I’ve never won any competition I entered, but now it seems I have won a competition I did not know I was in: I have been named as one of Australia’s top libertarian identities. Don Arthur thinks that surely there must have been some mistake, citing these words I wrote last year explaining why I was not a libertarian:
Classical liberals are certainly at the libertarian end of the political spectrum. In practice, though, I am uncomfortable with the label. Libertarians tend to have a rights-based view of the world (in this they parallel modern left-liberals, though their lists of rights are different). Personally, I don’t find rights theories or, for that matter any foundationalist theory, convincing. So while I favour the institutions of classical liberalism – limited government, the rule of law, protection of personal freedoms, the market etc – I have an more intellectually eclectic set of justifications than a simple assertion of rights. In practice, this leads to more pragmatic political positions than libertarians.
For example, while maintaing due scepiticism I basically agree with the line that Gerard Henderson has been pushing (eg today???s SMH) that in times of threat the government can reduce some people???s civil liberties if a strong enough case can be made that they are a threat to Australia???s security. In the libertarian view, rights are rights, regardless of circumstances.
Jason Soon thinks that in this passage I am defining libertarianism too narrowly as a rights-based philosophy, when it could have utilitarian derivations as well:
On that reading, Friedrich Hayek and Milton Friedman wouldn???t be classified as libertarians, nor would Friedman???s son, David Friedman who is fundamentally a utilitarian but has also written one of the most convincing books on anarcho-capitalism that I have ever read
John Humphreys agrees with Jason. He thinks that:
If somebody really wanted to make a distinction between ???classical liberal??? and ???libertarian??? it is probably fair to note that ???classical liberals??? are normally on the moderate corner of the libertarian circle (sic), but that doesn???t stop them from being libertarian.
If libertarianism and classical liberalism are not identical twins they are at least first cousins, which is why classical liberals can end up appearing like ‘moderate’ libertarians. Yet I still think that there are some distinctions that often if not always apply, and mean I am more comfortable self-describing as a ‘classical liberal’:
1) Underlying philosophy. Jason insists that libertarianism can rely on utilitarian as well as rights-based arguments. I think he is right that libertarians use utilitarian arguments, but I feel more to find stronger justifications than natural rights theories for the same freedoms as rights protect than as a real inquiry into what would maximise utility. Libertarians end up arguing against things like seat belt laws, random breath testing or gun control, which I think are tough arguments on utilitarian grounds alone. I think classical liberals tend to be more open to going where utilitarian arguments might take them, which is why I made the point about national security laws in the passage that Don quoted.
2) Style. Whether utilitarian or rights-based in their underlying philosophy, libertarians like deductive reasoning – applying clear principles to almost any set of facts. This is one reason, I think, that neo-classical economics and libertarianism often appeal to the same people. Deductive reasoning gives libertarianism a dogmatic character (the Randians tend to be insufferably dogmatic). Early classical liberals like Adam Smith preferred inductive reasoning; the pleasure in reading them (and talking with living classical liberals) is not just in having aspects of one’s worldview confirmed, it is in trying to find patterns and meaning in social and economic life. Where libertarians have solid principles, classical liberals have rules of thumb derived from experience: governments tend to mess things up, individuals are the best judges of their own interests, private property is essential to freedom and efficiency, etc.
3) Cultural attitudes. Libertarians tend to have a more anything goes attitude to culture than classical liberals. In this respect, classical liberals have things in common with conservatives, in believing that social order is desirable and that certain general cultural rules ought to be observed. Libertarians rush in to defend people’s freedom to say anything they like, no matter how racist, sexist, homophobic, etc. I’ll certainly argue against people who say such things being punished by law, but I don’t necessarily see anything wrong with them being ostracised for their actions. This is why I was not completely against ‘political correctness’. It is why I have a stricter comments policy than Catallaxy.
Political ideologies are very hard to pin down, and inevitably people will find exceptions – or even take exception – to my attempts to distinguish classical liberalism and libertarianism. But I have described the connotations attached to the two terms in my own mind at least. I have been called much worse things than a ‘libertarian’ – indeed, a radical libertarian once accused me of ’state worship’, which I found far more inaccurate and insulting. But given the choice, I prefer the label ‘classical liberal’.
Andrew Norton 
Andrew,
I wonder how consistent neoclassical economics really is with libertariansism, especially in its more extreme forms. The benchmark welfare criterion employed in normative applications of neoclassical economics is Pareto optimality. Sen’s impossibility theorem establishes the potential incompatability of this criterion with what appears to me to be a fairly weak version of libertarianism. In terms of actual policy analysis, the Kaldor-Hicks (potential Pareto improvement) criterion is probably more commonly employed by neoclassical economists. I suspect that this is closer to utilitarianism than it is to libertarianism.
