Towards a Universal Human Ethic

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The effort to establish an incontestable proof for libertarianism as a universal human ethic is an immense undertaking and one that (to avoid any possible false anticipation) will not be accomplished in this short essay. We can also suggest that even if a libertarian scholar was to arrive at such a thesis it is unlikely that he would attract the attention and rejuvenation of political philosophy that, say, John Rawls did upon publication of his A Theory of Justice, an inherently statist work that found natural admirers amongst those interested in promoting the cause of the state. In this essay we will outline some important considerations that may help towards establishing libertarianism as the universal, human ethic.

The first consideration, and one that the present author is yet to see in print, is why should the burden of proof be on libertarians to establish their case? Doubtless it is the task of those who posit a particular political or ethical theory to justify their propositions, but too often in this kind of debate, democratic government is seen to be the natural, neutral or perhaps “default” position, with libertarians striving to promote something new and exciting, like a novel invention or a method that must be proven to be right before we could possibly envisage accepting it (although it seems as though we are never allowed to have it tried and tested). However, the case is, arguably, the other way round. Liberty – the freedom of each individual as an independent moral agent free from interference – is the natural, default status of human beings, as will become clear from our analysis below. It requires only negative action on the part of every individual human – the abstinence from physical invasion of the person or property of another. Anything else, however, requires a positive, conscious choice to disturb this peaceful situation and to interfere, physically, with somebody else. Those proposing such a positive course of action should surely be required to prove their case ahead of those who argue for retention of the natural state of affairs? Indeed, the difficulty of establishing a case for libertarianism does not result in the case for government being any stronger and at the very least proponents of the latter should be prepared to justify their positions as well. Often in these debates the libertarian is presented with a smorgasbord of issues and is required to explain how each and every one of them would be dealt with in a libertarian society and produce a just outcome; for some reason, the slightest weakness, the slightest inability of the libertarian to explain how a single issue, however minor, would be handled better in a libertarian society is taken as conclusive proof that libertarianism must be discarded, regardless of the finesse of the argument before that point. This is nothing but intellectual sloth, or rather a preference to bask in the comfortable status quo rather than confront formidable questions. It may be difficult to argue for the rights to self-ownership and private property, but it is much more difficult to propose that a select few should be able to override self-ownership and private property; that a select few need not earn their living by serving others through voluntary trade but can, instead, confiscate it; that the select few can enact laws and edicts with no regard to any primary rationale whatsoever; that the select few can establish massive, compulsory monopolies over whole industries such as transport and healthcare; that this little elite can accumulate debt that exceeds the productive capacity of the planet; that it can spend this borrowed money on invading and bombing civilians in foreign countries in conflicts that are not its concern. This side of the debate cannot be ignored. Now, to be sure, not all statists agree that these are legitimate things for the government to do and would wilfully deplore them in concert with libertarians (although much of this would be a criticism of that which government does, as opposed to the libertarian view that opposes government per se). But this demonstrates that the status quo is not the default option and opponents of libertarianism must be prepared to establish their own philosophies as being superior to libertarianism rather than simply dismissing one that they do not share.

