Chapter 6--Antimarket Ethics: A Praxeological Critique
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Chapter
6—Antimarket Ethics: A Praxeological Critique
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10.
Back to the Jungle?
Many critics complain that the free market, in casting aside
inefficient entrepreneurs or in other decisions, proves itself an
“impersonal monster.” The free-market economy, they
charge, is “the rule of the jungle,” where
“survival of the fittest” is the law.
Libertarians who advocate
a free market are therefore called “Social
Darwinists” who wish to exterminate the weak for the benefit
of the strong.
In the first place, these critics overlook the fact that the operation
of the free market is vastly different from governmental action. When a
government acts, individual critics are powerless to change the result.
They can do so only if they can finally convince the rulers that their
decision should be changed; this may take a long time or be totally
impossible. On the free market, however, there is no final decision
imposed by force; everyone is free to shape his own decisions and
thereby significantly change the results of “the
market.” In short, whoever feels that the market has been too
cruel to certain entrepreneurs or to any other income receivers is
perfectly free to set up an aid fund for suitable gifts and grants.
Those who criticize existing private charity as being
“insufficient” are perfectly free to fill the gap
themselves. We must beware of hypostatizing the
“market” as a real entity, a maker of inexorable
decisions. The market is the resultant of the decisions of all
individuals in the society; people can spend their money in any way
they please and can make any decisions whatever concerning their
persons and their property. They do not have to battle against or
convince some entity known as the “market” before
they can put their decisions into effect.
The free market, in fact, is precisely the diametric opposite of the
“jungle” society. The jungle is characterized by
the war of all against all. One man gains only at the expense of
another, by seizure of the latter’s property. With all on a
subsistence level, there is a true struggle for survival, with the
stronger force crushing the weaker. In the free market, on the other
hand, one man gains only through serving another, though he may also
retire into self-sufficient production at a primitive level if he so
desires. It is precisely through the peaceful co-operation of the
market that all men gain through the development of the division of
labor and capital investment. To apply the principle of the
“survival of the fittest” to both the jungle and
the market is to ignore the basic question: Fitness for what?
The “fit” in the jungle are those most adept at the
exercise of brute force. The “fit” on the market
are those most adept in the service of society. The jungle is a brutish
place where some seize from others and all live at the starvation
level; the market is a peaceful and productive place where all serve
themselves and others at the same time and live at
infinitely higher levels of consumption. On the market, the charitable
can provide aid, a luxury that cannot exist in the jungle.
The free market, therefore, transmutes the jungle’s
destructive competition for meagre subsistence into a peaceful co-operative
competition in the service of one’s self and
others. In the jungle, some gain only at the expense of others. On the
market, everyone gains. It is the market—the contractual
society—that wrests order out of chaos, that subdues nature
and eradicates the jungle, that permits the
“weak” to live productively, or out of gifts from
production, in a regal style compared to the life of the
“strong” in the jungle. Furthermore, the market, by
raising living standards, permits man the leisure to cultivate the very
qualities of civilization that distinguish him from the brutes.
It is precisely statism that is bringing back the
rule of the jungle—bringing back conflict, disharmony, caste
struggle, conquest and the war of all against all, and general poverty.
In place of the peaceful “struggle” of competition
in mutual service, statism substitutes calculational chaos and the
death-struggle of Social Darwinist competition for political privilege
and for limited subsistence.
11.
Power and Coercion
A.
“Other Forms of Coercion”: Economic Power
A very common criticism of the libertarian position runs as follows: Of
course we do not like violence, and libertarians perform a useful
service in stressing its dangers. But you are very simpliste
because you ignore the other significant forms of coercion exercised in
society—private coercive power, apart from
the violence wielded by the State or the criminal. The government
should stand ready to employ its coercion to check or offset this
private coercion.
In the first place, this seeming difficulty for libertarian doctrine
may quickly be removed by limiting the concept of coercion to the use
of violence. This narrowing would have the further
merit of strictly confining the legalized violence of the police and
the judiciary to the sphere of its competence: combatting violence.
But we can go even further, for we can show the inherent contradictions
in the broader concept of coercion.
A well-known type of “private coercion” is the
vague but ominous-sounding “economic power.” A
favorite illustration of the wielding of such
“power” is the case of a worker fired from his job,
especially by a large corporation. Is this not “as bad
as” violent coercion against the property of the worker? Is
this not another, subtler form of robbery of the worker, since he is
being deprived of money that he would have received if the employer had
not wielded his “economic power”?
Let us look at this situation closely. What exactly has the employer
done? He has refused to continue to make a certain
exchange, which the worker preferred to continue making. Specifically,
A, the employer, refuses to sell a certain sum
of money in exchange for the purchase of B’s labor
services. B would like to make a certain exchange; A would not. The
same principle may apply to all the exchanges throughout the length and
breadth of the economy. A worker exchanges labor for money with an
employer; a retailer exchanges eggs for money with a customer; a
patient exchanges money with a doctor for his services; and so forth.
Under a regime of freedom, where no violence is permitted, every man
has the power either to make or not to make exchanges as and with whom
he sees fit. Then, when exchanges are made, both parties benefit. We
have seen that if an exchange is coerced, at least
one party loses. It is doubtful whether even a robber gains in the long
run, for a society in which violence and tyranny are practiced on a
large scale will so lower productivity and become so much infected with
fear and hate that even the robbers may be unhappy when they compare
their lot with what it might be if they engaged in production and
exchange in the free market.
“Economic power,” then, is simply the right under
freedom to refuse to make an exchange. Every man has this power. Every
man has the same right to refuse to make a proffered exchange.
Now, it should become evident that the
“middle-of-the-road” statist, who concedes the evil
of violence but adds that the violence of government is sometimes
necessary to counteract the “private coercion of economic
power,” is caught in an impossible contradiction. A refuses
to make an exchange with B. What are we to say, or what is the
government to do, if B brandishes a gun and orders A to make the
exchange? This is the crucial question. There are only two positions we
may take on the matter: either that B is committing
violence and should be stopped at once, or that B
is perfectly justified in taking this step because he is simply
“counteracting the subtle coercion” of economic
power wielded by A. Either the defense agency must rush to the defense
of A, or it deliberately refuses to do so, perhaps aiding B (or doing
B’s work for him). There is no middle ground!
B is committing violence; there is no question about that. In the terms
of both doctrines, this violence is either invasive and therefore
unjust, or defensive and therefore just. If we adopt the
“economic-power” argument, we must choose the
latter position; if we reject it, we must adopt the former. If we
choose the “economic-power” concept, we must employ
violence to combat any refusal of exchange; if we
reject it, we employ violence to prevent any violent imposition
of exchange. There is no way to escape this either-or
choice. The “middle-of-the-road” statist cannot
logically say that there are “many forms” of
unjustified coercion. He must choose one or the other and take his
stand accordingly. Either he must say that there is only one form of
illegal coercion—overt physical violence—or he must
say that there is only one form of illegal coercion—refusal
to exchange.
