I've read that David Friedman considers himself to be more "Chicago" than "Austrian" but he's also a market "anarchist."
How does that work out? Don't the pillars of the Chicago school involve some government intervention, like fiat currency, central banking, &c.?
Also, a big part of the reason I don't understand is because I'm not particularly well-versed in the Chicago school. I only just recently became interested in economics and I've been "reading up" on the Austrian school (yes, I do plan on learning other schools, but I'm trying to take it one step at a time right now).
Mises his support for state subsidy of opera was a joke, as far as I know. Something like 'well, if they're going to subsidize something, they might as well subsidize the opera!'
His implicit support for the draft is unfortunate, yes.
The state is not the enemy. The idea of the state is.
read his stuff http://www.daviddfriedman.com/Academic/Academic.html ....http://www.daviddfriedman.com/Academic/Law_as_a_private_good/Law_as_a_private_good.html
My Blog: http://www.anarchico.net/
Production is 'anarchistic' - Ludwig von Mises
Forum user StrangeLoop calls himself a "Coasean anarcho-capitalist," so there's another. I don't see what about the Chicago tradition, taken broadly, rules out anarchism. As someone new to economics, it's understandable that you might think the Chicago school is simply Friedmanite monetarism, but I believe the defining feature of it today is rational expectations.
Frankly, the strongest arguments in favor of anarchism I have yet read come from non-economists (legal and/or political philosophers) and economists using primarily Public Choice and New Institutionalism economics. I don't know if any of these writers (e.g. Anthony de Jasay, John Hasnas, Bruce Benson) are necessarily Austrians (as, say, Block, Salerno, Boettke, White and Selgin are Austrians), though they all use Austrian insights in combination with the insights of Coase, Posner, Demsetz and others. There is more to modern economics than policy recommendations in response to a recession, and the fundamentals of microeconomics are largely agreed-upon and Austrian-friendly. Law and Economics, Public Choice, New Institutionalism, etc., certainly complement Austrian economics, but they're not unique to it (indeed, they were developed mostly by neoclassical economists), and these are ultimately the disciplines that one must use to determine the feasibility of ordered anarchy.
The Chicago School and anarcho-capitalism have nothing to do with each other. But the same goes for
the Austrian School and anarcho-capitalism. One is a ideology, the other is a methodology as others
have pointed out. You could have asked a much more extreme question: How can one be a Keynesian and
an "anarcho"-capitalist? Well, one option would be that he thinks that even though state involvement would
be good for the economy, he is morally objected to it.
lol, a Keynesian anarchist...
Because Austrianism has no monopoly on craziness.
David Friedman or to whom it may concern,
1. As someone already said, the schools of thought are defined, insofar as they can be defined, by methodology. If you define them by conclusions, you might have problems with Mises' support for the draft and state subsidy of opera.
I only started Human Action no more than two weeks ago, heh. I should probably spend more time learning there then here! But, my mind wanders to the computer too often.
Do you reject praxeology and favor induction over deduction? With the methodology of the Chicago School, do you see it capable of verifying cause and effect in an economy?
2. I don't know what you think "monetarism" is. The quantity theory of money and its implications apply to commodity money, fractional reserve money, fiat money, any other monetary system you can think of. As it happens, my father wrote an essay on the optimum quantity of money and I pointed out that the behavior of the quantity which he argued was optimal was what would be produced by a system of competing private issuers.
I am nothing more than an amateur and I appreciate the response. My inclination towards monetarism was, that an economist which held monetarist beliefs had a non-Austrian view of business cycles. By reading your point here it seems to mean that monetarism is a larger umbrella. The monetarist has more than one path to run, you might say.
3. There is no inconsistency between fractional reserve money and anarchy--and the lower the fraction, the closer fractional reserve money comes to fiat money. On the historical evidence, fractional reserve money, not commodity money, is what free market banking produces.
Once again, I'm an amateur, but I'll stick my head out again at the risk of getting chopped off, heh.
I disagree, that is if I am reading you right. You believe that fractional reserve banking is nonfraudulent? How can a free market bank keep nonfraudulent contracts with all it's depositors that they can have their cash on demand while holding only a fraction of it's reserves? I believe the hypothetical free market would have full reserve banks (vaults) and if you want to earn interest you can deposit into equity.
Anyone feel free to critique.
You can't hurry up good times by waiting for them.
I would recommend reading "Denationalisation of Money" by F.A Hayek where he writes how a fractional reserve banking system may occur in a free market... Austrian Economics isn't necessarily anti-fractional reserve.
Thank you for the recommendation. I don't think I can dive into that now, I have other ventures I'm currently pursuing.
Mr. Friedman proposes that free market banking is fractional reserve banking in an appeal to history. I see the free market equivalent to the 'services' provided by fractional reserve banking as two fold: lending & borrowing without the contract of cash-on-demand and then full-reserve banks with the contract of cash-on-demand (vaults). Fractional reserve banking is a combination and ultimately is fraud, in that it is a lending/borrowing establishment WITH a contract for cash-on-demand.