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Advancing Austrian Economics, Liberty, and Peace

Advancing the scholarship of liberty in the tradition of the Austrian School

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ONE OF THE MOST commonly derided constructions of classical economic theory is “Crusoe Economics,” the analysis of an isolated man face-to-face with nature. And yet, this seemingly “unrealistic” model, as I have tried to demonstrate elsewhere, has highly important and even indispensable uses.[1] It serves to isolate man as against nature, thus gaining clarity by abstracting at the beginning from interpersonal relations. Later on, this man/nature analysis can be extended and applied to the “real world.” The bringing in of “Friday” or of one or more other persons, after analysis of strictly Robinsonian isolation, then serves to show how the addition of other persons affects the discussion. These conclusions can then also be applied to the contemporary world. Thus, the abstraction of analyzing a few persons interacting on an island enables a dear perception of the basic truths of interpersonal relations, truths which remain obscure if we insist on looking first at the contemporary world only whole and of a piece.

     If Crusoe economics can and does supply the indispensable groundwork for the entire structure of economics and praxeology—the broad, formal analysis of human action—a similar procedure should be able to do the same thing for social philosophy, for the analysis of the fundamental truths of the nature of man vis-à-vis the nature of the world into which he is born, as well as the world of other men. Specifically, it can aid greatly in solving such problems of political philosophy as the nature and role of liberty property, and violence.[2]

     Let us consider Crusoe, who has landed on his island, and, to simplify matters, has contracted amnesia. What inescapable facts does Crusoe confront? He finds, for one thing, himself, with the primordial fact of his own consciousness and his own body. He finds, second, the natural world around him, the nature-given habitat and resources which economists sum up in the term “land.”[3] He finds also that, in seeming contrast with animals, he does not possess any innate instinctual knowledge impelling him into the proper paths for the satisfaction of his needs and desires. In fact, he begins his life in this world by knowing literally nothing; all knowledge must be learned by him. He comes to learn that he has numerous ends, purposes which he desires to achieve, many of which he must achieve to sustain his life: food, shelter, clothing, etc. After the basic needs are satisfied, he finds more “advanced” wants for which to aim. To satisfy any or all of these wants which he evaluates in accordance with their respective importance to him, Crusoe must also learn how to achieve them; he must, in short, acquire “technological knowledge,” or “recipes.”

     Crusoe, then, has manifold wants which he tries to satisfy, ends that he strives to attain. Some of these ends may be attained with minimal effort on his part; if the island is so structured, he may be able to pick edible berries off nearby bushes. In such cases, his “consumption” of a good or service may be obtained quickly and almost instantaneously. But for almost all of his wants, Crusoe fids that the natural world about him does not satisfy them immediately and instantaneously; he is not, in short, in a Garden of Eden. To achieve his ends, he must, as quickly and productively as he can, take the nature-given resources and transform them into useful objects, shapes, and places most useful to him—so that he can satisfy his wants.

     In short, he must (a) choose his goals; (b) learn how to achieve them by using nature-given resources; and then (c) exert his labor energy to transform these resources into more useful shapes and places: i.e., into “capital goods,” and finally into “consumer goods” that he can directly consume. Thus, Crusoe may build himself, out of the given natural raw materials, an axe (capital good) with which to chop down trees, in order to construct a cabin (consumer good). Or he may build a net (capital good) with which to catch fish (consumer good). In each case, he employs his learned technological knowledge to exert his labor effort in transforming land into capital goods and eventually into consumer goods. This process of transformation of land resources constitutes his “production.” In short, Crusoe must produce before he can consume, and so that he may consume. And by this process of production, of transformation, man shapes and alters his nature-given environment to his own ends, instead of, animal-like, being simply determined by that environment.

     And so man, not having innate, instinctive, automatically acquired knowledge of his proper ends, or of the means by which they can be achieved, must learn them, and to learn them he must exercise his powers of observation, abstraction, thought: in short, his reason. Reason is man’s instrument of knowledge and of his very survival; the use and of his mind, the acquisition of knowledge about what is best for him and how he can achieve it, is the uniquely human method of existence and of achievement. And this is uniquely man’s nature; man, as Aristotle pointed out, is the rational animal, or to be more precise, the rational being. Through his reason, the individual man observes both the facts and ways of the external world, and the facts of his own consciousness, including his emotions: in short, he employs both extraspection and introspection.

     Crusoe, we have said, learns about his ends and about how to attain them. But what specifically does his learning faculty, his reason, do in the process of obtaining such knowledge? It learns about the way things work in the world, i.e., the natures of the various specific entities and classes of entities that the man finds in existence; in short, he learns the natural laws of the way things behave in the world. He learns that an arrow shot from a bow can bring down a deer, and that a net can catch an abundance of fish. Further, he learns about his own nature, about the sort of events and actions that will make him happy or unhappy; in short, he learns about the ends he needs to achieve and those he should seek to avoid.