We have already fully described the sort of society built on
libertarian foundations—a society marked by peace, harmony,
liberty, maximum utility for all, and progressive improvement in living
standards. What would be the consequence of adopting the
“economic-power” premise? It would be a society of
slavery: for what else is prohibiting the refusal to work? It would
also be a society where the overt initiators of violence would be
treated with kindness, while their victims would be upbraided as being
“really” responsible for their own plight. Such a
society would be truly a war of all against all, a world in which
conquest and exploitation would rage unchecked.
Let us analyze further the contrast between the power of violence and
“economic power,” between, in short, the victim of
a bandit and the man who loses his job with the Ford Motor Company. Let
us symbolize, in each case, the alleged power-wielder as P and the
supposed victim as X. In the case of the bandit or robber, P plunders
X. P lives, in short, by battening off X and all the other
X’s. This is the meaning of power in its original, political
sense. But what of “economic power”? Here, by
contrast, X, the would-be employee, is asserting a strident claim to P’s
property! In this case, X is plundering P instead of the other way
around. Those who lament the plight of the automobile worker who cannot
obtain a job with Ford do not seem to realize that before Ford and
without Ford there would be no such job to be obtained at all. No one,
therefore, can have any sort of “natural right” to
a Ford job, whereas it is meaningful to assert a
natural right to liberty, a right which each person may have without
depending on the existence of others (such as Ford). In short, the
libertarian doctrine, which proclaims a natural right of defense
against political power, is coherent and
meaningful, but any proclaimed right of defense against
“economic power” makes no sense at all. Here,
indeed, are enormous differences between the two concepts of
“power.”
B.
Power Over Nature and Power Over Man
It is quite common and even fashionable to discuss market phenomena in
terms of “power”—that is, in terms
appropriate only to the battlefield. We have seen the fallacy of the
“back-to-the-jungle” criticism of the market and we
have seen how the fallacious “economic-power”
concept has been applied to the exchange economy. Political-power
terminology, in fact, often dominates discussions of the market:
peaceful businessmen are “economic royalists,”
“economic feudalists,” or “robber
barons.” Business is called a “system of
power,” and firms are “private
governments,” and, if they are very large, even
“empires.” Less luridly, men have
“bargaining power,” and business firms engage in
“strategies” and “rivalry” as
in military battles. Recently, theories of “games”
and strategy have been erroneously applied to market activity, even to
the absurd extent of comparing market exchange with a
“zero-sum game”—an interrelation in which
A’s loss is precisely equal to B’s gain.
This,
of course, is the action of coercive power, of
conquest and robbery. There, one man’s gain is
another man’s loss; one man’s victory,
another’s defeat. Only conflict can describe these social
relations. But the opposite is true on the free market, where everyone
is a “victor” and everyone gains from social
relations. The language and concepts of political power are singularly inappropriate
in the free-market society.
The fundamental confusion here is the failure to distinguish between
two very different concepts: power over nature and power
over man.
It is easy to see that an individual’s power
is his ability to control his environment in order to satisfy his
wants. A man with an ax has the power to chop down
a tree; a man with a factory has the power, along with other
complementary factors, to produce capital goods. A man with a gun has
the power to force an unarmed man to do his
bidding, provided that the unarmed man chooses not
to resist or not to accept death at gunpoint. It should be clear that
there is a basic distinction between the two types of power. Power
over nature is the sort of power on which civilization must
be built; the record of man’s history is the record of the
advance or attempted advance of that power. Power over men,
on the other hand, does not raise the general
standard of living or promote the satisfactions of all, as does power
over nature. By its very essence, only some men in society can wield
power over men. Where power over man exists, some must be the powerful,
and others must be objects of power. But every man
can and does achieve power over nature.
In fact, if we look at the basic condition of man as he enters the
world, it is obvious that the only way to preserve his life and advance
himself is to conquer nature—to transform the face of the
earth to satisfy his wants. From the point of view of all the members
of the human race, it is obvious that only such a conquest is
productive and life-sustaining. Power of one man over another cannot
contribute to the advance of mankind; it can only bring about a society
in which plunder has replaced production, hegemony has supplanted
contract, violence and conflict have taken the place of the peaceful
order and harmony of the market. Power of one man over another is parasitic
rather than creative, for it means that the nature conquerors are
subjected to the dictation of those who conquer their fellowman
instead. Any society of force—whether ruled by criminal bands
or by an organized State—fundamentally means the rule of the
jungle, or economic chaos. Furthermore, it would be a jungle, a
struggle in the sense of the Social Darwinists, in which the survivors
would not really be the “fittest,” for the
“fitness” of the victors would consist solely in
their ability to prey on producers. They would not be the ones best
fitted for advancing the human species: these are the producers, the
conquerors of nature.
The libertarian doctrine, then, advocates the maximization of
man’s power over nature and the
eradication of the power of man over man. Statists,
in elevating the latter power, often fail to realize that in their
system man’s power over nature would wither and become
negligible.
Albert Jay Nock was aiming at this dichotomy when, in Our
Enemy the State, he distinguished between social
power and State power.
Those who properly balk at
any terms that seem to anthropomorphize “society”
were wary of accepting this terminology. But actually this distinction
is a very important one. Nock’s “social
power” is
society’s—mankind’s—conquest of
nature: the power that has helped to produce the abundance that man has
been able to wrest from the earth. His “State
power” is political power—the
use of the political means as against the “economic
means” to wealth. State power is the power of man over
man—the wielding of coercive violence by one group over
another.
Nock used these categories to analyze historical events in brilliant
fashion. He saw the history of mankind as a race between social
power and State power. Always
man—led by the producers—has tried to advance the
conquest of his natural environment. And always men—other
men—have tried to extend political power
in order to seize the fruits of this conquest over nature. History can
then be interpreted as a race between social power and State power. In
the more abundant periods, e.g., after the Industrial Revolution,
social power takes a large spurt ahead of political power, which has
not yet had a chance to catch up. The stagnant periods are those in
which State power has at last come to extend its control over the newer
areas of social power. State power and social power are antithetical,
and the former subsists by draining the latter. Clearly, the concepts
advanced here—“power over nature” and
“power over man”—are generalizations and
clarifications of Nock’s categories.
One problem may appear puzzling: What is the nature of
“purchasing power” on the market? Is this not power
over man and yet “social” and on the free market?
However, this contradiction is only apparent. Money has
“purchasing power” only because other men are
willing to accept it in exchange for goods, i.e., because they are
eager to exchange. The power to exchange rests—on both sides
of the exchange—on production, and this
is precisely the conquest of nature that we have
been discussing. In fact, it is the exchange process—the
division of labor—that permits man’s power over nature
to extend beyond the primitive level. It was power over nature
that the Ford Motor Company had developed in such abundance, and it was
this power that the angry job seeker was threatening
to seize—by political power—while complaining about
Ford’s “economic power.”
