Economics

Mises as Policy Advisor

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Ludwig von Mises scholar Richard Ebeling looks at Mises the policy analyst and advisor, as opposed to Mises the pure economist, over at the Coordination Problem blog:

much of Mises' conception of the general economic order, its workings and requirements, and the institutional and policy "rules" that would help establish and maintain freedom and prosperity did not arise from a pure "a priori" deductive spinning out of implications from the "action axiom."

They are, in many cases, the general theoretical insights and the social institutional and economic policy "wisdoms" derived from living through, acting within, and learned lessons from those momentous and often catastrophic events that shook Europe in the first half of the twentieth century, and particularly as experienced in the everyday reality of Austrian political and economic life during this time….if you had asked him a fiscal, or monetary, or regulatory policy question in the context of his role as analyst at the Chamber of Commerce, he would not have said, and did not simply say, "laissez-faire" – abolish the central bank, deregulate the economy, and eliminate taxes.

He accepts that there are certain institutional "givens" that must be taken for granted, and in the context of which policy options and decisions must be worked out.

He seemed to usually think with three policy "horizons" in his mind. The first, and the more distant, "horizon," concerned the most optimal institutional and policy arrangement in society for the fostering of the (classical) liberal ideal of freedom and prosperity…

The second "horizon," was closer to the actual circumstances of the present, but focused on the intermediary goals that would be leading in the direction of that more distant, "optimal" horizon. For example, ending a paper money inflation and reestablishing a gold-based monetary system, for general economic stability without which the market order and economic calculation cannot properly function….

And the third "horizon" in the context of which Mises analyzes and proposes economic policies, is the current situation and the immediate future. In other words, how do you design the concrete bylaws and rules for a central bank to prevent it from following an inflationary monetary policy, including the transition to and implementation of specie redemption, and the policy "tools" it should then use to maintain the exchange rate and convertibility?

If you are a student or fan of Mises or libertarian intellectual history, do read the whole thing.

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  1. “He accepts that there are certain institutional “givens” that must be taken for granted”

    This may be the largest difference between Mises and Rothbard.

      1. Because Rothbard was willing to consider alternatives to the state and its institutions. Mises, while brilliant and generally a friend of liberty, was not.

        1. Alternatives to the state? Would that be anarchy, or a peaceful commune, free of all those pesky state institutions like armies and courts and police?

          1. That would be anarcho-capitalism. Although, within that paradigm if someone actualy DID want to set up a VOLUNTARY commune that would be fine. It just would not be very efficient.

            Courts would certainly exist as would security forces of some sort. They would simply be bound to the voluntary organizations that would exist.

            If you would like more information on stateless legal theory here is a good description:

            http://mises.org/journals/jls/9_2/9_2_2.pdf

            1. So competing “voluntary organizations” would have their own courts and armies? Within the same country? Or would the concept of “country” be abolished? It would have to be in this utopia. Sorry. This anarcho-capitalist entity. I would add that anarchism and capitalism are philosophical opposites, but I suppose that’s the eternal debate amongst libertarians. One of them, anyway.

              1. “So competing “voluntary organizations” would have their own courts and armies?”

                Armies? Perhaps not armies in the sense we think of them now. But they would have their own ways of defending themselves. What they would not do is INICIATE war. War is expensive. There are far more cost effective ways of dealing with disputes.

                “Or would the concept of “country” be abolished?”

                The term “country” has many meanings. Some cultural meanings, some geographic meanings. There is no reason to assume that a group of people sharing a common culture could not exist in the same geographic area and call themselves a “country”. What would be abolished is the concept of the state.

                “I would add that anarchism and capitalism are philosophical opposites,”

                Tell me why you believe this to be the case. Is it because the anarchists who get the most press tend to oppose capitalism? I will agree the socialist-anarchists get far more press than an-caps. I think this is largely because anarcho-capitalists are not the ones who lob rocks into shop windows or burn cars or do other damage to private property. It is only the socialist-anarchists who do these things.

                1. “Armies? Perhaps not armies in the sense we think of them now.”

                  Let’s use the commonly accepted definition of “army.” It’s all we have, unless you want to careen into pointless semantics. The army of a free people should never initiate force, except in those circumstances when a failure to do so would imperil their freedoms. History provides the examples.

