Dmitry's Speech

In the flyers that you saw posted around campus I mentioned three very general things which I believe define libertarianism: beliefs in the goodness of uncircumscribed private property in both consumer and especially capital goods, freedom, and peace. I would like to say a few words about how each of these fits in the big picture of libertarian ideology. This way you'll at least know you are in the right club.

PRIVATE PROPERTY

The justice of one's property rights springs from the two institutions of the free society: original appropriation of natural resources and freedom of contract. Any property that has been taken from the state of nature or exchanged on the market, absent force or fraud, is designated as justly acquired. All such property is inviolable.

How is original appropriation defendable? After all, it leaves less for everyone else. There are four reasons. First, human beings are simply the kind of creatures that have to, in order to survive and prosper, take and use land and the resources on and under it. It is their nature and they cannot, usually, be stopped. This is not conflating "is" with an "ought" but using "ought implies can." Second, it is just since land in the state of nature is unowned; and "finders keepers." This is economist Israel Kirzner's principle. Third, allowing people to own natural resources is to the benefit of all, as, given the free market, they will develop them, create with their help consumer and capital goods, and offer them for sale to the public, thereby raising everyone's standard of living. Fourth, it permits self-realization, due to specialization and division of labor, such that each person who takes part in social cooperation aquires unique characteristics which make him different from everyone else. Natural resources become one's property as soon as they become part of some person's plan to use them for his own or someone else's benefit.

Why private property in the means of production? The most important reason is that it permits economic calculation, that is, calculation of profit and loss. The market is a society. It is billions of people making mutually beneficial exchanges. But it is also an organism and a process. Ludwig von Mises was the first to prove over eighty years ago the impossibility of economic calculation in a socialist society. The calculation problem states that the central planners cannot determine how to rationally allocate the factors of production to their most valued uses.

It is quite possible to conceive of the market as an organism without falling into the errors of methodological holism or of imagining the actors on the market as mindless cells in the body of the Leviathan. On the market not only does an individual act for the sake of the whole (i.e., other people) and in so doing affect it, but other people act for his sake and in so doing affect him. Each market participant is thus both a cause and an effect, a means and an end; he influences others, the whole which we call the market, and is in turn influenced by them. An organism is very different from a machine, even a very complicated one, in the sense that it must be looked at from the top down, lest its parts lose the meaning which the whole in which they participate bestows upon them. The components of an organism "fade" when the organism is taken apart. In short, an organism cannot be comprehended by looking at its parts in isolation of the whole. It is precisely because the market is an organic whole which is impossible to reduce to its component parts that the calculation problem is so difficult to grasp. It requires one to imagine what will happen if the market organism whose own state and the state of whose parts are determined by the reciprocal influence of those parts on each other is destroyed, and a machine where the central bureau issues orders to its separable, fixed, and inert components in order to activate them is erected in its place. Thus, Joseph Salerno writes:

In this competitive process, each and every type of productive service is objectively appraised in monetary terms according to its ultimate contribution to the production of the consumer goods. There thus comes into being the market's monetary price structure, a genuinely "social" phenomenon in which every unit of exchangeable goods and services is assigned a socially significant cardinal number [that is, its price] and which has its roots in the minds of every single member of society yet must forever transcend the contribution of the individual human mind.

Price system then is an emergent property of the market, though in the case of the market we can identify the source from which that property emerges, viz., the recognition by the individual members of society of the benefits of social cooperation and division of labor, and can even trace its evolution from a tiny two or three-person market to one in which social cooperation has become worldwide. Mises puts it this way:

The market process is coherent and indivisible. It is an indissoluble intertwinement of actions and reactions, of moves and countermoves. But the insufficiency of our mental abilities enjoins upon us the necessity of dividing it into parts and analyzing each of these parts separately. In resorting to such artificial cleavages we must never forget that the seemingly autonomous existence of these parts is an imaginary makeshift of our minds. They are only parts, that is, they cannot even be thought of as existing outside the structure of which they are parts.

