Philip Pilkington: Libertarianism and the Leap of Faith – The Origins of a Political Cult

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

You wanted God’s ideas about what was best for you to coincide with your ideas, but you also wanted him to be the almighty Creator of heaven and earth so that he could properly fulfil your wish. And yet, if he were to share your ideas, he would cease to be the almighty Father.

Søren Kierkegaard

Political cults often have the strangest and most obscure origins. Take Marxism, for example. Today it is well-known that Marxist doctrine essentially sprang out of the obscure 19th century economic debates over the source of ‘value’. By ‘proving’ – that is, lifting the assumption from classical political economy – that all ‘value’ came from labour, Karl Marx went on to show that it was therefore only logical to assume the existence of something called ‘surplus value’ that was sucked out of labourers by a parasitic capitalist class. From out of this obscure debate flowed an awesome political movement – and a tyranny to match.

What is less well-known is that today’s most popular political cult – that is, libertarianism – was born in very similar circumstances; it too, arrived into the world out of the obscure 19th century debates over economic ‘value’. But before we explore this in any detail it might be appropriate to speculate a little on what characterises a political cult and why so many of these find their sustenance in economic theories of value.

What is a Political Cult and Why Do they Often Love Economic Value Theory?

A political cult is characterised by a political or economic doctrine that answers all the ‘big questions’ about life, the world and everything else. The doctrine that is handed down is then to be conceived of as a way to live one’s life – a project, handed down from Mount Sinai, that one is under the moral obligation to spread far and wide. This is why we refer to these movements as cults. And it is this that gives them such an awesome status in the glazed eyes of their devotees.

Under such circumstances, politics becomes a sort of religious calling. In these doctrines there is usually an ‘Evil Being’ who is opposing the spread of the ‘Good’ on earth and it is these that are to blame for all the bad things in the world. In Marxism this Evil Being is the capitalist; in libertarianism it is the figure who is at different times referred to as the ‘collectivist’, the ‘liberal’ or the ‘socialist’. Needless to say that, since these figures are usually ones of Extreme Evil they must be ‘liquidated’ or ‘eliminated’ at the first possible opportunity lest they spread their Demonic Gospel to the masses.

Political cults thus provide their devotees with a firm identity in an otherwise changeable and, let us be frank, confusing world. Like all cults they provide an anchor for their devotees with which they can fasten themselves to a rigid doctrine. They also typically lend their devotees a Holier-Than-Thou attitude as they provide them with ‘secrets’ that those outside of the cult cannot grasp. Not only does this allow the devotees to feel ‘special’, in modern political cults it also gives them practical, albeit ‘secret’ advice about what they should do in their day-to-day lives. (Think of the advice to buy gold or foreign stocks coming out of certain libertarian front men, for example).

Finally, the political cult will usually offer their followers the possibility of a Heaven on Earth. If the follower behaves well and spreads their beliefs to others they will eventually arrive at some sort of Utopia. This is their reward for believing in the doctrines, despite these doctrines being ridiculed by others.

So, why do these cults spring out of economic doctrines based on value? Well, this is a very complex question but there is one key aspect that is absolutely fundamental. In order to understand it a little better we must think for a moment about what economic ‘value’ supposedly is. It is, in fact, when we boil it right down, a moral entity. If we can tell what people ‘value’ and why, then we can make prognostications on what is Good for society as a whole.

In times past organised religions handed down fixed value systems to their adherents. Today people have become disillusioned with religious systems – ostensibly because they conflict with these peoples’ supposedly ‘scientific’ worldview. But the impulse among some for the self-assurance provided by a religion is so strong that they seek out ‘scientific’ systems that operate in an identical manner to religious or cult systems.

This is why the economic doctrine of ‘value’ is such a good foundational stone for such a cult. It provides a pseudo-scientific account about how people attribute value to things and in doing so tells the cult member a ‘Truth’ that they can use to make turn the world into a Utopia in which the optimal amount of ‘value’ is realised by the optimal amount of people.

Karl Marx claimed that ‘value’ was embodied labour and hence his followers concluded with him that all that was Good sprang from labour and that society should thus be based on free labour. The libertarians – together with the neoclassicals that they otherwise scorn – believe that all ‘value’ springs from utility maximisation. While the neoclassicals simply tinker with toy-models of ‘value’ to bolster their pseudo-scientific prestige, the libertarians undertake a leap of faith into the unknown and claim that in the theory of marginal utility they have found a ‘Truth’ that must be brought down from Heaven to Earth.

The Birthing of a Cult

Libertarianism was born out of the late 19th century doctrine of marginalism; a doctrine that went on to gain popularity with those opposed to Marxism. We will not dwell too much on the doctrine of marginalism when applied to the analysis of ‘value’ – having done so elsewhere. Here we will merely note that marginalism provides a moral defence for the supposedly ‘free market’ system that we live under today.

Marginalism, when applied to ‘value’ analysis, holds that it is in Man’s nature to follow a certain path in his consumption habits. These habits are determined by his maximising his utility. Most modern marginalists claim that they can use this concept to show that a ‘free market’ system is the fairest social system possible, since it responds automatically to Man’s marginal utility preference it delivers ‘value’ in a perfect and harmonious manner.

Markets deliver this ‘value’ through the mechanism of price. Prices, which reflect peoples’ desires to maximise their marginal utility, ensure that the most equitable distribution of ‘value-in-the-abstract’ is accommodated for by the ‘free market system’. And this is the point at which marginal value analysis becomes a value judgment in a very real sense.

The neoclassicals held, and continue to hold, that their models could capture this complex dynamic. Such an assertion was and is, of course, absolute rubbish. But the Austrians took a different tack. “Yes,” they said, “marginal utility theory is the correct way to go, but we cannot formulate models that adequately capture the inner workings of this great mechanism.”

In their book Modern Political Economics: Making Sense of the Post-2008 World, the authors provide a good summary of this approach. In the book they discuss what effect the discovery of marginalism’s inherent uselessness had on the Austrians:

Faced with the impossibility of mathematically deriving prices and quantities on the one hand and a metric of social welfare on the other, some Marginalists understood the limitations of their utility calculus. Mainly of an Austrian persuasion (most notably Ludwig von Mises, Friedrich von Hayek and Joseph Schumpeter), they even gallantly tried to use this failure to the advantage of their claims on behalf of untrammelled markets and against the encroachments of collective agencies, trade unions, governments etc.

