Utilitarian Arguments for Liberty

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Utilitarianism or some form of consequentialism has underpinned the ethical worldview of many libertarians past and present. Within the “Austrian” School we may cite Ludwig von Mises, F A Hayek and Henry Hazlitt as proponents of this approach, contrasting with the more rule-based or deontological approaches of, say, Murray N Rothbard and Hans Hermann Hoppe, and the objectivism of Ayn Rand.

This essay will seek to examine some utilitarian and consequentialist arguments in favour of liberty. In doing so we must bear in mind two aspects. First, not all utilitarian arguments are of the same ilk and vary from simple approaches of judging outputs resulting from a posited situation with interpersonal utility comparisons, all the way to more general and sophisticated treatments such as that of Mises and that of Rothbard in his noted article “Towards a Reconstruction of Utility and Welfare Economics”1. Here, therefore, we will compare these two utilitarian approaches towards liberty. Second, the adequacy of utilitarianism can be examined from the point of view of providing a moral bulwark for a world of liberty on the one hand and from the point of view of promoting such a world on the other; our treatment of it may be different in each circumstance because that which may be suitable to form the moral foundations of liberty may be not be the key aspect that we can emphasise when persuading the populace of the virtues of a libertarian society. Hence we must examine any utilitarian argument from both points of view.

We will begin, then, with the basic forms of consequentialism that look to measure the output of individual scenarios. Such an approach will often posit an emotive and hypothetical situation where one individual owns property and another individual will succumb to some kind of malady such as hunger, illness and ultimately death unless he gets his hands on that same property. A typical example is of a lost man wandering in the woods, cold, malnourished and in immediate need of food and shelter. He comes across a log cabin, of which someone else is clearly the first user/occupier. By peering through the window our lost man can see that it is full of food. Would it be ethical for him to break in to the cabin, use it as shelter, and/or eat some of the food without the permission of the first user?2

The rule-based approach to libertarianism would state that the lost man does not have a right to break into the cabin, use it as shelter and eat the food without the permission of the cabin’s first user (hereafter, the “owner”) as it is a clear breach of the non-aggression principle. However, a utilitarian or consequentialist may argue that while the cabin owner has a prima facie right to the ownership of the cabin and its contents the question should be answered by taking the approach that avoids the most harmful consequences – or, conversely, promotes the best consequences. In this particular situation, the loss of the food or shelter to the cabin’s owner would, apparently, not be a remarkable cost. Yet the denial of it to the lost man, starving and shivering in the open, would be tremendous, may be even as much as his life. We may warrant, therefore, that the starving man should be able to break into the cabin.

Is it possible for such a view to form a) the moral backbone for libertarianism and b) a persuasive argument in promoting a libertarian society? In answer to the first question, we must decide firmly in the negative. First, all of these scenarios, such as the starving man in the woods, are purely hypothetical situations to which we are expected to give hypothetical responses. However, ethical dilemmas do not arise in hypothetical situations; they arise in real situations where there are genuine conflicts over scarcity. Although such hypothetical situations could one day come about, the danger of entertaining them is that it can be worded in such a way as to provoke the answer most desirable to its proponent. Thus the die is already loaded in favour of the latter’s political philosophy. Walter Block comments on such an example provided by Harold Demsetz of the Law and Economics movement (which is basically a utilitarian approach to legal rights). Demsetz’s scenario is that of “Austrian Pure Snow Trees”, which are owned by a religious sect. An ingredient from these trees happens to be the only cure for cancer, but the religious sect will not allow them to be used for that purpose, reserving them instead for religious worship. Demsetz challenges whether it is really “evil and vicious” to override the private property rights of the religious sect so that cancer sufferers can benefit from the trees’ curative ingredient. Block responds at length:

Given [Demsetz’s] highly emotional example, it is indeed hard to resist the notion that it would be preferable if the trees were used as a cancer cure.

Emotionalism can be a double edged sword, however. As long as our intuitive imagination has been unleashed by Demsetz in this creative way, why not push the envelope a bit? Consider, then, the case where the views of this religious sect are absolutely correct! That is, if the trees are torn down for so idolatrous and unimportant a purpose as curing cancer, then we’ll all be consigned to Hell forever. Wouldn’t it then be “intuitively appealing” to allow the islanders to continue their ownership of these trees?

Demsetz, in taking the opposite position, is acting as if the cult is erroneous in its religious beliefs. But assume for the moment the “cultists” to be correct in their world view. It would then be justified – according to Demsetz – not only to protect them from the onslaught of the cancer victims, but to seize the assets of the latter if this would in any way help the former. Suppose, that is, that there was a cancer cure, owned, now, by the victims of this dread disease, but that for some reason the worshippers determined that this material would help them in their efforts to contact the Deity. Then, according to the logic established by Demsetz, it would be appropriate public policy to forcibly transfer the cure to the control of the religious ”fanatics.” Surely Demsetz knows nothing-for certain that would render such a conclusion invalid.

[…]

Let us extend the Demsetzian argument in yet another dimension. Suppose that it was not the islanders’ trees that could cure cancer, but rather their hearts. That is, the only way to save the sufferers from this disease would be to kill, not the Austrian Pure Snow Trees, but their owners, the members of this religious sect, and then to take their hearts, chop them up, and feed them to cancer victims. Would Demsetz (“emotionally”) support this “modest proposal” to do just that?

[…]

Ultimately, there are only two ways of settling such problems. All others are merely combinations and permutations of these two. On the one hand, there is a provisional or instrumental property rights system. Here, holdings are secure only as long as no one can come up with a plausible reason for taking them away by force. Under this system, either dictators or majorities (or dictatorial majorities) hold the key to property rights. The difficulty is that there are no moral principles which can be adduced to derive any decisions. Presumably, utility or wealth or income maximization is the goal; but due to the utter impossibility of interpersonal comparisons of utility, this criterion reduces to arbitrariness. On the other hand is a thoroughgoing and secure property rights system. Here, one owns one’s possessions “for keeps.” The only problem here is the temptation to overthrow the system in order to achieve some vast gain, such as the cure for cancer. Demsetz’s example is so forceful by virtue of the fact that he expects his readers will consider a cure for cancer to be more valuable than a pagan rite – he knows it is likely they will engage in interpersonal comparisons of utility. But these temptations are easily resisted as they are inevitably imaginary and artificially constructed. We have yet to be presented with a real world example where there is a clear cut case for massive property rights violations.

[…]

Hypothetical arguments have their undoubted philosophical use. [However], the point being made here[…]is that [deontological] libertarian rules are only inconsistent with broad based utilitarian concerns in the imagination, not in reality.

Note how far from reality Demsetz must remove himself in order to manufacture an example that is intuitively consonant with his support for what in any other context would be considered murder (hearts) or theft (trees) or slavery-kidnapping (draft).

[…]

In very sharp contrast indeed, resort need not be made of fanciful examples to defend the libertarian vision.3

Imaginary scenarios, then, are always worded so that the listener is encouraged to empathise emotionally with the economically deprived while completely ignoring the point of view of the property owner, or at least making the latter look frivolous and capricious. Such a rhetorical trick applies not only to specific scenarios but also to entire political treatises. How much, for example, do the imaginary, hypothetical situations of the original position and the veil of ignorance in John Rawls A Theory of Justice – which do not exist in the real world – demand the very answer that the author desires?

