Abstract
Ludwig von Mises, without a doubt one of the most rigorous defenders in the history of economic thought of a social system of laissez faire unhampered by any governmental intervention, admits to two and only two deficiencies of a pure market system. While according to Mises it is generally true that a market economy produces the highest possible standard of living, this will not happen if any firm succeeds in securing monopoly prices for its goods. And the market cannot itself produce the goods of law and order. Law and order, or the protection of the legal framework underlying the market order, are rather considered by Mises, in current terminology, as “public goods,” whose production must be undertaken by the state, which is not itself subject to the discipline of the market, but instead relies on coercion, in particular on compulsory taxation.
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References
See Ludwig von Mises, Human Action: A Treatise on Economics,3rd rev. ed. (Chicago: Regnery, 1966), p. 357ff; idem, “Profit and Loss,” in: Planning for Freedom (South Holland, Il.: Libertarian Press, 1974), esp. p. 116. In this essay Mises takes a somewhat different, one might say, a proto-Rothbardian position.
See M. N. Rothbard, Man, Economy, and State (Los Angeles: Nash, 1972), ch. 10, esp. pp. 604–14.
Ibid., p. 614. See also W. Block, “Austrian Monopoly Theory: A Critique,” Journal of Libertarian Studies (1977); H. H. Hoppe, Eigentum, Anarchie und Staat (Opladen:
Westdeutscher Verlag, 1987), ch. 5; idem, A Theory of Socialism and Capitalism (Boston: Kluwer Academic Publishers, 1989), ch. 9.
See M. N. Rothbard, Man, Economy and State, pp. 883–90; idem, “The Myth of Neutral Taxation,” Cato Journal (1981).
Mises, of course, is by no means a completely orthodox public goods theorist. He does not share their and the public choice theorist’s commonly held naive view of the government being some sort of voluntary organization. Rather, and unmistakably so he says “the essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom,” (Human Action,p. 719). On this see also the refreshingly realistic assessment by Joseph Schumpeter, [Capitalism, Socialism and Democracy (New York: Harper and Bros., 1942), p. 198], that “the theory which construes taxes on the analogy of club dues or the purchase of a service of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of minds.” Nor does Mises overlook, as they almost invariably do, the multitude of fallacies involved in today’s fashionable economic literature on “externalities,” (Human Action,pp. 654–661). When nonetheless Mises’s position is classified as orthodox here, this is due to the fact that he, in this respect not differing from the rest of the public goods theorists, dogmatically assumes that certain goods (law and order, in his case) cannot be provided by freely competing industries; and that he, too, with respect to law and order at least, “proves” the necessity of a government by a non sequitur. Thus, in his “refutation” of anarchism he writes: “Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order. This power is vested in the state or government,” (ibid., p. 149). But clearly, from the first statement the second one does not follow. Why cannot private protection agencies do the job?! And why would the government be able to do the job better than such agencies?! Here the reader looks in vain for answers.
On the specific problem of a free market provision of law and order see M. N. Rothbard, For A New Liberty, rev. ed. (New York: Macmillan, 1978), ch. 12; idem, Power and Market (Kansas City: Sheed Andrews and McMeel, 1977), ch. 1; also G. de Molinari, The Production of Security, Occasional Paper No. 2 ( 1849; reprint, New York: Center for Libertarian Studies, 1977 ).
M. N. Rothbard, Man, Economy, and State,p. 887; see on the above also W. Block, “Public Goods and Externalities: The Case of Roads,” Journal of Libertarian Studies (1983); H. H. Hoppe, Eigentum, Anarchie und Staat,ch. I; idem, A Theory of Socialism and Capitalism,ch. 10.
On this see L. v. Mises, Human Action,pp. 153–55.
For Rothbard’s Mises-critique see M. N. Rothbard, The Ethics of Liberty ( Atlantic Highlands, N.J.: Humanities Press, 1982 ), pp. 205–12.
For various “cognitivist” approaches towards ethics see, K. Baier, The Moral Point of View: A Rational Basis of Ethics (Ithaca, N.Y.: Cornell University Press, 1961); M. Singer, Generalization in Ethics (New York: A. Knopf, 1961); P. Lorenzen, Normative Logic and Ethics (Mannheim: Bibliographisches Institut, 1969); S. Toulmin, The Place of Reason in Ethics (Cambridge: Cambridge University Press, 1970); F. Kambartel, ed., Praktische Philosophie und konstruktive Wisserschaftstheorie (Frankfurt/M.: Athenäum, 1974); A. Gewirth, Reason and Morality (Chicago: University of Chicago Press, 1978).