This was a clever move. While the neoclassicals tinkered with their silly toy-models, trying to show how prices are determined through a sort of grand marginal calculus, the Austrians shrugged their shoulders as to how such a Divine Event could occur. Instead they began to think of price as a sort of Miracle that proved the divinity of the Market mechanism. They then went on deploy this argument to show that anything that encroached upon this Divine Being’s presence was inherently Evil:

If no degree of mathematical sophistication can pin down the ‘right’ prices and quantities, how can a government or any other form of collective agency work them out? How could a socialist economy, or even a national health service, ever price things? Thus, the market mechanism is indispensible because of the radical indeterminacy of prices.

Note what is happening here. The Austrians, like their marginalist brothers and sisters, thought that in marginal utility theory they had found the source from which ‘value’ truly flowed. They never for one moment questioned that. Even when they came to conclude that marginalist analysis could never definitively show anything useful about price determination, they remained confident – indeed, they became even more confident – that such an analysis was Truth.

In short, they postulated a theory and then when confronted with the inconsistencies of the theory when it was applied to any practical ventures they simply threw up their arms and claimed that such inconsistency showed just how true theory was and how much we should respect it. The knowledge that the theory imparted then became, in a very real sense, Divine, in that we meagre humans would never be able to grasp it and instead should simply bow down in front of the Great Being that possessed this knowledge – that is: the Market.

This is what gives the libertarians their religious zeal. In their quest for the Grand Truth they find this Truth to be inaccessible to Man. But in this inaccessibility they find a Higher Truth again; namely, that there is some other entity out there – a benevolent entity called ‘the Market’ – that possesses this Truth and all we have to do is follow the Laws which it has handed down to us and we will eventually reach Utopia. This is, of course, a leap of faith – a truly Kierkegaardian Leap of Faith.

From the Leap of Faith to the Knight of Faith

The Austrians were never quite content with the chicanery and political posturing that they had passed off as scientific debate. As alluded to above, their theories about market prices were forged in the debates with those who advocated a socilialistic planned economy. Being ideological to the core, the Austrians were, for a while at least, perfectly content with saying that while no economist could say anything worthwhile about price determination – and thus, any attempt at a socialist planned economy would be doomed to fail because there could be no perfectly informed coven of evil socialist economists who could administer it – they were still happy with the airy theory of market prices that they had just poked such a large hole in. Yes, they had undertaken a Leap of Faith by admitting that their logical constructions would never be whole but, as Kierkegaard well knew, every Leap of Faith needs a hero, a Knight of Faith – and the Austrians soon found theirs.

The Austrians had, although one suspects that they never fully realised this, essentially proved that their theories were inconsistent. There was always, lurking somewhere, that element that disturbed the calculation of prices in the market models.

Let us emphasise here that this element of disturbance was found, not in reality, but only in their models and in their minds. The fact is that the Austrians, even in out-stepping their neoclassical brethren, were still only exploring their own fantasies. This fact must always be kept in the front of one’s mind when considering their doctrines.

We highlight this because it was precisely at this point that the Austrians could have conceded that they were building castles in the sky – ideologically and emotionally motivated castles in the sky, no less – and that it might be time to grow up and give up on the whole sordid venture of trying to establish a ‘logical’ ‘economic’ basis for ‘value’ that would temper them with the moral certainty they needed to carry on their political crusade. But not so. Instead they found a Kierkegaardian Knight of Faith to fill the gap in their logic. And that Knight of Faith was the entrepreneur.

The Austrian economist Israel Kirzner put it as such in his fine paper ‘The Economic Calculation Debate: Lessons for Austrians’ (which is also an excellent historical overview of much of what we have here been discussing):

[T]he truth is that Hayek opened the door to an entirely new perspective on the “goodness” of economic policies and institutional arrangements. Instead of judging policies or institutional arrangements in terms of the resource-allocation pattern they are expected to produce (in comparison with the hypothetically optimal allocation pattern), we can now understand the possibility of judging them in terms of their ability to promote discovery.

And this ‘discovery’, of course, comes from the entrepreneur who was hereafter identified by the libertarian as the social hero who broke through all barriers in the pursuit of the creation of new ‘values’ – and by that, we mean economic ‘values’ – for the community as a whole. Kizner again:

For Austrians, prices emerge in an open-ended context in which entrepreneurs must grapple with true Knightian uncertainty. This context generates precisely the kind of choice that stimulates the competitive discovery process. In this context, the entrepreneur does not treat prices as parameters out of his control but, on the contrary, represents the very causal force that moves prices in coordinating directions.

In Kierkegaard’s writings which, like the writings of the Austrians sought to establish a theological metaphysic from which an individual could derive principles of moral certitude, it was the Knight of Faith – the true believer with complete faith and certainty in both himself and God – that filled in the logical gaps inherent in even the greatest philosophical systems. For the Austrians the entrepreneur filled the same role – except that this was a great hero that had both full faith in the Market and the ability to find opportunities to inject disequilibrium into the price system through innovation.

By now we are far outside the realm of anything even remotely resembling a science of ‘value’. What we have instead is a vast metaphysical and moral system that is built around a very specific – not to mention very narrow – conception of value, together with a sort of existential appendage in the form of the hero-entrepreneur. The hero veneers over the logical flaws in the metaphysical system, while that system remains in place as a faith-based explanatory schema which can be applied to the world around the libertarian.

Note how fantasy blends into reality almost completely at this point. No longer do we separate our supposedly ‘factual’ ideas about ‘value’ from the mythological figure of the entrepreneur. Fact and fantasy merge to form a sort of continuum the purpose of which is to insulate the devotee from any empirical evidence that might arise to prove them wrong – or, at least, misled – regarding, for example, more fundamental and more pressing macroeconomic questions. They simply know what is what because they have it all worked out – and no silly facts are going to tell them otherwise.

From the fertile source of marginal utility value calculus the Austrians thus constructed a pristine moral and metaphysical system. But in doing so – like all metaphysicians – they allowed their imaginations to run away with them. They never noticed the point at which they crossed that fateful line; that line that separates our attempts to represent the world accurately and dispassionately to ourselves from our attempts to create a fantasy world in which we can live. The Austrians had, at first, attempted to use their imaginations to explain the world around them and, in doing so, had fallen into a dream world of their own creation.