In sum, political-power terminology should be applied only to those
employing violence. The only “private governments”
are those people and organizations aggressing against persons and
property that are not part of the official State dominating certain
territory. These “private States,” or private
governments, may either co-operate with the official State, as did the
governments of the guilds in the Middle Ages, and as labor unions and
cartelists do today, or they may compete with the official State and be
designated as “criminals” or
“bandits.”
12.
The Problem of Luck
A common criticism of free-market decisions is that
“luck” plays too great a role in determining
incomes. Even those who concede that income to a factor tends to equal
its discounted marginal value product to consumers, and that
entrepreneurs on the free market will reduce mistakes to an absolute
minimum, add that luck still plays a role in income determination.
After charging that the market confers undue laurels on the lucky, the
critic goes on to call for expropriation of the
“rich” (or lucky) and subsidization of the
“poor” (or unlucky).
Yet how can luck be isolated and identified? It should be evident that
it is impossible to do so. In every market action luck is interwoven
inextricably and is impossible to isolate. Consequently, there is no
justification for saying that the rich are luckier than the
poor. It might very well be that many or most of the rich have been unlucky
and are getting less than their true DMVP, while most of the poor have
been lucky and are getting more. No one can say
what the distribution of luck is; hence, there is no justification here
for a “redistribution” policy.
In only one place on the market does luck purely
and identifiably determine the result: gambling
gains and losses.
But is this what the
statist critics really want—confiscation
of the gains of gambling winners in order to pay gambling losers? This
would mean, of course, the speedy death of gambling—except as
an illegal activity—for there would obviously be no point in
continuing the games. Presumably, even the losers would object to being
compensated, for they freely and voluntarily accepted the rules of
chance before beginning to gamble. The governmental policy of
neutralizing luck destroys the satisfaction that all
the participants derive from the game.
13.
The Traffic-Manager Analogy
Because of its popularity, we may briefly consider the
“traffic-manager analogy”—the doctrine
that the government must obviously regulate the economy,
“just as traffic must be regulated.” It is high
time that this flagrant non sequitur be consigned to oblivion. Every
owner necessarily regulates his own property. In the same way, every
owner of a road will lay down the rules for the use of his road. Far
from being an argument for statism, management is simply the attribute
of all ownership. Those who own the roads will regulate their use. In
the present day, the government owns most roads and so regulates them.
In a purely free-market society, private owners would operate and
control their own roads. Obviously, the “traffic-manager
analogy” can furnish no argument against the purely free
market.
14.
Over- and Underdevelopment
Critics often level conflicting charges against the free market. The
historicist-minded may concede that the free market is ideal for a
certain stage of economic development, but insist that it is unsuited
to other stages. Thus, advanced nations have been exhorted to embrace
government planning because “the modern economy is too
complex” to remain planless, “the frontier is
gone,” and “the economy is now mature.”
But, on the other hand, the backward countries have been told that they
must adopt statist planning methods because of their relatively
primitive state. So any given economy is either too advanced or too
backward for laissez faire; and we may rest assured that the appointed
moment for laissez faire somehow never arrives.
The currently fashionable “economics of growth” is
an historicist regression. The laws of economics apply whatever the
particular level of the economy. At any level, progressive change
consists in a growing volume of capital per head of population and is
furthered by the free market, low time preferences, far-seeing
entrepreneurs, and sufficient labor and natural resources. Regressive
change is brought about by the opposite conditions. The terms progressive
and regressive change are far better than
“growth,” a term expressing a misleading biological
analogy that implies some actual law dictating that an economy must
“grow” continually, and even at a fixed rate.
Actually, of course, an economy can just as easily
“grow” backward.
The term “underdeveloped” is also unfortunate, as
it implies that there is some level or norm that the economy should
have reached but failed to reach because some external force did not
“develop” it. The old-fashioned term
“backward,” though still normative, at least pins
the blame for the relative poverty of an economy on the
nation’s own policies.
The poor country can best progress by permitting private enterprise and
investment to function and by allowing natives and foreigners to invest
there unhampered and unmolested. As for the rich country and its
“complexities,” the delicate processes of the free
market are precisely equipped to handle complex adjustments and
interrelations far more efficiently than can any form of statist
planning.
15.
The State and the Nature of Man
Since the problem of the nature of man has been raised, we may now turn
briefly to an argument that has pervaded Roman Catholic social
philosophy, namely, that the State is part of the essential nature of
man. This Thomistic view stems from Aristotle and Plato, who, in their
quest for a rational ethic, leaped to the assumption that the State was
the embodiment of the moral agency for mankind. That man should do such
and such quickly became translated into the prescription: The State
should do such and such. But nowhere is the nature of the State itself
fundamentally examined.
Typical is a work very influential in Catholic circles, Heinrich
Rommen’s The State in Catholic Thought.Following Aristotle, Rommen
attempts to ground the State in the nature of man by pointing out that
man is a social being. In proving that man’s nature is best
fitted for a society, he believes that he has gone far to provide a
rationale for the State. But he has not done so in the slightest
degree, once we fully realize that the State and society are by no
means coextensive. The contention of libertarians that the State is an antisocial
instrument must first be refuted before such a non sequitur
can be allowed. Rommen recognizes that the State and society are
distinct, but he still justifies the State by arguments that apply only
to society.
He also asserts the importance of law, although the particular legal
norms considered necessary are unfortunately not specified. Yet law and
the State are not coextensive either, although this is a fallacy that
very few writers avoid. Much Anglo-Saxon law grew out of the
voluntarily adopted norms of the people themselves (common law, law
merchant, etc.), not as State legislation.
Rommen also stresses the
importance for society of the predictability of
action, which can be assured only by the State. Yet the essence of
human nature is that it cannot be considered as truly predictable;
otherwise we should be dealing, not with free men, but with an ant
heap. And if we could force men to march in unison
according to a complete set of predictable norms, it is certainly not a
foregone conclusion that we should all hail such an ideal. Some people
would combat it bitterly. Finally, if the
“enforceable norm” were limited to
“abstinence from aggression against others,” (1) a
State is not necessary for such enforcement, as we have noted above,
and (2) the State’s own inherent aggression itself violates
that norm.
16.
Human Rights and Property Rights
It is often asserted by critics of the free-market economy that they
are interested in preserving “human rights” rather
than property rights. This artificial dichotomy between human and
property rights has often been refuted by libertarians, who have
pointed out (a) that property rights of course accrue to humans and to
humans alone, and (b) that the “human right” to
life requires the right to keep what one has produced to sustain and
advance life. In short, they have shown that property rights are
indissolubly also human rights. They have, besides, pointed out that
the “human right” of a free press would be only a
mockery in a socialist country, where the State owns and decides upon
the allocation of newsprint and other newspaper capital.
There are other points that should be made, however. For not only are
property rights also human rights, but in the most profound sense there
are no rights but property rights. The only
human rights, in short, are property rights. There are several senses
in which this is true. In the first place, each individual, as a
natural fact, is the owner of himself, the ruler of
his own person. The “human” rights of the person
that are defended in the purely free-market society are, in effect,
each man’s property right in his own
being, and from this property right stems his right
to the material goods that he has produced.