I have two posts that are somewhat related to these issues. One of them briefly discusses Sen’s impossibility theorem and provides a couple of relevant references (http://economicsgeek.blogspot.com/2006/09/newsflash-ipa-dont-believe-in-liberty.html). The other briefly discusses a potential difference between economists, libertarians and Marxists (http://economicsgeek.blogspot.com/2006/10/difference-between-economists.html) .
Regards,
Damien.
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I came across a book on the history of Carlton yesterday, and flipped to the index, thinking of you. Well over a dozen entries on labour, labourism, Labor Party, etc. Just one that had anything to do with Liberalism – a passing mention of the Melbourne Uni Liberal Club.
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John says: “…it is probably fair to note that ‘classical liberals’ are normally on the moderate corner of the libertarian circle (sic)…”
And you say that libertarians generally prefer deductive reasoning?
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Surely — the surly Libertarians probably would have a problem 🙂
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‘neo-classical economics and libertarianism often appeal to the same people’
Unless you’re defining neo-classical very broadly, I’d hope libertarians wouldn’t find neo-classical economics appealing. Classical economics should be the way, i.e. Smith, Mill, Say, Coase, Buchanan, Hayek, Plant, Hutt and the like.
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That seems a rather eccentric definition of classical economics, Siclair. It implies that those 20th Century people reverted to one or other core idea of Classical Political Economy (i.e. the school encompassing Smith, Say and Mill), but which had been abandoned by the neoclassicals. My idea of the core ideas of CPE is (1) a cost-based theory of price, (2) Say’s Law, and (3) a preference for free trade. As far as I know, Coase and Buchanan don’t subsribe to (1), and don’t have any particular interest in business cycles. I’m sure they prefer free trade, but so did the neoclassicals. Perhaps it has something to do with overcoming the neo-classicals’ exclusive interest in comparative static equilibrium analysis, and reasserting the importance of disequilibrium dynamics. But the 20th Century figure who did the most to resurrect classical themes in this regard is Schumpeter rather than people like Coase and Buchanan, and Schumpeter did not regard himself as a debunker of neoclassicals. Perhaps you have in mind something to do with the importance of institutions, in particular property, and incentivs. But, while it might be true that the first few generations of neoclassicals were not especially focused on this, I can’t see that neoclassicam in any way denies the importance of property rights and incentives. So what do you mean?
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A lot of libertarians seem to be attracted to Austrian economics — especially the work of Mises and Rothbard. Maybe they like the way Austrian theories allow you to learn all know about the world by sitting in armchair and thinking really hard. No need for difficult math, no pesky need to pay attention to pesky emprical data… Just the wonders of the synthetic a priori and the problem of what to do with all the stupid people who disagree with you.
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Very few people subscribe to the cost theory of price. Only classical economists subscribe to Says law these days, while the neoclassicals aren’t always as pro-free trade as they could or should be. I should have included Schumpeter (oversight on my part). The point is classical economists tend to believe the government should do less rather than more in the economy. Neo-classicals are agnostic on this point – libertarians would never be agnostic on government intervention.
Yes, a lot of libertarians are attracted to the Austrians. Probably because the Austrians are a coherent school and are (tend to be) classical in outlook. Although why they support the Mises and Rothbard approach rather than Hayek, I don’t know.
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I think most intellectually hip libertarians nowadays are more likely to be New Institutional Economists/transaction costs economists a la Coase and Williamson (I would not classify Coase as a classical). NIE is a subset of neoclassical economics and is very empirical, indeed the most empirical school within neoclassical economics, contra Don.
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Sinclair, I don’t know what mean about ‘classical economists these days’ and Say’s Law. If you are referring to ‘new classical’ macroeconomics, you must know that this is school is classical only in terms of the crude dichotomy invented by Keynes between his own approach and that of the ‘classics’ – which made no distintion between classical and neoclassical doctrines.
I’m taking me a long time to adjust to the idea that neoclassical economics, condemned for years by the left as a Trojan horse for laissez-faire ideology, is now supposed to be the font of misguided interventionist apologetics. I’m sure I’ll get there eventually. More seriously, you’ll have a hard time demonstrating that neoclassicals of the ilk of Jevons and Mill are more sympthatic to regulation than Mill. In any case, surely it’s unwise to group economists according to their policy recommendations rather then their analysis.