And so the foundations of the political cult we call libertarianism were firmly in place. It is an ingenious creation which even came to include what CG Jung and other mythologists might call a central ‘archetypal’ or mythic figure. Even more specifically, what the Austrians have done is insert into their narrative what the great American mythologist Joseph Campbell called the ‘monomyth’. The monomyth is a recurrent theme in mythologies from all over the world. It is essentially a ‘hero myth’ and, as Campbell argues, can be located in most major religious narratives (Christ, Buddha etc.). In this the Austrians provided the libertarian religion with their very own version of the monomyth.

That most libertarians are ignorant of the source of their beliefs – just as most of them are not very conversant with economic theory generally, their protestations to the contrary notwithstanding – only adds a sociological dimension to their cult. Their cult forms a hierarchy where those who are closer to the Grand Truth are supposed to know more than those who are less conversant. Those who are less conversant then scrutinise the Great Texts – which are largely taken to be Holy Writ – until they can advance up the priestly ranks.

The Malign Consequences of Political Cults

After experiencing what used to be called ‘Bolshevism’ we are well aware of the dangers of political cults if they should ever ascend to power. Indeed, we already had forewarnings of this danger in the cult of Reason that Robespierre erected in revolutionary France upon the intellectual architecture that Jean-Jacques Rousseau had constructed for him. All of these cults espouse liberty and freedom and end up creating regimes of pure tyranny. Why? Because in their violent desire to turn reality into a Utopia, they stamp all over reality as it fails to conform to the images in their minds.

Some have objected to fellow Naked Capitalism writer Andrew Dittmer’s ‘interview’ series as an attempt to misrepresent the libertarian movement by espousing the ideas of an extremist. This is unfair. The views of people like Hoppe may be fringe among libertarians – then again, they may not be – but the zealousness is the same across the whole movement.

Libertarians think that they have unearthed a Truth that no one else can grasp (because, of course, this Truth being so pure, anyone who could possibly grasp it must then by default recognise it as Truth). And they think that if they can get adequate social and political power to enforce this Truth we will all be better off for it. Hoppe’s vision of a totalitarian, corporatist future is thus realistic in that if libertarians were ever truly to get into power they would have to enact an immense violence upon the world to try to get it to conform to their vision of Utopia. In this, they are like every other political cult that has ever existed. And they are just as dangerous.

In fact, the libertarians are the direct heirs to the Marxist-Leninist throne. Even though their motives differ substantially, their Faith is based on very similar principles – which is not surprising given that both movements grew out of the same 19th century debate over economic value. In this regard it is useful to recall John Maynard Keynes’ characterisation of Marxism-Leninism:

[It] is the combination of two things which Europeans have kept for some centuries in different compartments of the soul – religion and business.

Keynes also highlighted an important point about how such cults become influenetial:

[They derive their] power not from the multitude but from a small minority of enthusiastic converts whose zeal and intolerance make each one equal in strength to a hundred indifferentists.

The goal may have changed, but the unswerving faith in pseudo-scientific – or, to be very precise, in the Austrians case, because they tend to eschew ‘scientificity’: pseudo-rational – economic doctrines has not. Let us just hope that such a cult does not deliver to us another era of primitive tyranny and medieval inquisition. It is our democracies that are at stake.

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  1. patrick

    I know this is probably heresy on an econ blog, but I think for many libertarians, economics is not the foundation of their political thought.

    Whether freedom tends to maximize GDP (or whatever your favorite cause is), it’s ethics — not economics — that is the foundation of freedom.

    Please read Bastiat and tell me it’s a pseudo-religion. LOL.

    1. Fraud Guy

      Having had some discussions with locally minted Libertarians (huge on Mises, Paul, and “free” markets), I run into constantly shifting arguments on value, policy, and the economy. However, the one thing they constantly return to, is that the value settled by the free market is always correct, and all constraints on that (taxes, minimum wage, etc.) should be abolished. When I ask why money should be the medium of value for all interaction, they look like I asked why the pope should be Catholic.

      At least I finally got them to admit that crony capitalism should be abolished, though they still see Obama as a communist sympathiser.

      1. jake chase

        I don’t fully understand all this Libertarian nonsense. I have read Hayek’s Road to Serfdom quite carefully, however, and find nothing in it with which to seriously disagree. His essential point is that we need government to create rules which are binding on all economic actors. Obviously, they must be sound rules. In particular, the rules must eliminate monopoly, and Hayek saw monopoly as a big problem. What Hayek was against was economic micromanagement by government. What he was in favor of was individual freedom. What I wonder is how many of those bashing Hayek day to day have actually read his book, and how many would disagree with what he says if they did read it.

        1. Jack E. Lope

          Like many others, what I know of The Road to Serfdom is second-hand.

          I see a parallel in the selective information drawn from Adam Smith’s An Inquiry into the Nature and Causes of The Wealth of Nations. I was supposed to read the entire thing for a class (~40 years ago, when the conservative economists were Keynesian), and I still have a copy. Many later interpretations – Ricardo comes to mind – are often attributed to Smith.

          Come to think of it, few who criticize and few who idolize Marx have actually read him. My favorite quote attributed to him: “If this is Marxism, then I am not a Marxist”.

          In all these cases, they should be read with some thought to the context of the world as it was. I have the ideas that Smith was leading-edge for 1776, Marx/Engels were leading-edge for mid-19th Century, Hayek, no so much.

        2. Lidia

          I would ask, too, whether most who define themselves as libertarians have read his work. I read “The Road to Serfdom” a while back, and there were plentiful references to the sort of social safety nets that are anathema to today’s libertarian crowd.

          “There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

          He was also against laissez-faire capitalism, a position I strain to perceive in anyone claiming to be a libertarian these days.

          1. Ransome

            Because laissez-faire capitalism inevitably leads to bankruptcy. There may be different paths, but bankruptcy is inevitable. Why? Because it almost impossible to earn wealth in quantities to grow. 99.999% of capitalists borrow money at interest. Several missed payments results in foreclosure or collateral confiscation; collateral worth more than the loan.