Second, the purpose of ethics is to resolve or otherwise avoid conflicts that arise from the result of physical scarcity. Rule-based approaches to liberty that provide physical demarcations to denote property rights permit this to a high degree of certainty in any given situation as the boundaries of permissible action are constructed objectively. Because all valuations through action result in physical changes to physical goods, objective evidence of these changes – i.e. homesteading, production, etc. – give an immediate cue to indicate to a latecomer that the property may not be touched4. Consequentialist approaches, however, cannot rely on objective, physical demarcations to denote property rights; rather, they rely upon the measurement of competing subjective values. This renders the resolution of conflicts and conflict avoidance much more difficult. The question the lost man faces is what am I permitted to do right now? If moral boundaries are based upon hypothetical and changing values and tastes then this question cannot be answered. He may assume that the cabin owner values the cabin and its stock of food less than he does, but he has neither evidence nor proof of this. Indeed the cabin owner isn’t even there to ask. And whether the cabin owner values it less may change from day to day. Yesterday, the cabin owner might not have valued these resources very highly at all; today, however, what if the cabin owner has himself suffered an accident and requires the shelter and food, which he believes to be in secure possession, and is now under threat from the wanton consumption by the lost man? What if the cabin owner’s life is threatened by the loss of food and shelter? Indeed, what if he had purchased the cabin as insurance against that very possibility? There is, therefore, no way of making a rational decision ex ante.

Third, if ethical determinations cannot be made ex ante then it follows that a decision must be made ex post. In other words, the lost man could take a chance by breaking into the shelter and then battle out the question of whether he was right to have done so later through litigation or a settlement process. It is for this reason that utilitarian forms of libertarianism tend to be minarchical rather than anarchical. Hence, this basic form of utilitarianism provokes the very monolithic state apparatus that libertarians should be opposing, and puts in its hands a tool – interpersonal utility comparisons – with which to make its decisions, a tool that is ridiculously uncertain and malleable5. To be sure, it might be possible for individuals to form an empathetic judgment based on interpersonal utility comparisons in an individual situation. But it does not follow from that possibility that a government or a court could make a rigorous determination when passing legislation or enunciating judgments that affect the lives of millions of people in multitudes of different situations6.

Fourth, at the heart of many consequentialist approaches is a fundamental misunderstanding as to what the concepts of “liberty” and “freedom” actually mean. If one views them as meaning freedom from want, from hunger, from the elements and so on then one is naturally led to a consequentialist approach. However, properly considered, liberty is a sociological concept that applies to the relationship between each individual human being. A person is free if he can live his life without the physical interference of his person and property by others. Whether he is hungry, cold, or naked, on the other hand, concerns his relationship not with other human beings but, rather, with nature. This can only resolved not by extending his “freedom” forcibly into the territory of others but by gaining power over nature – in short, by productivity. Any number of theoreticians can spill oceans of ink in trying to determine whether or how the wealth of the cabin owner should be distributed to the lost man in the woods. Yet wouldn’t it be so much better if society was so wealthy that the lost man possessed the wherewithal to prevent himself from being in such a wandering state in the first place? What if the man had an inexpensive GPS system; compacted supplies of food in pill/tablet form that could sustain him for weeks or months; emergency communication devices that would alert a private protection agency to his whereabouts? Yet it is precisely such productivity that is threatened by consequentialist determinations of property rights. Strong private property rights that remain certain following original appropriation or voluntary transfer promote economic growth by encouraging saving, long term planning and low time preference. Uncertain or vague private property rights do the exact opposite. If it is possible that your property will be snaffled in an instant by someone who allegedly “values” it more than you do then the attractiveness of using the good for saving and investment is lowered. You will be willing to take fewer risks and will work less hard with the good if you know that the fruit of your efforts might be confiscated in the blinking of an eye. At worst, such weak property rights encourage immediate consumption as soon as you get your hands on any good at all. That way, in most cases it will no longer exist for someone to take it away again at a later date.

Turning now to our next question, would such basic consequentialism serve in any way to persuade people of the virtues of a libertarian society? Again we have to answer firmly in the negative. We must remember that the primary preoccupation of libertarianism is with the evil and oppressive monolith known as the state. This is the entity that truly destroys freedom; it confiscates our income to fund its profligate spending; forces us to use its worthless paper money that it prints incessantly to fuel its endless foreign wars; destroys families and fuels poverty and dependency with the massive welfare state; regulates what we can do with our bodies, what we can say with our own mouths, where we can set up business, whom we may employ in that business and on what terms. Government is estimated to have killed approximately 262 million people outside of warfare during the twentieth century; private affronts to liberty – even such horrendous crimes such as murder and rape – pale in comparison to this. The US government’s so-called war on terror, at a cost of several trillion dollars, has killed an estimated 1.3m Iraqis, Afghanistanians and Pakistanis in its first ten years, even though more Americans are killed by falling televisions than by terrorist attacks. The greatest insult has to be that it is this miniscule private crime that supposedly constitutes the very justification for the state and its monopolisation of security and litigation. Although there is no shortage of nobility in striving to apply justice in every individual case, libertarians must fry the biggest fish and not spend their time debating whether a lost man breaking into a cabin is or is not an affront to liberty. When attempting to promote liberty, let us confront the very real ogre of the state rather than dwelling in imaginary scenarios that will make no practical difference to people’s everyday lives. Furthermore, as we mentioned above, if justice depends on interpersonal utility comparisons in individual cases, then it craves for the existence of a compulsory referee in the form of the state, the very thing that destroys liberty entirely. We must conclude then that this basic form of utilitarianism, which seeks to evaluate outputs from specific situations, must fail on all accounts as an argument in favour of liberty.

Let us now turn towards a second conception of utilitarianism, the more sophisticated approach adopted by such eminent theoreticians as Ludwig von Mises. The tenor of this approach is that voluntary exchange under the division of labour – i.e. the market – is essential for the survival and flourishing of every individual human being; every human is so interdependent upon every other that to plump for anything else would result in the rapid disintegration of the standard of living or, at worst, certain death. Hence this form of utilitarianism concentrates on the virtues of the market itself rather than looking to the justice of individual situations. Mises, and others who follow this approach, therefore avoid any complications arising by way of interpersonal utility comparisons.

It is important to realise that this argument is predicated upon a few other important Misesian insights. First is that when pondering the economic organisation of society only two extremes are possible – the free market or total socialism. As Mises so effectively argued, any “interventionist” point or “mixed economy” approach in between these two extremes will cause effects that must either lead to abandonment of the intervention on the one hand or to total control on the other. One must therefore choose between one or the other and cannot favour anything in between. By demonstrating the economic impossibility and the catastrophic consequences of full socialism Mises demonstrates the complete lack of basis for making a choice that favours full government control. The only rational option, therefore, is the unfettered free market. Second, and related to this theme, Mises was of the view that “society” is synonymous with social co-operation under the division of labour. As he says in Human Action:

A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.7

Following this line of thinking, questions such as “how to organise society” strike one as absurd when society itself is already a form of organisation. We do not have the choice of “picking” from an array of options when it comes to forming a society. Either there is social co-operation under the division of labour and society exists; or there is an atomistic hand-to-mouth existence and society does not exist. Any person, therefore, who genuinely wishes to promote a theory of society cannot rationally opt for any kind of socialism and, a fortiori, any kind of interventionism8.