The second consideration, and one that has been raised in previous essays, is the presuppositions of those who attempt to promote ethical theories of society. The characteristic of humans that distinguishes them from animals or unconscious matter is that they make voluntary choices to devote means towards ends, rather than simply relying upon instinct or the inertia of other matter. These voluntary choices are the substance of moral enquiry – because of the fact of scarcity, humans must choose between competing ends to which means could be devoted. An ethical theory informs the human of which ends he should pursue and which he should not with the means available. Without voluntary choice arising from scarcity moral theories would be redundant – total abundance would mean that every end is already fulfilled and hence moral theories would have no information to provide, and without voluntary choice moral theories would have no effect upon an action because the individual cannot change its outcome. Thus any being that makes voluntary choices is deemed to be a moral agent – the being to whom a moral theory applies. A theory of intrapersonal morality would concern only how moral agents should make choices in relation to amoral agents – those who have no voluntary choice such as dead matter, or objects. The moral question is “what is a good thing for this person to do with this object?” and not “what is a good thing for this person and for this object?” There is no such thing as moral rights arising in the form of dead matter and any moral enquiry concerns wholly the best ends for this individual human to pursue vis-à-vis that matter. With interpersonal morality, however, the question changes as now we are concerned about what is good for one actor and what is good for another in their relations between them. An interpersonal ethical theory accounts for not only the best ends of the one actor but also those of the other; thus, there arises the language of reciprocal rights and obligations that we possess and owe, respectively, to each other. As we noted, the essence of being human is that voluntary choices are completed through actions which are physical manifestations, making physical changes to the matter that is in the world and that this is the criterion of moral agency. If one person’s voluntary action, therefore, physically restrains or interferes with the person or property of another then what is the result? What happens when one person uses force against the person or property of another? Simply that this latter person is now prevented from making voluntary choices that result in actions devoted towards ends that he desires. Rather, his action is now forcibly directed, like a mere object, to the fulfilment of the ends of another individual. He therefore loses his characteristic as a moral agent and, worse still, as a human being entirely. For the very characteristic that makes him human – voluntary choice – has now been denied to him. What follows, therefore, is that any ethical theory that relies upon the force may be a perfectly applicable ethical theory to the individual actor doing the forcing – it may be perfectly acceptable if it is presented as a theory of what this one person should, treating every other human in the world as mere objects for his use. But if it is presented as an ethical theory of society then something is surely amiss – for how can such a theory apply to a society of humans, who, by virtue of that definition, each have independent moral agency making voluntary actions motivated by voluntary choices, when the substance of that theory denies them this very characteristic? It is no answer to this charge that, as humans, we have a reciprocal obligation to submit to the force of a person who may be said to have the “right to force”. Such an obligation does not make sense because an obligation presupposes the voluntary choice to carry out the substance of that obligation. If one is forced, however, there is no obligation at all – like a tree blowing in the wind it simply happens. Furthermore, the threat of force resulting in seemingly voluntary compliance is indistinguishable from force because there is no genuine choice – the same outcome will always result regardless of the victim’s choice to either carry out the forced ends voluntarily or to submit to violence. Moreover, neither does so-called “democratic oversight” of the enforcers – through, say, popular elections of the government – make any difference. In the first place, the answer of democratic oversight to seemingly despotic and autocratic propositions is reminiscent of the response of the socialists to Mises’ theory of economic calculation under socialism – in order to try and get around a very real problem faced by their theory they have to make socialism look like a market through various contrived devices such as bureaucrats “playing” entrepreneurs with money bestowed on them by the state – which raises the question of why not just adopt the market anyway instead of an inferior version of it? In just the same way here democracy lends a veneer to tyrannous and collectivist theories in order to make them look more free so that people are really “volunteering” to government edicts – which equally raises the question of why just not adopt genuine liberty? Regardless of this, however, democracy does not convey any genuine voluntary control to the individual. Rather, it conveys it to a majority of individuals. Any ethical social theory legitimated by democracy is not, therefore, a genuine human ethic but rather an ethic of the majority. Anyone in the minority is still forcibly subjected to ends that they do not want. Furthermore, this control by the majority would only be present in direct democratic systems where you get to vote on every individual issue. However, in so-called representative democracy, the political system under which most of us are languishing in the world today, the majority merely chooses the decision makers out of a carefully screened list once every four or five years – and there is no compulsion upon these leaders to carry out their manifesto commitments or electoral promises. The majority may have chosen the leaders but there is no guarantee that they would voluntarily submit to that which these leaders would decide to do once in office. Neither also does the fact that the tyranny may be partial rather than absolute save any collectivist social theory. For example, the government may forcibly confiscate 40% of your income in taxes; 60% of it is still yours to do with what you like as a free and independent human being (subject to all the myriad of government restrictions and regulations, of course). More specifically, the government does not regulate when you make a cup of coffee, or go to the toilet, or watch the television, or do your laundry. In other words there is still a very significant part of our lives in which collectivist ethical theories still allow us to be independent moral agents. However, this is only because the government has decided to leave you alone in these activities. If I had a working horse and I let it wander to any corner of the paddock that it wanted, sleep when it wanted, drink water when it wanted, none of this would change the fact that the horse is still entirely mine to dispose of as I wish. Indeed I might only allow these unilateral actions on the part of the horse because it makes it more pliable to being forced to work at a later date. In the same vein, most collectivist theories, absent some vague or waffling commitment to “fairness”, “equality” and so on, do not posit the substantive choices that should be made under their aegis – they merely advocate the procedural, political set up for making them. There is no reason why, in principle, government could not confiscate all or a larger chunk of your income, or actually regulate how often you go to the toilet or what you decide to wear. The de facto result of democracy is that it has seemingly legitimated any action of the government whatsoever, with democratic governments having made far more inroads to personal liberty of which ancient monarchs could only have dreamed. Substantive freedom under collectivism is based more upon what the populace is willing to bear rather than anything inherent in the ethical theory that informs it.

This proposition – that any theory that does not permit complete individual freedom can never be a genuine human ethic and therefore is, by its own standards, contradictory is not, of course, a watertight theory. It would, for example, have nothing to say to a person who did not wish to present his theory as a social theory and only cares about subjecting other people to the ends that he desires – in other words, a tyrant in the extreme. And indeed, just as a horse may need to be cajoled in working for you, so too may the tyrant pay lip service to espousing an ethical theory of society that works for everyone in order to placate the population, whereas privately he has concluded that only his ends really matter1. Nevertheless, it is certainly an important realisation whenever confronting someone who proposes such a theory. For if he is proposing a genuine theory of society then his theory is contradictory. If he is not, then his tyranny is simply revealed for what it really is and his true ends, to subject everyone else to his desires, will be laid bare for all to see. It is not likely that response to such a theory would contain an overwhelming degree of enthusiasm.

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1This is arguably the shortcoming of Hans Hermann Hoppe’s argumentation ethics, which relies upon the premise that ethical propositions must be determined by argument. Does this bind the person who doesn’t argue, or playfully argues only to cajole or placate while having already unilaterally concluded ethical propositions in his own mind?

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Myths about Freedom

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Libertarian enthusiasts usually take pride in their theoretical understanding of the ethics of liberty and the evils of statism. It is difficult not to read and be enthralled by the works of distinguished authors such as Murray Rothbard, Hans Hermann Hoppe, Walter Block, and from earlier generations the likes of H L Mencken, Albert Jay Nock and Frank Chodorov, before we even mention Ludwig von Mises and Friedrich von Hayek. Nevertheless, it is not likely to be the detailed theoretical purity of libertarianism that will be of much help in persuading the passive majority of the population that a free society is both the most economically prosperous and the most just. Rather, our main concern will be in overcoming the statist-bias that most people hold, a bias induced as a result of their indoctrination by their state school education, mainstream media and the presentation of any political debate as requiring at least some kind of government response. This bias crystallises in a number of myths that serve to put a mental block from any acceptance of a society without government, or at least a society where government plays a minimal role. This essay will attempt to explore and debunk some of these myths, not only to refute them but to do so in such a way as to cause people to realise just how ridiculous any adherence to them is, and that the truth is not only correct but blindingly obvious. Indeed such a revelation needs to be this powerful as that same statist bias usually results in the outcome of any debate concerning the necessity of government to be distinctly unbalanced. It is not enough for us libertarians to explain how the free market may make society better off in ten or twenty ways; for if the person whom we are trying to persuade finds an eleventh or a twenty-first thing that we cannot categorically demonstrate will be dealt with successfully in a society without government, then never matter how persuasive our previous arguments and never mind how much the balance is stacked in our favour, the one perceived failure is taken as capitulation that government is necessary and any hope of a free society needs to be abandoned. New and radical ideas that challenge what everyone has always held to be true are often met with this type of defence mechanism, permitting them to dismiss the new truth and return to the comfort of the status quo. This, in many ways, is the libertarian’s most formidable enemy, may be more formidable than the state itself. Let us turn, then, to trying to shatter some anti-freedom myths.