The purpose of the market is precisely to provide the process by which the hitherto unidentified human wants as well as new means to satisfy known wants are constantly discovered, brought into being, and tested for their relative conduciveness to human well-being. Whether or not one passes the test is determined by the means of profit and loss. The market is a process by which social cooperation and division of labor are actualized and human society becomes possible. It is a system with the help of which the part of the universe occupied by human beings becomes intelligible to each individual member of society and permits him to act rationally. As a result, it vastly enlarges the scope and possibility of moral action by ensuring that people will know when their self-interested undertakings, if successful, are going to be in the interest of the common good.

The "means" to economic ends are called "capital." Economic goods are such because they are valued by some person or other. Capital is not merely "stuff," but stuff as participating in a plan of action by an entrepreneur. And all plans are in the mind, subjective. Economic progress consists in no small part in figuring out which factors of production are underpriced and can be profitably used in some novel undertaking. So, for acting individuals in the market the world is constantly being repartitioned, as goods change their purposes and the extents of their use. Thus, economics is the study of human action and the planning that precedes it, not of wealth or goods or anything like that. What exists then is dependent on the minds, especially insofar as the minds attach final causes to things. The very same car repair manual may be used according to its designed purpose by a car mechanic, used as a doorstop by someone else, used as a weapon by still another person, or be a useless and therefore practically invisible item to someone who can't read. Furthermore, what is a capital good today may not be one tomorrow, and, alternatively, a thing which today is looked over with indifference tomorrow may turn out to be the hottest thing since sliced bread. The "order" of a capital good reflects its remoteness in comparison to the final consumer good of the first order. Thus, for example, in the car-making business we can treat metal ore as a higher order good than, say, a metal door handle.

In the free market there is no such thing as "total capital"; indeed people compete as to who can first identify, take ownership of, and exploit new means to help other people with their various ends – for a price, of course. Such people are known as entrepreneurs.

It is true that entrepreneurs can err because the future is always uncertain, but once they decide to embark on a project, they have before them a myriad of prices each of which is a cardinal number. They can determine by doing arithmetic calculations whether or not their actions will, if their understanding of the future prices is correct, lead to socially beneficial results. In short, the market provides a social framework in which individual actions acquire special meaning, viz. the meaning with respect to their tendency to promote consumer welfare. But the socialist planners attempt to "plan" in the absence of such a framework. They are faced with the impossible task of deciding between alternative ways of producing any good or service without any idea precisely which combination of means to attain their end is superior to all other possible combinations (i.e. which combination will not cause the more urgent wants of the consumers to be unsatisfied). Alternatively, we can say that the planners have no way of determining that the purpose for which they intend to use any particular resource will be agreeable to the consumers.

In sum, we can think about this problem in two ways. Without the financial markets

For any project to be undertaken the socialist planners cannot know what combination of inputs is best for producing the output.
For any resource the planners cannot know in which projects under consideration this resource ought to be used.

Thus, the abolition of the market causes the human mind to lose its grasp on reality and results in the eradication of what Joseph Salerno calls "humanity's uniquely teleological contribution to the universe." Socialism has no economy because the planners operate in the dark, unaware of how their actions affect other human beings. One can make choices only when the consequences of those choices are clear. But how can one choose if one is reduced to incomprehension?

FREEDOM

Freedom is justified in the similar four ways. Freedom is a prima facie good, and it is the statists who have the burden of showing that freedom should be curtailed. Freedom is to the benefit of all; even if you yourself do not require economic freedom, you must understand that you benefit by allowing other people to be free. As Mises writes,

The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable. They want the way left open to further economic improvements.