How useful is this approach for forming a moral backbone for libertarianism? At first, this approach seems remarkably more plausible than the basic form of consequentialism that we just discussed. By looking at the general consequences of the market we do not get caught up in traps such as interpersonal utility comparisons and we have a strong counter-argument against anyone who proposes a collectivist theory of social organisation. Moreover, the fact that the marketplace serves to improve the material wellbeing of every individual human being lends it a heavy degree of moral weight. If the free market was to spread misery and discontent through perpetuating a lower standard of living we would surely be willing to lend it less moral credence. Unfortunately, however, this utilitarian approach lacks the very thing to which the basic form of consequentialism was far too devoted – a rigorous passion for the justice rather than simply for the utility of private property rights.

First, although it provides a rhetorical defence against those who profess their collectivist aspirations to be for the benefit of society, it will never provide a defence against megalomaniacs who are content to milk everyone else for all they are worth. In other words, it will never provide an answer to those who believe society exists to serve them alone and that they are entitled to use other people in any way they see fit. The existence of such megalomania should not be dismissed lightly. Simply because we associate it more with caligulan monarchs and despots of times gone by does not mean to say that our democratic structures are impervious to it. Many libertarians are vocal opponents of what they see as “US exceptionalism” – the idea that the US government can pretty much do whatever it pleases in foreign affairs and standards that apply to a foreign government do not apply to the US. How can this be described as anything except megalomania?

Second, the logical effects of the socialisation of society – the total collapse of the division of labour and the complete decimation of the standard of living – can be gut wrenchingly long run effects. Society currently has plenty of capital that can be consumed and afford a comfortable, even luxurious living to any one individual. The Soviet Union took an agonising seventy years to die, a span of time that exceeds that of most individual’s adult lives. An advocate of socialism and socialisation is therefore not necessarily advocating his own certain death or relegation to poverty. He may be content to live like a king for the duration of his life and not care a whit if society became deeply impoverished long after he has dropped off of his mortal coil. Arguably this was the attitude inherent in Keynes’ oft-quoted quip “in the long run we are all dead”. As Murray Rothbard is supposed to have retorted, “Keynes died and we were left with the long run”. But such an attitude is provoked and enflamed by the fact that democratic government is a revolving door with officeholders required to endure repeated elections, endowing them a very short time in which to accomplish their goals. Every politician yearns for his day in the sun when he is lauded and praised as a great statesman, but he has to achieve this now, in the short run, before he loses an election. As long as he can reap the headlines and rewards during his tenure and, possibly, for the remainder of his life, who cares if his policies are ultimately destructive after he is long gone? It is for this reason that democratic governments are suffering from ever increasing and crippling debt as each generation of politicians seeks to shower its electorate with free goodies that only have to be paid for years after they have left office (or have died) and it is somebody else’s problem9. So too, could we suggest, that endless war has become the norm as each successive leader tries to demonstrate his Churchillian qualities and to elevate himself to the legendary, almost Godlike realms of the great warrior-statesman such as Lincoln and Roosevelt. Never mind that war ultimately is destructive; never mind that it destroys entire cities and societies; never mind that it kills, maims and otherwise ruins the lives of millions of innocent civilians. As long as the commander-in-chief can claim to have vanquished a cherry-picked foe in some distant country then his place as a saviour of civilisation is assured, at least in the meantime. So too do the manufacturers and profiteers of armaments display the same attitude. They know how evil and destructive war ultimately is; there is no shortage of literature espousing this fact. But they get to reap heavy profits now and to enhance their own lifestyles now. Why should they care about what happens in the long run?

Third, by resting its case on the general virtues of the market this kind of utilitarianism suggests that if some form of social organisation, other than the market, however unlikely, becomes feasible then private property rights could be legitimately overridden. In other words if some form of collectivism could sustain the division of labour and a standard of living equal to or exceeding that of the free market would the force behind government taxation, theft, murder then become legitimate? However, surely if such a world was to come about we would still argue that people have the right to self-ownership and the right to the ownership of goods in their possession as first user or through voluntary transfer? Of course, a person might choose to submit to the yoke of government planning if it affords him a higher standard of living than that of the free market, but this is a different kettle of fish as the submission is then purely voluntary. On its own, however, any ability of a system other than the free market to sustain a society is insufficient as a justification to override private property rights.

Fourth, this brand of utilitarianism may convey a sense of prospective justice – that which should happen concerning property rights in the future – but what does it have to say about retrospective justice? In short, how does utilitarianism know whether the existing structure of property rights is just? After all, the existing structure of ownership benefits a lot of thieves and plunderers that would need to be dealt with in the transition from a statist to a libertarian society. A libertarian steeped in natural law and Lockean homesteading theory would answer this question rather straightforwardly. Any current owner would have to demonstrate that his title derives either from original appropriation or through voluntary transfers in title. If it is not and someone who claims such a title comes forward then ownership must be yielded to the latter. A utilitarian, however, has a bit of a problem as his philosophy generally focuses on the benefit changes to the existing array of property titles to the current market participants. He could argue that, like the natural lawyer, all existing titles to property could be examined against competing claims and then either endorsed or rectified accordingly. However, because his theory is based on the efficacy of the market in developing the division of labour his case for requiring this is demonstrably weakened. Certainly theft and plunder disrupted the efficiency of the market in the past. However, wouldn’t a mass of re-appropriations to rectify ancient crimes undermine the efficacy of the market today, at least temporarily? Would it not be easier, from the point of view of efficiency, to just preserve all existing titles then let everyone go forward? Why compound a past disruption to the market with a new one? It is upon this basis that this brand of utilitarianism is criticised for preserving the status quo, for permitting, in the transmission to a libertarian world, the bureaucratic class to keep their hands on the loot, much like the oligarchy did in Eastern Europe after the collapse of the Soviet Union. To be sure, this argument against utilitarianism is not, in the view of the present author, as strong as some libertarians make it out to be. Nevertheless, utilitarianism does open itself up to the charge that there comes a point where stolen property should remain in the hands of the thieves (or their heirs) simply because the act of unwinding the theft would cause more disruption to the market than to not to do so, particularly if the property is heavily invested in an enterprise that provides substantial employment and is apparently productive. Moreover, while it is straightforward enough to justify voluntary trade in the marketplace as promoting the division of labour and the standard of living, we have to wonder whether the utilitarian can provide much of a justification for original appropriation – that is, for the first user of a good to retain it – with his utilitarian arguments alone. Original appropriation is of course the genesis of voluntary trade – we appropriate virgin goods with the intent to produce with them and trade them away for things we want in exchange, thus helping to overcome the fact that the world’s resources are not evenly distributed amongst different geographic regions. However, such a justification can only stand if one can also demonstrate that the originally appropriated property is previously ownerless and unvalued by other people, and is only recognised as scarce and valuable by the first user. The only possible such demonstration is that the first user was the one to “mix his labour with it”, whereas the actions of everyone else demonstrated no preference for that property. Hence all utilitarian arguments in favour of the free market, fundamentally, collapse into the Lockean homesteading theory anyway.