     This process, this method necessary to man’s survival and prosperity upon the earth, has often been derided as unduly or exclusively “materialistic.” But it should be clear that what has happened in this activity proper to man’s nature is a fusion of “spirit” and matter; man’s mind, using the ideas it has learned, directs his energy in transforming and reshaping matter into ways to sustain and advance his wants and his life. Behind every “produced” good, behind every man-made transformation of natural resources, is an idea directing the effort, a manifestation of man’s spirit.

     The individual man, in introspecting the fact of his own consciousness, also discovers the primordial natural fact of his freedom: his freedom to choose, his freedom to use or not use his reason about any given subject. In short, the natural fact of his “free will.” He also discovers the natural fact of his mind’s command over his body and its actions: that is, of his natural ownership over his self.

     Crusoe, then, owns his body; his mind is free to adopt whatever ends it wishes, and to exercise his reason in order to discover what ends he should choose, and to learn the recipes for employing the means at hand to attain them. Indeed, the very fact that the knowledge needed for man’s survival and progress is not innately given to him or determined by external events, the very fact that he must use his mind to learn this knowledge, demonstrates that he is by nature free to employ or not to employ that reason—i.e., that he has free will.[4] Surely, there is nothing outré or mystical about the fact that men differ from stones, plants, or even animals, and that the above are crucial differences between them. The critical and unique facts about man and the ways in which he must live to survive—his consciousness, his free will and free choice, his faculty of reason, his necessity for learning the natural laws of the external world and of himself, his self-ownership, his need to “produce” by transforming nature-given matter into consumable forms—all these are wrapped up in what man’s nature is, and how man may survive and flourish. Suppose now that Crusoe is confronted with a choice of either picking berries or picking some mushrooms for food, and he decides upon the pleasantly tasting mushrooms, when suddenly a previously shipwrecked inhabitant, coming upon Crusoe, shouts: “Don’t do that! Those mushrooms are poisonous.” There is no mystery in Crusoe’s subsequent shift to berries. What has happened here? Both men have operated on an assumption so strong that it remained tacit, an assumption that poison is bad, bad for the health and even for the survival of the human organism—in short, bad for the continuation and the quality of a man’s life. In this implicit agreement on the value of life and health for the person, and on the evils of pain and death, the two men have clearly arrived at the basis of an ethic, grounded on reality and on the natural laws of the human organism.

     If Crusoe had eaten the mushrooms without learning of their poisonous effects, then his decision would have been incorrect—a possibly tragic error based on the fact that man is scarcely automatically determined to make correct decisions at all times. Hence, his lack of omniscience and his liability to error. If Crusoe, on the other hand, had known of the poison and eaten the mushrooms anyway—perhaps for “kicks” or from a very high time preference—then his decision would have been objectively immoral, an act deliberately set against his life and health. It may well be asked why life should be an objective ultimate value, why man should opt for life (in duration and quality).[5] In reply, we may note that a proposition rises to the status of an axiom when he who denies it may be shown to be using it in the very course of the supposed refutation.[6] Now, any person participating in any sort of discussion, including one on values, is, by virtue of so participating, alive and affirming life. For if he were really opposed to life, he would have no business in such a discussion, indeed he would have no business continuing to be alive. Hence, the supposed opponent of life is really affirming it in the very process of his discussion, and hence the preservation and furtherance of one’s life takes on the stature of an incontestable axiom.

     We have seen that Crusoe, as in the case of any man, has freedom of will, freedom to choose the course of his life and his actions. Some critics have charged that this freedom is illusory because man is bound by natural laws. This, however, is a misrepresentation—one of the many examples of the persistent modem confusion between freedom and power. Man is free to adopt values and to choose his actions; but this does not at all mean that he may violate natural laws with impunity—that he may, for example, leap oceans at a single bound. In short, when we say that “man is not ‘free’ to leap the ocean,” we are really discussing not his lack of freedom but his lack of power to cross the ocean, given the laws of his nature and of the nature of the world. Crusoe’s freedom to adopt ideas, to choose his ends, is inviolable and inalienable; on the other hand, man, not being omnipotent as well as not being omniscient, always finds his power limited for doing all the things that he would like to do. In short, his power is necessarily limited by natural laws, but not his freedom of will. To put the case another way it is patently absurd to define the “freedom” of an entity as its power to perform an act impossible for its nature![7]

     If a man’s free will to adopt ideas and values is inalienable, his freedom of action—his freedom to put these ideas into effect in the world, is not in such a fortunate condition. Again, we are not talking about the limitations on man’s power inherent in the laws of his own nature and of the natures of other entities. What we are talking about now is interference with his sphere of action by other people—but here we are getting a bit ahead of Robinson Crusoe and our discussion. Suffice it to say now that, in the sense of social freedom—of freedom as absence of molestation by other persons—Crusoe is absolutely free, but that a world of more than one person requires our further investigation.