            If only earned wealth was used, several negative months would mean a small decrease in wealth by selling a small amount of what formerly was collateral. Success or failure depends on the nature and use of capital, by you and your competitors. It becomes clear why lenders win most of the time and why businesses fail, most of the time. In fact, a person with debt walks a tightrope. A person without debt walks on the ground. If I were Libertarian, I would be on about debt and not just a debt based fiat currency.

    2. UnlearningEcon

      Libertarianism *is* an ideology based on neoclassical economics, in fact I was planning to do a post on it myself. Their entire idea of ethics is based on rational economic man, neoclassical bizzare-o world of governments versus markets, and the economy as some sort of magic entity that springs up out of nowhere, with no political and social institutions required.

      1. aet

        Libertarianism is inhuman ; and its proponents see that as a virtue!

        I say: “Fu** ’em!”

        How’s THAT for a “libertarian” utterance? Easy to imagine that phrase coming from a “libertarian’s ” mouth – because that’s what their “philosophy” fundamentally amounts to: “Screw everybody but me & mine!”

        “Libertarians” will get no help from me: but if they were to act consistently with their professed belief, they really wouldn’t expect any, now would they?

  2. GeorgeNYC

    Absolutely (dare I use that word) great analysis.

    I fear that we are losing our ability to understand that these abstractions were originally designed to give us a framework for trying to understand reality rather than as a substitute for it. The map is not the territory. We crave easy proxies for understanding the world. It is far simpler to look at the Dow Jones average than to even start to understand the complexity of an economy.

    I see all of this analysis as to what “should” be done to “save the financial system” which takes place entirely in this abstract world.

    1. aet


      Got to move the physical mass, if you wish to change the world, rather than change people’s minds – or just your own.

      But the latter is most often the correct thing to do.
      For the world makes its own rules: we can but dis-cover them.

  3. Darren Kenworthy

    Who are you writing to? If a non dogmatic “libertarian” who identifies as one simply because they like the idea of “liberty”, in the sense of “maximum freedom for everyone”, would they find your piece convincing?

    1. Darren Kenworthy

      I meant to start sentence two “If the reader were an non dogmatic ‘libertarian’…would they find your piece convincing.”.

    2. Christophe

      The author is clearly not writing to your non-dogmatic libertarians as he gives no indication that he considers there to be any such entities. He specifically notes that “the zealousness is the same across the whole movement.”

      Given his historical contextualizing of libertarianism, exposing of its intellectual inconsistencies, and identifying of its cult characteristics, Mr. Pilkington is apparently writing to opponents of libertarianism to provide them with more nuanced arguments for their critiques. But you already know that and were feigning ignorance in posing the rhetorical question above.

  4. Jesse

    Where is all this libertarian-bashing coming from all the sudden, Yves? Why does an anarchist like David Graeber (who I like a great deal) not have his ideas come under similar scrutiny, and instead get a column promoting his ideas? The buck obviously stops with you – no one is questioning that – but it’s not like Atlas Shrugged just hit #1 on within the last 2 weeks.

    1. Yves Smith Post author

      First, I’ve been regularly hard on libertarians. In case you missed it, the Dittmer piece was designed as a six part series. Pilkington sent in this piece and actually wanted me to run it Monday. I told him we needed to finish the Dittmer series first.

      Second, only one Graeber piece was on his anarchism (and that was his piece arguing it was influential in OWS. I put a big caveat at the top, since my experience in NYC is that anarchists have a minor role in OWS. Otpor is a much bigger influence). There was also a two part interview on his book, which was about the history of debt, not anarchy.

      1. RanDomino

        I’m guessing it helps that he’s an actual scientist as opposed to one of these praxeologist (autocorrect: “parasitologist,” how Freudian) madmen. People tend to have a little more credibility when they base their argument on empirical observation of reality.

        1. Jesse

          I like him a great deal. I just don’t see how libertarianism is more far-fetched than anarchism; libertarianism is rooted in certain schools of anarchism, is it not?

          1. Foppe

            Not really. Anarchism is about emergent/democratic organization and sharing/giving according to ability/needs (at least when it comes to subsistence needs), whereas libertarians at best ignore the issue of social organization entirely (because of their emphasis on the importance of negative liberty).
            Redistributionism, from a libertarian PoV, is extremely hard if not impossible to argue for coherently — even for left-libs, who are amenable to the general idea.

          2. RanDomino

            No. Modern “Libertarianism” has an extremely tenuous connection to 19th century Anarchism, by way of Individualism which was never very influential. The fundamental difference between Libertarianism and Anarchism is their mutually exclusive ideas of property ownership and use; Libertarians should really be called “Propertarians” because they have this quasi-religious belief in “property rights” (by which they mean title-based property ownership); Anarchist property is based on use (whoever uses a thing is its owner, and if a thing ceases to be personally and tangibly used by a person then they no longer have any claim to it; for example an empty building, if no one can explain how they intend to use it, is up for grabs, with the consent of neighbors if any activity that occurs there might affect them). Usufruct is probably the closest word for the Anarchist concept of legitimate property use-ownership.

            Anarchists are against both government AND capitalism, because we recognize that the only irreplaceable function of a government/State is to maintain and protect property titles. Capitalism cannot exist without some single, central, indisputable agency carrying out this function; multiple agencies would either maintain conflicting lists or merge their lists and create a system to ensure that they were constantly in sync (which is effectively the same as having a single list). Disputes (real or invented) may not be resolved through violence, but if history is any indication, whoever things they can get an upper hand through violence would not hesitate to do so. A war of all against all and eventual domination by Leviathan, establishing their sole authority over the property title registry, would result; capitalism with no government would shortly create a new government.

            Furthermore we think that the vaunted “exchange” of capitalism, regardless of a formal government, is itself coercive. The idea of “I’ll give you this if you give me that” can be turned into a threat: “I won’t give you this *unless* you give me that.” If the desired good is necessary to life, such as food or shelter, then the price can be determined more by coercion than by the function of efficient market forces. Anyone who’s been employed in a low-skill job in a time of high unemployment knows very well to shut up and not complain about speed-ups and dropping wages.