No one will Build the Roads!

The first myth is what may be summarised as the “who will build the roads?” problem – that we are so used to government engaging in the monopolistic production of certain goods that we cannot imagine a world where government would be absent from that sphere of production. Under this category is included such questions as “who will take care of the disabled?”; “who will supply the water?”; “without the NHS what will happen to you when you are poor and sick?”; and so on and so forth. Aside from pointing out that everything (including roads) that government runs was first, at some point, invented by the free market and not by government bureaucrats, we might point out that the capitalist-entrepreneurs manage to successfully deliver into our hands some of the most technically complex items with components and expertise delivered from a multitude of countries. Refrigerators, television sets, radios, laptops, smartphones, cars, the list goes on. Having achieved all of this, will the prospect of having to take on something as wildly complex and as technically unnerving as laying down some tarmac from A to B strike the fear of God into budding entrepreneurs? Would those that aspire to the fame and fortune of Bill Gates and Steve Jobs be twisting and turning in their sleep from nightmarish apparitions of such a horror? Can these inferiors only be rescued by the boldness and bravery of the elite government bureaucrats who can master this fiendishly complicated endeavour? Clearly this is utter nonsense and any perpetuation of this myth relies solely on the argument from existence. Yet we can easily counter this by imagining what our thought process would be if government had taken over a lot more than it already does. If government had monopolised the smartphone industry, would you be saying “thank God for government! Without them, who will build the iPhone?!” If government took over the stationery stores would you wonder “who will sell me my pencils and pens?!” if government was to vanish? If you could only get clothes from government department stores, would the sudden loss of this monopoly mean that we would all have to go round stark naked?

Libertarians are, of course, always at something of a perceived disadvantage in challenging this myth as we are not advocating any strict, one-size fits all plan like other ideologies do. We intend to leave everyone alone to make their own plans peacefully. Hence we do not know precisely who will build the roads, where they will be, what they will look like and how they will be run. Indeed we don’t even know if roads will cease exist and be replaced by some more convenient method of transport. 2015 is the year to which, in the film Back to the Future II, the protagonist finds himself transported, surrounded by cars that fly and roadways and highways that exist not on the ground but in the sky. And yet here we are, one year earlier in 2014, without anything even approaching that level of technology because government forcing us to pay for their roads through taxes stifles any competitive innovation in that area. Indeed, anything that government touches lacks modernisation and development. Roads, schools, the post office, rubbish collection and so on all carry on with the same monotonous methods, procedures and technology while the free market around them innovates. Government is not only unnecessary for building the roads – it is actively preventing us from developing better methods of transport.

Greed and Individualism

The second myth we must tackle is that more freedom encourages greed, selfishness, and an individualistic, atomistic existence in which no one cares for anyone else. Nothing could be further from the truth. Libertarianism is neutral regarding the personal choices that people make so long as those choices are non-violent. Freedom may permit you to make as much money and keep it all for yourself, to shut yourself away from all social contact, to never give anything to charity, or to refuse to help an old lady across the street. But it also permits you to not make as much money as you can, to give as much of it away as you like, and to help as many old ladies across the street as you have time for. It encourages neither type of behaviour. The only reason why freedom and capitalism are accused of encouraging greed and selfishness is because people in free societies have generally chosen the path of increasing productivity, material wealth and the standard of living (ignoring, of course, the fact that while this confers great riches upon the most productive, the living standards of all people are raised far above what they otherwise would be). People who dislike these outcomes attack the system of freedom rather than the choices people make under it because they need to hide the fact that they simply wish to force society away from choosing a path that most people want but that they, the disgruntled, do not want. If they were to acknowledge that nothing about freedom per se encourages greed and selfishness they would reveal that what they are really trying to achieve is to force humanity to conform to their ends rather than what people individually want. It is true that people, as individuals, think and feel pleasure and pain as individuals first, then that of their closest family and friends second, of minor acquiantances third, and for the most part probably do not even care about the billions of remaining people whom they will never meet. Human nature places the individual at the centre of his own life. But not only are humans also sociable and co-operative creatures – the greatest product of this being the division of labour where, as if by magic, the actions of one person, you, could be serving the needs of someone thousands of miles away whom you do not even need to meet let alone care for – it is not the task of political philosophy to correct or otherwise make amends for perceived failures of human nature. Humans are self-interested and act as individuals; it is impossible for it to be otherwise and any political system has to accommodate rather than subvert or alter these facts. It is precisely because freedom is the only political system that does this that free societies have flourished to degrees unobtainable by any other political system. But the greatest irony surely has to be that it is capitalism and freedom that promotes moral fervour, selflessness and care for others, whereas it is any government system attempting to do the same by its usual raison d’être – force and violence – that encourages an individualistic and atomistic existence.   Forced government redistribution of wealth does not cause the donor to become any more moral or selfless; for moral actions require moral choices and if he is simply forced to have his earnings siphoned off into the welfare pot then this demonstrates nothing about his moral character. But further, if anything, having been denied the personal choice to determine which causes are good ones for your money, it is more likely that forced redistribution will instil in you bitterness, resentment and hatred of your fellow humans rather than sympathy, care and a willingness to help. Moreover, it is the existence of generous social safety nets that leads directly to the fracturing of family relationships and friendships and of any need to engage with fellow human beings on a personal and empathetic level. These relationships become most important precisely at your time of need and if the state is there ready to fill your cup in hand on these occasions then cultivating them becomes relatively less important. In a free society however, not only must each person possess a great empathetic skill in order to determine how best to serve everyone else under the division of labour, but the lack of a welfare state means one must rely on one’s friends and family, and they must in turn be able to rely on you. Hence these bonds of mutual care and assurance become stronger under a free society whereas a government-run society all but eradicates them. Finally, the bigger government becomes, the more it leeches from the productive sector, the higher the glittering stack of gold (or paper money, at least) that it steals encourages people to stop producing and to start finding reasons why they should be the beneficiaries of a share of the loot ahead of anyone else. Hence the proliferation of lobbyists, focus groups, think tanks, statisticians, and so on that exist for nothing more than showing why thieved tax revenue should go to one place and not another, and it is hardly astonishing when all manner of alleged societal ills and problems appear seemingly out of nowhere and can be, conveniently, solved by a fat wad of government cash being paid to their sponsors. Big government therefore pits each human against every other in a fight for the loot – it is a contest of who can get everyone else’s money first. If this is not selfish and greedy, then what is?

