Friday, September 01, 2006


What if?

How many of you would still be libertarians if free markets weren't the best economic system?

It's possible to arrive at the same conclusion (that liberty is the best system) using either utilitarian (J.S. Mill) or natural rights (Locke) arguments. Which do you think is most common? Best for converting people to libertarianism?


The Lockean arguments are clearly the superior ones, even though Mill's utilitarian ones—and worse still, Bentham's—are often (very often) used to make the case for some program or policy.
The problem is, of course, that many folks believe there is positive economic value and growth in 'broken windows,' another reason this blog is so aptly named. If they read Bastiat, or Hazlitt, they would 'get it.' That still doesn't mean that liberty and libertarian thought would have appeal. Many anti-libertarians simply imagine that they will be the 'good people' with the 'good ideas,' in charge of all of the dolts (including those whom they imagine they will replace) who don't understand what exactly the 'greater good' is. So the myth of the broken window prevails, and if New Orleans is not booming and better off than a year ago--after one of the biggest 'broken window' episodes ever—its because the wrong people held the reins. Good luck on that.
Someone seriously needs to republish (or e-publish) Hazlitt's "Time Will Run Back," don't you think?
As to the direct question on libertarians—there are some embeded moral absolutes in Locke, as there also are in good libertarian thought. That is really the reason that so many libertarians are natural-rights adherents. Mill's version allows for so much relativistic morality and a contextual view of rights, that it cannot preserve a stable system of property rights in the long term.The long term is just a matter of what is expedient in the short term. When existing rights become inconvenient, they must 'evolve' for the good of society. By the way, we need to keep in mind that utilitarian thought is not exclusively the purview of Mill--there are lots of differing stripes in this broader utilitarian camp.
Karen, welcome to the blog! Thanks for chiming in.

I definitely agree that Locke's arguments (and natural rights arguments in general) are better than utilitarian ones. However, I find that people aren't as willing to listen to these as to utilitarian arguments. (Obviously this is a problem, since utilitarian thought doesn't always lead to liberty.)

Also, I suspect that many people who call themselves libertarians only do so because of the economic superiority of free-market policies.

I've been working on ways to convince utilitarians of the value of natural rights, but it's an uphill battle.
Clearly, if people won't listen to reason and adopt correct thought and correct ideas, a dictatorship of the enlightened is in order. Oh wait, that's the utilitarian approach.

Never mind then.
Welcome, Karen!

I came to Juris Naturalism (Libertarianism) through ethics. Many come to it through economics, or politics, or law. Perhaps there is a way to measure the propensity for accepting the utilitarian arguement vs. the natural rights argument based upon how an individual arrived at a liberty loving stance.
The utilitarian stance seems to have greater appeal amongst rationalists, while the natural rights stance seems to appeal to the religious, though not necessarily.
If I were a consequentialist libertarian, this would be my answer:

I'm a libertarian in the sense that I believe that the government shouldn't commit certain types of acts. But this is just one implication of a broader thesis, that certain types of acts have bad consequences, regardless of the doer. As an example, I believe that printing money and using it to manipulate the bond market a.k.a. "monetary policy" has bad consequences.

So, suppose I might be moved to abandon my objection to printing money and using it to manipulate the bond market. Were I so moved, I would then no longer object to the government printing money and using it to manipulate the bond market. I also would no longer object to private actors printing money and using it to manipulate the bond market. Perhaps this would make me less libertarian, but it would get me no closer to the statist position of favoring monetary policy when the government is doing it and opposing monetary policy when any private entity is doing it.
"How many of you would still be libertarians if free markets weren't the best economic system?"

Hmmm. I dunno. About 23%? I like to think I would, being of the "natural rights" mindset, but there's no way to know for sure. I actually went from utilitarian-moderate to utilitarian-libertarian to natural rights-libertarian in my personal discovery process, which happened fairly quickly once I learned good sense. But if libertarianism lost its utilitarian appeal, maybe I wouldn't have made it to this point. Good question.
My path was similar: I first became a libertarian because people convinced me that it worked, economically speaking. Now, I've progressed to being a natural rights libertarian with considerable disdain for solely utilitarian arguments.

Obviously, I can't state for certain that I'd be a libertarian no matter what, but I think that I would be. Maybe I can invent "freedom utiles" (frutiles?) to use in arguments against utilitarians.
I'm surprised that Student hasn't come to ask us 1)what we mean by best and 2)why we think free markets are best, whatever that turns out to be.