     Since, in this book, we are interested in social and political philosophy rather than in philosophy proper, we shall be interested in the term “freedom” in this social or interpersonal sense, rather than in the sense of freedom of will.[8]

     Let us now return to our analysis of Crusoe’s purposeful transformation of nature-given data though the understanding of natural laws. Crusoe finds virgin, unused land on the island; land, in short, unused and uncontrolled by anyone, and hence unowned. By finding land resources, by learning how to use them, and, in particular, by actually transforming them into a more useful shape, Crusoe has, in the memorable phrase of John Locke, “mixed his labor with the soil.” In doing so, in stamping the imprint of his personality and his energy on the land, he has naturally converted the land and its fruits into his property. Hence, the isolated man owns what he uses and transforms; therefore, in his case there is no problem of what should be A’s property as against B’s. Any man’s property is ipso facto what he produces, i.e., what he transforms into use by his own effort. His property in land and capital goods continues down the various stages of production, until Crusoe comes to own the consumer goods which he has produced, until they finally disappear through his consumption of them.

     As long as an individual remains isolated, then, there is no problem whatever about how far his property—his ownership—extends; as a rational being with free will, it extends over his own body, and it extends further over the material goods which he transforms with his labor. Suppose that Crusoe had landed not on a small island, but on a new and virgin continent, and that, standing on the shore, he had claimed “ownership” of the entire new continent by virtue of his prior discovery. This assertion would be sheer empty vainglory, so long as no one else came upon the continent. For the natural fact is that his true property—his actual control over material goods—would extend only so far as his actual labor brought them into production. His true ownership could not extend beyond the power of his own reach.[9] Similarly, it would be empty and meaningless for Crusoe to trumpet that he does not “really” own some or all of what he has produced (perhaps this Crusoe happens to be a romantic opponent of the property concept), for in fact the use and therefore the ownership has already been his. Crusoe, in natural fact, owns his own self and the extension of his self into the material world, neither more nor less.

[1]See Murray N. Rothbard, Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), vol. 1, chaps. 1 and 2.

[2]Such seventeenth- and eighteenth-century constructs as “the state of nature” or “the social contract” were not wholly successful attempts to construct such a logical analysis. Such attempts were far more important than any actual historical assertions that may have been made in the course of developing these concepts.

[3]This economic “land,” including all nature-given resources, does not necessarily mean “land” in the popular sense, as it may include parts of the sea, e.g., fishing waters, and excludes man-made improvements on the earth.

[4]See Murray N. Rothbard, Individualism and the Philosophy of the Social Sciences (San Francisco: Cato Institute, 1979), pp. 5-10. For one thing, a person cannot coherently believe that he is making judgments and at the same time that he is being determined by a foreign cause to do so. For if that were true, what would be the status of the judgment that he is determined? This argument was used by Immanuel Kant, Groundwork of the Metaphysics of Morals, trans. H.J. Paton (New York: Harper and Row, 1964), pp. 115f.

[5]On the value of life not depending on whether it is perceived as one of happiness, see Philippa R. Foot, Virtues and Vices (Berkeley: University of California Press, 1978), p. 41.

[6]Elsewhere, I have written: “if a man cannot affirm a proposition without employing its negation, he is not only caught in an inextricable self-contradiction; he is conceding to the negation the status of an axiom.” Rothbard, Individualism, p. 8. Also see R.P. Phillips, Modern Thomistic Philosophy (Westminster, Md.: Newman Bookshop, 1934-35), vol. 2, pp. 36-37.

[7]See Rothbard, Individualism, p. 8, and F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), p. 26.

[8]Perhaps the one great advantage of the term “liberty” over its synonym “freedom” is that liberty is generally used only in the social, and not in the purely philosophic free-will sense, and is also less confused with the concept of power. For an excellent discussion of free will, see J.R. Lucas, The Freedom of the Will (Oxford: Clarendon Press, 1970).

[9]Later on, when other people arrived on the continent, they too, in natural fact, would own the lands which they transformed by their labor, the first man could only obtain ownership of them by the use of invasive force against their natural property, or by receiving them from the newcomers in voluntary gift or exchange.

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