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In Defense of Mises's Utilitarianism

October 7, 2011

Tags Free MarketsPraxeology

"The only fully Misesian economists are Rothbardians, and most Rothbardians have abandoned Mises's entire approach to the 'why' of liberalism."

Students of classic liberalism and Austrian economics might come across a curious inconsistency concerning the doctrine of utilitarianism in Austro-liberal literature.

On one hand, you may find vigorous attempts to refute the doctrine, or denunciations of its alleged inadequacy. Especially among modern libertarian writers, "utilitarianism" may come off as something of a dirty word: down there with positivism and Keynesianism among doctrines antithetical to modern Austro-liberal thought.

On the other hand, you may find in the writings of Ludwig von Mises, the fountainhead of Austro-liberalism, a full espousal of utilitarianism.

One reason for this inconsistency is semantic. What many libertarians mean when they denounce "utilitarianism" is vitally different from what Mises meant by the term. For example, there is a strand of utilitarianism that attempts to "measure" utility, and use utility measurements to decide ethical and political issues. Many libertarians refer to the fallacy of this approach when attempting to refute "utilitarianism."

But nothing could be further from Mises's utilitarianism than this doctrine. Indeed Mises himself was, from very early on in his career, in the forefront of refuting the very notion of measurable utility. Utility, he demonstrated, was a purely ordinal matter of ranking, and could never be a cardinal magnitude.

One would think that students of Mises, when referring to "utilitarianism" would pay due regard to what Mises himself (as well as other Austrian utilitarians like Henry Hazlitt and Leland Yeager) meant when he spoke of the doctrine. Instead, many refer solely to fallacious formulations of utilitarianism that Mises did not endorse.

But the primary reason for the above-stated inconsistency is that there has been a revolution in the ethics of Austro-liberalism. Mises's greatest student, Murray N. Rothbard, considered utilitarianism to be inadequate, criticized it with characteristic vigor, and proposed his own alternative "natural-rights" libertarian ethical doctrine.

Rothbard's critique of utilitarianism has been widely accepted by Austro-liberals, who also either accepted his ethical doctrine wholesale, or used it as a springboard for developing their own nonutilitarian ethical doctrine (for example, the "argumentation ethics" of Hans-Hermann Hoppe and the neoeudaimonism of Roderick Long).

Rothbard happened to also be the scholar who was most true to Mises's economics. While the followers of Mises's other student F.A. Hayek have taken Austrian economics into divergent directions, it is Rothbardian economists who have been most true to Mises's economic vision.

These two developments have led to the poignant state of affairs that, while Mises has been hugely influential through his students Rothbard and Hayek, there are very few thoroughgoing Misesians left today, in the sense of having Mises as their primary influence in social philosophy in general. The only fully Misesian economists are Rothbardians, and Rothbardians have abandoned Mises's entire approach to the "why" of liberalism.

I contend that this development was a turn for the worse, and that modern Austro-liberalism would gain soundness, clarity, and power by returning to Mises in this regard. In the present essay, I will address various objections to Mises's utilitarian liberalism.1

Value Freedom and Utilitarianism

Utilitarianism is often associated with the English philosopher Jeremy Bentham, who, echoing Joseph Priestly, wrote, "the greatest happiness of the greatest number is the foundation of morals."2

This is sometimes construed to be a posited scientific "ought": a statement that it is an objective fact that individuals ought to pursue the greatest happiness of the greatest number of people. Critics may object to this as an unfounded assumption.

All such objections would be pushing against an open door with regard to Mises's utilitarianism. Mises did not believe in scientific "oughts." To the contrary, he held that all science was necessarily value free, or in German, wertfrei. He, agreeing with philosopher David Hume, believed it was vain to try to infer an "ought" from an "is." He held that "there is no such thing as a scientific ought,"3 and, "[t]here is no such thing as a normative science, a science of what ought to be."4 Mises believed that there is no such thing as "objective value," whether in market exchanges, or in human conduct in general.

Roderick Long explained how Mises's utilitarianism does not involve assertions of objective value.

You might think that if someone says economics implies utilitarianism, it sounds like they think that economics implies a positive ethical theory — because we usually think of utilitarianism as a particular ethical theory, a theory that says that certain things are objectively good. The standard versions of utilitarianism, like John Stuart Mill's version, assert that a certain goal — human welfare, happiness, pleasure, satisfaction — is intrinsically valuable and worth pursuing, objectively so. And then our job is to pursue it.