            Instead of capitalism, we advocate “gift economics,” a system based on free giving rather than exchange. As David Graeber pointed out in that earlier article here, this was the standard form of social economic activity for nearly all of human history, so genetically we’re very well adapted to it. Even today, if you were to calculate the dollar value of every gift given (including services such as helping someone get their car out of a snowbank or telling them the time while on a subway ride, physical gifts from the more formal kind at birthdays and holidays to informal kinds like food sharing, letting the neighbor borrow your weed trimmer, etc), it would probably rival the “real” economy. The fact is that people are generally decent; giving and contributing increases a person’s dignity, which is the real motivation for most people. it’s just a few sociopaths who have convinced us that we’re as materially selfish as they.

            On a larger scale, there is the highly-developed Anarcho-Syndicalism, which rivaled Communism in the 1910s-early ’20s and which was the driving force behind the Spanish Revolution in 1936 (which was brutally crushed by Communist betrayal, a mistake we will not make again). Anarcho-Syndicalism is a proposal for a system in which workers control their workplaces through direct democracy, organized industrially and between industries by organizational federations to make decisions about production and distribution.

            A consequence of gift economics is that this whole insufferable debate about the best way to determine “value” in either the Marxian or neoclassical sense is wholly superfluous, which I find delightful in the same way Alexander must have felt when he cut the Gordian knot. There is no need to measure use-value or exchange-value; just whether or not people are fed, living in decent houses, have good books, etc; there’s no “X” but just “yes vs no” and “more vs less”. If, as this article says, arguing over value is like religion, Anarchism is atheist.

          3. Goin' South

            RanDomino does a nice job of explicating the differences between Anarchism and Propertarianism above, but your question does raise a valid point. Given the criteria Pilkington sets, he would need to call Anarchism a “cult” as well. This is odd, since it was Pilkington who did such a friendly interview of Graeber that initially brought the anarchist to the attention of readers here.

            I read Pilkington’s argument as essentially a defense of reformist approaches to political economy that preserve the status quo. After all, he cites Keynes as an authority on his side. Any perspective so radically different from the status quo, that urges overturning it in what would amount to a revolution, risks being labeled as a “cult” under the criteria put forth in this article.

            Pilkington would do better to look a bit deeper for the source of danger in some Utopian ideas or perspectives that seek to answer the Big Questions about how people can live together. He does, at one point, mention the Bolskeviks. Bolsheviks were Marxists who thought they were an elite vanguard morally authorized to take over a revolution, ruthlessly dominate it and establish their own version of a proletarian dictatorship by violently quashing all opposition. Remember that not all Marxists are Bolsheviks, though anarchists since Bakunin have warned that this idea of a proletarian dictatorship started the ball rolling down the road to tyranny.

            As we’ve read in this great series on Propertarians over the past several days, these Randian types are extremely elitist as well. They are little more than crude social Darwinists who hate all our impulses toward mutual aid and egalitarianism.

            In that love for an elite lies the real danger. Bolshevism/Leninism and Propertarianism both depend on that love.

            As for a willingness to tackle Big Questions in a way that might expose the status quo as illegitimate and ready to be discarded, do we really want to be so worshipful of what is that we label any who would dare to advocate its overthrow as cult members?

          4. Stephen Nightingale

            RanDomino: “Anarchists are against both government AND capitalism”

            Well, not exactly. I see them as being against externally imposed government(underwritten by government monopoly on violence), and the absentee landlord and limited liability type of capitalism. If it is to last at all, anarchism has to be self-governing. This doesn’t preclude community marshalling of resources in the creation of what amount to capital goods.

            Anarchism hasn’t had any persistent large scale successes because it hasn’t solved the problem of the proper use of violence – as a Pandora that goes back in the box when not needed.

          5. Nikhil

            Goin’ South

            I’m not sure that Pilkington’s discussion of a cult applies to what RanDomino said about anarchism.

            In describing a cult Pilkington says that the defining moment is an embrace of a certain conception of value as being morally correct. Whatever outcomes are produced by this embrace are considered “good” as they stem from an adherence to this value system. If any injustices occur from they are the acceptable sacrifice needed to stave off the inevitably greater moral decay and chaos that abandoning the original value would create. It is a belief that real outcomes cannot be managed at the expense of a founding idea.

            What RanDomino states is that anarchism is more interested in outcomes. Do people have enough to eat? A place to live? etc. If not then something must be done to correct these unjust outcomes. True that the most “good” tool to accomplish this according to anarchists is democratic process but this is not the same as the establishment of a “value” that Pilkington talks about. If the outcomes of a democratic process are unjust then they should be revisited through democratic means. Its messy but it is a belief that real outcomes are prime, a normative idea of politics.

            I think these ideas are pretty different.

          6. LeonovaBalletRusse

            Correct. This history is traced succinctly in:

            Chapter 8: “The Tomb Raiders of the Postmoern Right: Junger’s Anarch, the Neocon, and the Bogus Hermeneutics of Leo Strauss, in “THE IDEOLOGY OF TYRANNY: Bataille, Foucault, and the Postmodern Corruption of Political Dissent” by Guido Giacomo Preparata (New York, Palgrave Macmillan, 2007)– a work of dense, superlative research.

        2. Lidia

          RanDomino, thanks very much for your reply to Jesse! I am only just exploring now what it means to be an “official” anarchist, but it is a very liberating feeling in a way that both “liberalism” and “libertarianism” manage to avoid for me.

          As I look back over my life, I see that it has always been marked by a strong reaction against arbitrary authority, although I never recognized it as such. I opened a small business because I couldn’t stand being an employee; while my business thrived, I didn’t cause it to grow because neither I nor my two partners could stand being bosses. I left the US, and as an ex-pat the artificial concepts of nations couldn’t be more transparent to me.

          Really, these concepts are such huge forms of TAXATION on our human spirit as well as on the planet’s resources that it is often depressing to contemplate the power they have over most people. I like your phrase very much about anarchy being the “atheism” of artificial economic constructs and, while this may not have been your meaning, the taxation certainly extends to most modern-day religions.

          1. Piano Racer

            I wanted to second Lidia in thanking RanDomino for his insightful replies. I have a few questions:

            * If property rights are determined by use, how do you decide when a property is “unoccupied”? Can I occupy a huge mansion, or do I need to “maximize its utility”? Who makes these determinations, and who enforces them? Or is it just the consensus of the “neighbors”? What if I build a house and want my kids to have it after I am gone, who decides that? As the current occupier, do I have discretion on who is “first in line” if I leave? What if I take a 6-month vacation but intend to return, do I need to let others use it while I am gone, and would I have any claim when I returned?