Having addressed the question of whether this form of utilitarianism can be a useful moral underpinning for libertarianism, let us turn now to whether it is useful as a persuasive tool for espousing the virtues of a free society. In this sphere, utilitarianism certainly fares much better. The heaviest gun in the arsenal of the utilitarian libertarian is the fact that living in an unfettered free society where government exists, at most, as a “night watchman”, limited to protecting private property rights of the individual, will produce manifold increases in the standard of living through a rise in real wage rates. It also has the virtue, in contrast to the basic form of consequentialism, of concentrating its focus on the very institution that is an anathema to freedom – the government – instead of getting bogged down in the minutiae of individual cases. Squarely, it is government that needs to withdraw itself from the marketplace and it is government that needs to stop meddling in economic affairs in order to bring about these wonderful consequences. Furthermore, every government minister promotes his programmes on the basis that they will serve to help at least some sector of society, if not everybody. The utilitarian, however, armed with a thorough understanding of economics, can easily demonstrate why the results must always be the very opposite of those intended and why the government interference will always, necessarily, create more harm than good when examined under the terms of its own justification. While, therefore, a given politician or promoter may have ulterior motives in proposing any programme – such as to benefit lobbyists, donors or other special interests – his public justification for the programme can be shown as shambolic. There may, of course, be some difficulty in disabusing people of the notion that the free market is a “sink-or-swim” society and there is also added problem of those who steadfastly refuse to try their hand in the marketplace for what might seem like a distant reward and prefer instead to yield to the siren song of government redistribution. To this, only a passionate plea for the justice of the market place can provide an answer.

Conclusion

George Reisman explains how an understanding of the consequences of free market economics has “powerful implications for ethics”:

It demonstrates exhaustively that in a division-of-labor, capitalist society, one man’s gain is not another man’s loss, that, indeed, it is actually other men’s gain — especially in the case of the building of great fortunes. In sum, economics demonstrates that the rational self-interests of all men are harmonious. In so doing, economics raises a leading voice against the traditional ethics of altruism and self-sacrifice. It presents society — a division-of-labor, capitalist society — not as an entity over and above the individual, to which he must sacrifice his interests, but as an indispensable means within which the individual can fulfill the ultimate ends of his own personal life and happiness.

A knowledge of economics is indispensable for anyone who seeks to understand his own place in the modern world and that of others. It is a powerful antidote to unfounded feelings of being the victim or perpetrator of “exploitation” and to all feelings of “alienation” based on the belief that the economic world is immoral, purposeless, or chaotic. Such unfounded feelings rest on an ignorance of economics.10

While, therefore, we must conclude that no form of utilitarianism provides an adequate, watertight moral backbone for libertarianism, which can only be furnished by demonstrating the justice inherent in private property rights and free exchange, we must also agree that we can never ignore the manifold benefits to every individual and the harmonious society that they create. Indeed, few people, publically, ever attempt to propose an ethical theory that does not create a society of peace and harmony. Thus a through understanding of the effects of the free market can provide a framework with which to refute competing theories on their own terms. Furthermore, few deontological libertarians omit to pepper their theories with demonstrations of the beneficial consequences of the marketplace. While, therefore, this essay has been generally critical of utilitarianism it is likely that it will always have a central place in libertarian theory.

1Reprinted in “Economic Controversies”, pp. 289-333. Rothbard is, however, keen to note that his reconstruction does not provide any plea for an ethical system, merely “conclusions to the framer of ethical judgments as part of the data for his ethical system”.

2Another example is the so-called runaway train that will hit five people if diverted onto one track or only one if diverted onto the second. Should the signalman switch the points to the second track to ensure that only the one person is killed?

3Walter Block, Ethics, Efficiency, Coasian Property Rights and Psychic Income: A Reply To Demsetz, The Review of Austrian Economics, Vol.8, No. 2 (1995) 61-125, at 76-84 (emphasis added, some footnotes omitted.

4Libertarian jurisprudence does, of course, have to determine precisely which physical acts result in which property rights. However, any difficulty is likely to remain only in borderline cases or cases where evidence of prior ownership is fleeting or difficult to apprehend and, in general, all persons should be able to determine in the majority of situations whether property is subject to a prior right and a third party referee would not be required to determine this.

5As a result it is also the case that consequentialists vary in their particular views concerning the justice of taxation, eminent domain, intellectual property, etc. on to a greater degree than rule-based libertarians.

6Ironically, the same argument based on interpersonal utility comparisons – that the wealthy value what they have less than the poor and that the latter “need” this wealth more than the rich do – is used by proponents of government welfare and redistribution. It is difficult to understand how an argument that can be used against a world of liberty can be used in favour of it.

7Ludwig von Mises, Human Action: A Treatise on Economics, p.676.

8It is upon this foundation that Mises’ examination of concrete economic policies, where he moves from the wertfrei into the world of value judgments – the effectiveness of the policies themselves from the point of view of those who promote them – is  based.

9Because the incessant tendency is now reaching a chronic level the ability to postpone the day of reckoning has become ever more difficult and most of the more recent glory-seekers are now living to reap what they sow. Former Federal Reserve Chairman Alan Greenspan is a pertinent example.

10George Reisman, Capitalism: A Treatise on Economics, p. 17.

Austro-Libertarianism – Three Next Steps

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Austro-libertarianism undoubtedly has a long history of scholarship of which it can proudly exemplify as not only providing a coherent body of truthful insights into the way in which the world really works, but also provides a foundation for a just and prosperous society.

However, far from resting on any laurels (and I doubt any scholar in this tradition would ever believe that we are at the stage where we can do such a thing), this essay will suggest three areas of development to which scholars in the Austro-libertarian tradition may wish to focus their research.

Pure Praxeology

The first area is to reconceive “Austrian” economics as a pure (or at least “purer” theory) of praxeology. Although “Austrian” economics is noted for deriving its laws from the theory of individual human action, economics traditionally – not least because concepts such as exchange, production, prices, money, and so on are the complex phenomena that we wish to study and understand the nature of – concentrates only on action above the level of the bilateral exchange of wares for a money income. Our economic categorisations and concepts therefore rest on that limitation. “Austrian” treatises, although they begin quite properly by explaining how economic theory is derived from the action axiom (together also with extremely useful chapters on unilateral or “Robinson Crusoe” exchange), soon begin to espouse their theories in terms of these more aggregative concepts, only occasionally returning to individual action in order to emphasise a particular point1.

A simple example to illustrate this point is the economist’s approach to the classification of goods. A “consumer good” is one that is purchased by a consumer for money without any further sale for money expected. Bread, for example, is treated as a consumer good because it generally goes through no further monetary exchange prior to being consumed. At the individual level, however, the bread may only be a capital good in making, say, a sandwich. Labour is combined with the bread and other goods – say cheese and tomatoes – in order to produce the final consumer good of a cheese and tomato sandwich. We can say the same thing about cutlery and crockery, paper and ink and so on. All of these goods are used at the level below that of exchange for money by individuals to produce further goods. “Land”, on the other hand, is treated as the natural resources which are a gift to all humans, not just an individual human being. However, a good produced by another human being may, to the individual who happens to stumble upon it, comprise “land” in the sense that it is a free gift to him and that he has not had to exert any productive effort in order to bring it into the condition in which he finds it. If, for example, I find an abandoned car in perfect working order and (assuming there are no competing ownership claims), even though the car is a produced good, as far as my action and my computation of costs and benefits towards that action goes, the car is a gift of nature and is in exactly the same condition as, say, a tree that has grown naturally.