And

In the market economy, the laissez-faire type of social organization, there is a sphere within which the individual is free to choose between various modes of acting without being restrained by the threat of being punished. If, however, the government does more than protect people against violent or fraudulent aggression on the part of antisocial individuals, it reduces the sphere of the individual's freedom to act beyond the degree to which it is restricted by praxeological law. Thus we may define freedom as that state of affairs in which the individual's discretion to choose is not constrained by governmental violence beyond the margin within which the praxeological law restricts it anyway.

Praxeology and economics do not say that men should peacefully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise. Compliance with the moral rules which the establishment, preservation, and intensification of social cooperation require is not seen as a sacrifice to a mythical entity, but as the recourse to the most efficient methods of action, as a price expended for the attainment of more highly valued returns.

What justifies freedom of contract? It is simply this: that voluntary exchange benefits both parties as far as they see it at the time at the exchange. Thus, the happiness of both is increased. Of course, a contract between A and B to have B kill C is unenforceable in a libertarian society, though not because there is something wrong with the notion of contract, but because the killing of C would be illegal in itself.

Thirdly, freedom allows one to create one's own personality, to self-actualize.

Then there is freedom of consumption.

Opium and morphine are certainly dangerous, habit-forming drugs. But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine. And why limit the government's benevolent providence to the protection of the individual's body only? Is not the harm a man can inflict on his mind and soul even more disastrous than any bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music?

These fears are not merely imaginary specters terrifying secluded doctrinaires. It is a fact that no paternal government, whether ancient or modern, ever shrank from regimenting its subjects' minds, beliefs, and opinions. If one abolishes man's freedom to determine his own consumption, one takes all freedoms away. The naive advocates of government interference with consumption delude themselves when they neglect what they disdainfully call the philosophical aspect of the problem. They unwittingly support the case of censorship, inquisition, religious intolerance, and the persecution of dissenters.

PEACE

Peace is the third crucial plank of libertarianism. Yet we are told these days that wars can never end for the same reason why crime-fighting can never end. There will always be thieves and murderers, and there will always be terrorists and "rogue states." The former are suppressed by the cops and judges, and the latter by soldiers.

There are at least five problems with this analogy. Let's start with the most obvious one, that major wars, despite the relative decline of the state, are still nation-against-nation wars. This is a variant of crude collectivism, in which few distinctions are made between the innocent and the guilty. Wars in today's highly interdependent world are such a technologically primitive way of resolving disputes, so that innocent folks die, economies ruined, and freedoms repressed even as a few of the bad guys are killed as well, that their costs seem to far outweigh the benefits.

Why is that? The ever deepening specialization, division of labor, mutual dependence, and in the end even differences in individual personalities as a result of both the increasing variety of occupations, of consumer goods and services, and of personal pursuits, are what Mises called the "cosmic becoming" of society. This becoming, as if a flower grows from a seed into a fully-developed thing, is utterly incompatible with war. War and its precursors such as sanctions and trade barriers destroy the people with whom we do business. If America were now to go to war with Japan, American consumers would have to bear with using inferior and more expensive transport equipment, cars, semiconductors, electrical machinery, chemicals, electronics, and whatever else Japan exports to the US, or even do without them at all. The intricate structure of production within which the numerous US and Japanese companies and workers are now intertwined would be annihilated. Exporting and importing would come to an end; foreign-own enterprises would be expropriated; jobs will be lost. And the repercussions would be felt everywhere, not merely in the US and Japan. Wars tear societies apart instead of knitting them together into a planetary web of economic, scientific, and cultural production, cooperation, and exchange, thereby bringing prosperity and the fruits of civilization to everybody. The more advanced a society is, the greater the damage and disruption done by wars.

