Abstract: Evictionist theory allows the mother of an unwanted fetus not to kill it (abortion equals eviction plus killing) but to at any time evict it from her womb, even if it sometimes means the death of the latter. Departurism is incompatible with that philosophy. Parr supports the latter theory. The present paper is devoted to a refutation of that perspective.
Abstract: David Friedman attacks deontological or principled libertarianism from a utilitarian point of view. The present essay is an attempt to refute his critique of this philosophy, and to cast aspersions on the utilitarian version of libertarianism he favors.
Download Paper: “David Friedman and Libertarianism: A Critique“
Abstract: When there exists a situation in which a non-criminal trespasser is ceasing his property-directed aggression (that is, when he is in the act of stopping the crime of trespassing), departurism contends that libertarian law ought to require that the owner of the property in question allow for this trespasser to complete the process of his departure from the premises just in case death is the result of his eviction. Because such a case is relevantly similar to the case of a trespass within the womb (and because allowing for such a trespasser to depart in this situation is the gentlest manner possible consistent with stopping the crime) the same course of action ought to be endorsed by libertarian legal theory in either case.
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Abstract: In this essay I will try to demonstrate that the principle of self-determination is based on a formal and individualistic view of liberty rights. I also propose a different perspective that takes into account the relationships rather than the individual. I will show how this result can only be achieved through a different ascription of rights to individuals: in particular, I will try to demonstrate 1) that any social practices express specific values, 2) that these values are the result of historical and cultural circumstances, 3) that they are subject to an ongoing public debate, and finally 4) that only if the individual praxis is consistent with these values can it lead to recognition of rights
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Abstract: In the so-called “international credit market crisis,” which started in the second half of 2007 in the US subprime mortgage market, financial derivatives, most notably credit default swaps (CDS), have been publically blamed for having caused, or at least aggravated, the economic and monetary debacle. However, sound economic analysis reveals that CDS are fully compatible with the principles of the free market, and that CDS are not to blame for the disintegration of credit markets—with their tumbling banks, struggling private borrowers and increasingly overstretched government finances. CDS are instruments which are fully compatible with Rothbard’s libertarian property rights and contract theory—and thus economically and ethically legitimate. CDS are an efficient and effective instrument for putting an end to ever higher debt accumulation under fiat money regimes. Economic and ethical fault is to be found with fiat money rather than CDS.
On page 14 of the manuscript,
“This, in turn, increases the disciplinary pressure on borrowers, who are about to build up unsustainable debt levels, to consolidate; or it makes borrowers, who have become financially overstretched, go into default.”
“This, in turn, increases the disciplinary pressure on borrowers who are about to build up unsustainable debt levels to consolidate; or it makes borrowers, who have become financially overstretched, go into default.”
Abstract: Professor Edward Younkins has a very ambitious project, that is, to suggest a solid justification for a capitalist society integrating moral and political philosophy, and economics in support of public policy. With this book Professor Younkins concludes his argument in favor of the compatibility of Austrian Economics with neo-Aristotelian philosophy as the best justification for a free society. That synthesis is understood by many as unsustainable, but with his research the author challenges that common assumption.
Abstract: In this article we consider the theories of utility developed by Rothbard and Kirzner in their respective treatises on economic theory (Man Economy and State, and Market Theory and the Price System). We argue that while both authors were strongly influenced by Mises’ ordinalist conception of utility and in fact both authors affirm this conception in their initial expositions of utility theory, their subsequent developments diverge quite sharply. In particular, Kirzner adopts an approach that is neoclassicist in its essentials, and we discuss how this approach conflicts with the approach developed by Mises (and continued by Rothbard). We thus give further support to Salerno’s (2011) contention that there exists a tension within Austrian price theory today, falling between two camps: Rothbard’s furtherance of the Mengerian “causal-realist” tradition, and Kirzner’s “dynamic” version of the standard Hicksian indifference-based framework.
Abstract: In this article we consider an argument put forth by Selgin (1988) in support of the claim that there exists a mechanism for limiting coordinated expansions of fiduciary media under a system of fractional reserve free banking. Selgin argues that such banks hold risk-adjusted reserves against expected losses, and even if the expectation of reserve losses remains zero, the variance of such losses (adverse clearings) increases under an in-concert expansion (if such expansion is unwarranted by demand). It is this increased variability that is claimed to act as a brake on the expansion. We take issue with this argument on the basis of the fact that such a characterization of observed clearings would require that characteristics of the underlying data-generating process be obtainable from pathwise realizations of that process. In other words, there is an implicit assumption of stationarity (or more strongly, ergodicity) in Selgin’s argument, and this assumption is at odds with well-known empirical facts of non-stationarity associated with most economic time series. We also point out ways in which techniques of risk management commonly found in the modern financial industry are unlikely to be effective in addressing this problem.
