What Happens When You Conflate Austrian Economics and Libertarianism

Steve Horwitz has expressed concern over the Ron Paul campaign for rhetorical and substantive reasons.  This New Republic attack on Paul explains why Horwitz has those concerns.

I believe this story digs into Paul's history and provides the least charitable reading possible of the quotes pulled.  As a result the article doesn't contextualize any of the positions held within the larger picture of the libertarian world-view, nor the socially conservative perspective from which Paul approaches libertarianism.  In short, I am pretty sure a much more reasonable presesentation of Paul's various positions on the Civil War, race, and human sexuality could be presented.

But why would the world of politics ever permit that reading?!  Politics is  not about 'truth tracking', it is about power seeking.  Smear tactics are the norm, charitable reading and the meeting of minds is for a different realm of human affairs.

However, this is not the point I want to emphasize.  Instead, what I want to point out is that if you read piece, while Austrian economics is mentioned, NO substantive economic position is addressed.  Austrian economics properly understood is NOT a social philosophy, but a technical set of arguments that can form a theoretical framework to aid our understanding of the economy and the social world, and can be deployed as part of a tool-kit for social criticism.  It is not, per se, a tool for advocacy.  The role of the economist, properly understood, is that of a (1) Teacher of the principles of a discipline [e.g., specialization and exchange; demand curves slope downward; people respond to incentives; dispersed knowledge is coordinated through the price system, etc.], (2) Student fo society [e.g., technical scientist working hard to identify the filter processes and equilibrium tendencies in operation in economic systems; historical scholarship on the processes of social change, etc.], and (3) Social Critic who uses the tools of the discipline of economics to place parameters on notions of utopia [e.g., means-ends analysis of proposed public policies, etc.]. 

All 3 roles, as Henry Simons put it, allow economics as a discipline to serve as a prophylactic against popular fallacies.  When economists loose sight of their role in society and attempt to push the discipline into a tool for advocacy, the prophylactic function can become compromised and societies may become pregnant with fallacies to their deteriment.  Socialism and fascism are two such instances, but I would argue that even the more mild attempts at constructivist social engineering exhibit these tendencies, e.g., Keynesian inspired foreign aid programs in Africa.  You cannot be a little bit pregnant!  Bad ideas lead to bad public policies which result in bad results.

The conflating of Austrian economics and libertarianism distorts the picture of what the fundamental contributions of Menger, Bohm-Bawerk, Mises, Hayek, and Kirzner are to the scientific discipline of economics and the art of political economy.  Even Rothbard, whose For a New Libderty defines the libertarian world-view in my mind, made several important technical arguments in economics and engaged in significant historical scholarship, that stand independent of his political philosophy.  These contributions are to a considerable extent lost sight of, and to some extent seriously doubted altogether, when the political philosophic position is argued to be one and the same with the economic analysis.

I do agree, however, with Schumpeter on the positive role that ideological vision can play in scholarship --- the pre-analytic cognitive act does provide us with the raw material for analysis.  But it is the analysis that determines whether or not a contribution to economics is being made.

My political sympathies obviously are of the radical libertarian persuasion, and I am probably as guilty as anyone of sometimes slipping between economics and politics too quickly.  But I try not to.  I tend to see myself as an economist who is skeptical of government solutions due to the logic of economics and the empirical record I have examined, which when combined with moral sentiments that side with the individual as opposed to the collective, produce a libertarian vision.  This vision is anti-war, anti-regulation, anti-tax, and pro-free-trade, pro-freedom of association, and pro-private property rights as the institutional embodiment of the regime that enables a society of free and responsible individuals.  Leonard Read once summed up the libertarian philosophy with the phrase "Anything That's Peaceful."

The implications that follow from that position are far ranging and often disturbing to those who are more accustomed to the prevailing ideologies of our day.  But this libertarian vision can also be presented in a way that emphasizes its empowering elements, rather than the constraining elements on the exercise of power.  Obviously the constraining of state power is a major (and essential) element to the libertarian philosophy.  But it can be emphasized that the constraining of state power is to eliminate poliical discrimination to free up opportunity for those who were previously oppressed unjustly.  When the Institute for Justice takes on a case to free up the economic rights of minority citizens that have been strangled by silly local regulations, that is an empowerment message.  When we look in the developing world and how through access to credit and entrepreneurial opportunity individuals can escape poverty, we are talking about empowerment.  But that side of libertarianism isn't getting discussed enough in the current political context in the US.  Why not?  Eliminate political privilege, free up economic opportunity.  Embrace the entrepreneurial culture, but be ready to also face the responsibility.  The individual bears the risk, but also reaps the reward.  It is a society of free and responsible individualism that constitutes the libertarian vision of tomorrow.

