Friday, March 15, 2019

Arguing Against "Libertarianism"

1.0 Introduction

By "libertarianism", I mean propertarianism, a right-wing doctrine. In this post, I want to outline some ways of arguing against this set of ideas. (On this topic, Mike Huben has much more extensive resources than I can allude to.)

2.0 On Individual Details

I like to use certain policy ideas as a springboard for arguments that they have no coherent justification in economic theory. Unsurprisingly, the outdated nonsense market fundamentalists push does not have empirical support either. I provide some bits and pieces here.

Consider the reduction or elimination of minimum wages. More generally, consider advocacy of labor market flexibility. I like to provide numerical examples in which firms, given a level and composition of net output, want to employ more workers at higher wages. Lots of empirical work suggests wages and employment are not and cannot be determined by supply and demand.

Lately, I have been developing examples of international trade. (I think these examples need work when produced means of production can be traded.) In these numerical examples, the firms in each country specialize as in the theory of comparative advantage. That is, they produce those commodities that are relatively cheaper to produce domestically. I explicitly show processes for producing capital goods and assume that capitalists obtain accounting profits. Numeric examples demonstrate that a country can be worse off with trade than under autarky. Their production possibilities frontier (PPF) is moved inward. So much for the usual opposition to tariffs.

Some like to talk about the marginal productivity theory of distribution. But no such valid entity exists. I suppose one could read empirical data on the distribution of income and wealth and mobility as support for this, although others might talk about monopsony and market power.

No natural rate of interest exists. So some sort of market rate would not be an attractor, if it wasn't for the meddling of Jerome Powell and the Federal Reserve. As I understand it, this conclusion also has empirical support.

A whole host of examples arises in modeling preferences. I do not think I have previously mentioned, for example, Sen's demonstration of The Impossibility of a Paretian Liberal.

One can point out sources of market failure from a mainstream perspective. I think of issues arising from externalities, information asymmetries, principal agent problems, and so on. As I understand it, John Quiggin is popularizing such arguments in his upcoming Economics in Two Lessons.

3.0 Arguments From Legitimate Authority

I like to cite literature propertarians claim as their own. One set of arguments is of their experts advocating policies on the other side. For example, in The Road to Serfdom, Hayek advocates a basic income and social security. He says his disagreement with Keynes is a technical argument about whether fiscal or monetary policy can stabilize the economy and prevent business cycles, not a matter of the fundamental principles he is arguing about in the book. Adam Smith argues for workers and against businessmen, projectors, and speculators. He doesn't expect rational behavior, as economists define such. Among scholars, those building on Marx could with more right wear Smith ties than Chicago-school economists.

A second set of arguments from authority provide a reductio ad absurdum. One points out that propertarian authorities seem to end up praising authoritarians and fascists or adopting racists as allies. I think of Von Mises praising Mussolini, Friedman's advice to Pinochet, and Hayek's support for the same. The entanglement between propertarianism and racists in the USA has been self-evident at least since Barry Goldwater's run for president. I might also mention Ron Paul's newsletters.

4.0 Hermeneutics of Suspicion

Instead of arguing about the validity of certain supposed propositions, one might argue about why some come to hold them. Why do so many argue against their concrete material interests and for the whims of malefactors of great wealth? In social psychology, one can point to research on the need for system justification and on the just world fallacy. Marxists can draw on Lukács' analysis of reification or Gramsci's understanding of civil society and hegemony.

I also like how doubt is cast on the doctrines just by noting their arguments are easily classified as falling into a couple of categories. Propertarians can be seen as hopping back and forth from, on one foot, justifying their ideas on consequential, utilitarian, or efficiency grounds to, on the other foot, justifying it based on supposed deductions from first principles. So when you attack one argument, they can revert to the other, without ever admitting defeat. (Am I stealing from John Holbo here? From Cosma Shalizi?)

Albert Hirschman classified arguments into three categories: perversity, futility, and jeopardy. One could always say, "I agree with your noble goals", but:

  • Your implementation will lead to the opposite.
  • What you are attempting is to change something that is so fundamental (e.g., human nature) that it cannot succeed.
  • Your attempt risks losing something else we value (e.g., self-reliance, innovation, liberty etc.)

If the arguments are always so simply classified, they cannot be about empirical reality, one might think.

5.0 Conclusion

None of the above addresses issues of political philosophy that propertarians may think central to their views. I do not talk about what roles of the state are legitimate, the source of authority in law, the false dichotomy of state versus markets, negative liberties and positive liberties, or the exertion of private power by means of the ownership of property. In short, this approach is probably irritating to propertarians. I'm good with that.


Anonymous said...

"Von Mises praising Mussolini"

He did more than that, he actually advised the fascists in Austria:

Propertarianism and Fascism

As he blamed the Great Depression of unions and welfare, presumably his advice was on how best the fascist regime could crush labour... strange form of "anti-statism," arguing the state breaking workers' heads is liberty but providing medical help to the victims is tyranny...

"Among scholars, those building on Marx could with more right wear Smith ties than Chicago-school economists."