War of All Against All

Related to the last myth is the allegation that without government every human being would forever be robbing, stealing from and murdering everyone else, reducing humanity to the level of brutal savages and putting an end to civilisation as we know it. This myth suggests that it is an inherent part of human nature to oppose to the death every other human being in a fight for what is a fixed pool of resources, much like animals do in the jungle. If you can’t struggle your way to the top of the food chain in this “society” you will die at the hands of someone else. The first question to ask any advocate of this position is if, in the event that government and its monopoly of security, protection against crime and law enforcement, was completely abolished in a flash, would that person immediately go out and start looting, maiming and killing? In other words, is the only thing keeping you from putting a gun to someone else’s head the fact that government will detect and imprison you? Do you have no conscience whatsoever and are utterly dependent upon government to stop you from turning into a predatory animal? Furthermore, is government the only reason you go to work every day to co-operate with your fellow employees, greet your neighbours a good morning, have coffee with friends, walk your kids back from school, and sit down to a family meal in the evening where you will talk, laugh and joke with other human beings? Will you stop doing all of these sociable activities and engaging co-operatively with other human beings if government vanished? If you meet a friend for lunch is government the only thing stopping you from shooting him and pinching his dessert? The answer is of course no, an answer that is necessitated by the government advocate’s recognition of this behaviour as immoral. Humans possess consciences, moral fervour, and the ability to distinguish between right and wrong. If he concedes that there are some acts that he would not carry out even if there would be no sanction whatsoever, is it not reasonable for our government supporter to expect this of other people as well? At the very least he has every reason to expect the same of every other person with whom he engages in these sociable activities. Indeed, can he name anyone he knows who, absent government, would transform into a criminal, and if he can, do those people form a majority of his friends and acquaintances? Humans not only possess a moral fervour that prevents them from acting wrongfully in the absence of retribution, but they also transcend their recognition of strict moral duty and are, additionally, an inherently sociable and co-operative species. Not only do we form bonds of friendship and kinship far more powerful than any government gun, but, as we mentioned when tackling the previous myth, we have developed a system of co-operation – the division of labour – in which you do not even have to know, meet, like, love, respect or admire any other human being whose needs you serve. Indeed, you may positively hate that person and yet you can still achieve gain through co-operation within the boundaries of voluntary trade – a gain that is mutual and not just for you, where both parties come off better, all in spite of the fact that you do not care a bit about each other. Government was not necessary for this creation – it was truly a “spontaneous” order, spontaneous in the sense that it was the product of human purpose but not of any human’s design. Only a handful of sociopaths and nutcases – a bare of minority of the population – require deterrence in order to prevent them from committing crimes. In addition to private security forces being able to deal with these individuals, there will certainly not be any overnight, societal collapse. Rather, it is government that pits each human against his fellow. Government achieves all of its ends through violence and force – someone gains at the expense of someone else. If you can tap into that mechanism then you can pinch, plunder and pillage from anyone whom you like. But it gets worse than that for government overlays this regime of violence with a veneer of democratic legitimacy, thus weakening people’s sharp, moral distinctions and ennobling anything you do against another human being, however evil and immoral, all OK as long as it was done through democratically elected government. It is worth emphasising this point – not only is government permitting this behaviour but is effectively saying that it is a good thing. It is no small wonder that with such encouragement the war of all against all not only exists under government but becomes prolific.

Companies will Poison our Food!