On the natural rights tradition see, J. Wild, Plato’s Modern Enemies and the Theory of Natural Law (Chicago: University of Chicago Press, 1953); H. Veatch, Rational Man: A Modern Interpretation of Aristotelian Ethics (Bloomington, Ind.: Indiana University Press, 1962); idem, For An Ontology of Morals: A Critique of Contemporary Ethical Theory (Evanston, Ill.: Northwestern University Press, 1971 ); idem, Human Rights: Fact or Fancy? ( Baton Rouge, La.: Louisiana State University Press, 1985 ).
A. Gewirth, “Law, Action, and Morality,” in: R. Porreco, ed., Georgetown Symposion on Ethics: Essays in Honor of Henry B. Veatch ( New York: University Press of America, 1984 ), p. 73.
See the discussion in H. Veatch, Human Rights,pp. 62–67.
To disassociate myself from the natural rights tradition is not to say that I could not agree with its critical assessment of most of contemporary ethical theory — indeed I do agree with Veatch’s complementary refutation of all desire — (teleological, utilitarian) ethics as well as all duty (deontological) ethics, ibid., ch. 1. Nor, then, do I claim that it is impossible to interpret my approach as falling in a “rightly conceived” natural rights tradition after all (see also footnote 17 below). What is claimed, though, is that the following approach is clearly out of line with what the natural rights approach has actually come to be, and that it owes nothing to this tradition as it stands.
See K. O. Apel, “Das Apriori der Kommunikationsgemeinschaft und die Grundlagen der Ethik,” in: idem, Transformation der Philosophie,vol.2 (Frankfurt/M.: Suhrkamp, 1973); also J. Habermas, “Wahrheitstheorien,” in H. Fahrenbach, ed., Wirklichkeit und Reflexion (Pfullingen: Neske, 1974); idem, Theorie des kommunikativen Handelns, vol. 1 (Frankfurt/M.: Suhrkamp, 1981), pp. 44ff; idem, Moralbewusstsein und kommunikatives Handeln (Frankfurt/M.: Suhrkamp, 1983).
Of course, then, since the capability of argumentation is an essential part of human nature — one could not even say anything about the latter without the former — it could also be argued that norms which cannot be defended effectively in the course of argumentation are also’ incompatible with human nature.
Methodologically, this approach exhibits a close resemblance to what A. Gewirth has described as the “dialectically necessary method,” (Reason and Morality,pp. 42–47) — a method of a priori reasoning modelled after the Kantian idea of transcendental deductions. Unfortunately though, in his important study Gewirth chooses the wrong starting point for his analyses. He attempts to derive an ethical system not from the concept of argumentation but from that of action. However, surely this cannot work, because from the correctly stated fact that in action an agent must, by necessity, presuppose the existence of certain values or goods, it does not follow that such goods then are universalizable and hence should be respected by others as the agent’s goods by right. (Gewirth might have noticed the ethical “neutrality” of action had he not been painfully unaware of the existence of the well-established “pure science of action” or “praxeology” as espoused by Mises. And incidentally, an awareness of praxeology also might have spared him from many mistakes that derive from his faulty distinction between “basic,” “additive” and “non-subtractive” good (ibid., pp. 53–58). Rather, the idea of truth, or of universalizable rights or goods only emerges with argumentation as a special subclass of actions, but not with action as such, as is clearly revealed by the fact that Gewirth, too, is not engaged simply in action, but more specifically in argumentation when he wants to convince us of the necessary truth of his ethical system. However, with argumentation being recognized as the one and only appropriate starting point for the dialectically necessary method, a libertarian (i.e., non-Gewirthian) ethic follows, as will be seen.
On the faultiness of Gewirth’s attempt to derive universalizable rights from the notion of action see also the perceptive remarks by A. Maclntyre, After Virtue: A Study in Moral Theory (London: Duckworth, 1981), pp. 64–5; J. Habermas, Moralbewusstsein and kommunikatives Handeln,pp. 110–11; and H. Veatch, Human Rights,pp. 159–160.
See the works cited in footnotes 11 and 12 above. “See the works cited in footnote 16 above.
It might be noted here that only because scarcity exists is there even a problem of formulating moral laws; insofar as goods are superabundant (“free” goods) no conflict over the use of goods is possible and no action-coordination is needed. Hence, it follows that any ethic, correctly conceived, must be formulated as a theory of property, i.e., a theory of the assignment of rights of exclusive control over scarce means. Because only then does it become possible to avoid otherwise inescapable and unresolvable conflicts. Unfortunately, moral philosophers in their widespread ignorance of economics have hardly ever seen this clearly enough. Rather, like H. Veatch (Human Rights,p. 170), for instance, they seem to think that they can do without a precise definition of property and property rights only to then necessarily wind up in a sea of vagueness and ad-hoceries.