In the second place, alleged “human rights” can be
boiled down to property rights, although in many cases this fact is
obscured. Take, for example, the “human right” of
free speech. Freedom of speech is supposed to mean the right of
everyone to say whatever he likes. But the neglected question is:
Where? Where does a man have this right? He certainly does not have it
on property on which he is trespassing. In short, he has this right
only either on his own property or on the property
of someone who has agreed, as a gift or in a rental contract, to allow
him on the premises. In fact, then, there is no such thing as a
separate “right to free speech”; there is only a
man’s property right: the right to do as
he wills with his own or to make voluntary agreements with other
property owners.
The concentration on vague and wholly “human”
rights has not only obscured this fact but has led to the belief that
there are, of necessity, all sorts of conflicts between individual
rights and alleged “public policy” or the
“public good.” These conflicts have, in turn, led
people to contend that no rights can be absolute, that they must all be
relative and tentative. Take, for example, the human right of
“freedom of assembly.” Suppose that a
citizens’ group wishes to demonstrate for a certain measure.
It uses a street for this purpose. The police, on the other hand, break
up the meeting on the ground that it obstructs traffic. Now, the point
is that there is no way of resolving this conflict, except arbitrarily,
because the government owns the streets. Government
ownership, as we have seen, inevitably breeds insoluble conflicts. For,
on the one hand, the citizens’ group can argue that they are
taxpayers and are therefore entitled to use the streets for assembly,
while, on the other hand, the police are right that traffic is
obstructed. There is no rational way to resolve the conflict because
there is as yet no true ownership of the valuable street-resource. In a
purely free society, where the streets are privately owned, the
question would be simple: it would be for the streetowner to decide,
and it would be the concern of the citizens’ group to try to
rent the street space voluntarily from the owner. If all ownership were
private, it would be quite clear that the citizens did not have any
nebulous “right of assembly.” Their right would be
the property right of using their money in an
effort to buy or rent space on which to make their demonstration, and
they could do so only if the owner of the street agreed to the deal.
Let us consider, finally, the classic case that is supposed to
demonstrate that individual rights can never be absolute but must be
limited by “public policy”: Justice
Holmes’ famous dictum that no man can
have the right to cry “fire” in a crowded theater.
This is supposed to show that freedom of speech cannot be absolute. But
if we cease dealing with this alleged human right and seek for the property
rights involved, the solution becomes clear, and we see that there is
no need at all to weaken the absolute nature of rights. For the person
who falsely cries “fire” must be either the owner
(or the owner’s agent) or a guest or
paying patron. If he is the owner, then he has committed fraud upon his
customers. He has taken their money in exchange for a promise to put on
a motion picture, and now, instead, he disrupts the performance by
falsely shouting “fire” and creating a disturbance
among the patrons. He has thus willfully defaulted on his contractual
obligation and has therefore violated the property rights
of his patrons.
Suppose, on the other hand, that the shouter is not the owner, but a
patron. In that case, he is obviously violating the property right of
the theater owner (as well as the other patrons). As a guest, he is on
the property on certain terms, and he has the obligation of not
violating the owner’s property rights by disrupting the
performance that the owner is putting on for the patrons. The person
who maliciously cries “fire” in a crowded theater,
therefore, is a criminal, not because his so-called
“right of free speech” must be pragmatically
restricted on behalf of the so-called “public
good,” but because he has clearly and obviously violated the
property rights of another human being. There is no need, therefore, of
placing limits upon these rights.
Since this is a praxeological and not an ethical treatise, the aim of
this discussion has not been to convince the reader
that property rights should be upheld. Rather, we have attempted to
show that the person who does wish to construct his
political theory on the basis of “rights” must not
only discard the spurious distinction between human rights and property
rights, but also realize that the former must all be absorbed into the
latter.
APPENDIX
PROFESSOR OLIVER ON SOCIOECONOMIC GOALS
Some years ago, Professor Henry M. Oliver published an important study:
a logical analysis of ethical goals in economic affairs.
Professor Kenneth J. Arrow
has hailed the work as a pioneer achievement on the road to the
“axiomatization of a social ethics.” Unfortunately,
this attempted “axiomatization” is a tissue of
logical fallacies.
It is remarkable what difficulty economists and political philosophers
have had in trying to bury laissez faire. For well
over a half century, laissez-faire thought, both in
its Natural-Rights and its utilitarian versions, has been extremely
rare in the Western world. And yet, despite the continued proclamation
that laissez faire has been completely
“discredited,” uneasiness has marked the one-sided
debate. And so, from time to time, writers have felt obliged to lay the
ghost of laissez faire. The absence of opposition
has created a series of faintly worried monologues rather than a lively
two-sided argument. Nevertheless the attacks continue, and now
Professor Oliver has gone to the extent of writing a book almost wholly
devoted to an attempted refutation of laissez-faire
thought.
A.
The Attack on Natural Liberty
Oliver begins by turning his guns on the natural-rights defense of laissez
faire—on the system of natural liberty.
He is worried because
Americans still seem to cling to this doctrine in underlying theory, if
not in actual practice. First, he sets forth various versions of the
libertarian position, including the “extreme”
version, “A man has a right to do what he will with his
own,” as well as Spencer’s Law of Equal Freedom and
the “semiutilitarian” position that “a
man is free to do as he pleases as long as he does not harm
someone.” The “semiutilitarian” position
is easiest to attack, and Oliver has no difficulty in showing its
vagueness. “Harm” can be interpreted to cover
practically all actions, e.g., a hater of the color red can argue that
someone else inflicts “aesthetic harm” upon him by
wearing a red coat.
Characteristically, Oliver has least patience with the
“extreme” version, which, he contends, is
“not meant to be interpreted literally,” not a
seriously reasoned statement, etc. This enables him to shift quickly to
attacks on the modified and weaker versions of libertarianism. Yet it is
a serious statement and must be coped with seriously, especially if
“A” is replaced by “Every” in
the sentence. Too often political debate has been short-circuited by
someone’s blithe comment that “you can’t
really be serious!” We have seen above that
Spencer’s Law of Equal Freedom is really a redundant version
of the “extreme” statement and that the first part
implies the proviso clause. The “extreme” statement
permits a more clear-cut presentation, avoiding many of the
interpretative pitfalls of the watered-down version.
Let us now turn to Oliver’s general criticisms of the
libertarian position. Conceding that it has “great
superficial attractiveness,” Oliver levels a series of
criticisms that are supposed to demonstrate its illogic:
(1) Any demarcation of property “restricts
liberty,” i.e., the liberty of others to use these resources.
This criticism misuses the term “liberty.”
