Why Research on Anarchism is Not Necessarily Ideological?

A mistaken but recurring theme by some of the commentators to this blog is that modern Austrian economics has been completely taken over by libertarianism and extreme laissez faire.  First, I personally think that sound economics should be policy relevant.  In other words, engagement in contemporary policy debates on the transition from socialism, the plight of underdevelopment, the dynamics of interventionism, and the manipulation of money and credit is a virtue not a vice.  But I also think that if you look closely at the work done by modern Austrian economist on these issues it is decidedly not first-principle libertarianism.  It is instead economic consequentialism in nature.  The focus is on consequences, not violation of rights per se.  And as such is based on economic argument which in turn is grounded in economic theory. [To readers who think economic theory is a dogma I don't really know what to say except read more economics --- a good start for the critically minded might be McCloskey's How to be Human, Though an Economist and in particular her rule #10 -- Learn Price Theory, Which is No Easy Task -- in my experience almost all confusion results from not learning basic price theory, or thinking you learned it when you didn't].

So you don't have to be a libertarian to understand the role that property rights, free price movements, and profit and loss accounting play in guiding resource use, spurring on innovation, and prodding individuals to continually adjust to changing circumstances.  You just have to be an economist.  Simply put: incentives matter, information is necessary, and institutions structure incentives and determine the flow, and quality of the information communicated.

So this question of institutions is looming always in the background.  Most standard price theory treats the institutions as exogenously given, and then examines human behavior within that given environment.  Part of the reason why anarchism has become increasingly a topic of professional concern is the desire to move from treating institutions as exogenous to treating them as endogenous.

Significant economists such as Jack Hirshleifer, Avinash Dixit, Raghuram Rajan have argued that we must assume anarchy and examine the "laws of lawlessness" if we want to get a better (more realistic) examination of the economic process of development.

So anarchy research, I have argued, has gone through various intellectual stages in economics and political economy:

1. Romantic anarchism --- associated with William Godwin and basically utopian;

2. Normative anarchism --- associated with Murray Rothbard and focused on the consistent application of natural rights;

3. Positive anarchism --- associated with Bruce Benson, but also Chris Coyne, where the focus is on empirical studies where the institutions of governance are either lacking or extremely weak and the question is how institutions of governance have historically emerged either through private or public means;

4. Analytical anarchism --- associated in contemporary literature with Peter Leeson, where the focus is on how the mechanisms of self-government work with applications to empirical cases.

If my description is accurate, one can see that all the contemporary thinkers within the Austrian camp are focusing on 3 and 4, and not 1 and 2.  In short, this is not a libertarian take over, but instead an analytical and empirical examination of endogenous rule creation, formation, evolution and enforcement.

And, it is a research program in economics that links older Austrian ideas (e.g., Mises's central proposition about Ricardo's Law of Association) with modern literature in economics (e.g., the institutions rules debate associated with Acemoglu, Rodrik, Shleifer, etc.).

My current working paper with Pete and Chris entitled Comparative Historical Political Economy lays out the argument for the how and why of this research program.  Extreme laissez faire is not mentioned.

Now I can understand how a reader might get confused with a reading only of titles and if they have a set of priors that believe that we cannot distinguish between normative inspirations and analytical examination.  As Schumpeter pointed out, there is an important role for ideology in the social sciences by providing the theorist with pre-analytic cognitive material.  Ideology can inspire an inquiry, it just cannot substitute for inquiry.  The inquiry in all of these exercises is based on "modern subjectivist economics" of Menger, Mises, Hayek, Rothbard, Kirzner and Lachmann, and has roots in the long history of political economy from Adam Smith and John Stuart Mill to Frank Knight to James Buchanan.

So let me speak for myself, though I think it is descriptive of others as well, I am personally of the radical libertarian persuasion, but that provides me with raw material for inquiry.  In short, the puzzles and paradoxes I think about are no doubt influenced by this libertarian outlook.  But I work very hard to focus my approach to these puzzles and paradoxes on the analytical economics of the matter.  I try to follow McCloskey's rules, especially #10, but all of them actually in presenting my argument, and I submit them for academic peer review.  The process of peer review is to make sure that ideological influences are held in check, and that the argumentative structure and empirical evidence provided meets professional standards.  I have had my share of rejected attempts, they force you back to the drawing board and to rethink the exercise.  The secret is to learn from the process, don't become shy due to the process.  Being bold is how you push the boundaries of a science, being professionally responsible is how you assure that your boldness is justified.

The contemporary anarchism research is both bold and responsible.  It is the readers of this blog that have to get caught up to date with the literature in economics.  A good place to start might be my paper "Anarchism as a Progressive Research Program in Political Economy." Of course, a careful reading of any paper by Peter Leeson, or Chris Coyne will do the trick as well.  Their papers (and books) are grounded in analytical puzzles concerning the economics of governance, and the empirical examination of situations where the normal institutions of government are either absent or weak, yet social cooperation doesn't collapse to zero.  I have not once seen either of them invoke a man-qua-man argument or utter the phrase non-aggression axiom in their work.  Instead, it is all about choice theory and the evolution of institutions.  And it represents some of the most innovative and important work in the field of political economy.

BTW, congratulations to Pete and Chris for being recognized by the SDAE for the Best Paper (Pete's JPE piece) and Best Book (Chris's Stanford book) for 2008.

Comments

[Steve Miller]

Excellent response, Pete.

[J Hall]

Indeed. Very well put.

[Vedran]

Just a side note...using the word anarchism and talking about policy implications in the same post is almost laughable.