On human rights as property rights see also M. N. Rothbard, The Ethics of Liberty, ch. 15. John Locke, Two Treatises on Government, ed. P. Laslett (Cambridge: Cambridge University Press, 1970), esp. vol. II, V.
On the non-aggression principle and the principle of original appropriation see also M. N. Rothbard, For A New Liberty,ch. 2; idem, The Ethics of Liberty,chs. 6–8.
This, for instance, is the position taken by Jean-Jacques Rousseau, when he asks us to resist attempts to privately appropriate nature-given resources by, for example, fencing them in. He says in his famous dictum; “Beware of listening to this impostor, you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” [“Discourse upon the Origin and Foundation of Inequality Among Mankind,” in: J. J. Rousseau, The Social Contract and Discourses,ed. G. Cole (New York: 1950), p. 235.] However, to argue so is only possible if it is assumed that property claims can be justified by decree. Because how else could “all” (i.e., even those, who never did anything with the resources in question) or “nobody” (i.e., even those not, who actually made use of it) own something — unless property claims were founded by mere decree?!
M. N. Rothbard, The Ethics of Liberty,p. 32; on the method of a priori reasoning employed in the above argument see also, idem, Individualism and the Philosophy of the Social Sciences (San Francisco: Cato Institute, 1979); H. H. Hoppe, Kritik der kausalwissenschaftlichen Sozialforschung. Untersuchungen zur Grundlegung von Soziologie und Ökonomie (Opladen: Westdeutscher Verlag 1983); idem., “Is Research Based on Causal Scientific Principles Possible in the Social Sciences?” Ratio (1983), (supra ch.7); idem, A Theory of Socialism and Capitalism,ch. 6.
On the problem of deriving “ought” from “is” see W. D. Hudson, ed., The Is-Ought Question (London: Macmillan, 1969).
See M. N. Rothbard, The Ethics of Liberty,p. 45.
On the importance of the definition of aggression as physical aggression see also M.N. Rothbard, ibid., chs. 8–9; idem, “Law, Property Rights and Air Pollution,” Cato Journal (1982).
On the idea of structural violence as distinct from physical violence see D. Senghass, ed., Imperialismus and strukturelle Gewalt (Frankfurt/M.: Suhrkamp, 1972). The idea of defining aggression as an invasion of property values also underlies both the theories of justice of John Rawls and Robert Nozick, however different these two authors may have appeared to be to many commentators. For how could Rawls think of his so-called difference-principle [“Social and economic inequalities are to be arranged so that they are...reasonable expected to be to everyone’s — including the least advantaged one’s — advantage or benefit,” J. Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press 1971), pp. 60–83; p. 75ff], as justified, unless he believes that simply by increasing his relative wealth a more fortunate person commits an aggression, and a less fortunate one then has a valid claim against the more fortunate person only because the former’s relative position in terms of value has deteriorated?! And how could R. Nozick claim it to be justified for a “dominant protection agency” to outlaw competitors, regardless of what their actions would have been like? [R. Nozick, Anarchy, State and Utopia (New York: Basic Books, 1974 ), pp. 55f.] Or how could he believe it to be morally correct to outlaw so-called non-productive exchanges, i.e., exchanges where one party would be better off if the other one did not exist at all, or at least had nothing to do with it (as, for instance, in the case of a blackmailee and a blackmailer), regardless of whether or not such an exchange involved physical invasion of any kind (ibid., pp. 83–6), unless he thought that the right to have the integrity of one’s property values (rather than its physical integrity) preserved existed?! For a devastating critique of Nozick’s theory in particular see M. N. Rothbard, The Ethics of Liberty, ch. 29; on the fallacious use of the indifference curve analysis, employed both by Rawls and Nozick, idem, Toward a Reconstruction of Utility and Welfare Economics, (New York: Center for Libertarian Studies, Occasional Paper Series No. 3, 1977 ).
See also M. N. Rothbard, The Ethics of Liberty,p. 46.
For an awkward philosophical attempt to justify a late-comer ethic see J. P. Sterba, The Demands of Justice (Notre Dame: Notre Dame University Press, 1980), esp. pp. 58ff, 137ff; on the absurdity of such an ethic see M. N. Rothbard, Man, Economy, and State,p. 427.
It should be noted here, too, that only if property rights are conceptualized as private property rights originating in time, does it then become possible to make contracts. Clearly enough, contracts are agreements between enumerable physically independent units which are based on the mutual recognition of each contractor’s private ownership claims to things acquired prior in time to the agreement, and which then concern the transfer of property titles to definite things from a definite prior to a definite later owner. No such thing as contracts could conceivably exist in the framework of a late-corner ethic!
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Hoppe, HH. (1993). From the Economics of Laissez Faire to the Ethics of Libertarianism. In: The Economics and Ethics of Private Property. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-8155-4_8
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