Obviously, any property right infringes on others’
“freedom to steal.” But we do not even need
property rights to establish this “limitation”; the
existence of another person, under a regime of
liberty, restricts the “liberty” of others to
assault him. Yet, by definition, liberty cannot be
restricted thereby, because liberty is defined as freedom to control what
one owns without molestation by others. “Freedom to
steal or assault” would permit someone—the victim
of stealth or assault—to be forcibly or fraudulently deprived
of his person or property and would therefore violate the clause of
total liberty: that every man be free to do what he
wills with his own. Doing what one wills with someone
else’s own impairs the other person’s
liberty.
(2) A more important criticism in Oliver’s eyes is that
natural rights connote a concept of property as consisting in
“things” and that such a concept eliminates
property in intangible “rights.” Oliver holds that
if property is defined as a bundle of things, then all property in
rights, such as stocks and bonds, would have to be eliminated; whereas
if property is defined as “rights,” insoluble
problems arise of defining rights apart from current legal custom.
Furthermore, property in “rights” divorced from
“things” allows non-laissez-faire
rights to crop up, such as “rights in jobs,” etc.
This is Oliver’s primary criticism.
This point is a completely fallacious one. Although property is
certainly a bundle of physical things, there is no dichotomy
between things and rights; in fact, “rights” are
simply rights to things. A share in an oil company
is not an intangible floating “right”; it is a
certificate of aliquot ownership in the physical property of the oil
company. Similarly, a bond is directly a claim to ownership of a
certain amount of money and, in the final analysis, is an aliquot
ownership in the company’s physical property.
“Rights” (except for grants of monopolistic
privilege, which would be eliminated in the free society) are simply
divisible reflections of physical property.
(3) Oliver tries to demonstrate that the libertarian position, however
phrased, does not necessarily lead to laissez faire.
As we have indicated, he does this by skipping quickly over the
“extreme” position and concentrating his attack on
the unquestionable weaknesses of some of the more qualified
formulations. The “harm” clause of the
semiutilitarians is justly criticized. Spencer’s Law of Equal
Freedom is attacked for its proviso clause and for the alleged
vagueness of the phrase “infringes on the equal freedom of
others.” Actually, as we have seen, this proviso is
unnecessary and could well be eliminated. Even so, Oliver does
considerably less than justice to the Spencerian position. He sets up
alternative straw-man definitions of “infringement”
and shows that none of these alternatives leads to strict laissez
faire. A more thorough search would easily have yielded
Oliver the proper definition. Of the five alternative definitions he
offers, the first simply defines infringement as “violation
of the customary legal code”—a question-begging
definition that no rational libertarian would employ. Basing his
argument necessarily on principle, the libertarian must fashion his
standard by means of reason and cannot simply adopt existing legal
custom.
Oliver’s fourth and fifth
definitions—“exercise of control in any form over
another person’s satisfaction or
deeds”—are so vague and so question-begging in the
use of the word “control” that no libertarian would
ever use them. This leaves the second and third definitions of
“infringement,” in which Oliver manages to skirt
any reasonable solution to the problem. The former defines
“infringement” as “direct physical
interference with another man’s control of his person and
owned things”; and the latter, as “direct physical
interference plus interference in the form of threat of
injury.” But the former apparently excludes fraud, while the
latter not only excludes fraud, but also includes
threats to compete with someone else, etc. Since neither definition
implies a laissez-faire system, Oliver quickly
gives up the task and concludes that the term
“infringement” is hopelessly vague and cannot be
used to deduce the laissez-faire concept of
freedom, and therefore that laissez faire needs a
special, additional ethical assumption aside from the basic libertarian
postulate.
Yet a proper definition of “infringement” can
be found in order to arrive at a laissez-faire
conclusion. The vague, question-begging term
“injury” must not be used. Instead, infringement
can be defined as “direct physical interference with another
man’s person or property, or the threat of such physical
interference.” Contrary to Oliver’s assumption,
fraud is included in the category of
“direct physical interference,” for such
interference means not only the direct use of armed violence, but also
such acts as trespass and burglary without use of a weapon. In both
cases, “violence” has been done to someone
else’s property by physically molesting it. Fraud is implicit
theft, because fraud entails the physical appropriation of someone
else’s property under false pretenses, i.e., in exchange for
something that is never delivered. In both cases, someone’s
property is taken from him without his consent.
Where there’s a will there’s a way, and thus we see
that it is quite easy to define the Spencerian formula clearly enough
so that laissez faire and only laissez
faire follows from it. The important point to remember is
never to use such vague expressions as “injury,”
“harm,” or “control,” but
specific terms, such as “physical interference” or
“threats of physical violence.”
B.
The Attack on Freedom of Contract
After disposing to his own satisfaction of the basic natural-rights
postulates, Oliver goes on to attack a specific class of these rights:
freedom of contract.
Oliver delineates three
possible freedom-of-contract clauses: (1) “A man has a right
to freedom of contract”; (2) “A man has a right to
freedom of contract unless the terms of the contract harm
someone”; and (3) “A man has a right to freedom of
contract unless the terms of the contract infringe upon
someone’s rights.” The second clause can be
disposed of immediately; once again, the vague notion of
“harm” can provide an excuse for unlimited State
intervention, as Oliver quickly notes. No libertarian would adopt such
a phrasing. The first formulation is, of course, the most
uncompromising and leaves no room whatever for State intervention. Here
Oliver again scoffs and says that “very few persons would
push the freedom-of-contract doctrine so far.” Perhaps, but
since when is truth established by majority vote? In fact, the third
clause, with its Spencerian proviso, is again unnecessary. Suppose, for
example, that A and B freely contract to shoot C. The third version may
say that this is an illegal contract. But, actually, it should not be!
For the contract itself does not and cannot violate
C’s rights. It is only a possible subsequent action against C
that will violate his rights. But, in that case, it is that action
which must be declared illegal and punished, not the preceding
contract. The first clause, which provides for absolute freedom of
contract, is the clearest and evidently the preferable formulation.
Oliver sees the principle of freedom of contract, because of the
necessity that there be mutual agreement between two people, open to
even stronger objection than the basic natural-rights postulate. For
how, asks Oliver, can we distinguish between a free and voluntary
contract, on the one hand, and “fraud” and
“coercion”—which void
contracts—on the other?
First, how can fraud be clearly defined? Oliver’s critique
here is in two parts:
(1) He says that “common law holds that certain types of
omissions as well as certain types of false statements and misleading
sections void contracts. Where is this rule of omission to
stop?” Oliver sees, quite correctly, that if no omission at
all were allowed, the degree of statism would be enormous. Yet
this problem is solved very simply: change
the common law so as to eliminate all rules of omission whatever! It is
curious that Oliver is so reluctant even to consider changes in ancient
legal customs where these changes seem called for by principle, or to
realize that libertarians would advocate such changes. Since
libertarians advocate sweeping changes elsewhere in the political
structure, there is no reason why they should balk at changing a few
clauses of the common law.