It is easy to see why any loss of the connection to individual action can quickly lead economists in the “Austrian” tradition and their fellow travellers down wrong paths. Murray N Rothbard provides an extensive critique of W H Hutt’s aggregative concept of “consumer sovereignty” – the idea that all consumers are sovereign over producers and that the latter exist only for the benefit of the former and not for themselves2. The market place is where everybody seeks to benefit himself through voluntary exchange, and there is not, in fact, a distinct class of labourers, of producers and of consumers with one being “sovereign” over the other. Rather, everybody at differing points of the day (even from minute to minute) participates in a different economic category – a man is a labourer when he goes to work; he is a consumer when he stops by at the shop on his way home; he is a capitalist if he purchases some shares for his pension, and so on. Questions of “sovereignty” – the boundaries of rule – concern only the political arena. Concentration on the basis of economic law in individual human action would have avoided any fallacy and prevented a resort to parcel phenomena into homogenous, collective blocks. However, Rothbard hardly escapes the same danger to which Hutt succumbed, building his entire theory of production using the economic fiction of the Evenly Rotating Economy (ERE), an economy in which all economic activity is repeated and known. Thus, entrepreneurial profit and loss is eliminated. This model allows (or, perhaps, forces) Rothbard to conclude that capital goods earn no net rents and that all rents are paid back to the original factors of production – land and labour – a theme that is oft repeated throughout his entire treatise. It is submitted here, however, that regardless of how such an approach may be helpful in illustrating the complexity of the structure of production, any firm or even implied conclusions drawn from it are likely to be grossly misleading and can only lead to error. The most dangerous false step from this presentation is to assume that the ownership of land – as an original factor – provides essentially free income to those who happen to hold it. Needless to say Rothbard takes great pains to rebut this conclusion, but his attempt could be condensed, with a slight modification, to a single paragraph:

As the only income to ground land that is not profit or interest, we are left with the original gains to the first finder of land. But, here again, there is capitalization and not a pure gain. Pioneering—finding new land, i.e., new natural resources—is a business like any other. Investing in it takes capital, labor, and entrepreneurial ability. The expected rents of finding and using are taken into account when the investments and expenses of exploration and shaping into use are made. Therefore, these gains are also capitalized backward in the original investment, and the tendency will be for them too to be the usual interest return on the investment. Deviations from this return will constitute entrepreneurial profits and losses. Therefore, we conclude that there is practically nothing unique about incomes from ground land and that all net income in the productive system goes to wages, to interest, and to profit3.

The correct position, therefore, is that “things” do not “earn” anything. All actions, whether they involve the dispensation of labour, land or capital goods, require the sacrifice of one state of affairs (“costs”) in the pursuit of another state of affairs. It is hoped that the ends brought about are more valuable than the ends given up. The creation of this value if the action is successful (or its destruction if it is not) is the product of entrepreneurial judgment. All income from any action is therefore paid out to cover costs, interest or entrepreneurial profit and loss. All net rents in the economy accrue only to this latter element – successful entrepreneurial judgment with the means at one’s disposal, whether this is your labour, land that you own, or a capital good that you hold. All of these things that can be bought or sold for more or less money than is sufficient to cover their costs plus interest. It is only by remaining firmly anchored to action at the individual level that this realisation can remain in focus4.

Coupled with this endeavour of better preserving the link between the complex phenomena in the economy with individual action is a greater emphasis on “Austrian” methodology not as a separate topic but one to be espoused during the course of the treatise. The reason for this is that a “vulgar” conception of “Austrianism” would state that all economic theory and all of the laws of economics are deduced logically from the action axiom and one or two subsidiary axioms. Truths derived empirically have little or no place in “Austrian” economics. This is not, however, altogether true. Only the core theory concerning the action axiom and its immediately related categories, in addition to some of the more fundamental laws (such as the law of marginal utility) are deduced logically. However, there is a great body of “Austrian” economic law that requires the ascertainment of empirical facts. We cannot, for example, derive economic laws of bilateral exchange without ascertaining the existence of more than one human being, an endeavour which any individual cannot simply deduce. We cannot have an “Austrian” approach to the economic effects of taxation unless one group of persons had, in fact, attempted to tax another group. We cannot have an “Austrian” business cycle theory without first assuming the existence of banks, the practice of fractional reserve banking, a loan market and even money itself must be presupposed. Although the regression theorem, for instance, is a valid praxeological law5, it would only exist if we first of all knew that money existed and that people had chosen to use a good as a general medium of exchange. Now it is true, of course, that these laws would remain valid and true even if the substantive human choices upon which they rely had not been made. If we imagined a world without money, for example, and pondered its existence merely as a hypothetical we could still derive “Austrian” laws concerning it without it ever actually existing. The actual phenomena in existence simply direct our interest to them as those are the areas that matter in our lives and hence are the things we wish to study and understand. No doubt it is also quite impossible to try and “imagine” alternative institutions and choices that have never existed and to apply to them the core “Austrian” theory, especially as our own experience of real concepts such as money, exchange, prices, banking and so on often provides an illustrative tool to our theoretical insights. However, it is more accurate to speak of the entire endeavour of “Austrian” economics not solely as a body of economic law that is deduced logically, but as the application of the core theory, deduced from the action axiom, to the substantive institutional choices that humans have made, the existence of which is verified empirically6. More prominent highlighting of the “Austrian” method and the source of each parcel of knowledge during the course of a treatise would aid greatly any misunderstanding in this regard.

Ethics

The second area of fertile development in “Austro-libertarianism” is the necessity to sever or more sharply delineate the relationship, often casually assumed not only in political philosophy but also in the opinions of lay persons, between legal norms and moral norms. That is, the question of what should be legal – in other words, those norms which may be enforced by the imposition of violence – should be separated from the question of what is good, worthy or preferable. It is submitted that this is one of the greatest barriers to a proper understanding of the role of violence in interpersonal morality, and has been dealt with in detail by the present author here, here and here. Many people happily recognise the illegitimacy of the legal (violent) enforcement against themselves of norms that other people value as moral ends which, as the hapless victims of this enforcement, they themselves do not (or at the very least, they would complain about it). But, because of the prevalence of the legitimising effect of democracy and the blurring of any distinct line between the governors and the governed, most would not think twice to advocacy of the legal (violent) enforcement of ends that they deem good against other people. Indeed, the criterion for what should be legally enforced boils down to little more than what most people think should be legally enforced. Libertarians need to create an understanding that the proper role of violent enforcement is restricted to preserving the physical integrity of each individual’s person and property – and as moral agency requires such integrity in order for a person to choose and act, such an insight is crucial for any proper understanding of interpersonal morality. The examination of whether something is bad, unpleasant or a vice must be separated from the question of whether its prevention should be enforced legally; and, equally and oppositely, the examination of that which should be peacefully permitted by the law should be separated from the question of whether such acts are good and noble things. In addition to aiding moral and political philosophy, this would be of a benefit to libertarianism specifically as it would render inert the perceived support for all of those bad and unpleasant things – drugs, prostitution, gambling, blackmail, and so on – which are non-violent but are nevertheless not necessarily things that we would wish to see in our society7.

Inflation

The final area for development in Austro-libertarianism, this time in the field of economic history and anthropology, is to engage in a rigorous study of the effects of inflation and inflationism throughout history. “Austrian” scholars have certainly charted well the purely economic effects but, in the opinion of the present author, an exhaustive study of the social, cultural, political, and aesthetic effects of inflation is yet to be written, at least in the “Austrian” tradition. As Henry Hazlitt notes:

[Inflation]…discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse8.