Anyone want to talk about welfare economics rather than strictly about ideology? We usually hit a dead end fairly soon on this topic, but maybe Karen can offer some thoughts.
There are a number of good reasons for hitting a dead end soon after one ventures in to welfare economics. Here's a couple: 1) Measurement. We are so used to using proxies in economics, that we forget that some essential elements of the things we are approximating aren't captured by the proxy, so aren't going to be manioulted particularly well by policies that manipilate the proxy varialbes. By this I mean, for example, money prices as a proxy for subjective valuation, and, in welfare economics, policy-derived changes in choices of goods, services, incomes, etc., as a proxy for happiness.

At best, any of the observable proxies are a rule of thumb guidleine to subjective realities, but they're not absolute, and they certainly fail to measure personal happiness in the aggregate as well as on an interpersonal comparison basis. So, measurement (or lack thereof) of the really important changes in utility is a dealbreaker/dead end quite often.

But let's say that you are willing to spot the point that the observables—like money income— are a second-best but acceptable approximation of how well-off people feel in one situation as compares to another. Many economists approach this issue and utter the appropriate verbal cautions about believing that these measures accurately reflect what we take them to reflect, but they are the best we can do, etc., etc.

This second-best compromise position appears to avoid moving us too far toward the Lachmannian cliff at which we declare we really cannot know anything, or much of anything, with certainty. Radical uncertainty is no fun at all, so we mostly leave it alone in favor of some reasonable if inaccurate assumptions about the proxies we settle for.

It's what happens next that is a problem. Since welfare is a state of comparative well-being or satisfaction, changes in welfare will have to be be changes for the better, or changes for the worse. Which brings us to

2) Who is to evaluate? For an individual, the answer is easy--they themselves know whether they are better off or worse off, or will know after enough time has passed for any policy or decision change to have created subsequent changes around them.

For a society, the answer is impossible to determine. Even if measurement were possble, unless one can say according to whose particular values things are better or worse than before, the answer will be different depending upon which person you interview to ask the question. So long as individuals in a group have different values and differing priorities, there is no single answer.

This should indicate that a single policy can be expected to affect different people to different degress and in different directions, positive and negative. We typically treat this as if utility were a math problem, and if we can zero the sum of negatives and postives, we've got a neutral solution (socially). Not true. There's some good work by Austrians on this, as Roy Cordato for one knows far better than I (which he will tell you, if you but ask).

Still, we would like to be able to say something generally true at least some of the time. At the micro level, broken windows are a boon to some and a bane to others. Still, the positive and negative effects don't cancel themselves out at the macro level. There is definitely a loss in that value was destroyed, irrecoverably.

To the extent that economic resources are both complementary to other resources and specific in their use, and that economic resources fuel economic growth, then there is a loss of productive capability to the economy. Whatever kind of loss that is called, it is a legitimate declaration of loss.

Anyway, Travis, these are just a couple of very inadequately stated reasons why welfare econ. is a conversation stopper-people mostly aren't starting out talking the same language, or with the same values or assumptions in mind.'s hard to make progress from there.
Here's a follow-up question: Is Austrian economics left behind (especially in welfare econ) because it does not offer a concrete (albeit inaccurate) way to compare and quantify welfare under two different policy regimes?

For example, if you make some assumptions about supply and demand curves and forget about the illegality of interpersonal utility comparisons, you can come up with real numbers representing consumer and producer surplus, add them together, and arrive at a "social surplus."

Is this worth doing, despite its violation of subjective utility and obvious inaccuracies? Chris and Student have said before that cost-benefit analyses are still useful for policy direction. What do Austrian economists think? Bad for economics, but OK for policy analysis?

Austrian Economics does offer at least two ways that I can think of to compare policy regimes. Rothbard's paper "Toward a Reconstruction of Welfare Economics" is the best known but also Roy Cordato has a really great book entitled "Welfare Economics and Externalities in an Open Ended Universe," where he lays out a detailed case for measuring efficiency in terms of plan coordination. Admittedly, the approaches in both of these works do not reduce welfare or efficiency to a convenient scalar like "welfare" or "total social utility," but they do permit the comparison of different regimes.
Post a Comment

<< Home
CrispAds Blog Ads

Does someone you know deserve flowers?
Web Site Hit Counter
Dell Canada

This page is powered by Blogger. Isn't yours?