(2) He states that even rules against false statements seem statist to
some people and could be pushed beyond their present limits, and he
cites SEC regulations as an example. Yet the whole problem is that a
libertarian system could countenance no administrative
boards or regulations whatever. No advance regulations could be handed
down. On the purely free market, anyone damaged by false statements
would take his opponent to court and win redress there. But any false
statements, any fraud, would then be punished by the court severely, in
the same manner as theft.
Secondly, Oliver wants to know how “coercion” can
be defined. Here, the reader is referred to the section on
“Other Forms of Coercion” above. Oliver is confused
in contradictorily jumbling the definitions of coercion as physical
violence and as refusal to exchange. As we have
seen, coercion can rationally be defined only as one or the other; not
as both, for then the definition is self-contradictory. Further, he
confuses physical interpersonal violence with the scarcity imposed by
the facts of nature—lumping them both together as
“coercion.” He concludes in the hopelessly muddled
assertion that the freedom-of-contract theory assumes a meaningless
“equality of coercion” among contracting parties.
In fact, libertarians assert that there is no coercion at all in the
free market. The equality-of-coercion absurdity permits Oliver to state
that true freedom of contract at least requires
State-enforced “pure competition.”
The freedom-of-contract argument, therefore, implies laissez
faire and is also strictly derivable from the postulate of
freedom. Contrary to Oliver, no other ethical postulates are necessary
to imply laissez faire from this argument. The
coercion problem is completely solved when
“violence” is substituted for the rather misleading
term “coercion.” Then, any contract is free and
therefore valid when there has been an absence of violence or threat of
violence by either party.
Oliver makes a few other attacks on “legal
liberty”; e.g., he raises the old slogan that
“legal liberty does not correspond to
‘actual’ liberty (or effective
opportunity)”—once again falling into the age-old
confusion of freedom with power or abundance. In one of his most
provocative statements, he asserts that “all men could enjoy
complete legal liberty only under a system of anarchy” (p.
21). It is rare for someone to identify a system under law
as being “anarchy.” If this be anarchism, then many
libertarians will embrace the term!
C.
The Attack on Income According to Earnings
On the free market every man obtains money income insofar as he can
sell his goods or services for money. Everyone’s income will
vary in accordance with freely chosen market valuations of his
productivity in fulfilling consumer desires. In his comprehensive
attack on laissez faire, Professor Oliver, in
addition to criticizing the doctrines of natural liberty and freedom of
contract, also condemns this principle, or what he calls the
“earned-income doctrine.”
Oliver contends that since workers must use capital and land, the right
to property cannot rest on what human labor creates. But both capital
goods and land are ultimately reducible to labor (and time): capital
goods were all built by the original factors, land and labor; and land
had to be found by human labor and brought into production by labor.
Therefore, not only current labor, but also
“stored-up” labor (or rather, stored-up
labor-and-time), earn money in current production, and so there is as
much reason why the owners of these resources should obtain money now
as there is that current laborers earn money now. The right of past
labor to earn is established by the right of bequest, which stems
immediately from the right of property. The right of inheritance rests
not so much on the right of later generations to receive
as on the right of earlier generations to bestow.
With these general considerations in mind, we may turn to some of
Oliver’s detailed criticisms. First, he states the basic
“earned-income” principle incorrectly, and this is
a standing source of confusion. He phrases it thus: “A man
acquires a right to income which he himself creates.”
Incorrect. He acquires the right, not to “income,”
but to the property that he himself creates. The
importance of this distinction will become clear presently. A man has
the right to his own product, to the product of his
energy, which immediately becomes his property. He derives his money income
by exchanging this property, this product of his or his
ancestors’ energy, for money. His goods or services are
freely exchanged on the market for money. His income is therefore
completely determined by the monetary valuation that the market places
on his goods or services.
Much of Oliver’s subsequent criticism stems from ignoring the
fact that all complementary resources are founded on the labor of
individuals. He also decries the idea that “if a man makes
something, it is his” as “very simple.”
Simple it may be, but that should not be a pejorative term in science.
On the contrary, the principle of Occam’s Razor tells us that
the simpler a truth is, the better. The criterion of a statement,
therefore, is its truth, and simplicity is, ceteris
paribus, a virtue. The point is that when a man makes
something, it belongs either to him or to someone else. To whom, then,
shall it belong: to the producer, or to someone who has stolen it from
the producer? Perhaps this is a simple choice, but a necessary one
nevertheless.
Yet how can we tell when a person has “made”
something or not? Oliver worries considerably about this question and
criticizes the marginal productivity theory at length. Aside from the
fallacies of his objections, the marginal productivity theory is not at
all necessary (although it is helpful) to this ethical discussion. For
the criterion to be used in determining who has made the product on the
market and who should therefore earn the money, is really very simple.
The criterion is: Who owns the product? A spends
his labor energy working in a factory; this contribution of labor
energy to further production is bought and paid for by factory owner,
B. A owns labor energy, which is hired by B. In this case, the product
made by A is his energy, and its use is paid for,
or hired, by B. B hires various factors to work on his capital, and the
capital is finally transformed into another product and sold to C. The
product belongs to B, and B exchanges it for money. The money that B
obtains, over and above the amount that he had to pay for other factors
of production, represents B’s contribution to the product.
The amount that his capital received goes to B, its owner, etc.
Oliver also believes it a criticism when he states that men do not
really “make goods” but add value to them by
applying labor. But no one denies this. Man does not create matter,
just as he does not create land. Rather, he takes this natural matter
and transforms it in a series of processes to arrive at more useful
goods. He hopes to add value by transforming matter. To say this is to strengthen
rather than weaken the earnings theory, since it
should be clear that how much value is added in producing goods for
exchange can be determined only by the purchases of customers,
ultimately the consumers. Oliver betrays his confusion by asserting
that the earning theory assumes that “the values which we
receive in exchange are equal in worth to those which we create in the
production process.” Certainly not! There are no
actual values created in the production process; these
“values” take on meaning only from the values we
receive in exchange. We cannot “compare received and created
values” because created property becomes
valuable only to the extent that it is purchased in exchange. Here we
see some of the fruits of Oliver’s fundamental confusion
between “creating income” and “creating a
product.” People do not create income; they create a product,
which they hope can be exchanged for income by
being useful to consumers.
Oliver compounds his confusion by next taking up the laissez-faire
theorem that everyone has the right to his own value scale and to act
on that value scale. Instead of stating this principle in these terms,
Oliver introduces confusion by calling it “placing values on
an equal footing” for each man. Consequently, he can then
criticize this approach by asking how people’s values can
have an “equal footing” when one person’s
purchasing power is more than another’s, etc. The reader will
have no difficulty in seeing the confusion here between equality of
liberty and equality of abundance.
Another of Oliver’s critical objections to the earned-income
theory is that it assumes that “all values are gained through
purchase and sale, that all goods are those of the market
place.” This is nonsense, and no responsible economist ever
assumed it. In fact, no one denies that there are nonmarketable,
nonexchangeable goods (such as friendship, love, and religion) and that
many men value these goods very highly. They must constantly choose how
to allocate their resources between exchangeable and nonexchangeable
goods. This causes not the slightest difficulty for the free market or
for the “earned-income” doctrine. In fact, a man
earns money in exchange for his exchangeable goods.