Our final myth is the notion that private companies, in seeking to maximise their profits, will put poisonous chemicals in our food, will cut corners with safety, our buildings will collapse, our cars will crash, our lives will be at the mercy of these profit-hungry merchants of greed! The obvious retort to this ridiculous assertion is that if a company is expecting people to buy its goods, if it is expecting to outwit its competition, and if it is expecting to make profits, then just why on Earth would it do these things? What advantage is there in creating a product that is going to kill your customers ahead of one that will not and will keep them coming back to you time and time again to keep on purchasing your products with loyalty? As soon as it is realised just how dangerous the goods you are selling are, won’t a competitor leap in with safer products and drive you out of business? At the base of this misunderstanding is the idea that, in the absence of government, regulation will simply vanish and companies will have a free hand to do whatever they like without restriction. But regulation is itself a market activity – not only does it consume scarce resources just like any other but it aims for an end that consumers desire. At the heart of regulation is not the desire to forcibly stop a company from producing in a certain way or from carrying out a certain activity. Rather it is to furnish information to customers so their choices are more informed. Indeed, free market regulators are dealers in the market for information and they need to decide precisely which information is of the most benefit to consumers. Although there exists consumer groups and watchdogs to which people subscribe in order to gain more information about the companies from which they buy, most regulation will take effect as independent certifications of standards which companies will have to achieve. If the standard, in quality, safety, or whatever is achieved then the company will be licensed to advertise the fact that its products have met this standard. Underwriters Laboratories, which regulates product safety, is an example of this arrangement. The regulator too has to judge precisely which standards consumers are willing to pay for. If consumers do not care to know whether a product has achieved a certain standard then companies will not seek certification or accreditation. If the standard is too high then products will become too expensive and the regulator will cease to receive custom from companies and will go out of business. If, on the other hand, the standard is too low then the certification is meaningless as customers are demanding knowledge of a level of quality that the regulator is not setting out to detect. Free market regulation is therefore alive and thriving and it is tied to precisely how much of it consumers demand. If people will not buy your goods because they do not achieve the level that is demanded by private regulators then you will find yourself going out of business.

Related to this notion is the myth that profit seeking will cause a relentless quest by greedy businessmen to deplete the resources of the Earth and after an extravagant party everything will be used up and the world will be left as a barren wasteland. This idea overlooks the fact that profits are determined not only by revenue but also by costs. Just as companies seek to maximise their revenues in order to be profitable so too must they decrease their costs. They are under constant pressure to achieve more output with less input. There is, therefore, an inbuilt incentive towards conservation in a free market – using less, and not more. If resources become depleted then their cost begins to increase so companies have to pay more to use them as inputs, squeezing profit margins and encouraging the switch to less scarce materials. Thus not only is the endangered resource preserved for only those ends which need it most desperately but the increased price induces the production of substitutes or fresh discoveries of the virgin material that were previously unprofitable to harness. As we have explained in detail elsewhere, the very resources that are in danger of depletion today are precisely those where the pricing, profit and loss system has been restricted and replaced by government licensing. Rainforests, fish stocks, and endangered animals are all examples of where ownership has been overridden by government fiat. As they are ownerless the use of these resources is not regulated by the cost of their depletion so there is every incentive to consume them now until they waste away. If this should be doubted then why are elephants, tigers and whales in danger of extinction whereas dairy cows, chickens, and sheep are not? How come the evil profit-seeking capitalists have not, quite literally, driven lambs to the slaughter until there are none left?

Conclusion

These are just some of the main myths which libertarians might encounter when trying to promote their vision of a free society. No doubt there will many more of them that crop up as a result of the statist bias that is inherent in most individuals. Libertarians face an uphill struggle in this regard, but hopefully what we have determined above goes some way to showing how ridiculous clinging to government really is.

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Means, Ends, Production and Consumption

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One of the apparent weaknesses of economics (of any school of thought) is that as soon as one gets past the “Robinson Crusoe” stage of an isolated individual and proceeds to the elaborate explanations of production, exchange, and the division of labour, it becomes extremely easy to forget that at the start of every economic system, at the bottom of every theory, is the individual acting man, the person who has ends that he achieves with means through actions. There are two, seemingly contradictory (although actually related) dangers from this oversight. First, by separating the categories of production, consumption, saving, investment, entrepreneurship and so forth into separate personae under the division of labour, we forget that these qualities are inherent in the action of all human beings and are simply abstractions from the different categories of action applied to different groups in order to demonstrate their role in the economic system as a whole. What results, therefore, is atomistic appreciation of these different categories, so that, for example, we talk of the needs of “producers” or of the welfare of “employees” or of interests of “borrowers” or of “savers” being punished, and so on. Secondly, we can go to the opposite extreme and only look at the whole economy, concluding erroneously that what is “good” for the economy (if such a thing can be said) is also good for the individual human beings who make up that economy. These two dangers we will explore in turn.

 The Atomised Categories of the Economy

When looking at an individual human being, it is not outrageously difficult to understand how the object of each human being is to achieve his most highly valued ends with the scarce means available to him. We do not need to enter a deep, praxeological analysis to understand how the individual human will, all else being equal, seek to maximise his gains and minimise his costs. He will attempt to inflate the former and deflate the latter as far as it is possible for him so to do. It is also clear that the final object of all of his action is consumption – the enjoyment of the fruits of his toil, the benefit of which he predicts will outweigh the disutility of that toil. If, therefore, in a situation of isolation, a human decides to plough a field, plant seeds and then sow the resulting crop we can readily understand that he will seek to achieve the highest yield of crop possible while ploughing the field and sowing the seeds in a manner that bears him the lightest labour and the lowest cost. If he is able to achieve the same yield with a lower cost or a higher yield with the same cost, he will, all else being equal, proceed to do so. Hence, if he is suddenly gifted a tractor that halves his ploughing time, we can understand easily why he will make use of it. If he can purchase a new type of seed that doubles the crop yield but with no extra work then, again, no one will have any difficulty in appreciating this. The idea that we will always take the shortest route to the same end or the same route to a higher end can be empathetically understood by any human – we are always trying to spend less and have more, cut down on X and increase Y, all to yield the highest benefit for the minimum cost1.

