Power & Market

The Economics of Javier Milei

The election of Javier Milei brings the first anarchocapitalist world leader in history. Although prolific in the Spanish-speaking world, English speakers know very little of the Argentine´s views. The fact that he heads the Libertarian Party of Argentina certainly hints at what direction his politics run.

Earlier this year, Philipp Bagus and I edited a two-volume book in honor of Jesús Huerta de Soto. Milei wrote a chapter entitled “Capitalism, Socialism, and the Neoclassical Trap.” To my knowledge, it is Milei´s only writing made directly in English for an English audience.

If anyone doubts Milei´s credentials, the chapter is a scathing critique of neoclassical growth theory. It also offers a full-blown Rothbardian alternative. Mises´s work on interventionism and Hayek´s knowledge problem form the basis of his analysis.

Speaking of neoclassical economic analysis, Milei writes:

Note that whenever situations that do not match the mathematical structure arise, they are considered “market failures”, and that is where the government appears to correct those failures. However, to successfully solve this problem, it is assumed that the government knows the utility function of all individuals (preferences) for the past, the present, the future, the time preference rate and knows the state of the current technology and all future enhancements, along with their respective amortization rates. In short, to solve the problem in question, the government should be able to master a significant amount of information that, by definition, individuals themselves ignore or are not able to handle, which exposes that the idea of the welfare state acting on the market to correct failures is a contradiction.

Furthermore, Milei concludes that:

when it is made clear that the correction of market failures by the government as proposed in the neoclassical paradigm is conceptually invalid, taking into consideration that the only ones who can internalize those effects are individuals, once the artificial separation of decision-making processes is eliminated, there will no longer be any reason for government intervention, which will not only stop the socialist advance but will also allow us to counterattack.

This is not your grandfather´s South American leader who politicizes under the influence of neoclassical “Chicago Boy” economists. Milei is a full-blown libertarian. His Libertarian Party won yesterday´s run-off election by carrying nineteen of twenty-two Argentine states and 56% of the popular vote. A plurality of Argentine voters must also be fed up after decades of socialism.

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