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Coase is hardly neoclassical. I’m not a huge fan of Williamson’s – he is too obtuse. I have heard of people talking about the CDAWN school (Coase, Demsetz, Alchian, Williamson, North), but this could be the NIE approach. While a lot of NIE is empirical, I don’t know that I’d call it ‘the most empirical school’.
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No, I’m not referring to the New Classicals in macroeconomic theory. Look up the wikipedia on Says law (http://en.wikipedia.org/wiki/Says_Law). I’m not saying neoclassical economists are all raving lefties, I’m saying that neoclassical economics is consistent with a range of views regarding government intervention. Whereas classical economics (and libertarianism) is not consistent with a wide range of views on the appropriate scope and scale of government intervention.
In terms of modern adherents the Wikipedia has overlooked my colleague Steve Kates (http://www.amazon.com/Says-Law-Keynesian-Revolution-Macroeconomic/dp/1858987482/sr=1-1/qid=1160547349/ref=sr_1_1/002-9231583-1804831?ie=UTF8&s=books) and (http://www.amazon.com/Two-Hundred-Years-Says-Controversial/dp/184064866X/sr=1-2/qid=1160547349/ref=sr_1_2/002-9231583-1804831?ie=UTF8&s=books).
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If you mean Coase doesn’t do math, that’s correct. But the intuition behind his theory of the firm for instance is fundamentally within the neoclassical maximising paradigm.
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‘the intuition behind his theory of the firm for instance is fundamentally within the neoclassical maximising paradigm’
This statement makes me very uncomfortable. I don’t know; I don’t think so. If maximising is the benchmarrk, then we’re all neoclassicals. I think about neoclassical work as the modern version of Marshall as perverted by Pigou and formalised by Samuelson et.al. Coase has no time for this type of economics.
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I still think that’s an eccentric defintion, what do you mean by ‘perverted’? Public goods isn’t the be-all and end-all of neoclassical economics anyway. What you want to argue is that naive versions of neoclassical welfare economics ignored the ‘political’ problem. But even this now has been incorporated into models.
Neoclassical economics is basically subjectivism, maximising and marginal analysis.
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I believe Coase’s specific gripe was with ‘blackboard economics’. What the guys in NIE or CDAWN or Law and Economics (with which there are overlaps) do is more than blackboard economics but still uses the same conceptual approach as neoclassicals.
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“Public goods isn
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I’m a classical liberal with libertarian tendencies, I agree (on spec) with Sinclair’s definition of neoclassical economics, and I think that that particular way of thinking about economics is rubbish.
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From Mankiw’s blog – the Nopigou club. Follow the links and read the posts
http://gregmankiw.blogspot.com/2006/10/nopigou-club.html
Mankiw, himself, is a huge fan – if not ‘founder’ – of the Pigou Club.
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Sinclair, I don’t think you can define classical economics by it’s conclusions. And while Austrians do share conclusions with classical economist, they would be offended to be grouped with pre-marginal revolution thinking.
At the marginal revolution, three schools were born from the classicals. Austrians (who became marginalised for several reasons), General Equilibrium types (who tended to more socialist solutions) and Partial Equilibrium types (Friedman & Chicago school). Their respective leaders would be Menger, Walras & Jenvons/Marshall.
Libertarian economists would tend to be NIE, Austrian or Chicago-school.
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‘Libertarian economists would tend to be NIE, Austrian or Chicago-school.’
Yes. I think that’s correct.
‘At the marginal revolution, three schools were born from the classicals.’
Yes. That’s about right too.
‘Their respective leaders would be Menger, Walras & Jenvons/Marshall.’
Hmm. Two traditions can lay claim to Marshall. The Pigouvians – now nobody ever calls themself a Pigouvian – and the Chicago-style can both revere Marshall. While Pigou said, “It’s all in Marshall”, if you read then, you’ll quickly find that it isn’t.
I think what we’re arguing about is the extent of the ‘r’ in the marginal revolution. Sure, such silly ideas as the labour theory of value are now discarded, but too many of the classical insights are ‘lost’ in neoclassical economics. My view is that the classical school evolved and survives in the present in Austrian and NIE approaches. While for the mainstream – the neoclassical – the marginal revolution was a Revolution and the classical insights do not survive in their thinking. You can be a good, clever, wise, neoclassical economist and not read Adam Smith, or own a copy of his books, or even know he ever existed.
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Andrew, I’ve just started reading Buchanan’s “Why I, too, am not a conservative”. I think you might enjoy it – especially the bits were he sets out a four dimensional matrix of classical liberal tenets.
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Sinclair – I should check it out, though I must admit to never having been a Buchanan fan.