What we can also readily appreciate in this scenario is the different categories of action inherent in the single, lone human. He is a consumer, a producer, an entrepreneur, a saver, an investor, and a capitalist. He must carry out all of these activities with the means available to him on his own behalf. And hence it should be obvious that all of these activities are carried on not for their own sake but for the valuable ends and the improvements to his life that they achieve. If all of the ends could be achieved with no work, production, no saving, no investment and no capital accumulation whatsoever few would doubt that he would be in a far better position. How many of us would turn down the opportunity to purchase anything we wanted without having to go to work each day? Judging by the fact that more than half of the eligible population play the national lottery, it stands to reason that this would be few. It would, therefore, be absolutely absurd for us to say that a person’s life would be made better by loading additional burdens onto the ones that already exist. Who in their right mind would say that our lone human would be better off digging the soil with his bare hands rather than with a tractor and plough? Or that he is better off having to transport water on his shoulders than with the aid of pipes and irrigation? This would only mean that he would endure more work, more hardship but for the same end. No one in his right mind would advocate such a course of action. Additionally, no one would ever say (all else being equal) that a person has “produced too much”. We would not take the fruits of our labour and burn a half of it because the extra productivity means that we might not have to work next week. The result of this would be that a person forces himself to endure the same work for a lesser end. Again, all of this is readily understandable and no person would advocate such courses of action and expect to be taken seriously.

Unfortunately, however, this appears to be the approach that we take as soon as the division of labour comes into play and we examine the economy as a whole. For now, when considering the economy in such a manner, while all persons will still retain their multi-faceted characteristics2, the roles of consumer, producer, saver, investor, entrepreneur and so on are not concentrated in an individual but are split out so as to understand them in the new context of the division of labour and exchange. This is, of course, highly useful as it is only by utilising this approach that we can hope to gain any understanding of economic phenomena in the world in which we live, a world that is certainly not isolated but where each individual relies heavily on the productivity of everyone else. However, there is a danger in compartmentalising these activities and considering them only in isolation. With our lone human, we noted that less work means the same enjoyment for a lower burden of effort. A labour saving device, such as machine to pick fruit, for example, would obviously be of a benefit to him. But in the whole economy where the roles of consumer and producer are split, if such a device is introduced, the relative benefits and burdens appear to be split also. Hence, person X, the purchaser and consumer of fruit, is benefited by the lower cost of the product that the machine has permitted. But person Y, who might have been a fruit picker before the machine was introduced, might now find himself completely out of a job (or he may find that at least the demand for his services is drastically reduced) with apparently no corresponding benefit. The conclusion that is often drawn is that there has been a great harm and that “something must be done” to alleviate the plight of the formerly employed fruit pickers. This becomes manifest in a number of policy considerations such as “make work” rules, subsidies, campaigns against machinery and so on, many of which are instigated under union pressure.

The errors of these conclusions come from looking only at the production element of the economy and ignoring the consumer element. For no one in their right mind would say that an individual human should “make more work” for himself or destroy productive machinery to “give him a job”. It is obvious that such things would be a detriment to his ability to consume the fruits of labour. Nor would he be able to subsidise himself by taking money out of one of his pockets and putting it into the other. The very aim of every individual person is to gain as much as he can while doing less work, not more. Yet this is precisely what we do when looking at the economy as a whole. If productive machinery is allowed to displace jobs then this means that the consumers benefit with lower prices and/or increased product. To ward off the loss of jobs by artificially restricting the saving of labour is simply to “benefit” the production end of the economy but to “burden” the consumer end. But the whole point of production is consumption. These people, being kept in jobs that are unneeded, are in no way contributing towards the benefits of consumption. Their work continues as a deadweight cost and there is neither dignity nor achievement in perpetuating their pointless labour. Furthermore, while it is true that they will suffer unemployment in the meantime, the increased supply of free labour will cause wages to fall temporarily. This means that new lines of employment, those that were not previously economic when the people’s labour was desired to pick fruit, are now suddenly viable. New entrepreneurs will rush in to hire the spare labour and devote it to their new enterprises. One must not forget that there will be a degree of hardship during the transition, particularly if one was in a now redundant job for many decades or if a particular skill or talent has now become obsolete. But by deploying the labour to new lines of work, the array of consumer goods now increases. The labour saving device enables more consumption for lower prices, the final end of production, rather than stifling it in the production of the same goods for the same prices. In his role as a consumer every person will feel this benefit over time as real wages increase as a result of the increased productivity.

All of this goes to show that, far from failing to explain anything noteworthy, the economics of the isolated man – so-called “Robinson Crusoe” economics – must be thoroughly borne in mind if one wishes to avoid these misunderstandings.

