we rationally accept as self-evident. In a way, we "presuppose" reason, and the presuppositionalist presupposes "God." The difference is, the concept of "God" contains dozens, hundreds, or even thousands of presuppositions such as: God is a being, God is intelligent, God is good, God is eternal, God exists outside of space and time, God has a son name Jesus who died for our sins, God does not want us to eat shellfish, etc. Some even "presuppose" that God wrote/inspired every word in the Bible so that everything in the Bible is "presupposed" to be true, as well. This is sort of like presupposing that "everything is true." This one presupposition contains every presupposition (including "everything is false"), and this leads to absurdity.
The critical thinker accepts as little as possible as "self-evident." The presuppositionalist fails to delineate between that which he must accept, and that which he wants to believe. My advice, don't bother arguing circularity with the presuppositionalist. In fact, don't bother arguing with the presuppositionalist at all, since they already presuppose that they are right, and they can't possibly be wrong.
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