So in response to hatchet-job campaigns like that in The New Republic, or pundits such as David Fraum, we should be prepared because of our failure to prevent the conflation of Austrian economics and libertariansim, and the rhetorical emphasis many have chosen to pursue in presenting the libertarian political philosophy.  We must be prepared to respond. 

First, to insist that economics is not an ideologically disputed discipine anymore than chemistry or physics are.  The basic teachings of economics are in place, it is the implications, and outter edges, that are in contention just like any other vibrant scientific discipline.  There is, in short, nothing out of the mainstream of economics to insist that people respond to incentives, that disperse knowledge is coordinated through the price system, that inflation can distort economic activity, that regulation can be captured by powerful interest groups, etc.

Second, to point out what role the economist plays in society (Teacher, Student, Social Critic).  Economics per se does not lend itself to advocacy of this or that policy, it does provide wisdom on the spontaneous ordering of society, and technical knowledge on means-ends efficiency.  Economics must be combined with some moral sentiments (themselves up for debate) to be transformed into advocacy.  But the discipline independent of moral assessment provides us with knowledge that places parameters on people's utopia.  Wishing it so doesn't make it so, and economics tells us why.  So much of political campaigning is about selling wishful thinking to a population that doesn't know any better.  Economics has not only a role to play, but a unique and powerful role in serving as the prophylactic against public fallacies.  We need to defend the structural integrity of that prophylactic so it can do its job! 

Third, be able to step away from our position as economist quo economist and instead take on our role as citizen and express our libertarianism as a doctrine of empowerment and inclusion. Libertarianism is not a fancy excuse for individuals who want to freely express racism, or bash certain sexual lifestyles, or businessmen who want to smoke dope.  Of course, in a free society, just as in any society populated by human beings, there will be those who are ignorant and prejudice. The question is one of minimizing the access to politcal power of the ignorant and prejudice so that whatever repugnant views they may hold cannot be instantiated into policy and must always be confroted with free competition in ideas, in associations, in the market.  In short, libertarianism doesn't promise perfection, it just promises an institutional regime where man's imperfections are held in check through decentralization of power, and competition. 

Freedom creates space for individuals to pursue their projects.  Libertarianism is about empowerment of all to pursue their life project as they best see fit.  As Leonard Read said "Anything That's Peaceful."  Why doesn't The New Republic write about that?

Comments

[DeeWilliams]

I'm confused. As you note, the article does not directly address any economic arguments. In fact, it only mentions Austrian economics to the extent that Ron Paul is associated with the Mises Institute, which is named after an Austrian Economist. That's IT!

So how can you say that the article attempts to "conflate austrian economics and liberatiranism"? Your reading is not supported by the text itself. The article was clearly about the POLITICAL views of Dr. Paul and the people he associates himself with.

I understand it's easy to get emotional when someone says something about people you know or like that isn't quite nice. But that is no excuse for a bad argument. So let's be honest. There is really nothing wrong with this article (at least at face value). You may be "pretty sure" that there is someway to spin those newletters so that Paul doesn't come off as a bigot, but you don't have a leg to stand on until you do the grunt work to back that up.

[Peter Boettke]

Dee,

First, the LvMI is tied to Paul and they are relying on newsletters linked to off that sight. By implication, then, the sort of stuff that they consider crazy is stuff that gets linked to Austrianism. I want to make sure those who are in the Austrian camp start to recognize the potential 'traps' that are set by this close association.

Second, a libertarian position on the Civil War (see Jeff Hummel's excellent book), or on Civil Rights (see Richard Epstein's excellent book) would strike many as strange, but it does not entail the endorsment of a racist position. Far from it. Hummel's book is all about the importance of the abolitionist movement even though it is highly critical of Lincoln, and Epstein's book is about how the civil rights act violated constitutional principles though he is certainly no defender of ignorant discrimination.

Third, I find journalistic discussions of economics to be horribly off-base --- blog discussions perhaps even less informed! --- and I would like to clarify the role that economics (and particularly the economic teachings of Mises-Hayek-Kirzner) play in the public discourse on economics.

For a variety of reasons, I take it, you find my arguments to be less than persuasive (on this and other occassions). I really don't know how to respond to you except to try to listen to your criticism, restate the position that I am trying to articulate in light of your criticism, and try to write a clearly as I can.

Pete

[DeeWilliams]

Pete,

Thanks for responding. I will respond to each of your comments in order.

1) Well, actually, the author says he retrieved most of the newsletters from libraries at the University of Kansas and the Wisconsin Historical Society. But, even still, the author makes no attempt to link the political views held by Paul and others at LvMI to Austrian Economics in general or Libertarianism per se. In fact, he says that many libertarians at places like Cato would find LvMI's views odd. So any connection between these three things would have to be made by the reader. So your problem really isn't with the "hacks" at the New Republic, but the people you imagine will read things into the article that are not there.