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I recently invested in his 20 volume collected works. I haven’t enjoyed his more famous stuff, but there are some gems in there well worth the read (for economists anyway).
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Andrew,
I just found this thread from a recent link – though I think I skimmed it earlier when you posted it. I like your distinction and while I regard myself as quite strongly influenced by classical liberalism (along with rival camps like conservatism and social democracy), I find myself unattracted to libertarianism. Then again there may be some circular redefinition going on. I may tend to think of the more strident expressions of the same position as ‘libertarian’ and the more moderate expressions as ‘classical liberalism’. Anyway the distinction you’ve proposed makes sense to me intuitively.
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Sinclair,
Why does it matter if modern economists have read any of Adam Smith’s publications, yet alone own copies of them? Should modern mathematicians read Euclid’s “Elements”? The useful aspects of economic thought from one generation get encapsulated into the body of knowledge that is taught to the next generation. The fact that they read it in textbook form rather than the original source does not matter. After all, if you had to read all of the original source documents in a discipline whose knowledge frontiers are expanding, you would eventually have so much to read that you would have not have time to do so. This does not mean that it is not interesting to go back and read some of the original documents. However, is not really necessary to do so in order to be a good economist.
Regards,
Damien.
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I think John Quiggin made a similar point to the view expressed in my previous comment in a comment he made on a post by Rafe Champion to do with Austrian economics.
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Damien, 2nd post first. Both John and Rafe are making important points in their (ongoing) discussion. Each is talking at each other, rather than to each other and both are being too dogmatic.
First post: This is an unexamined assumption,
A body of material moves from one (academic) generation to the next, not I suspect the ‘useful’ aspects, but those aspects that easily lend themselves to classroom teaching and written textbooks. For example, it has taken many years for Coase’s lighthouse example to get into textbooks (or rather Samuelson’s lighthouse example to exit.) Coase has argued against ‘blackboard economics’ for decades, yet it persists. The assumptions made about knowledge are a violation of Hayeks work from the 1930s and 1940s, yet they persist in blackboard economics and survive into appalling policy decisions. Ditto Buchanans Cost and Choice.
Why should we read Smith? (1) Because he isn’t in the textbooks. (2) Because we see where modern economics ‘gets’ it wrong. Simple example. Smith has two ‘theorems’: One the invisible hand, Two the division of labour is limited by the extent of the market. The second ‘theorem’ is a story about increasing returns. Modern ‘welfare economics’ can’t handle increasing returns and classifies this as being a ‘market failure’. So what Smith refers to as being one of the great arguments in favour of markets, modern ‘welfare’ economists classify as a failure. That is why you should try to read Smith.
Can we read all original sources? No. But as Douglass North tells us, ‘History matters’. History matters especially when the feedback corrective loops don’t work very well (such as in academic disiplines). (Please don’t say peer review corrects error – it doesn’t work very quickly, if at all, not in social science). So originals matter, especially if you’re going to be citing their ideas.
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as a non-economist, i think more economists should try and read political philosophy to understand the moral implications of their policy prescriptions. economists who understand the spontaneous order of a free market system, and the way in which it puts power in the hands of the common person rather than governments and the favoured elite, are less likely to advocate statist solutions.
the key point is that decisions of rationing must be made… whether it is through the market or government, resources are scarce. the so-called excesses of big business are nothing compared to government excess. reduce the role of government, and bring the economy back into the economist.
the main demand for economists is in academia and government – two places that specialise in devising freedom diminishing programs to maintain their own relevance/influence in the eyes of the public. but economists should admit the extent to which their solutions are worse than the problem. they would do better to leave us alone. just let people be free.
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‘Should modern mathematicians read Euclid
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Oh spare us, Sukrit. What you’re basically saying is ‘ignore what social science tells you if it goes against your libertarian theology’.
Economists probably have a far higher percentage of libertarian-leaning members than any other academics (including your beloved philosophers most of whom are either conservatives or socialists), indeed more so than any other member of the public. Why do you think this is so? Economists arrive at mostly libertarian conclusions because they are economists and systematically think through aspects of policy and have made a far greater contribution to human freedom where the evidence for it being beneficial is the greatest, and where it isn’t, they mostly stick to the evidence and say so. All those concepts you mentioned are economic concepts. And as a new zealous convert to this religion of libertarianism, it upsets you when they say so. I’m almost embarassed to be associated with libertarianism now reading the ravings of some new converts all over the web.
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You cannot escape the economy.
Why anyone would suggest economists are irrelevant to social policy eludes me.
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