What could be more reasonable? A man acquires his income by selling
exchangeable goods at market; so naturally the money he acquires will
be determined by the buyers’ evaluations of these goods. How,
indeed, can he ever acquire exchangeable goods in return for his
pursuit (or offer?) of nonexchangeables? And why should he? Why and how
will others be forced to pay money for nothing in return? And how will
the government determine who has produced what nonexchangeable goods
and what the reward or penalty shall be? When Oliver states that market
earnings are unsatisfactory because they do not cover nonmarket
production as well, he fails to indicate why nonmarketable goods should
enter the picture at all. Why should not marketable goods pay
for marketable goods? Oliver’s statement that
“nonmarket receipts” are hardly distributed so as
to “solve the nonmarket part of the problem” makes
little sense. What in the world are “nonmarket
receipts”? And if they are not inner satisfaction from inner
pursuits by the individual, what in the world are they? If Oliver
suggests taking money from A to pay B, then he is suggesting the
seizure of a marketable good, and the receipts are
then quite marketable. But if he is not suggesting this, then his
remarks are quite irrelevant, and he can say nothing against the
earned-income principle.
Also, it should not be overlooked that all those on the market who wish
to reward nonmarketable contributions with money are free to do so. In
fact, in the free society such rewards will be effected to the maximum
degree freely desired in it.
We have seen that the marginal productivity theory is not necessary to
an ethical solution. A man’s property is his product, and
this will be sold at its estimated worth to consumers on the market.
The market solves the problem of estimating worth, and better than any
coercive agency or economist could. If Oliver disagrees with market
verdicts on the marginal value productivity of any factor, he is hereby
invited to become an entrepreneur and to earn the profits that come
from exposing such maladjustments. Oliver’s problems are
pseudo-problems. Thus, he asks, “When White’s
cotton is exchanged for Brown’s wheat, what is the ethically
correct ratio of exchange?” Simple, answers the free-market
doctrine: Whatever the two freely decide.
“When Jones and Smith together produce a good, what part of
that good is attributable to Jones’ actions and what part to
Smith’s?” The answer: Whatever they have mutually
contracted.
Oliver gives several fallacious reasons for rejecting the marginal
productivity theory. One is that income imputation does not imply
income creation, because a laborer’s marginal product can be
altered merely by a change in the quantity or quality of a
complementary factor, or by a variation in the number of competing
laborers. Once again, Oliver’s confusion stems from talking
about “income creation” instead of
“product creation.” The laborer creates his labor
service. This is his property, his to sell at whatever market he
wishes, or not to sell if he so desires. The appraised worth of this
service depends on his marginal value product, which, of course,
depends partly on competition and the number or quality of
complementary factors. This, in fact, does not confound, but rather is
an integral part of, marginal productivity theory. If the supply of
co-operating capital increases, a laborer’s energy service
becomes scarcer in relation to the complementary factors (land,
capital), and his marginal value product and income increase.
Similarly, if there are more competing laborers, there may be a
tendency for a laborer’s DMVP to decline, although it may
increase because of the wider extent of the market. It is beside the
point to say that all this is “not fair” because
his service output remains the same. The point is that to the consumers
his worth in production varies in accordance with these other factors,
and he is paid accordingly.
Oliver also employs the popular but completely fallacious doctrine that
any ethical sense to the marginal productivity theory must rely on the
existence of “pure competition.” But why should the
“marginal value product” of a freely competitive
economy be any less ethical than the “value of the marginal
product” of the Never-Never Land of pure competition? Oliver
adopts Joan Robinson’s doctrine that entrepreneurs
“exploit” the factors and reap a special
exploitation gain. But on the contrary, as Professor Chamberlin has
conceded, no one reaps any
“exploitation” in the world of free competition.
Oliver makes several other interesting criticisms:
(1) He maintains that marginal productivity cannot apply within
corporations because no market for a firm’s capital exists
after the initial establishment of the company. Hence, the directors
can rule the stockholders. In rebuttal, we may ask how the directors
can remain directors without representing the
wishes of the majority of stockholders. The capital market is
continuing because capital values are constantly shifting on the stock
market. A sharp decline in stock values means grave losses for the
owners of the company. Furthermore, it means that there will be no
further capital expansion in that firm and that its capital may not
even be maintained intact.
(2) He maintains that the marginal productivity theory cannot account
for the “lumpy,” “fixed”
contribution to all incomes of the services supplied by the State. In
the first place, marginal productivity theory does not at all, in its
proper form, assume (as Oliver believes) that factors are infinitely
divisible. Any “lumps” can be taken care of. The
problem of the State, therefore, has really nothing to do with lumpy
factors. Indeed, all factors are more or less
“lumpy.” Furthermore, Oliver concedes that the
services of the State are divisible. In one of his rare flashes of
insight, Oliver admits that there can be (and are!) “varying
degrees of police, military, and monetary (e.g., mint)
services.” But if that is the case, how do State services
differ from any other?
The difference is indeed great, but it stems from a fact we have
reiterated many times: that the State is a compulsory monopoly in which
payment is separated from receipt of service. As long as this condition
exists, there can indeed be no market “measure” of
its marginal productivity. But how can this be an argument against
the free market? Indeed, it is precisely the free market that would
correct this condition. Oliver’s criticism here is not of the
free market, but of the statist sphere of a mixed statist-market
economy.
Oliver’s attribution of income creation to
“organized society” is very vague. If by this he
means “society,” he is using a meaningless phrase.
It is precisely the process of the market by which the array of free
individuals (constituting “society”) portions out
income in accordance with productivity. It is double- counting to
postulate a real entity “society” outside the array
of individuals, and possessing or not possessing
“its” own deserved share. If by
“organized society” he means the State,
then the State’s “contributions” were
compulsory and hence hardly “deserved” any pay.
Furthermore, since, as we have shown, total taxation is far greater
than any alleged productive contribution of the State, the rulers owe
the rest of society money rather than vice versa.
(3) Oliver makes the curious assertion (also made repeatedly by Frank
Knight) that a man does not really deserve ethically to reap the
earnings from his own unique ability. I must confess that I cannot make
any sense of this position. What is more inherent in an individual,
more uniquely his own, than his inherited ability?
If he is not to reap the reward from this, conjoined with his own
willed effort, what should he reap a reward from?
And why, then, should someone else reap a reward
from his unique ability? Why, in short, should the
able be consistently penalized, and the unable consistently subsidized?
Oliver’s attribution of such ability to some mystical
“First Cause” will make sense only when someone is
able to find the “first cause” and pay it its
deserved share. Until then, any attempt to
“redistribute” income from A to B would have to
imply that B is the first cause.