Apart from the wide “macro” effects of inflation – not least of which include the birth of odious ideological movements and regimes and their ability to fund wars and conflict – also of interest is how inflation effects us at the individual level. For example, how many of our day-to-day products that we enjoy today are the result of genuine development by a capitalist economy and how many are simply substitutes developed in an era of inflation to enable people to attempt to salvage some of their previous standard of living? Products such as instant coffee, condensed milk; synthetic clothing; plastic bottles; and so on. How many genuine labour saving products were developed not because people genuinely wanted to save time but because inflation had either reduced their income to such a degree that time came at a premium or because inflation had induced impatience and a present-oriented fervour? Indeed the latter may have had distinct ramifications beyond the economic – the birth of adolescence as a distinct demographic; the sexualisation of society; the preference for entertainment ahead of learning; the attraction to style rather than to substance; the prominence of sound bites and “tweets” rather than in-depth analysis; the emphasis on youth and adaptability to an ever changing world rather than on age and accumulated wisdom. All of these things have significant consequences for which inflation much at least be partly responsible. Further, how much does inflation distort our views of reality and of what is possible? Inflation, as Hazlitt noted, makes speculation rather than production profitable – the image of productivity and wealth creation rather than the very thing itself. It makes big or easy wins more attractive than patient investment in a lifelong endeavour. But at the extreme we might say that we have attempted to replace reality itself with dreamed ideals. Government, has taken over and replaced real money (gold and silver) with a fake paper counterfeit. Having replaced reality with one form of fakery, we expect government to be able to legislate to replace reality with our pseudo visions, to carry out the miracle of transforming stones into bread. Thomas Nast’s cartoon, Milk Tickets for Babies in Place of Milk (below), concerning the inflation during the American Civil War, perhaps captures the foundation of this mindset in artistic form. The cartoon contains representations of reality that are passed off, for example, by Acts of Congress as reality itself. As English professor Paul A Cantor explains:

Nast’s illustration brilliantly captures [the confusion of] things with representations of things. Like Magritte [in the painting The Treachery of Images], Nast reminds us that a picture of a cow is not actually a cow, but he is not making a merely aesthetic statement. He is drawing a more serious analogy between the duplicity involved in artistic representation and the duplicity involved in the government printing money and forcibly establishing it as legal tender, an analogy embodied in the parallel “This is a Cow By Act of the Artist” and “This is Money by the Act of Congress”9.

Given that “Austrians” lead in the way in a providing a genuine understanding of the definition and effects of inflation it would be appropriate for an historian versed in “Austrian” theory to undertake a full study along the lines that we have suggested here.

View the video version of this post.

1It is also the case that most “Austrian” scholars writing today received their initial education in the mainstream economics tradition and only later “turned” to “Austrianism”. Thus one senses a tendency, if not a persistency, to lapse into the comfort of aggregative and pseudo-concepts, at best obscuring the essential connection to individual human action, and at worst completely losing it and ending up in the rhetoric of collectivist and societal-oriented action.

2Murray N Rothbard, Man, Economy and State with Power & Market, p. 631-6

3Ibid., p.530, emphasis added.

4The present author is not enthusiastic about the excessive use of equilibrium constructs and they should, at the most, be used as a tool in order to distinguish one concept from another, an endeavour that would be impossible without such a construct. Nevertheless, it is possible that a dynamic equilibrium – a fiction in which there is change and entrepreneurial profit and loss but where all forecasts of the particular entrepreneur in the model are correct – together with a focus on the costs of land acquisition and of the dispensation of labour would have created a better illustration than the ERE. But whatever model is used, it is submitted that the illustration of every stage of production, whether it is with land, labour or capital, necessitates the elements of costs, interest and entrepreneurial judgment and that, contra to Rothbard’s assertion that the mental construction of the ERE is necessary in explaining the structure of production, a much clearer grasp of reality can be and, indeed, is attained without omitting any of the crucial elements.

5Although this is disputed. See Gary North, The Regression Theorem as Conjectural History, Ch. 7 in Jörg Guido Hülsmann (ed.), The Theory of Money and Fiduciary Media – Essays in Celelbration of the Centennial.

6If anyone should doubt this and remain steadfastly wedded to the idea that “all” of “Austrian” economics is deduced logically this then he should attempt to present an “Austrian” treatise written in formal logic.

7The present author has dealt with the so-called “thick” or “thin” libertarian debate here.

8Henry Hazlitt, Economics in One Lesson, p.157.

9Paul A Cantor, Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics, The Review of Austrian Economics, Vol. 7, No. 1 (1994), 3-29.

Austro-Libertarianism – Fighting for the Truth

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In the battle of ideologies, Austro-Libertarianism (that is, “Austrian” economics and libertarian political philosophy), in spite of (or, sometimes, perhaps because of) its logical consistency and rigorous passion for truth and justice, is lumbered with several burdens that are not always shared with opposing philosophies. Some of these – such as the fact that libertarianism is not a complete moral philosophy and can look, at best, cold and emotionless, or, at worst, a recipe for rampant selfishness and egotism – we have examined elsewhere. Let us explore a few more of them and suggest reasons for how they can be overcome, or at least mitigated as much as possible.

The Collectivist Mentality

Perhaps the biggest problem we face is that the fundamental tenets of the modern, democratic state are not viewed as being open to question. It is seen to be paradigmatic that democracy is the best system of government, that voting means freedom, that politicians serve their people and “the nation”. Whatever the current moral or political debate it is always seen as being a debate that should take place within the system rather that as an attempt to revolt against it. Indeed, in the history of political philosophy, consideration of alternative methods of rule has never been at the low that it is now whereas the possibility of no rule at all (anarchism) is completely off the radar. All alternatives to social democratic government are believed to be just baffling or bewildering, a mentality is reinforced and engrained by two aspects.

First, questions are always posed in the form of the collective and people are encouraged to debate only by thinking of the needs of the whole rather than of the individual parts that make up that whole. “Should Britain do X?” “Should we have nationalised railways?” “What should be done about our health service?” By not even allowing the possibility of individual tastes and desires to find expression, people are always geared towards the notion that there must, for every problem and issue, be a single solution that everyone must be made to endure. Although this is endemic throughout all political debates it can be seen in force in the current possibility (at the time of writing) that the United States will engage in military action against the Syrian government in response to the alleged use of chemical weaponry. “What should we do?” “The United States has a moral obligation…” “Our country will not waiver in its resolve” etc.

In what way can Austro-Libertarians face this challenge? The problem is that it is tempting to accept the terms of the argument and dive head first into discussing only collectives. In response to, for example, the question “should we have a nationalised health service?” a libertarian may find it difficult to prevent himself from crying “no!” and reeling off all manner of facts and  figures to show why a system of private healthcare would be far superior. Libertarians, however, must avoid this temptation entirely because it accepts, in principle, the notion that everyone must accept the same solution. It is also the expected answer from one’s ideological opponents and they are likely to be prepared with an array of counterarguments to nullify or at least blunt one’s own. Rather, an intelligent libertarian should attempt to change the terms of the debate and break out of the collective mentality altogether and focus on individuals. So in answer to the question concerning healthcare, one might retort the following:

“I have no problem whatsoever with the Government providing your healthcare through the National Health Service or whatever you want to call it. I don’t want to stop you from doing what you think is best for your needs with your money. But what right do you have to force me to do the same? I want to look after my healthcare needs in the way that I want with my own money. Do whatever you want with yours, just leave me out of it!”