Very true -- Murray Rothbard hated Smith (his followers seem to be following that). Those non-Rothbardites who have looked at his attacks note he misunderstands Smith, when not systematically misrepresenting his ideas. Which is, as far as I can see, pretty much what Rothbard did to everyone he disagreed with...

Incidentally, Proudhon very much viewed himself as working in Smith's tradition -- as can be seen from the final chapter of his System of Economic Contradictions:

Chapter XIV: Summary and Conclusion

The above has never been translated in full below.

An Anarchist FAQ

Larry Hamelin said...

I've been thinking about this topic a long time (and you've talked about some of my own arguments) and I realize that I honestly don't really understand what propertarians are actually arguing for. You want freedom? Good for you. Would you like a side Mom and apple pie to go with that? In what sense is any ordinary liberal democratic republic a hellish tyranny?

You hate the government? Oh my god, well why didn't you say so? You know there's a support group for that. It's called everybody, and we meet at the bar. (Apologies to Drew Carey)

What freedoms are you missing that you really want? In most liberal democratic republics, you already may more-or-less go where you please, dress as you please, buy or not buy what you please, work as you please, say, watch, and listen to what you please. Even porn!

What more do you want? The freedom to not pay taxes? Be a racist? Own slaves? Shoot someone on 5th Ave. in broad daylight? Rape and murder children? If think you're strong enough to take these freedoms, I guess you and your friends can try, and my friends and I can try to stop you. We'll see who lives and who dies. But why is it in my interest to just give you these sorts of freedoms?

Sturai said...

Buenas, I don't know if you have spotted the renewed paper by Yoshihara and Kwak on Sraffian Indeterminacy. It's interesting how they have changed their conclusions on the (in)determinacy of the steady-state. In the previous version they "established" determinacy for the steady-state and indeterminacy for the growing case. Now they claim indeterminacy also for the steady case. It seems to me that they have followed a hint from Garegnani in his debate against Mandler on the overdetermination via Walras' Law that makes it posible to reduce one equation.

For me it looks like the main point of the political debate spins around the argument about "wages up or going during a recesion due to unconventional effects like reswitching, recurrence, etc" against "unconventional effects are possible but what matters is that we can prove under the same axioms of the orthodox that distribution is indeterminate so it has to be established institutionaly outside of the market (integrating the first critique by the way).

The extension of this road taken by yoshihara claims to have achieved the establishment of indeterminacy also for technical change. This time the lead comes from Schefold's conflict whith Mandler on intertemporal linear economies with demachination or with inmigration-reswitching. What yoshihara announce is indetermination with technical change even when the functions are doble differentiable. I would like to see how steedman recurrence can be inserted on these models and if regularity can also expell these couriosums out.

The extension of the quest for indeterminacy is postulated in joint production models but that complex world maybe needs a lot of axioms and restrictions to be obtained.

PS: I would like to know if you have thought about Bidard's Algorithmic theory of the choice of technique paper. In particular about the possibily of a path of technical choices that are cost-saving but not labour-saving.

Robert Vienneau said...

Thanks for comments. I guess I had once stumbled upon Miss' relationship with Dollfuss.

I guess you can see where propertarians do not engage with Larry here.

Yoshihara and Kwak seem to flatly disagree with Mandler on mathematical conclusions to be drawn from common assumptions. I don't feel like taking a side without more study. Maybe I can follow Y & K to present a numerical example.

I mention Bidard's algorithm, as presented in his book, in my 1917 ROPE paper. I'd have to review more.

Sturai said...

For some time I've waiting for Schefold retaking the critique of intertemporal equilibrium on linear economies. Not in the line of the more abstract one he developed against Mandler (1) but the continuation of the numerical ones in both his 1997 book (2) and the Essay of 2000 (3) where he ends with a kind of regret about the exposition of the argument due to the limited space.

I think that work on Paradox from Capital is going to emerge in the work from Yoshihara and Veneziani. And that they are going to some kind of synthesis from Sraffa and Roemer's work. In their last published work together (4) about the persistence of exploitation they talked about technical change as the way that capitalism continues to persist and how there could be a technical change that does not allow exploitation to continue. I have thought about your examples about firms hiring more people for a higher wage as a stream of thought. The old Controversy showing again in the form of a technical progress that doesn't allow exploitation to persist. In connexion with this they mention on the conclusion of that paper Bidard's Algoritmith as a way to obtain the same result. Technical change without exploitation. I seem to grasp connection with Marx's declining Rate of Profit but more specifically what I think is that they're going to the joint production world as a detour from the paradoxes of the simple production.

(1) Reswitching as a Cause of Instability of Intertemporal Equilibrium. Bertram Schefold, Metroeconomica, 2005.
(2) Normal Prices, Technical Change and Accumulation. Bertram Schefold, 1997.
(3) Paradoxes of capital and counterintuitive changes of distribution in an intertemporal equilibrium model; ch. 10, B. Schefold in Critical Essays on Piero Sraffa's Legacy in Economics, H. D. Kurz, 2000.