2)I totally agree. One can be a secessionist without being a racist. That is a very weak point of the article. Of course, it is a weak point you did not really mention in your initial post and it is totally unrealted to Austrian Economics or libertarianism in general.

3) Again, I totally agree. Most journalist do a very poor job when dealing with economics, which is why I am glad this author stayed away from the subject all together.

Lastly, I think you do an excellent job of addressing my comments. I hope you are not slighted by my comments, because I really do respect and enjoy your academic writing. I just responded to this post because I thought you were getting a little worked up over a simple misunderstanding. So I thought I would help you out. :)

[Michael Thomas]

Thank you for making the point that Austrian economics is not a political orientation.

Politics gives an inordinate number of examples of double-speak and paradoxes. Hillary Clinton claims to want to change society to remove privilege. George Bush wages a war to end violence. Clinton crys and shows that she is more human. George Bush slaughters the English language with a southern accent even though he is from New England. Marketing.

Libertarianism is often treated as if it all flows consistently from a set of primary assumptions. In this way it is treated as if it were nothing more than applied logic. If this were true, then the only issue which remained political would be the choice of the premises which are used at the start.

Economics studies decision making, the logic of choice. Given such a definition of libertarianism, the political philosophy becomes attractive to those who view economics in this way. What more fertile ground would there be for the study of the logic of choice, than a group of people who explicitly claim that their political beliefs flow from a set of parsimonious assumptions.

It seems that this is the reason that political economists are sucked in by the appeal of densely argued political positions. This blurs the line between refutable hypothesis and the system which libertarianism offers. Confidence, which is a measure exogenous to economic models, is endogenous in the pursuit of libertarian ideology.

Austrian Economics, which relies on its subjective part of the marginal evaluation, stands in stark contrast to any system. In my mind there is a clear contrast between the system on one hand, and the patient scientific claims of the Austrian school. Both give us reason to trust the individual, but as Dr. Boettke points out, one is scientific and the other is political.

[Peter Boettke]

Dee,

You are correct, I wrote with the intent of providing a response to those who would read the article in the New Republic and make a guilt by association argument. It is not that the article itself does so. But I fear that others will. And, I wanted to suggest a way in which an Austrian economist who happens to possess strong libertarian sympathies might respond. (1) Insist on the integrity of economics as a scientific discipline and the Austrian contribution to that discipline historically and today; (2) provide a clear argument as to the unique role that the economists plays in society in their capacity as teacher, scholar and social critic, and (3) if you move away from your role as an economist and function as a citizen, adopt a rhetoric of empowerment in your presentation of libertarianism.

Do you find anything objectionable in that set of arguments?

[ryan michael daza]

Professor

I regularly use my classical liberal political and social philosophy and my economic education when critiquing politics, pundits, and politicians. I definitely agree with professor Boettke in the prophylactic function of economics to check populist policies. However, I continue to contradict myself by becoming an activist so the prophylactic function can survive to be used.

Institutions are thick, sticky, and some – highly robust in a group setting. Getting these beliefs to move along is not easy. When arguing with my pro-government social-democrat friends, they thus necessitate solid persuasion. A Republican could not persuade them to move even if a car was coming. But living with them for years I know their institutions and culture. I somewhat use what I know from developmental economics to get across to them. I use liberalism as a focal point to decrease social distance and build trust which has allowed for a more effective persuasion capability. As an agent of persuasion, activist tactics are necessary to effectively, at the very least, increase their demand for a new belief. Using relative language (like using majority/minority in the place of ‘democracy’) I get them to agree with themselves. At last resort, I expose their ideas for being conservative; they don’t like that. Bottom line is the economic argument may not be enough to loosen dubious embedded institutions that were taught to them by their family growing up, developed into focals that facilitated reducing communication costs, increase the flow of information, increase trust and solidarity, & increase stability and credible commitment by generating common knowledge. It is culture; not as some fuzzy concept, which functions instrumentally and rationally literally as a ‘way of life’. Transfer this to DC. There are also cultural tendencies at Capital Hill which function as and is sustained viz. statist activist policies; and there are many peripheral institutions that depend on this government action in order for survival.

My problem is that using economic logic as a prophylactic against populist policies may not outweigh the perceived costs of changing culture. Journalist, analysts, and politicians have their careers on this and highly developed networks to out-group people and marginalize critiques. Direct critique would probably increase solidarity and therefore cultural robustness.

Professor, considering the current status quo, Is activism a primitive for a functional prophylactic? I have got my hands dirty lately thinking of this.

[DeeWilliams]

Pete,

Great sound advice. :)