Libertarianism and one of its pillars, free-market economics, get an unfair rap for its alleged preoccupation with the pursuit of wealth. It’s unfair because, while wealth and economic growth are important, the philosophy is about much more: human flourishing through freedom and its natural product, social cooperation.
One source of confusion is the undoubted libertarian interest in economics. Unfortunately, economics is commonly understood to be the discipline concerned with the narrow pursuit of material goods. Mainstream economics encourages this belief. Too bad.
This misconception may be traced to the classical economists, who otherwise made important contributions to the discipline. In The Economic Point of View, Israel Kirzner notes that “this ‘material’ approach to economics . . . seems to have held a fascination for a number of economists over an extended period of time, viz., the view that saw economics as essentially concerned with the goods necessary to ensure the physical subsistence of mankind.”
The object of study was homo economicus (economic man; the term was first used by critics.) Kirzner continues: “This view seems to be the most extreme form of the materialistic outlook on economic affairs. The distinctive feature of all conceptions of economics as a science of wealth or of material goods, as against alternative conceptions of the discipline, consists in their identification of economics with some special end of human action. Not all action is subject to economic law, but only such action as is directed towards a more or less well-defined class of objects, viz., wealth or material goods.”
So there we are. Economics is thought by many to be concerned exclusively with the individual’s selfish pursuit of maximum wealth, or material goods. Other pursuits are thought to be beyond economics. Libertarians see economics as essential to understanding the world. Therefore libertarianism must largely be about the individual’s selfish pursuit of wealth, or material goods.
But note that Kirzner said there are “alternative conceptions of the discipline.” The most prominent of these is the Austrian school. Another is the similar approach taken by the British economist Philip Wicksteed, known as the “British Austrian.” How does their approach differ from the classical school? In this context they differ by assigning a far broader scope to economics. For them economics is about the pursuit of ends per se. All purposeful action—along with the spontaneous orderly process it generates—is the subject of economic analysis.
Wicksteed (1844-1927) was the author of The Common Sense of Political Economy (1910). According to Kirzner,
This British contemporary of [Austrians] Menger, Böhm-Bawerk, and Wieser appears to have had no direct contact or correspondence with any of them. His biography, which provides detailed descriptions of Wicksteed’s trips abroad, makes no mention of his ever having visited Vienna. His work seems to have made no direct impact on the work of his Austrian contemporaries; he, in turn, while certainly mentioning their work, seems not to have drawn any of his main ideas from them.
Yet there is remarkable overlap in their approaches to economics, most relevantly in the matter of scope. Right out of the box, in his introduction, Wicksteed stated:
We shall find that the economic relations constitute a machinery by which men devote their energies to the immediate accomplishment of each other’s purposes in order to secure the ultimate accomplishment of their own, irrespective of what those purposes of their own may be, and therefore irrespective of the egoistic or altruistic nature of the motives which dictate them and which stimulate efforts to accomplish them.
In his first chapter, while discussing the ubiquity of human beings’ choosing among alternatives, Wicksteed observed:
Insensibly we have passed from the confined conception of price as so much money, to the generalised conception of price as representing the terms on which anything we want may be had or anything we shun avoided. Current phraseology recognises this wider application of the language of the market and of pecuniary expenditure. “Spend,” “afford,” “waste,” “worth,” “price,” are terms universally applicable to all kinds of material and immaterial resources and objects of desire or aversion, whether milk, money, time, pain, or vital energies. . . . “Price,” then, in the narrower sense of “the money for which a material thing, a service, or a privilege can be obtained,” is simply a special case of “price” in the wider sense of “the terms on which alternatives are offered to us”; and to consider whether a thing is worth the price that is asked for it, is to consider whether the possession of it is more to be desired than anything we can have instead of it, and whether it will compensate us for everything we must take along with it. Selection between alternatives, then, is the most generalised form under which we can contemplate the ordinary acts of administration of resources, whether in the market-place, the home, or elsewhere; and, obviously, price or the terms on which the alternatives are offered (how much of this against how much of that?) must often be a determining consideration in our choice between them. [Emphasis added.]
(A longer quote from Wicksteed is here.)
Cited by Mises