The Broad View of the Economy

The second error we outlined above was of the opposite ilk – that, rather than looking at parts of the economy in compartmentalised components, one looks only at the whole economy and only thinks in terms of hermetically sealed aggregates and totals. With the individual, lone human we noted that anything that increases his consumption and reduces the burden of production is of a benefit to him. When he is, in effect, his own “mini-economy” all burdens are felt by him and all benefits are enjoyed by him; the one is weighed against the other in the same mind. If, for example, a person desires more to bake more bread and to achieve this he is going to deliberately curtail his production of meat then there is no problem in saying that the burden of the reduction of meat is offset by the increase in bread, for this individual feels both the burden of less meat and the benefit of more bread. His action demonstrates that he prefers bread to meat. This is not the case in the economy as a whole, where roles are concentrated under the division of labour and burdens and benefits are scattered across many – literally millions of – different people. It is a mistake to assume that there is any one, particular event that will be “good for the economy as a whole”. For the economy is just a number of people trading and co-operating peacefully; it is not an entity in its own right, it does not feel, it does think, it does not desire and feels neither pleasure nor pain. While we can, for example, say that a decline in meat production offset by a rise in steel production is a benefit “for the economy as whole” in the sense that the individual members of this economy have chosen to prefer steel over meat (and that jobs in the meat industry will shift to steel production), it is not the case that some broad measures of “output” and “input” leads to the conclusion that all is well. The most pervasive manifestation of this error is the almost ubiquitous obsession with GDP, a figure that is calculated from numerous aggregates that bear no relationship whatsoever with the underlying desires of the acting humans. A particularly crucial element in this aggregates is that of government spending. If GDP starts to fall, say, from the onset of a recession, then Government can simply prop it up by increasing its share of the GDP pie. But it does not follow from this that there is any benefit from this spending. It can only be concluded that an exchange is beneficial if the parties to exchange are volunteers. They only exchange because their action demonstrates that they desire the good that is gained more than the good that is given up. Government spending, however, is funded by taxation3, a compulsory exchange, not a voluntary one. Because the exchange was compulsory it demonstrates that the tax-paying party would prefer not to have his money in the hands of the government. If he did so prefer he would have paid it across voluntarily. When the government spends this money, therefore, it can only do so in ways that are less valuable to those people who provided the funding. There is no sense in which anyone is “better off”. The big aggregate numbers may look impressive following this expenditure but what has not been realised is that they are completely severed from the preferences of the individual people. The situation is no different from one man holding a gun to another’s head and forcing the latter to devote his productive resources to churn out stuff that he doesn’t want. The effort, the production and the physical results may look impressive but there is no point in producing anything if it does not satisfy someone’s most urgently desired needs. What has been gained, like Bastiat’s famous broken window, has simply been at the expense of something that was more highly desired. The same is true also of so-called “infrastructure” spending, which ignores the intricate web of the capital structure. This has been dealt with in detail here. Suffice it to say for the moment that government spending on capital goods does not help the economy; rather, the effect is to divert the economy from a path on which it was meeting the needs of individual people onto a path where it must adapt itself to the new capital resource. Lines of production that depend upon that resource will become profitable, but only at the expense of other, more highly desired lines that have to be abandoned because their funding was compulsorily diverted to government capital expenditure.

The same fallacy – of viewing the economy only as a whole – is evident in the whole saga of the business cycle and credit expansion.  For while the forced lowering of the rate of interest swells the aggregate numbers – everyone is employed, stock markets climb, skyscrapers start shooting up, etc. – what has been forgotten is the underlying preferences of the individuals in the economy. They are not willing to devote the resources necessary to sustain the new capital structure which is precisely why, when the credit expansion stops, the whole lot comes tumbling down. Indeed, the entire approach of mainstream economists seems to be that the economy is doing well as long as somebody, somewhere, is spending on something, i.e. as long as there is some kind of “activity” then there is no cause for alarm. Their failure to acknowledge the wastefulness of the boom and the necessity of the bust demonstrates their lack of comprehension of the fact that spending the scarce resources at our disposal on stuff that is simply not wanted is emphatically not economising activity – it is just waste. The lesson from the 2008 financial crisis should be that you cannot build houses if people are not prepared to pay for the bricks.

The Praxeological Method

These two errors – of looking at the economy too narrowly and then too broadly – can only be avoided by following the praxeological method. For both errors have their root in the failure to grasp the same basic point – that all economising activity is initiated by humans who desire, choose and act so as to devote the scarce resources available to best meet their most highly valued ends. By understanding this crucial fact one would never focus too narrowly and advocate a programme to help certain producers at the expense of others; but neither also would one look too broadly and conclude that what appears to be some kind of economic activity – expressed through aggregates, totals and figures – is always a good thing. Human choice, actions and ends are the foundation of economic understanding and it is vital that is restored to its rightful place in economic thought.

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1We do not, of course, have to assume that every human wants to “have more” in the sense of material fulfilment; rather that every human wishes to meet his ends for the lowest costs whatever the substance of these ends may be.

2A labourer, for example, must, to a degree, possess entrepreneurial skill in choosing the employer from which his labour will yield the highest return; he will also be a saver and investor if, for example, he saves some of his income in a pension fund. And everyone, whatever their broader role in the economy, is also a consumer.

3Even if it is funded by borrowing not only must these borrowed funds be repaid with tax loot but also government borrowing crowds out private borrowing.

The Scourge of the Collective

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By the far the most significant error with any political, social, economic or philosophical discourse today is that all questions, issues and problems are posed by starting not from the individual but from the collective as the most significant unit in the discussion. Time and again, even among liberal and libertarian circles, hot topics are posed as any of the following: “Should we do V?”; “Should society allow X?”; “Should the Government intervene in Y”? “Should everyone be forced to do Z?”

Such a way of tackling these problems assumes that there must be an answer that is applicable to everyone. That, for everyone, either one of A or B must apply but individuals (those selfish, unfeeling, heartless and greedy morons whose interests must always be subjugated by the “good of the people”) are never able to choose which one of those they might prefer. Indeed, for libertarians and liberals to accept the false dilemma by entering these discussions results in them conceding the basic assumption of the statist opposition, that is that the individual is subordinate to the collective.

Here are some common examples. Please note that the discussion of each is not intended to resolve the issue at hand, merely to demonstrate the correct way of posing the question.