The problem is not only due to the nature of war as such, but of technology, as well. Hence, second, the weapons used in wars are imprecise. Unlike the cops' handguns (and I am talking about normal cops, not the SWAT ninjas), they cannot be used only on the guilty parties. They don't discriminate and kill everyone in the vicinity. This is especially true of nuclear arms, but applies to a lesser degree to all military weapons. Some may disagree by pointing to devices such as "smart bombs" that are able to target the enemy while sparing the innocent better. To that I reply that these innovations are not nearly good enough. When war is as efficient as the city police searching for a thief, then the peace lovers will be satisfied. However, I find such possibility difficult to take seriously. In short, poorly directed and unfocused force replaces careful discernment. So even the best attempts of the US to conduct wars look like using a chainsaw to do cancer surgery. A lot of eggs are broken, and the omelet is never made.

Third, crime-fighting results in exactly four things: justice or retribution, deterrence of future crime, rehabilitation of the offenders, and protection of society as a result of removing the criminals from it, all ideally properly balanced. (So, e.g., the third outcome is like putting a criminal through a purgatory, and the fourth is like sending him to hell.) To what extent does war imitate these effects? Let's go through them very quickly one by one.

Which of the recent wars have been just? I can't think of any. Maybe you can, though don't tell me that the entry of the US into WW2 was to enforce justice. In order to prove any such claim you would have to identify a group of people, comprising an enterprise association, who committed specific crimes for which a war punished them and only them. I'd say that the mass slaughters of wars have been the second greatest injustice ever to visit this planet.
The arrest of a criminal does not cause his buddies to step up their efforts to resist the state. Deterring conflict through wars does not appear to work; in fact, the effect is likely to be completely opposite, because of the political significance of killings. Attempts to impute "self-interested rationality" to the enemy and devise strategies to manipulate him into surrendering as quickly as possible fail to come to grips with the fact that many people naturally consider things other than narrow costs and benefits. Just think of suicide bombers. In addition, wars unleash a wave of private lawlessness and crime.
Has the war in Iraq improved that country? I think that a civil war, currently going on, is hardly progress. If there are seething hatreds among different groups in a country, suppressed by force and clever politicking, then some of the possible solutions are: secessions, laissez-faire free markets, and ideological work promoting religious or ethnic tolerance. It is only in these ways that peace could be achieved. Simply "decapitating" a regime that kept the peace, however coercively, is utter foolishness. Thus nation-building has so far been a losing project, in which all the subtleties of the losing side's culture, internal and foreign politics, economic relations, etc., are ignored. Once again, the effect has been opposite: we have made our "ward" worse.
It is true that Saddam Hussein is no longer a threat to anybody, not that he threatened the United States. But as one Iraqi said, "the Americans took Saddam out but put many Saddams in the street." I doubt that anyone, including us, is better protected. On the contrary, we are very likely in greater danger than we had been before Bush sent troops to Iraq.

Fourth, soldiers are nothing like policemen also in the sense that the latter deal with citizens, and the former with enemy. And the enemy has no legal protections. For them there is no presumption of innocence, no right to a trial, no right to confront accusers, no right against cruel and unusual punishment or torture, and so on and so forth. Instead, they get swift deaths from "surgical strikes" or are spirited away to some gulag.

Finally, society can deal with sporadic criminals, including terrorists, who arise every now and then. In a war violence is over the top, and it is perpetrated by the very governments that are supposed to protect people from violence. So, on the one hand, the intensity of wartime conflict causes society to unravel; and on the other hand, there is no one to appeal to for protection. The military is not a protector; it is a destroyer of law and order, from whom people, normally, flee. Not for nothing is war one of the four horsemen of the Apocalypse. Any time someone says that soldiers protect your freedom, think something like "Napoleon" or "Genghis Khan," or even, as Roderick Long has brilliantly argued, "Hezbollah and the Israeli government."

In condemning wars, libertarians are not being isolationist. On the contrary, they want to engage the entire world into social cooperation under division of labor. They want all barriers to trade and to free movement of capital and labor to disappear. They want international travel to be as hassle-free as possible. They support the gold standard, in order to further unify the world by making gold and/or silver the single international currency not subject to manipulation by political elites in every country in the world. It is our acts of war that isolate us and make the rest of the world hate us.