                  “[A] group of people sharing a common culture” can call themselves anything they want: tribe, association, federation, state…they needn’t even share a common culture. But they must share a common philosophy to be successful. (Again, history provides an almost limitless number of examples: the Balkans, the Near East, Russian conquests, Africa…) That’s why the United States, thus far, has been so spectacularly successful. Those waves of uneducated immigrants might not be able to cite Mises or Rothbard or Jefferson or Locke or Aristotle, but they know, as human beings, why they want to live in America. They are humans. They want to be free. It’s in their nature.

                  “I would add that anarchism and capitalism are philosophical opposites.” Tell me why you believe this to be the case.

                  Because anarchism does not recognize the concept of property rights. Anarchists consider “property” as an arbitrary concept. All rights derive from property rights, the most fundamental of which is the right to life as an individual, and the right to profit from the products of one’s mind. The protection of these fundamental rights requires a neutral arbiter and enforcer with exclusive powers–granted by the consent of the people–to initiate force.

                  1. But they must share a common philosophy to be successful. (Again, history provides an almost limitless number of examples: the Balkans, the Near East, Russian conquests, Africa…) That’s why the United States, thus far, has been so spectacularly successful.

                    Really? Because I know plenty of people that don’t share my basic political philosophy or the idea that freedom is a human right. In fact, most of the country disagrees with me and with each other philosophically.

                    Because anarchism does not recognize the concept of property rights.

                    That’s interesting, because most capitalist anarchists do support property rights. Doesn’t this contradict your expert definition o anarchism?

                    1. “most capitalist anarchists do support property rights”

                      Nice. You say “most” (as if a plurality means anything), then you conflate capitalism with anarchism (mutually exclusive terms) in order to buttress a concept (property rights) that cannot be validated within the framework of an arbitrary and indefinable politico-economic system (anarchism.)

                      But if you can define “anarchy,” please do so, and tell us why it is the ideal politico-economic system. Thanks.

                    2. “But if you can define “anarchy,” please do so, and tell us why it is the ideal politico-economic system. Thanks.”

                      Anarchy is simply the lack of a government. It has no other connotations. In fact it is not a politico-economic system but rather the lack of one. I note the way you hyphenated politico-economic. These are two separate spheres. One can impact the other but this is like saying the “air-water system”. Anarchy is a blank slate. But it is a blank slate that enables people organize their lives in the way they wish without impact those who do not wish to participate. Whenever someone tells me he is a socialist the first question I ask is “Are you a voluntary socialist or a coercive one?” This shifts the debate. Because if that person is an anarcho-socialist I explain that I am an anarcho-capitalist and if the government were to end we could live side by side as friends and neighbors. Neither of us need war on the other if the state ends. So long as the state exists however we are at political war with one another.

                    3. Nice. You say “most” (as if a plurality means anything), then you conflate capitalism with anarchism (mutually exclusive terms) in order to buttress a concept (property rights) that cannot be validated within the framework of an arbitrary and indefinable politico-economic system (anarchism.)

                      Yeah it means that I don’t know the political persuasions of every single anarcho-capitalist. It also means that you are wrong about anarchism not recognizing property rights. And I didn’t “conflate” the two terms. I said capitalist anarchists, meaning anarchists that are capitalist. There are also communist anarchists, socialist anarchists, etc. Really your two arguments about semantics are both unimportant and wrong. Nice try though.

                      I think PIRS has thoroughly answered the rest of your misinformed challenges, but for some more information why don’t you try wikipedia: http://en.wikipedia.org/wiki/Anarchism