This is a response that will almost certainly catch someone on the back foot. Having expected an argument about what is best for everyone and there being no possibility of “their” solution taking hold unless they win, they now, suddenly, have to face the fact that actually, they are most welcome to go ahead with what they want with the resources that they can muster. They just have to leave everyone who does not want to be a part of it alone. The terms of the debate have therefore switched from arguing about the merits of their system to arguing about why they should have the right to force everyone to become a part of it. That, they might find, is far harder for them to justify, especially once it is revealed that such a system as they advocate can only take place through the methods of violent enforcement. Liberals (in the modern sense of the word), lefties and collectivists do not like to think of themselves as being violent people and revealing them for what they are might be something of a shock.

Who Will Build the Roads?!

The second problem is related to the first and is manifest in the following types of argument. “How will we defend ourselves?” “Who will take care of disabled people?” “Won’t poor people die without nationalised healthcare?”  All forms of this argument may be summarised as the “Who will Build the Roads?” problem, where government has carried out a function for so long that people cannot imagine how else it would be done.

The obvious answer is, first, to point out how government has never invented or run anything that was not first done so by free individuals (except, perhaps, for nuclear weaponry – developing the machinery of mass killing is something that seem to come naturally to government). Knowledge of a few examples, such as how turnpikes were funded and constructed, and the history of the railways (and their subsequent deterioration under nationalisation) would be beneficial. But so too also is pointing out the fact that the opponent’s argument boils down to little more than this: “I don’t know how else X could be done. Therefore everyone else must be violently enforced to do it my way”. In other words, one should perhaps retort by questioning why that person’s lack of imagination means that everyone else must be subjected to violent enforcement. The whole point of the free market is that it unleashes the creative power of individuals and no one knows precisely what this creative power will produce and in what form. Government, on the other hand, causes nothing but stagnation in everything it runs. Schools, for example, are still teaching in the same way that they have done for nearly two centuries – a teacher in front of a class full of students, a method that seems to be rapidly failing as numeracy and literacy rates decline. Why is education stuck in a time warp whereas the free market around it is innovating and improving all of the time?

Nevertheless this may be a battle easily lost. There is a curious tendency in debates of this type for people to press one continually about how each and every minute issue would be resolved in a free society. Even if you bat away each one for six with success, as soon as there is something that you cannot explain, something to which you cannot illustrate a free market solution in any concrete fashion, however trivial and insignificant, you are expected to surrender and admit that government is necessary. Even if it is not possible to explain how a free society could possibly tackle one, single alleged problem, why is this one, minor “defect” claimed as a sweeping victory for government? Such a view is the result of the wilful (as opposed to merely passive) ignorance and closed-mindedness of one’s opponent and that is perhaps the hardest thing of all to overcome.

Market Chaos and the Fight for Resources

The next problem is the belief that individualism and freedom can only lead to chaos and collapse, a war of all against all in which everyone is motivated only by their greed in the fight for the scarce resources available. Surely there must be someone with their hands on the steering wheel to guide and take control, to steer everyone in the same direction, to ensure that free markets do not become over-zealous and drive us all to ruin? After all, everyone knows that the free market caused the Great Depression, right?

Apart from the usual explanations of how it was, in fact, government that causes economic crises and how it is government that causes the chaos of allocation through its inability to calculate, the more important and hard hitting retort to this accusation is to point out that freedom does not mean a lack of control at all. It simply means that individuals have control over their own lives as opposed to some central bureaucracy. Contrary to the opinions of even some free market proponents, there is nothing “spontaneous” or “disorderly” about freedom1. Rather every human action unfolds as the result of a purpose and desire and one is permitted to achieve these desires with one’s own person and property, and the person and property of those whom you can solicit to join, voluntarily, your enterprise. In this way the ends of everyone can be satisfied as far as they possibly can with the scarce resources available. Government, on the other hand, must always result in the substitution of one person’s or set of people’s purposes for everyone else’s, enforced by violence. Indeed, where someone says that government is needed to “steer us all in the same direction”, the very problem is what should that direction be? Nobody ever has precisely the same vision of how enforced collectivism should be implemented, nor of the goals that it should achieve. Ideological battles and physical wars have seldom been between liberty and collectivism but rather between different brands of collectivism. Fascists and communists, for instance, were pitted against each other in World War II even though they are both brands of totalitarian government. As Mises put it, an advocate of collectivism “always has in view his own brand of socialism” (Omnipotent Government, p. 253). It is government and collectivism, then, with its desire to forcibly direct everyone else’s person and property towards ends that they do not desire that causes chaos, conflict, and fighting. Further, if the market is motivated by greed, then what could be greedier than not only wanting to achieve your ends with your own property but with everyone else’s as well? And if everyone else refuses to play ball then you will fight them and force them to comply! At least a greedy free marketer has to stick to his own turf and needn’t have anything to do with you.

Economic Law and the Laws of Natural Sciences

Another problem is people’s perception of economic law as opposed to the laws of the natural sciences. Many of the latter are either immediately apparent, such as the law of gravity, or are accorded a high degree of respect when scientific research reveals them. Few feel that they have the ability to question the results that scientists produce, particular as we seem to live in a positivistic and evidence-obsessed culture. Economic law, however, is never accorded the same respect and for some reason it has always been believed, from eras of kings and conquerors through to prime ministers and presidents, that government can repeal and banish it through a simple decree.

If government attempted to legislate against the law of gravity – for instance, by demanding, that every object must be 2 feet from the ground – people would have little hesitation is declaring the politicians to be stark raving mad. Yet if the government attempts to alleviate shortages or unaffordability by enacting price controls, even though economists have, for generations, explained the necessary effects of such a measure, it is still believed that such an attempt is legitimate. The laws of economics are as scientific and true as the laws of the natural sciences. Only the precise conditions that bring them into play – that is the valuations of the individual humans and the uncertainty of future, natural events – are scientifically indeterminable. But so long as certain conditions are met, economic law cannot be counteracted. A reason for ignorance of this fact is that the ultimate causes of an economic distortion – human valuations and interference by government control – are difficult to link through to the result, except by a chain of deductive reasoning. Where prices rise for example, no one necessarily witnesses the increase in demand relative to supply (and no one witnesses the increase in the quantity of money that is brought about by government-controlled central and fractional reserve banking). All that it is seen is the numbers on the price tags getting higher, a fact that can easily be blamed on the greed of the merchant or trader. If subsequent price controls cause a shortage, again, the actual cause is not perceived. All that is seen is those same greedy merchants refusing to stock their shelves because now the price doesn’t allow them to “extract” a “huge profit”.

Part of this problem is also owing to a misunderstanding of the subject matter. The natural sciences deal with inanimate objects, i.e. their laws concern matter that feels no desires or purposes and is incapable of expressing choice. Hence the laws of the these sciences are seen to be immovable and true for all of time. Even if good or bad results follow from these laws one has to work with or around them rather than simply ignoring them. No one can, for example, simply dismiss the law of gravity or ignore air resistance if one wishes to fly. A bridge can only be built by understanding geometry and how loads affect various structures. Economics, however, concerns human choice and desire, something that may not only be impulsive and of the moment, but also has results – beneficial or bad – that are motivated and subject to influence and change. It is therefore perceived that economic law, dealing only with the supposedly wishy-washy vagaries of human desire rather than the concrete and immovable facts of the universe, can be overcome – by force if necessary. What is not realised is that economics does not deal with the substance of choices and resulting actions but with their form. Economics takes peoples choices and actions as a given, examining what must be true as a result in spite of their specific content. Its laws are universally valid even though certain choices may be necessary to demonstrate their effects (no could witness the interplay of supply and demand, for example, unless people were actually willing to trade).