1. Should we intervene in other countries’ affairs?

Anyone attempting to answer this question is invited to argue, in the face of brutal oppression or of invasions of countries elsewhere, that either everyone must be forced to pay for or participate in “our” intervention or everyone must not. In short, a more honest way of stating the question is “should the Government confiscate the fruits of our productivity (i.e. tax) us to pay for military aggrandizement abroad?”

But why should we all have to intervene or all not have to intervene via the Government? If I believe so strongly that the aggressive violence on the part of state leaders or armies overseas is so unjust and must be repelled then what is stopping me from sending my financial help with money that I have earned to this cause? Indeed, what is stopping me from resigning from my current life and flying out to act as a freedom fighter in defence of the helpless civilians? On the other hand, if I believe that whatever is going on abroad is none of my business or I have (in my view) much greater pre-occupations at home and that my financial resources are best devoted to these why should I be taxed to fund a cause that others find important but I do not? What right does anyone else have to money that I have earned but they have not? Further, actions always speak louder than words. If you believe so strongly in something then you should be able to put your own money where your mouth is. If you are only willing to do so with other people’s money then perhaps it isn’t that much of a just cause after all?

In short, the problem should be discussed as follows. If the individual wants to support a cause abroad should he be prevented from doing so if it inflicts no violence or aggression on any other individual? If he does not wish to support such a cause then should he be forced to do so when his antipathy is similarly free of violence and aggression?

2. Should we allow the buying and selling of organs?

Again, the question is not “should we permit or ban the trade of organs?” It’s “should I be prevented or permitted by you from trading what is a part of my person or property with another individual on terms agreeable to ourselves that inflicts no violence or aggression on anyone else?” Answers on either side must therefore be directed to the question of what justifies one individual or group of individuals being able to violently enforce their point of view on others who do not share this point of view.

3. Should we regulate industry X?

The story is always the same. Something terrible happens, a plane crash, a building falls down, or someone loses their life savings through the collapse of some hair brained investment scheme. The clamour is always for us to regulate more, usually in the name of safety, to prevent such disastrous consequences from ever happening again. In practice what this means is that the Government should be permitted to tax all of us in order to more closely supervise industry X, industry X being whichever industry is deemed to have caused the unfortunate event.

As tempting as it is to launch into a discussion of the fact that regulation itself consumes valuable resources and hence is also a part of the market process, plus that regulations are often the very cause of the problems that they seek to ameliorate (or at least the existing regulations fail to detect problems that should have been obvious within their existing scope – Bernie Madoff for instance), we shall stick to the problem of how these questions should be posed correctly. If I think that industry X should be regulated then why can’t I pay, with my own resources, a consumer watchdog to keep an eye on industry X and report to me any potential problems? Or, as would more likely be the case, why do I not just refuse to purchase products from industry X and insist that, before I return as a paying customer, they must conform to the standards laid out by regulator Y? (Underwriters Laboratories is a good example of this arrangement). Should my desire to see industry X regulated allow me to command the resources of people who wish to have nothing to do with industry X, or are happy to accept its products unregulated at the price for which they are on offer?

4. Should we ban smoking in public places?

The loaded phrase in this question is “public places”, a good definition of which is as follows:

“Generally an indoor or outdoor area, whether privately or publicly owned, to which the public have access by right or by invitation, expressed or implied, whether by payment of money or not, but not a place when used exclusively by one or more individuals for a private gathering or other personal purpose.”

The problem is that most premises that are within the scope of this definition of “public place” in various pieces of legislation are not places that are paid for and maintained by public money (taxes). They are privately owned and operated places to which members of the public usually do not possess a right to enter but rather are invited to do so in order to carry out trade. Shops, bars, restaurants, gyms, etc. are all good examples of this kind of premises that are categorised as a “public place”. No one is forced to enter these places, to purchase products that are sold there or to pay for their upkeep. In short all activity that goes on there is entirely voluntary.

The question, therefore, is not whether “we” should ban smoking in “public places”. It is “should I, as an owner of private premises into which the public are invited, be forced by you and others to allow or prevent my invited visitors from smoking when you have no obligation to enter, pay for or maintain these premises?” Alternatively “why if I prefer or prefer not to smoke when I am an invited visitor to certain premises should I be not able to find premises that suit my desire accordingly when you need not enter, pay for or maintain these premises?”

In conclusion, the common element running through all of these questions is the absence of violence and aggression involved in the acts concerned. In short all of the questions can be posed as “Should X prevent Y from doing activity Z when Y carrying out activity Z inflicts no violence or aggression on X?” Posing the questions in this way strips naked all collective thinking and exposes it for what it really is: the violent enforcement of the values, tastes and morals of some people upon people who do not share the same.

Finally, the words of Ludwig von Mises in these regards are instructive:

Individual man is born into a socially organized environment. In this sense alone we may accept the saying that society is-logically or historically-antecedent to the individual. In every other sense this dictum is either empty or nonsensical. The individual lives and acts within society. But society is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individual men. It is a delusion to search for it outside the actions of individuals. To speak of a society’s autonomous and independent existence, of its life, its soul, and its actions is a metaphor which can easily lead to crass errors.

The questions whether society or the individual is to be considered as the uitimate end, and whether the interests of society should be subordinated to those of the individuals or the interests of the individuals to those of society are fruitless. Action is always action of individual men. The social or societal element is a certain orientation of the actions of individual men. The category end makes sense only when applied to action. Theology and the metaphysics of history may discuss the ends of society and the designs which God wants to realize with regard to society in the same way in which they discuss the purpose of all other parts of the created universe. For science, which is inseparable from reason, a tool manifestly unfit for the treatment of such problems, it would be hopeless to embark upon speculations concerning these matters. (Human Action, Scholars Edition, p. 143)

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