Hello everyone,
I like to debate people online and in real life to strengthen my own understanding of economics and poliical theory. One thing I have noticed is that many tend to view Austrians and libertarians as rigid and inflexible to the extent that we support the market economy, some call it "market fundamentalism".
Now I know about Mises' arguments against socialism and central planning and the historical failure of communism and the Soviet Union. But when i bring up an argument made by the great Austrian economists, such as Mises' views on the impossibility of socialism due to the inability for economic calculation, it doesn't seem to make an impact.
The reason for this is that most "leftists" that I talk to agree with the critiques of total socialism or central planning. They say "we believe in capitalism, but we just want a mixed economy where we have government regulation and some socialist aspects to counterbalance the excesses of capitalism."
They seem to view themselves as pragmatic and reasonable while those of us who believe in the market are dogmatic and ideological while ignoring reality. That is the way it is portrayed anyway.
So I know of the critiques of total socialism or communism but how can I make the case against a "mixed" economy?
In fact, there is a post on a political forum I visit sometimes where a poster issued this challenge:
"Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.
Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF."
I have already responded to this post. But how would you respond?
Thanks.
jrodefeld:"Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution."
I know it's not yours, but this statement is perfectly meaningless. What is the "best" distribution of goods?
1. The previous two posts are perfectly correct in that there's no way to determine, outside of personal judgment and prejudice, what the optimal state of economic affairs is. What income groups should have the highest income? What should the inequality difference be? What is the height that income should rise to? How much productive efficiency are we willing to sacrifice? There is no science of ought. We can show that the market system creates a state of affairs in which everyone is forced to serve anyone else if they want to increase their monetary wealth which leads to everyone else being better off by definition. If this isn't good enough for you then what is exactly? What gives you the right to be the final arbiter of all things economic?
Democracy is not a solution to this. Apart from the truly colossal problems which result from democracy, even if a large percentage of society somehow agrees precisely on a plan, what gives them the right to oppress everyone else into society on doing this? What exactly is the probability that such a consensus will be reached in real life?
2. I'm actually writing a long ass post out on this very issue. The fact is that there's very little a government can theoretically do, to make someone better off that would not hurt someone or many people even if you assume omniscience and a perfect institution of the government's will. Taxation always hurts someone unless every person who is taxed is made better off because of the spending then it reduces their total utility. Practically the only case you can point to where the government can theoretically improve people's lives is in the area of public goods, and even with these goods we cannot determine how much every person we tax benefits from this. In real life anything the government does is likely to be done in an incredibly wasteful manner because the democratic state itself is a public good. Everyone has an incentive to have a government that is less wasteful and more intelligent (exactly what the term intelligent means varies on who you talk to) but with such complex issues no one individual has an incentive to spend any time at all on becoming educated on issues. This means that even in the purely democratic society without whatever bullshit politicians will do there's going to be massive pitfalls in efficiency and positive performance.
3. The market economy follows the laws of the consumer's democracy. Insofar as individuals wish to maximize their own income they have to provide for others. As time goes on then in the absence of increasing uncertainty the market will inevitably tend to match people's incomes to what they produce. This means that what people earn begins to match exactly what they have contributed to the productive process. It's hard to envision a more "fair" system.
I agree with Neodoxy in that the market economy is as much of a democracy as anything else, there is certainly no norm in democracy as to how to apportion votes, there is no convention. An unrestricted market is a continuous series of elections among peers where people compete to earn the votes of the other market participants, resulting in a positive sum positive feedback cycle. Its incredible that people dont see this, I saw most of it for years but the kicker for me was a mises daily where someone said "everyone participates in the market process through determining prices"
Does he bang his head on the wall to exercise his brain out of curiosity?
Deductive proofs are just that - proofs. Statistics require interpretation, i.e. "rhetorical bullshit". I am inclined to believe he is the sort of individual (speculative or otherwise) that would dismiss any "theoretical support" as "rhetorical bullshit". And it is pretty easy to show why mixed economies will not stay mixed, as there is simply no logical stopping point at which they may cease to expand in the statist direction. For every intervention the gov't ignorantly enacts, it generates knock-on, unpredictable short, medium and long term consequences requiring further remediation (hence why there is so much regulation to cope with the effects of prior regulation.) Any philosophies designed to attain an "optimum" level of gov't interference will fall back on utilitarianism, a very nebulous, easy to manipulate results-oriented approach, ultimately. The evidence is pretty clear on their tendency to become more and more statist.
As for their superiority to market economies? Here the burden of proof is squarely on the advocates of force who wish to interrupt voluntarily enacted exchanges. Austrians and public choice economists have a huge array of arguments both theoretical and empirical against any intervention in the economy. It is just varying levels and shades of socialism.
Democracies are probably the least likely to remain a mixed economy of all possible types of statist mixed economies, as they ultimately entail politicians optimising their attainment of power by trying to satisfy whoever is willing and able to line their short-termist pockets with money and allow them to exercise greater power. Both Hoppe and Caplan have excellent books on how corruptive and perverse this system of governance is.
Freedom of markets is positively correlated with the degree of evolution in any society...