            * If there is no personal property, how can an individual prepare for the future? Right now I can use my extra income to purchase several years worth of food and water, etc. Would I be able to “accumulate” (“hoard”, some might define it) under your system? If not, how can I save wealth for a future when it may be needed, i.e. a period of drought? Or is the assumption that communities would make these sorts of preparations collectively?

            The thing I like most about RanDomino’s comments is how his clear, thoughtful explanation did not resort to childish name calling and unnecessary pejoratives, which I cannot say about Mr. Pilkington:

            “today’s most popular political cult – that is, libertarianism” – I’d argue that today’s most popular political cult is the ridiculous left/right paradigm that pervades the mainstream media – Mr. Pilkington’s “cult”, no doubt.

            “the glazed eyes of their devotees.” – wow.

            “They never for one moment questioned that” – 100% subjective emotional language that adds nothing to the argument.

            “they simply threw up their arms and claimed that such inconsistency showed just how true theory was and how much we should respect it” – What is added by using such emotionally-appealing and obviously completely subjective language?

            I could go on, with this and many other posts by Phil.
            He clearly has a negative emotional component to what he writes, and at least for me it is a huge turnoff and makes it difficult for me to take his arguments seriously.

          2. RanDomino

            Thanks! It’s a lot easier to be positive when you have a good idea of what you’re *for*… I suppose I’m a fanatic, of the same sort described in the article. I try to stay skeptical and grounded about what I think, for what that’s worth.

            -Property rights. There is no clear, simple answer as to when something is abandoned. To prove that something is abandoned would mean proving that no one is using it- proving a negation; impossible. Instead, we can rely on human intuition- Are there signs that it’s in use? If people are physically using it at the moment, ask them about it. If there’s no one around, see how long it’s been unused for clues if the last users are coming back. Ask neighbors. It takes due diligence. This can be streamlined if communities are organized and keep track of their environs.

            If you want to ‘abandon’ some property to someone in particular, just give it to them.

            I don’t think any kind of firm time limits make sense. If you’re planning on coming back, the safest thing to do would be to let your neighbors/community know. But then again if you say you’ll be back in 6 months and you’re not back for three years, you might be out of luck. Like I said, there are no firm, one-size-fits-all rules; there can’t be. But intuition is pretty universal. There might be some flubs but, “Whoops, didn’t realize you were still using that,” is a hell of a lot better than, “You’re trespassing, you have to sleep on the street.”

            -Personal property. Okay, let me expand on gift economics. Like I said, in Anarchist economics property is owned by the user(s). This means that anything you produce in conjunction with others is the collective property of all who collaborated on it, and whatever you produce yourself is your exclusive property, free to use or hoard or give away or destroy. The same general choices are available to a group with its collective property; decisions should be made using the Consensus process that Occupy Wall Street is popularizing (or something similar; this is, of course, only a recommendation). A productive collective, for example a farm or clothing factory or shipyard or whatever, can do with its product whatever it wants.

            Precisely how a collective or individual distributes their product is up to their choosing. They could join with a cross-industrial federation of collectives which can organize distribution both within the supply chain and to society. The ‘classical’ Syndicalist organizational scheme was that EVERY workplace would be part of ONE labor federation which would distribute to ALL of humanity. I think the ideas have gotten a little more refined since then (I’m not too proud to admit that Syndicalism was an influence of Italian Fascism, which many Syndicalists there joined in the 1920s after their movement had been crushed, and the Spanish Falangist economic philosophy to a lesser extent).

            Actually, the market might be a better system. The simplest I think I can put it right now is that each collective would make individual arrangements to accept material inputs from other collectives (for example a clothes factory might offer to take wool or cotton from nearby farms), and in turn arrange with other collectives or communities for distribution, with nothing given ‘upstream’ in exchange. Why would anyone give their product to someone ‘downstream’? Because that’s what keeps the economy functioning. Unfortunately, this hasn’t been tried on a large scale, but I’m pretty sure it’s where the thinking is headed.

            sorry about the tangent there, but hopefully that illustrates a little better how an Anarchist economy might function.

            More to your question in particular- Your personal property is yours, even if you’re not using it at precisely that moment; it’s enough to have at least somewhat credible plans for it. Setting aside a few tons of dry goods ‘just in case’ is probably fine; trying to claim everyone needs to get out of New York because you’ll need it to focus your psychic powers against an invasion of aliens from the 17th dimension will probably not earn you many takers.

            On “hoarding”; one of the most important Anarchist books is titled “The Conquest of Bread,” the point being that technological improvements have made real scarcity a thing of the past. The scarcity we think exists is a result of capitalism- destroying what is useful because those who need it have no money; creating artificial scarcity to drive up prices; diverting resources to frivolities for the “1%”; inventing new “needs” like televisions, exotic vacations, and 2.5 cars in every garage; raising rent to drive people out to build condos for yuppies. I live well on about $6000/year (and it could be even less if I didn’t have to pay for property) by cutting away everything that’s not a necessity, such as healthy food, or extremely useful, such as indoor plumbing. I see people spend scads of money on so much worthless crap and it makes me sick. People don’t live like that because they want to, but because they feel they’re supposed to. Capitalism has destroyed community, which is where real fulfillment is found; it’s made us dependent on alienating jobs and consumerism, rather than liberating us through self-sufficiency so we can freely and respectably contribute as free equals.

            sorry, off-track a little again- I meant for my argument there to be that if capitalism wasn’t creating all these artificial scarcities and fake demands, there would be so much excess that you wouldn’t be able to hoard enough for it to be noticeable even if you tried. So, yeah, go ahead, if you want to stock up. Whatever you’re given, whatever you produce, and whatever you find that’s abandoned, is yours, to do with as you please.

          1. aet

            Committing ‘waste’ of your property can get you dispossessed of it under English land law.

            Property owners have less “liberty” – and have always had less liberty – than common people think they do. as to there treatment of their “own” land.

            In England, the reversion always rests in the Crown: and it can protect its usually-dormant rights, given the proper circumstances.

            Property is a social construct, not a natural category of being.

            Property is what we make it: not more, nor less.
            Property is ALL open for discussion: every single aspect, incident, and element of it. That’s why we need Courts of Law and (especially) of Equity.