Abstract: My claim that probability ought to be defined as a purely subjective measure of human belief has been challenged in a recent and interesting article on these pages by Arnold Baise (2011). Baise argues that probability ought to be defined, not as a purely subjective measure of human belief, as I have claimed, but rather in the following way:
Probability P(A|I) is a number between 0 and 1 that indicates how plausible it is that proposition A is true, based on information I. In addition, one could add that a probability of 1 indicates certainty that the proposition is true, while a probability of 0 indicates certainty that the proposition is false. (2011, p.3).
The reasoning that leads Baise to advance this definition for probability, however, is seriously and apodictically flawed. As a consequence, his definition for probability must be rejected as a viable alternative to my purely subjective definition.
Abstract: William Easterly has a reputation of being a free enterprise oriented economist. Were this not the case, his 2006 book The White Man’s Burden would not have been such a disappointment. In the event, this author misunderstands economic planning; buys into the fallacious notion of the poverty trap (poor nations are too poverty stricken to develop on their own without help from others – how did England manage this?); accepts a positive role for government in development, just as does Easterly’s target, Jeffrey Sachs; calls for state investment in early education; extols the virtues of democracy; attacks the idea of private fire companies, among many other compromises with dirigisme. With friends like this, laissez faire capitalism hardly needs enemies.
Download PDF: “Review of Easterly’s The White Man’s Burden”
Abstract: The author of this article maintains that Ayn Rand’s version of virtue ethics can provide a powerful basis for operating a successful business organization. An argument is made that Ayn Rand’s Objectivist virtues can serve as an underpinning for a firm’s long-term sustainable success as well as for the flourishing and happiness of its employees. In order to attain a company’s goals, values, and purpose, these virtues must be integrated with the firm’s vision, culture, and climate. The Objectivist virtues are said to provide an integrated framework for employees’ decisions and actions. Leaders must link these virtues to the survival and success of both the firm and its employees. Toward the end of the paper a diagram is presented to aid the reader in visualizing the linkages among the ideas presented therein.
Abstract: The root of any system of economic theory is the theory of price. But while modern Austrian economists have put a great deal of effort and ingenuity into building up the superstructure of their discipline since the mid-1970s, they have paid scant attention to ensuring that the price theory supporting the edifice is a sound and settled doctrine. The result is that, for many current Austrians, price theory is a “dynamic” version of neoclassical price theory. More precisely, it is Chicago price theory with a theory of entrepreneurship and of competition as a rivalrous process grafted onto it. This ad hoc approach to Austrian price theory thus relies heavily on the analytical tools and techniques developed by Alfred Marshall, Frank Knight, and Jacob Viner. George Stigler later elaborated these individual contributions into a systematic price theory.
The prevailing approach almost completely ignores the fact that there exists an alternative “causal-realist” tradition of price theory that was founded by Carl Menger and developed by his followers both in Austria and abroad. These include especially Böhm-Bawerk, J.B. Clark, Frank Fetter, Herbert Davenport, Philip Wicksteed, and Ludwig von Mises. The causal-realist tradition, which is explicitly anti-Marshallian and anti-Stiglerian, maintained a shadowy presence in Austrian economics for most of the postwar period. It is only in recent years that some Austrian economists, seeking a sound price theory to sure up the foundations of their discipline, have explicitly recognized and embraced it.
Israel M. Kirzner’s neglected book, Market Theory and the Price System, which was first published in 1963 and reprinted in a new edition this year, was the first and only systematic attempt to marry Stiglerian price theory with elements of the causal-realist tradition. Murray N. Rothbard, who had already reformulated and significantly advanced the causal-realist tradition in his own treatise Man, Economy, and State, wrote a comprehensive and quite critical referee report on Kirzner’s book manuscript for the publisher in 1961. His comments have never been published before.
This article contains two parts. The first part is a response to certain claims and omissions made by Peter J. Boettke and Frédéric Sautet, the editors of the new edition of Kirzner’s book. The second part contains Rothbard’s report on the book as a supporting document for the arguments of the first part. By proceeding in this way the goal is to clarify the important issues at stake for Austrian price theory.
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Abstract: This article reviews Jan Narveson and James Sterba’s co-authored book Are Liberty and Equality Compatible?. Sterba argues that negative liberty requires that the poor have a right not to be interfered with in taking from the rich to fulfill their basic needs. Narveson argues that negative liberty means that people agree not to coerce others and that taking from anyone (without their consent) violates negative liberty. The authors not only differ on this point, but, as contractarians, on what terms reasonable people would likely agree to in a “social contract.”