Clearly Mises can't mean that. Since Mises thinks that there are no objective values, when Mises embraces utilitarianism he can't be embracing the view that human welfare is an objective value. What Mises means by "utilitarianism" is a little bit different from the kind of utilitarianism that people like John Stuart Mill advocate. By "utilitarianism" Mises means something like simply giving people advice about how to achieve the goals they already have. So you're not necessarily endorsing their goals, but utilitarianism says that really the only real role for any kind of evaluation is simply to talk about means to ends, because you can't evaluate the ends.5

Long's characterization of Mises's value-free utilitarianism is shown to be accurate by the following statement by Mises: "Utilitarianism, on the other hand, does not deal at all with ultimate ends and judgments of value. It invariably refers only to means."6

The Social Phenomenon of Morality

Long's characterization is a useful corrective, and is basically sound, but it can lead to a misconstruction. When Long says that utilitarianism is about "giving people advice about how to achieve the goals they already have," it can lead one to think that the role of the utilitarian social philosopher is to offer such advice to individuals facing particular dilemmas of interpersonal conduct.

Taking this view, many libertarian critics of utilitarianism raise scenarios in which an individual's preferences, even with all the long-term consequences considered, would not line up with liberal principles.7

If the value-free utilitarian cannot say anything to convince such people to adhere to liberalism, the objection runs, then you need some other nonutilitarian argument (like a natural-rights argument, or argumentation ethics, for example) to make the case for liberty.

This evinces a misunderstanding of the social phenomenon of morality. To see why, first we must consider some basic principles.

First of all, it must be realized that moral codes are human things. As Mises wrote, "The notion of right and wrong is a human device."8

Furthermore, moral codes, like all human devices, have a purpose for which they are made:

All moral rules and human laws are means for the realization of definite ends. There is no method available for the appreciation of their goodness or badness other than to scrutinize their usefulness for the attainment of the ends chosen and aimed at.9

And the purpose for which moral codes are adopted is as a means for the attainment of ends that are only possible through social cooperation: for social utility: "The notion of right and wrong is … a utilitarian precept designed to make social cooperation under the division of labor possible."10

The sound utilitarian does not say the purpose of a moral code should be social utility. But rather the purpose of moral codes are and always have been ultimately social utility. In this way, utilitarianism, strictly speaking, is more about "meta-ethics" than "ethics."

If thought leaders realize that, for example, a liberal moral code (both as a whole, and in its constituent parts) is more socially expedient than alternative codes, and they convince the general populace of that fact, this revolution in public opinion would engender a revolution in the prevailing morality.

When a moral code is adopted in society, approbation and good will for following the code, as well as reprobation and ill will for violating it, become common. This approbation and reprobation also generally become internalized, forming the consciences of individuals.

Moral traditions can take on a life of their own, and become quasi ends in themselves. For the sake of their transmission and perpetuation, they can also be buttressed by divine or metaphysical pronouncements, and adorned by ritual. But ultimately all customs are human means, not divine or ultimate ends in themselves.

When making decisions that are covered by a moral code, individuals do not deliberate over the ultimate utilitarian considerations on which the code is based. Instead their decision is immediately determined by social pressure and conscience. However, that doesn't change the fact that the ultimate basis for the adoption of the moral code is utilitarian, and that the ultimate, mediate cause of moral action is social utility.

The role of the utilitarian social philosopher is not to parachute into ethical dilemmas and inform individuals which choice is in their enlightened self-interest. It is to inform individuals in their moments of sober reflection (when they are not caught up in an urgent crisis) which set of general rules is in their enlightened self-interest.11 If the social philosopher is generally successful, those general rules will become integrated into the prevailing moral code.

Once that moral code is adopted, it is the role not of social philosophers but of parents, mentors, peers, and conscience to make the prevalent morality effective on a daily basis.

Economic Intervention and Moral Restraint

Many critics accuse utilitarian economists of inserting value judgments into their analysis. Mises clarified the matter:

While many people blame economics for its neutrality with regard to value judgments, other people blame it for its alleged indulgence in them.…

The semantic confusion in the discussion of the problems concerned is due to an inaccurate use of terms on the part of many economists. An economist investigates whether a measure a can bring about the result p for the attainment of which it is recommended, and finds that a does not result in p but in g. an effect which even the supporters of the measure a consider undesirable. If this economist states the outcome of his investigation by saying that a is a bad measure, he does not pronounce a judgment of value. He merely says that from the point of view of those aiming at the goal p, the measure a is inappropriate. In this sense the free-trade economists attacked protection. They demonstrated that protection does not, as its champions believe, increase but, on the contrary, decreases the total amount of products, and is therefore bad from the point of view of those who prefer an ampler supply of products to a smaller. It is in this sense that economists criticize policies from the point of view of the ends aimed at. If an economist calls minimum wage rates a bad policy, what he means is that its effects are contrary to the purpose of those who recommend their application.

