A triangular intervention occurs when an intervener either compels a pair of people to make an exchange or prohibits them from making an exchange. The coercion may be imposed on the terms of the exchange or on the nature of one or both of the products being exchanged or on the people doing the exchanging.

Triangular interference with an exchange can alter the terms of the exchange or else in some way alter the nature of the product or the persons making the exchange. The latter intervention, product control, may regulate the product itself (e.g., a law prohibiting all sales of liquor) or the people selling or buying the product (e.g., a law prohibiting Mohammedans from selling—or buying—liquor).

UP TO THIS POINT WE HAVE been assuming that no violent invasion of person or property occurs in society; we have been tracing the economic analysis of the free society, the free market, where individuals deal with one another only peacefully and never with violence. This is the construct, or “model,” of the purely free market. And this model, imperfectly considered perhaps, has been the main object of study of economic analysis throughout the history of the discipline.

Intervention is the intrusion of aggressive physical force into society; it means the substitution of coercion for voluntary actions. It must be remembered that, praxeologically, it makes no difference what individual or group wields this force; the economic nature and consequences of the action remain the same.

In tracing the effects of intervention, we must explore both the direct and the indirect consequences. In the first place, intervention will have direct, immediate consequences on the utilities of those participating. On the one hand, when the society is free and there is no intervention, everyone will always act in the way that he believes will maximize his utility, i.e., will raise him to the highest possible position on his value scale. In short, everyone’s utility ex ante will be “maximized” (provided we take care not to interpret “utility” in a cardinal manner).

We have thus seen that individuals maximize their utility ex ante on the free market, and that they cannot do so when there is intervention, for then the intervener gains in utility only at the expense of a demonstrated loss in utility by his subject. But what of utilities ex post? People may expect to benefit when they make decisions, but do they actually benefit from their results? How do the free market and intervention compare in traveling that vital path from ante to post?