Recent posts by Pete (here and here) have unleashed a torrent of comments. Before I start, let me state clearly that I respect Jeffrey Friedman’s work. He does an amazing job as the editor of Critical Review. Jeffrey Friedman made a series of claims in the comments to Pete’s posts, among them are four that I find important: (a) Rawls’s difference principle is compatible with laissez-faire, such that there is nothing paradoxical in the idea of “Ralwsian libertarianism,” (b) why would normative libertarian theory have anything to do with Austrian economics positive claims about human action and markets?, (c) all social relationships are coercive to some extent, and (d) definitions are, strictly speaking, stipulative (arbitrary).
A way of looking at these claims is to ask the question: does one need to know economics to do political philosophy? The answer is yes. This is something Pete has emphasized in his replies. Rawls’s economics is wrong and this has a huge impact on his position in political philosophy. The same is true of so many other philosophers that J. Friedman urges libertarians to read. J. Friedman seems to be bothered that Austrians/libertarians have a poor understanding of philosophy but it doesn’t seem to be an issue that most political philosophers have a poor understanding of economics. I was raised in France where as students we learnt about Derrida, Deleuze, Foucault, Lyotard and many others. The truth is that their economics is plainly wrong, is Marxist in its essence, and their political philosophy is largely inspired by it. Political philosophers who have better economic priors arrive at different conclusions, which in large part explain the rift that exists between European philosophers and US ones.
This contrasts with the way Austrian economists venture into political philosophy. It is true that neither Rothbard nor Kirzner are political philosophers but at least they proceeded to discuss those issues using solid economic principles. The work that Kirzner has done on justice and ethics for instance proceeds directly from his economics. He cannot explain the notion of finder-keeper (which justifies initial property rights) without a good understanding of the entrepreneurial process of competition (see his Discovery, Capitalism and Distributive Justice). The same is true with his work on ethics for instance in which he criticizes Frank Knight. As Kirzner puts it: “Knight’s ethical objections to the market economy are in fact in large part… based on a flawed understanding of how that economy works and what it achieves.” So for Kirzner (and many other Austrians such as Rothbard), unless the economic concepts used are correct, the philosophical conclusions will be wrong.
This is why Austrian economics, while a purely positive science, has something to say about libertarian normative theory (and other views). In this respect, I would argue that Austrian economics does not, strictly speaking, support the Rawlsian critierion of maximin. Market process theory argues that the market process is never Pareto optimal. In other words, as entrepreneurs discover new opportunities, the plans of some individuals in society may be frustrated. Some people may become poorer as a result. Overall, capital is accumulated in society through the entrepreneurial process, but at a micro level, there can be losers. This means that a strict application of the Rawlsian principle is not supported by Austrian views.
If Rothbard and Kirzner are right (i.e. we need good economics to do good political philosophy), then the question is really one of the nature of the economic concepts and the possibility of truth in economics (and elsewhere). At this stage, it should be a debate among philosophers rather than economists who pretend to know philosophy (with the risk that a bit of knowledge can be damaging). But J. Friedman has clearly stated his position in his comments: he holds a nominalist view (i.e. definitions are arbitrary, are social constructs, and have no reference to reality). This is the position that many post-modern philosophers take. In this view, the difference between coercion and liberty is purely one of convention.
Austrian economists have traditionally been realist in epistemology following the Aristotelian-Thomist approach. In this view, concepts are neither arbitrary nor socially constructed. They stand for the reality they represent. Science is about establishing and clarifying concepts. This is why Kirzner is an essentialist for instance. I am no philosopher and thus will not pretend to know much on the subject. However, one must be aware of the philosophical issues. Mises, Rothbard, Kirzner, and other Austrians hold the view that the coherence of reasoning and the quality of concepts are the cornerstone of thinking. I take these points as epistemologically valid. They help us make good economics and, by extension, develop good political philosophy.
One cannot do economics without epistemology, and one cannot do political philosophy without economics. If one denounces libertarians as philosophically ignorant, then one cannot ignore the fact that many political philosophers are economically illiterate (especially in Europe).