In this sense we may say that economics is apolitical or nonpolitical, although it is the foundation of politics and of every kind of political action. We may furthermore say that it is perfectly neutral with regard to all judgments of value, as it refers always to means and never to the choice of ultimate ends.12

The only kind of "should" statement Mises accepts as nonarbitrary is the kind that runs, "If you want Y, you should do X," which can be restated in a more unambiguously value-free way as, "Doing X results in Y, which you want."

The above characterization by Mises, if considered without care, might also be misleading. It may once again conjure the image of the "parachuting social philosopher": in this case of an economist heroically bounding into a lobbyist's office and convincing the lobbyist that the particular tariff he is advocating is against his enlightened self-interest.

Mises recognized that in such a situation a lobbyist may very well actually benefit from a tariff, if he considers the policy in isolation. But if one considers the policy as a single instance in a general pro-tariff state of affairs, economics would show that the whole system is to his detriment.

Mises gave the example of featherbedding.13 Considering the policy alone, it may seem beneficial for a worker to support featherbedding in his own field. But the worker, Mises pointed out, "cannot prevent featherbedding from becoming a general practice" and that then the practice would hurt the individual worker as a consumer far more than it helps him as a producer.

Of course the featherbedding promoted by a single worker is a very small factor in making featherbedding a general practice. Therefore, a worker may very well judge that the personal benefits of a single instance of featherbedding greatly outweighs the costs to him of its miniscule contribution to the general practice.

But the point is not that each worker will eschew featherbedding on these considerations alone. The point is that, if it were generally realized that the systemic effects of featherbedding was general impoverishment, a general antifeatherbedding mentality would become part of the prevailing moral code. Featherbedding would become an object of general reprobation, and the conscience of the individual would generally recoil at it. For the individual worker, reprobation, ill will of others, and pangs of conscience within himself, would then be weighed in the balance as tremendous downsides of featherbedding.

Since featherbedding has to do with property, antifeatherbedding would become part of the legal code as well. In a society with an antifeatherbedding mentality (caused by a general realization of its social disutility) social pressure and conscience would be enough to prevent the advocacy of featherbedding in most cases. In the few cases in which that was not true, its realization would be prevented by the legal force that would be characteristic of such a state of public opinion.

The matter is the same with regard to businessmen as it is with regard to workers. As Mises wrote, "There have always been businessmen who ask for privileges, protection, and so on."14

However, "The duty to make such a system of privileges disappear does not rest with the businessman but with public opinion."15

Now, what certainly would not prevent tariffs, featherbedding, and other antiliberal privileges would be social philosophers parachuting in to inform lobbyists and workers about "violations of right reason concerning the nature of man" (natural-rights arguments) or the "performative contradictions" implicit in their proposals (argumentation ethics).

Caste Conflicts and Long-Run Interests

Mises wrote eloquently on the "harmony of interests."16 However, he would generally qualify his statements concerning the "harmony of interests" by saying that it only exists "on the market." Rothbard stressed this qualification:

It is true that on the free market there are no clashes of class or group interest; all participants benefit from the market and therefore all their interests are in harmony.

But the matter changes drastically, Mises points out, when we move to the intervention of government. For that very intervention necessarily creates conflict between those classes of people who are benefited or privileged by the State and those who are burdened by it. These conflicting classes created by State intervention Mises calls castes. As Mises states,

Thus there prevails a solidarity of interests among all caste members and a conflict of interests among the various castes. Each privileged caste aims at the attainment of new privileges and at the preservation of old ones. Each underprivileged caste aims at the abolition of its disqualifications. Within a caste society there is an irreconcilable antagonism between the interests of the various castes.17

Rothbard thought this posed a problem for Mises's utilitarianism:

But Mises has a grave problem; as a utilitarian … he has to be able to convince everyone, even those whom he concedes are the ruling castes, that they would be better off in a free market and a free society, and that they too should agitate for this end. He attempts to do this by setting up a dichotomy between "short-run" and "long-run" interests, the latter being termed "the rightly understood" interests. Even the short-run beneficiaries of statism, Mises asserts, will lose in the long run. As Mises puts it,

In the short run an individual or a group may profit from violating the interests of other groups or individuals. But in the long run, in indulging in such actions, they damage their own selfish interests no less than those of the people they have injured. The sacrifice that a man or a group makes in renouncing some short-run gains, lest they endanger the peaceful operation of the apparatus of social cooperation, is merely temporary. It amounts to an abandonment of a small immediate profit for the sake of incomparably greater advantages in the long run.