Abstract: The issue of whether logic has an ontological base—rests, ultimately, on the principles or nature of reality—is constantly with us. In this paper I revisit it, drawing on a piece I wrote back in 1969, for the early incarnation of Reason magazine. I conclude that the Aristotelian idea that logic tracks reality is sound and those opposed—conventionalists, pragmatists, conceptualists, Kantians, et al.—have it wrong.
Download Paper: “A Priori: A Brief Critical Survey”
Abstract: Murray Rothbard, in his The Ethics of Liberty, attempts to derive property ownership from the act of homesteading. Under this system, property is claimed through the act of mixing one’s labor with it. However, the theory of homesteading as a means for property rights formation is one that favors production over consumption and denies the subjectivity of value.
Abstract: The lynchpin perhaps even the very foundation of free market environmentalism is the tragedy of the commons. If we do not have private property rights in land, endangered animal species, fish, trees, etc., then there will be a real danger, as the left wing environmentalists charge, of extinction of these resources. Prof. Eleanor Ostrom attempts to show that this is not so; that private property rights are not at all needed if we are to escape environmental degradation of this sort. The present essay is not so much book review as it is an attempt to refute Ostrom, and thereby defend private property rights. In her view, communal rights will suffice; private property is not needed. My claim is that she is incapable of properly distinguishing between stockholders, or partnerships, or groups of people who together own private property, on the one hand, from, on the other hand, communal ownership.
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Abstract: The objective theory of probability of Richard von Mises has been criticized by Crovelli (2009), who defends a subjective approach. This paper attempts to clarify the different meanings of ‘objective’ and ‘subjective’ when applied to probability, and then argues for an objective Bayesian theory of probability, as exemplified in the writings of E. T. Jaynes. In addition, a definition of probability based on this approach is given.
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Abstract: Action-based legal theory is a discrete branch of praxeology and the basis of an emerging school of jurisprudence related to, but distinct from, natural law. Legal theory and economic theory share content that is part of praxeology itself: the action axiom, the a priori of argumentation, universalizable property theory, and counterfactual-deductive methodology. Praxeological property-norm justification is separate from the strictly ethical “ought” question of selecting ends in an action context. Examples of action-based jurisprudence are found in existing “Austro-libertarian” literature. Legal theory and legal practice must remain distinct and work closely together if justice is to be found in real cases. Legal theorizing was shaped in religious ethical contexts, which contributed to confused field boundaries between law and ethics. The carrot and stick influence of rulers on theorists has distorted conventional economics and jurisprudence in particular directions over the course of centuries. An action-based approach is relatively immune to such sources of distortion in its methods and conclusions, but has tended historically to be marginalized from conventional institutions for this same reason.
Abstract: In this article we reply to George Selgin’s counterarguments to our article “Fractional Reserve Free Banking: Some Quibbles”. Selgin regards holding cash as saving while we focus on the real savings necessary to maintain investment projects. Real savings are unconsumed real income. Variations in real savings are not necessarily equal to variations in cash holdings. We show that a coordinated credit expansion in a fractional reserve free banking (FRFB) system is possible and that precautionary reserves consequently do not pose a necessary limit. We discuss various instances in which a FRFB system may expand credit without a prior increase in real savings. These facets all demonstrate why a fractional reserve banking system – even a free banking one – is inherently unstable, and incentivized to impose a stabilizing central bank. We find that at the root of our disagreements with Selgin lies a different approach to monetary theory. Selgin subscribes to the aggregative equation of exchange, which impedes him from seeing the microeconomic problems that the stabilization of “MV” by a FRFB system causes.
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Abstract: This paper argues that in attempting to protect the religious life from the sullying influence of worldly affairs, Roger Williams participated, albeit unintentionally, in creating the economic conditions that led to the birth of American capitalism. Although Williams argued for a separation of church and state, he did so not in the interest of defending economic liberty, but instead to preserve the sanctity of the church against the frequent immorality that seemed to him required in worldly governance. Questions of pricing and wages, lending and interest—issues that would until Williams’s intervention have been handled by the church in terms of Aquinas’ just price theory—fell outside of the church’s purview according to the new model described by Williams. The result was the creation of an “amoral” public space where the effective separation between spiritual and material concerns led to a kind of free-by-default economic marketplace. This paper traces the development and inadvertent consequences of this essentially theological idea as it took shape in the colonial era.