      2. Jessica

        I am reading his book about debt now. It is teaching me a lot. I would be curious to hear sometime the reactions of others who read it.

      3. Fiver

        Wonder if you were aware that Optor has been the subject/target of a number of alternative opinion site pieces across the political spectrum. I came across this a couple months ago posted on a popular “left” site by a “former CIA operative” who didn’t try very hard to dismiss it, which of course made me wonder why he posted it in the first place. Tinfoil hat stuff? A false false-flag? Maybe. But with an annual budget in the multi-hundreds of billions (now easily in excess of a trillion/annum) for decades, no real enemies, and considering there are no ethical restraints whatever so far as these folks are concerned, I rule out nothing:

    2. Anentropic

      I welcome it because elucidating their ideas helps to highlight how influential they have become, in many ways it feels like we are all living in their world at the moment.

      1. Jesse

        Actually, this is a libertarians worst nightmare. Endless wars in multiple countries, NSA-spying on citizens/PATRIOT Act, socialism for the super rich, etc.

        1. F. Beard

          True. But many “libertarians” would enslave us to gold (and therefor to usury), probably unwittingly.

          1. Piano Racer

            Libertarians do not want to force anyone on a gold standard, they just want the market to decide what is used as money rather than have it be dictated to them by the government. History has shown that precious metals are well-suited to that task, and hence many libertarians argue for their use, not to be forced down the throats of those who do not want to use them but to be freely chosen by all.

          2. F. Beard

            they just want the market to decide what is used as money rather than have it be dictated to them by the government. Piano Racer

            Your mistake is to assume that a single money supply can ethically serve both government (force) and the private sector (voluntary trade). It can’t.

            The only place for gold, assuming it can survive there, is the private sector for private debts. As for government debts (taxes,fees, etc) inexpensive fiat is the ONLY ethical money form.

        2. RanDomino

          You’re thinking too socially. What the modern, so-called “Libertarians” value above all is profit, and who can deny that their Knights of Faith are making a killing off those things?

        3. Lidia

          I don’t think that what we are faced with is -at all- libertarians’ “worst nightmare”. Rather, I think that it is libertarians’ dream situation, albeit one that they are hard-pressed to justify in front of their fellow citizens.

          1. Jesse

            You’re so lazy you didn’t even offer a single rebuttal to any of the issues – all of which are core libertarian issues – I raised.

          2. LeonovaBalletRusse

            Jesse, these issues were addressed in the fifties, and it was acknowledged that the key to *fixity*, to stasis for *elite DNA monopoly on real property was *inherited wealth*–mostly finessed through so-called family *Trusts* today.

            The key to *equality* and mobility of capital from generation to generation is the elimination of inherited wealth, which ipso facto leads to monopoly by DNA sets. We can see how much of *the pie of all wealth* must expand per DNA set in the multiple-marriage-multiple birth generational expansion within just one such set: The House of Saud. But this works the same for the House of Bush, the House of Morgan, the House of Rockefeller, in which the *maternal* dynastic names remain obscure.

            It’s all about: “My DNA uber alles forever.” Brian Sykes’s “ADAM’S CURSE” makes this clear. As resources become scarcer, the potential for violence and catastrophic breakdown becomes greater. The DNA sets that monopolize the wealth today will in the future need *MORE* for themselves.

            This is why the abolition of inheritance taxes is key to the Reich Principals and their cult collaborators.

            As proposed in the fifties, inheritance taxes are for amateurs. Inherited wealth itself must be forbidden, whether through *Trusts* or otherwise. IDA TARBELL’s complaints against the *Standard Oil Trust* and its murderous monopoly hold true for *Family Trusts*.

          3. Lidia

            I’m not “so lazy”.

            If you are interested (not that you might be beyond the abstract) in a personal reaction from me:
            “Actually, this is a libertarian’s worst nightmare. Endless wars in multiple countries, NSA-spying on citizens/PATRIOT Act, socialism for the super rich, etc.”

            I am totally against endless wars in multiple countries.
            I am totally against NSA spying on citizens.
            I am totally against socialism for the super-rich.

            What made you think otherwise?

            What an odd, reactionary, comment…

            Aside from these targeted issues, “libertarians” continue to have gross lacunae as far as real people constructing real societies are concerned.

          4. Jesse

            I am totally against endless wars in multiple countries.
            I am totally against NSA spying on citizens.
            I am totally against socialism for the super-rich.

            What made you think otherwise?

            What an odd, reactionary, comment…

            What are you talking about? You misunderstood me, this has nothing to do with what YOU think of those issues.

            Here’s what happened:

            A) I listed 3 core issues (there are many more, but the first 3 off the top of my head) to show why any libertarian would be furious at the current system of government.

            B) You ignored those 3 issues I raised and then blithely/lazily asserted that libertarians are in a “dream situation.”

            C) I called you out for making this declaration with no evidence whatsoever. If you had been able to make an argument that libertarians were happy with endless wars, or they were happy with the NSA spying on citizens, or they were happy with socialism for the rich, then you would have rebutted my point.

            But if you’re willing to concede that those things would infuriate libertarians (which google searches will easily confirm), then why would you also assert that they are in a “dream situation”?

          5. Lidia

            Jesse, I must be seeing self-professed libertarians that are flying under your radar. The majority of “libertarians” that I have seen haven’t reacted at all to encroachments on civil liberties of gays, women or ethnic minorities. Ron Paul, for example, is a veritable poster-boy for white patriarchy.

          6. Lidia

            EVERY self-professed libertarian I have known is a person born on third base who assumed he/she had hit a triple.

            They have NO idea of what they owe to other people whether as individuals or communal structures, no idea of what they owe to the planet, and no intention of acknowledging such (should this unwelcome perception creep into their consciousness despite their best efforts to repulse it).

          7. Lidia

            Precising: the majority of libertarians I have known worked in the defense sector and related fields, to tell the truth. I went to MIT, and at least a quarter of the students there self-identified as “libertarian”.

            Techno-Masters of the Universe.
            Randian übermensch in whose hands the world would be rendered plastic.

            They really were not at all interested in any “liberty” other than the liberty to do as they themselves, in their pathological narcissism- saw fit.

            They were autistic, and regularly talked of fellow human beings “broken” (when they did not deliver expected goods to the ¨ubermensch).