                      Anarchism is a political philosophy which considers the state undesirable, unnecessary and harmful, and instead promotes a stateless society, or anarchy.[1][2] It seeks to diminish or even abolish authority in the conduct of human relations.[3] Anarchists may widely disagree on what additional criteria are required in anarchism. The Oxford Companion to Philosophy says, “there is no single defining position that all anarchists hold, and those considered anarchists at best share a certain family resemblance.”[4]
                      There are many types and traditions of anarchism, not all of which are mutually exclusive.[5] Strains of anarchism have been divided into the categories of social and individualist anarchism or similar dual classifications.[6][7] Anarchism is often considered to be a radical left-wing ideology,[8][9] and much of anarchist economics and anarchist legal philosophy reflect anti-statist interpretations of communism, collectivism, syndicalism or participatory economics. However, anarchism has always included an individualist strain [10] supporting a market economy and private property, or unrestrained egoism that bases right on might.[8][11]
                      Others, such as panarchists and anarchists without adjectives, neither advocate nor object to any particular form of organization as long as it is not compulsory. Differing fundamentally, some anarchist schools of thought support anything from extreme individualism to complete collectivism.[2] The central tendency of anarchism as a social movement have been represented by communist anarchism, with individualist anarchism being primarily a philosophical or literary phenomenon.[12] Some anarchists fundamentally oppose all forms of aggression, supporting self-defense or non-violence, while others have supported the use of some coercive measures, including violent revolution and terrorism, on the path to an anarchist society.

                  2. “Because anarchism does not recognize the concept of property rights.”
                    This is like saying “Heliocentrism does not recognize the concept of property rights.” It neither accepts it nor rejects it. Anarchism is simply the rejection of government ? nothing more nothing less. This is why it is so often hyphenated with another descriptor. There are anarchists of many flavors and varieties. I am an anarcho-capitalist. This differentiates me from anarco-primitivists, anarco-socialists and so forth.
                    “Anarchists consider “property” as an arbitrary concept.”
                    Funny, because I don’t.
                    “The protection of these fundamental rights requires a neutral arbiter”
                    And why would you consider the government a neutral arbiter?

              2. Capitalism is about privatization. I don’t see the contradiction at all.

  2. I was attending Mardi Gras with Fidel Castro
    Bucksome cross dressers threw fake gold coins at our feet
    As we discussed the fate of the revolution
    Suddenly, CIA men dressed in bikinis
    Tried to stab us with fountain pens
    Fidel blew mustard gas from his cigar
    And immobalized the lot of them
    19 tequilas later we had a deal
    Havana goes back to the mob
    And Fidel and I open a chain of Kentucky Fried Chicken shops

  3. Wow,that actually makes sense when you think about it.

    Zeo
    http://www.fbi-logfiles.int.tc

  4. Read the comments, very good stuff there. Especially the point about those of us not in the position of giving advice dont have any reason but to give the best case advice.

  5. In the comments someone called Mario Rizzo wrote:

    “When the president appoints me Fed Chairman I will come up with lots of good third-best policies. Now since I am not angling for such a job, I do not need to spend my life proving that I can come up with good “politically feasible” policies.”

    This kind of thinking may well explain the decline of a once good and noble Alan Greenspan. Before he was appointed fed Chairman he spoke out against the very existence of the Federal Reserve. He wrote in favor of having a gold standard. He was even one of Ayn Rand’s inner circle. After accepting the position he made moral compromise after moral compromise. He went down the rabbit hole of third best and fourth best solutions. It is easy to see how such a person could be corrupted by power and later take positions he once would have screamed at others for having.

    In some ways Greenspan is the opposite of Mises. Greenspan started out with good principles and became corrupted with power. Mises, after having a position of power developed his correct principles by seeing the flaws in the “best practical advice” he was able to give.

  6. Sounds like Mises had a reasonable attitude. Don’t let the perfect be the enemy of the good. People had some of the same objections to Friedman. He was willing to work within the system to make incremental improvements, unlike Rothbard, who had no influence at all.

    The libertarian has two challenges, making things better in the short run, and proposing a vision for the long term. Doing one doesn’t mean you can’t do the other.

    MASH reference: “‘Pierce, since when did you join the Army?’ ‘Since they asked me to run it.'”

    1. Agreed. Short-term policy solutions that can be both acceptable to the general public, so that they can actually be implemented, and also lead toward long-term libertopian goals. This will make think more of the “how” now than I previously had been.

    2. Rothbard was perfectly willing to “work within the system”. Hence his good friendship with Ron Paul. And Rothbard is still one of the most influential libertarians within the movement.

  7. Do you think there will ever be a Libertarian or independent president or will it always be someone from one of the two major parties?

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