The great problem here is: why should people always consult their long-run, as contrasted to their short-run, interests? Why is the long run the "right understanding"? Ludwig von Mises, more than any economist of his day, has brought to the discipline the realization of the great and abiding importance of time preference in human action: the preference of achieving a given satisfaction now rather than later. In short, everyone prefers the shorter to the longer run, some to different degrees than others.

How can Mises, as a utilitarian, say that a lower time preference for the present is "better" than a higher?18

First of all, the market is so productive and widespread in its beneficence that vanishingly few in the power elite "caste" would not benefit from it being made more free. As Mises pointed out, "The average American worker enjoys amenities for which Croesus, Crassus, the Medici, and Louis XIV would have envied him."19

Had Louis XIV established economic liberty at the beginning of his reign, capitalist France would have poured a greater cornucopia of goods and services on his head than his crippling taxes and imperialistic wars ever did.

Following Rothbard's line of reasoning, Robert Murphy, in a critique of utilitarianism, asked, "Is it really true, for example, that Josef Stalin acted against his interests, even in the long run?"20

Perhaps Stalin may have been one of the tiny minority of people who did prosper more than he would have under a more liberal order. But he only did so ex post. Stalin was extremely lucky: he happened to end up on top of the murder heap, and not somewhere in the middle as the victim of yet another Stalin's purge. Ex ante, he had no guarantee that would occur, and any person in a similar ex ante position could only reasonably expect to be liquidated at a young age. And it is the ex ante tendencies of general rules that matter in the adoption of codes of interpersonal conduct.

Furthermore, it is not true that utilitarian liberals need to convince literally everyone that a liberal society would better serve their interests. Only the majority need be convinced. Such a revolution in public opinion would necessarily engender a revolution in the prevailing morality. Against such a prevailing morality, even the most ardent statist caste member would be unable to make any headway.

In the above passage, Rothbard also misinterpreted what Mises meant in his discussion of the "harmony of long-run interests." Mises would not make such an elementary mistake as to say that a lower time preference is somehow objectively better than a higher one. Mises was not saying people should, according to some imposed external standard, consult the long-run interest of avoiding the pitfalls of interventionism instead of consulting the short-run interest of enjoying the benefits of privilege.

Rather the issue is that the long-run impacts of an intervention are more difficult to know about than short-run impacts, especially for one unacquainted with economics. Mises concluded, using his thymological judgment, that most would prefer to avoid the long-run pitfalls if they only knew about them. When Mises said that the long-run benefits of preserving social cooperation are "incomparably greater," he meant according to nearly every acting individual's own judgment (were they only aware of the long-run consequences), not according to some imposed external standard.

Utilitarian liberalism does not say, "You want B, but you should really want A." Rather, it says, "You think B will result in Y, which you want. But it will not. Instead it will result in X, which you do not want. However, if you adopt A, you will get Z, which you would like best, but did not even know was possible."

And it says this, not with regard to particular choices considered in isolation, but with regard to the systemic consequences to be expected of general rules. Furthermore, it says this not in order to persuade each individual in every concrete choice in their daily lives, but so as to effect a revolution in public opinion concerning social expediency, which in turn will necessarily engender a revolution in the prevailing moral code.

There is indeed a harmony of interests, but not only with regard to acts of exchange within a liberal society and a free market. There is also more general harmony of interests that always persists. Even within an illiberal society and a hampered market, the establishment of a liberal society and a free market, through the adoption of a liberal moral code, is in the interest of virtually everyone, from power-elite potentate to poverty-stricken pleb.

By using praxeology and economics to unveil that fact, utilitarian liberalism can translate the ever-present harmony of interests into a harmony of actual preferences among the general public, paving the way for a peaceful and prosperous liberal social order.

We classic liberals want to change the world. We cannot change the world by steering our skeptical auditors into "blank-out" moments using ingenuous philosophical arguments that they may for the moment be unable to refute. To change the world, we must speak, not solely to man's reason, but to his purposes.


Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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