Perhaps the epitome of this misunderstanding is that people even go as far as seeming to relax their awareness of the condition of scarcity. Government, in particular, is deemed to be an endless fountain of plenty that should forever be funding more or doing more to cure X, Y and Z. In citing various facts and statistics that demonstrate deficiencies and deplorable situations – “30% of people can’t afford to heat their homes!” “40% of people spend more than half their income on food!” “Child poverty afflicts a third of all families!” – all that our outraged social pioneers accomplish is pointing out the fact that we do not live in the Garden of Eden. Aside from not even entertaining the fact that freedom and lack of government is the path to prosperity, these busybodies have no proposal or specific method for determining precisely which needs are more pressing and must be resolved and which must be left to languish, however deplorable. All we get is that “something must be done!” a cry that will forever be heard until we live in the land of Cockaigne. An additional, exasperating cause of this is the incentive to engage in rent seeking behaviour. When government is sitting on a big pile of cash that could be spent on pretty much anything it wants, it becomes more economically viable for people to stop producing and to start demanding a share of the existing productivity. It is therefore not surprising that a whole host of problems and ills come crawling out of the woodwork when they can be solved, conveniently enough, by their sponsors and promoters receiving government money.

It is very difficult to overcome this mentality but there are some simple things that one can do to countenance this type of ignorance. If someone has difficulty in comprehending the validity of economic law, a basic way of shining some light on the truth is to point out the motivations of other parties in a situation – to put the person in the shoes of someone else. If, for example, the debate concerns price controls, persuade the person to appreciate the point of view of the seller as opposed to that of the buyer. What if he was in that situation and was suddenly told that he can’t sell an item for more than, say £10 each yet his costs are £15? In short, ask him, would you continue to sell in that situation? Secondly, where someone proposes a government measure to alleviate an alleged ill, ask for justification of why that problem deserves funding compared to others (having a few other of these problems at one’s finger tips may assist in this regard). As he is unlikely to be able to offer a definitive method of prioritising government spending, the answer will almost certainly dissolve into “raise taxes on the rich!” That will open the door to a wider discussion of the efficacy of government vs. the free market in creating wealth and vanishing problems such as poverty.

Truth and Lies

Perhaps the greatest intellectual difficulty that Austro-Libertarians face, however, is not the existing mentality of the people or their biases towards collectivist solutions. Rather, it is the fact that we are not always up against people who are interested in the truth. Government, relying on violence rather than entrepreneurial talent in order to attain its revenue, provides an easy and luxuriant income to hoards of individuals who would never have a hope of attaining that income on the free market. This is not to suggest, of course, that everyone who receives government funding is stupid and useless. In most cases it is simply the fact that their talents would not be in high demand on the free market. All human beings seek to further their ends and to make their lives more comfortable and rewarding through the means that are available. Economics frequently talks about how humans use objects as means to achieve their purposes, but so too can other humans be used as means. After all, why bother doing something for yourself if you can just order someone else to do what you want? Power, and the exercise of it, is therefore an extremely seductive potion, one that, once drunk, is very difficult to relinquish the effects of. But government has never survived on its own by simply crying “We are better for you!” “We are morally right!” etc. Rather, it has had to buy in other sectors of the population at large in order to retain its veneer of legitimacy. There are two of these that we shall mention here.

First, intellectuals are a prime category of those persons who are unlikely to obtain the income that they do on the free market. It is only through government funding and largesse that their theses and research papers would ever have a hope of being written. There is also, perhaps, the snobbish aspect that intellectual endeavour is somehow “above” the market and represents higher truth or something better than grubby trading (the same mentality one can often find pervading that other sink pit of government money, the arts). But that aside, when, for example, the majority of macroeconomic research is funded by the Federal Reserve, what likelihood is there that the budding and bright PhDs who can only find employment in one of these research programmes are going to churn out conclusions that are critical of central banking? Or when hoards of scientists are swept up by the Intergovernmental Panel on Climate Change (IPCC) what chances are there that their conclusions will not invoke the need for more government control? This essay is not the place, of course, to determine the merits of specific scientific research. Rather, the point is that one has to be extremely suspicious of Government-funded programmes that conveniently either justify or warrant an increase in the size of government. But it is also true that some intellectuals themselves may wish to disingenuously cloak the truth in favour of a cherished political agenda – they simply believe that big government is a good thing. In any case, bringing on board seemingly impartial and objective intellectual justification for government is a massive boon.

Secondly, one might say that the population itself has been bought off. Democratic governments effectively bribe the citizenry with their own (or, rather, other people’s) money, not only by promising wonderful schools, hospitals, transport networks etc., but also by directly showering handouts from (and creating dependence upon) the ballooning welfare state, all conveniently paid for by taxing “the rich”. Even if one manages to resist the siren song of the former, it is very hard to denounce one’s receipt of a stream of free money. Given that there are so many people who are reliant upon government today it is difficult to envisage how one may even go about the practical operation of dismantling it, let alone attempting to convince people of the justification of such a move.

One cannot necessarily condemn individuals we have been discussing as being totally evil and immoral. If the livelihood of oneself and one’s family is reliant on, say, a tax credit or if one is in a government-funded job then it is understandable, if not forgivable, that people will tow the government line. But that only means that the exceptions, the ones who do not follow the Pied Piper’s tune, shine ever more brightly into the ether and it remains the fact that the justification of government is fundamentally nothing more than a charlatan operation. The supreme irony has to be that people are paying for the justification of their own enslavement.

It is very difficult to challenge this problem in the search for the truth. One could resort to challenging the credentials of one’s ideological opponents, but this can lead one down a dangerous path, resulting in ad hominem attacks and accusations of sour grapes. One should probably only restrict such observations to the most general terms, as we have done here, or at least ensuring that they only pepper solid arguments and counter-arguments that concern the specific issues. Instead, one can only countenance illusions and wizardry with one’s own solid passion for truth and justice, a reputation that one might have to earn through patient adherence to it. Lies and falsehoods will eventually be revealed for what they are. We, as Austro-Libertarians, know that government cannot ever achieve its promises, we know that it is a foregone certainty that it can never control the entire economy without collapsing, we know that it is immoral, violent and destructive. Everything that government does simply sows the seeds of its own doom. Perhaps we are starting to see the beginning of this at the time of writing, as Western populations, having been lied to once over the Iraq war, having seen the mess created in Afghanistan, and having grown ever more distrustful of the so-called “War on Terror” in general, are showing strong resistance to endorsing the US government’s desired attack on the Syrian regime that we mentioned above. Crucially, people are convinced that governments are lying about its supposed justification – “trust us” and “we know there is evidence” is no longer working. It may be only be a matter of time before this sentiment is linked towards the continued failure of government to find a way out of its self-induced economic malaise since 2008 and all of government’s chickens come home to roost. Who then, when all of the liars, conjurers and charmers have vanished will be left to pick up the pieces and who will people turn to for a way forward? Only those who all along remained steadfast to the truth and to what was right – the Austro-Libertarians.

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1As we have said elsewhere the notion of the market as a “spontaneous order” is metaphorical in only the very strictest sense.