Any hopes of erasing anarchy, anarcho-capitalism, etc from our lexicon. As long as these words are around, there will be no policy implications taken from Austrian work. There's plenty of good subsitutes. Koch should fork over some money to hire Frank Luntz and give us some new words. We need a complete overhaul of language

[Curt Doolittle]

Peter,

Wonderful analysis.

The anarchic though experiment allows us to better understand how to convert political decisino making into market decision making once the decisions or set of them, is large enough in scope that political (human) decision making is not possible. It also helps us know the opposite.

Thank you for providing a framework for discussion.

Curt

[matthew mueller]

Pete,

This was an excellent post. Getting away from normative anarchism, I want to ask, though, if it makes sense to apply "the logic of choice" to the development of institutions. I understand that a big part of this resarch program involves the endognenization of institutional structures. But it seems more correct to try to understand how institutions shape individual behavior (even immutable economic laws like incentives, demand, information, etc.) rather than the other way round. My impression from this literature is that the logic of choice can be applied universally to many different institutional structures to understand how social cooperation persists and develops. So while instititions have been endogenized, individual behavior has not. The real task for those who are concerned with institutions is explaining how the development of institutions themselves shape and transform individual behavior. It seems to me a fundamental error to apply the standard price theoretic model of individual behavior to commerce and political networks in 16th Western Europes, for example (not to mention pirates!).

This is where I think the Old Instutionalist school has a leg up on NIE and its cognate fields.

[Zachary Kurtz]

I would definitely agree with this post.

It's interesting, actually, that most of the libertarians I know (ok, well I suppose it's only a few) don't know/understand/bother with Austrian economics specifically because they DON'T associate economic freedom with liberty.

They want to government to return social liberties (like drug policy, etc.) but don't associate government economic intervention as a violation of liberty.

Granted, these are the jaded libertarians of the younger generation who are probably libertarian in name only (who liked Ron Paul in the primaries, but rallied around Obama during the general election when they saw him smile).

[John Singleton]

Is this progressive research program in anarchism hiring? Where can I apply?

[Roger Koppl]

FWIW, I'm *not* a radical libertarian, but I'm happy with everything BPete says in this post. As a relative statist -- compared to BPete et alii! -- I'm more into policy design, but I don't think BPete said anything to the effect that policy design is somehow tainted or unclean.

[Brian Pitt]

Excellent Post.

Congragulations Pete L. and Chris C.. Btw, I have read both the "Laws of Lawlessness" and "After War;" and I continue to refer to them when exploring the power of rational choice theory

[Mark Hubbard]

A query, please, from a New Zealand Libertarian/Objectivist.

Are you making the equation in this article of Libertarian = Anarchist?

Laissez-faire capitalism has to be at the bedrock for any society in which individual freedom (built upon the non-initiation of force) is to thrive, so the Austrian School of economics and Libertarian politics (when combined with Objectivist philosophy) are natural, and happy, bedfellows, for the most part.

But to view Libertarianism and Anarchism as synonymous is, in my mind, to have built an analysis based upon a complete misconception of one, or both, of these idea-sets.

[Vedran]

I think Mark's comment is important.

There is a lot of intellectual dishonesty that goes with the terms libertarian and anarchist. When talking to certain company, anarchists will refer to themselves as libertarians leading to the confusion.

I don't think anyone is saying libertarianism= anarchism. I think anarchists like to cover themselves up by calling themselves libertarians.

And on the other end of the spectrum, how many people truly go around calling themselves Marxists these days? Similarly, there are only "progressives" now.

[Eric Sundwall]

I'm working on a piece that places anarchy outside the assumed precepts of ideology. The crux of which is defining ideology as a process.

Of course I only have a blog, computer and secret text from a perhaps dead professor . . . I always miss the meetings.

[liberty]

"I think anarchists like to cover themselves up by calling themselves libertarians."

Heh. I find myself sometimes doing the opposite. "Anarchist" goes over better with leftist crowds than "libertarian" (which in turn goes over WAY better than "conservative," which anyway is too vague and could mean too many things).

[Ludwig van den Hauwe]

I have read Pete´s paper and I believe that while it is interesting and informative, it remains very much at the surface and elementary.
Much of the spontaneous order thinking and tradition have been taken over by the game theorists. One of the answers I - probably among others - would like to get is why Austrians believe their approach is distinctive, novel and fruitful even in comparison with approaches that use modern techniques.

[Grant]

Has anyone studied the Internet as an example of market anarchy? It is a system of property rights and transactions without a government, so it would seem to be relevant.

As a side note, it also provides huge numbers of public goods (network protocols, virus protection, free software, etc). Much of the world's communication is becoming more and more reliant on public goods produced voluntarily in what is basically anarchy (e.g., Linux, Apache and MySQL).

[Peter Boettke]

Grant,

Look at the Winter 2005 issue of the Journal of Law, Economics and Public Policy --- it is a special issue on the law, economics and technology of private contract enforcement in cyberspace that I edited. Great papers by Bruce Benson, David Friedman, Ben Powell, Ed Stringham, Pete Leeson and Chris Coyne.

Pete

[Rafe Champion]

A reference to this issue on a left-liberal blog, with some criticism of Pete Boettke and "Austrian autodidacts".
http://clubtroppo.com.au/2008/11/25/austrian-economics-in-ten-points/#comment-333548

[Peter Boettke]

Rafe,

If I am wrong in my interpretation of Marshall, then so is Wicksteed and a boat load of other economists. Marshall's famous phrase was it takes both blades of the scissors to cut the paper --- utility and cost. The Austrian and Wicksteedian reply was Yes, but both blades of the scissors are made of the same stuff --- the subjective utility of the decision maker. Supply, in other words, reflects alternative demand. Why the commentator cannot see this point, is quite surprising for anyone who has studied the history of economic ideas.

I guess we can leave it at that.

Pete