(4) Oliver confuses private, voluntary charity and grants-in-aid with
compulsory “charity” or grants. Thus, he misdefines
the earned-income, free-market doctrine as saying that “a
person should support himself and his legitimate dependents, without
asking for special favors or calling upon outside parties for
aid.” While many individualists would accept this
formulation, the true free-market doctrine is that no person may coerce
others into giving him aid. It makes all the difference in the world
whether the aid is given voluntarily or is stolen by force.
As a corollary, Oliver confuses the meaning of
“power” and asserts that employers have power over
employees and therefore should be responsible for the
latter’s welfare. Oliver is quite right when he says that the
slave-master was responsible for his slave’s subsistence, but
he doesn’t seem to realize that only the reestablishment of
slavery would fit his program for labor relations.
To say that the feeble-minded or orphans are
“wards,” as Oliver does, leads to his confusion
between “wards of society” and “wards of
the State.” The two are completely different, because the two
institutions are not the same. The concept of “ward of
society” reflects the libertarian principle that private
individuals and voluntary groups may offer to care for those who desire
such care. “Wards of the State,” on the contrary,
are those (a) to whose care everyone is compelled by
violence to contribute, and (b) who are subject to
State dictation whether they like it or not.
Oliver’s conclusion that “Every normal adult should
have a fair chance to support himself, and, in the absence of this
opportunity, he should be supported by the State” is a
melange of logical fallacies. What is a “fair
chance,” and how can it be defined? Further, in contrast to
Spencer’s Law of Equal Freedom (or to our suggested Law of
Total Freedom), “every” cannot here be fulfilled,
since there is no such real entity as the “State.”
Anyone supported by the “State” must, ipso
facto, be supported by someone else in
the society. Therefore, not everyone can be
supported—especially, of course, if we define “fair
chance” as the absence of interference or coercive penalizing
of a person’s ability.
(5) Oliver realizes that some earned-income theorists combine their
doctrines with a “finders, keepers” theory. But he
can find no underlying principle here and calls it merely an accepted
rule of the business game. Yet “finders, keepers”
is not only based on principle; it is just as much a corollary of the
underlying postulates of a regime of liberty as is the earned-income
theory. For an unowned resource should, according to basic property
rights doctrine, become owned by whoever, through his efforts, brings
this resource into productive use. This is the “finders,
keepers” or “first-user, first-owner”
principle. It is the only theory consistent with the abolition of theft
(including government ownership), so that every useful resource is
always owned by some nonthief.
Some years ago we were promised a
“refutation” of the libertarian
position—one which never appeared. It was to be entitled,
“Back to the Jungle.” See Ralph
L. Roy, Apostles of Discord (Boston: Beacon Press,
1953), p. 407.
On the spurious problems of
“bargaining power,” see
Scoville and Sargent, Fact and Fancy in the T.N.E.C.
Monographs, pp. 312–13; and W.H. Hutt, Theory
of Collective Bargaining (Glencoe, Ill.: Free Press, 1954),
Part I.
Nock, Our Enemy
the State.
Here we refer to pure
gambling, or games of chance, such as roulette, with no
intermingled elements of skill such as in race-track betting.
It is curious that so many
economists, including Alfred Marshall, have
“proved” the “irrationality” of
gambling (e.g., from the diminishing marginal utility of money) by
first assuming, clearly erroneously, that the participants do not like
to gamble!
Heinrich Rommen, The
State in Catholic Thought, a Treatise in Political Philosophy
(London, 1950).
Thus, see
Leoni, Freedom and the Law.
Rommen, State in
Catholic Thought, p. 225.
See Murray
N. Rothbard, “Human Rights Are Property Rights” in Essays
on Liberty (Irvington-on-Hudson, N.Y.: Foundation for
Economic Education, 1959), VI, 315–19. See also
Rothbard, “Bertrand de Jouvenel e i diritti di
proprietá,” Biblioteca della Liberta
(1966, No. 2), pp. 41–45.
Paul L. Poirot,
“Property Rights and Human Rights” in Essays
on Liberty (Irvington-on-Hudson, N.Y.: Foundation for
Economic Education, 1954), II, 79–89.
Henry M. Oliver, Jr., A
Critique of Socioeconomic Goals (Bloomington: Indiana
University Press, 1954).
Kenneth J. Arrow,
“Review of Oliver’s A Critique of
Socioeconomic Goals,” Political Science
Quarterly, September, 1955, p. 442. Arrow is correct,
however, when he says, “It is only when the socio-economic
goals have been made clear that we can speak intelligently about the
best policies for their achievement.” Such clarification has
been attempted in the present chapter.
Oliver, Critique of
Socioeconomic Goals, pp. 1–12.
Oliver, Critique of
Socioeconomic Goals, pp. 12–19.
In objection to this clause,
Oliver states that “Anglo-American law traditionally has
voided certain types of contract because of the belief that they are
against the public interest.” Ibid., p.
13. It is precisely for this reason that libertarians suggest changing
traditional Anglo-American law to conform to their precepts.
Furthermore, “public interest” is a meaningless
term (an example of the fallacy of conceptual realism) and is therefore
discarded by libertarians.
Oliver, Critique of
Socioeconomic Goals, pp. 26–57.
Edward H. Chamberlin, The
Theory of Monopolistic Competition, 7th ed. (Cambridge:
Harvard University Press, 1956), pp. 182ff. “Pure”
competition is an unrealistic—and undesirable—model
admired by many economists, in which all firms are so tiny that no one
has any impact on its market. See, Man,
Economy, and State, chapter 10.
Oliver often cites in his support
the essay of Frank H. Knight, “Freedom as Fact and
Criterion” in Freedom and Reform (New
York: Harper & Bros., 1947), pp. 2–3. There is no
need to elaborate further on Knight’s essay, except to note
his attack on Spencer for adopting both
“psychological hedonism” and “ethical
hedonism.” Without analyzing Spencer in detail, we can, by a
proper interpretation, make very good sense of combining both
positions. First, it is necessary to change
“hedonism”—the pursuit of
“pleasure”—to eudaemonism—the
pursuit of happiness. Second,
“psychological eudaemonism,” the view that
“every individual universally and necessarily seeks his own
maximum happiness,” follows from the praxeological axiom of
human action. From the fact of purpose, this truth
follows, but only when “happiness”
is interpreted in a formal, categorial, and ex ante
sense, i.e., “happiness” here means whatever the
individual chooses to rank highest on his value scale.
Ethical eudaemonism—that
an individual should seek his maximum
happiness—can also be held by the same theorist, when
happiness is here interpreted in a substantive and ex
post sense, i.e., that each individual should pursue that
course which will, as a consequence, make him
happier. To illustrate, a man may be an alcoholic. The eudaemonist may
make these two pronouncements: (1) A is pursuing that course which he
most prefers (“psychological eudaemonism”); and (2)
A is injuring his happiness, this judgment being based on
“happiness rules” derived from the study of the
nature of man, and therefore should reduce his
alcohol intake to the point that his happiness is no longer impaired
(“ethical eudaemonism”). The two are perfectly
compatible positions.
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