            Mitt Romney of Bain Capital was, back in the 1980s, a kind of robot demi-god to this cohort, and I knew several people who went to work for that amoral organization.

    3. K Ackermann

      Something that I’ve always found ironic with Atlas Shrugged is the use of a railroad for Taggart’s company. Railroads were about the most heavily subsidized industry by the US government.

      It’s not surprising. A great number of the most important inventions and technologies have been prompted by government initiatives.

      1. Moneta

        The whole movement is a farce. Up here in Canada, people are buying into austerity and shrinking government.

        The problem is that I can’t see how we’ll employ our better educated population by relying on the private sector as R&D usually happens outside Canada if government does not intervene. We import most of our consumer products (added value) and export resources (low added value). That’s not a healthy long term strategy if you ask me.

        Without government, I don’t see anything big happening in Canada because the risks are too high for the size of our companies; but for some reason, Canadians have been buying into the libertariais view that government should disappear.

        Capitalism is not a one-size-fits-all system. Each country has its own issues where in some collectivism works better than individualism and vice versa. It depends on the geography, the climate, the distribution of population, the resources, etc.

        And America the gorilla has been forcing everyone’s hand into its own worldview which could be good for itself but not necessarily for others.

        1. aet

          It hasn’t been so good for Americans either.

          TV rules down there, right? And TV just doesn’t care.

    4. Philip Pilkington

      I was less interested in Graeber’s ideology — which I am unsympathetic toward — than in his academic work. I don’t think he lets his ideology tamper with the historical work he did on debt.

      He is also an intellectual leader of OWS which is why I commissioned the OWS article from him and presented it to Yves. (Which I don’t think was just a shameless plug for his ideology).

      Put simply (and I think Yves would largely agree with me): you can be a Martian for all I care as long as your academic or intellectual work is up to scratch. If a libertarian or an Austrian publishes a book as relevant as Graeber’s was you can be sure I’ll be looking them up for an interview — even though they probably won’t give it to me now that attacked their dodgy ideology…

      1. Jardinero1

        I think you engaged in quite a bit of projection of what you think the “libertarian” believes. You also extoll a cohesive whole among libertarians where none exists. If there is no cohesive whole there can hardly be a cult. No two libertarians agree on much. The few things that Austrians might agree on could be:

        1. self ownership
        2. any system which has less coercion is preferred to one with more coercion
        3. value is a subjective measure that varies from one person to the next and over time.

        1. Yves Smith Post author

          Your #2 is a Trojan horse. For libertarians and Austrians, the only source of coercion is the state, which is empirically untrue. Plenty of wealthy private parties have had large private armies (you even have that now among oil oligarchs in Russia). If you think large scale enterprise does not have coercive power (and coercion goes beyond the right to use violence), you are missing a big part of the equation.

          Robert Heilbroner has a great discussion of how commerce now assumes many of the coercive functions formerly in the hands of the state in his book Behind the Veil of Economics.

          1. Jardinero1

            I don’t believe one can correctly state that “libertarians and Austrians, the only source of coercion is the state”. Such sweeping generalizations about any group or system of thought are patently false.

            I think few seriously think or would say “but for the state there would be no coercion or violence”. Fewer still believe that that the only source of coercion is the state. Most would agree with you and freely admit that there are numerous other sources of coercion and violence. That isn’t the issue. The issue is what are the consequences of the state monopoly on violence?

            Austrians take different positions on the consequences of the state monopoly on coercion and violence. Some Austrians would say that the state can do very little to temper those other sources of coercion and violence(so why bother with the state?). Others would posit that the state exacerbates violence by granting the privilege of violence to some and withholding it from others(so limit the state or get rid of it). Others would say that the state harms more through its own violence, via wars abroad, against vice at home and incarceration, than people would do to themselves without the state as an actor.

          2. LeonovaBalletRusse

            Yes, Yves, “L’etat c’est moi” said BigOil via Bush-Cheney, with “I am the Decider” and “apres moi le deluge.” Same with BTBTF, and *DefenseSecurity* fiefdoms. These breed corporate and dynastic monarchs, who are now *the state*.

      2. Jesse

        Appreciate you taking the time to reply – I honestly didn’t remember you being the one to write the Graeber article until people referenced it in the comments.

        1. Jesse

          Correction, I should have said “presented”, not “wrote”. I also understand the distinction you’re making, it was about Graeber’s OWS affiliation, not his political ideas.

          I just get the feeling that libertarianism is singled out lately on the blog, even though it’s as marginalized (the majority of the TEA party, which itself is a relatively small group, is NOT libertarian) an ideology as many others that will never be targeted here.

          1. Lidia

            I get the feeling, instead, that libertarianism is given a full and fair airing, and is found lacking, resulting in libertarians’ calling ‘foul’ when the ideology to them dear is rightly deemed insufficient.

    5. LRT

      “Where is all this libertarian-bashing coming from all the sudden, Yves?”

      I have to agree with this question, its completely bizarre, the blog seems to have become obsessed with completely weird fringe political movements. I cannot understand why anyone bothers with Libertarianism – I have never personally met one and only know of one genuinely card carrying Libertarian by reputation as an author.

      This is a movement that has nothing to do one way or the other with the current political and economic situation, never mind whether libertarian ideas (whatever they are) do, because there are too few libertarians and they have too little influence.

      Its really very strange. How to convey the strangeness of the impression this gives? Well, its a bit as if the Economist should gradually metamorphose into the New Left Review, and should then devote half of each issue to combating and refuting the Social Credit movement in far West Canada.

      Or as if suddenly half of each issue of the BMJ should turn into furious denunciations of camomile tea!

  5. RanDomino

    Sometimes I think it’s great how we’re making progress dispelling popular myths about political economics, philosophy, and social justice and the history thereof. Then I read things like the first paragraph of this.

      1. RanDomino

        In this case, Marx really advocated the policies and strategies that the Bolsheviks would make infamous. What I’m referring to is the idea that Marxism is aaaaall about the labor theory of value. It seems that most non-Marxians (and non-anti-capitalist) criticism of Marxism begins and ends there; never mind that practically all of them miss that what Marxian economics means by value is not what classical and neoclassical economics means by value. It’s like the Saturday Night Live sketch about 20,000 Leagues Under the Sea with the characters repeatedly confusing depth and distance traveled.

        1. Lefty

          Adam Smith, David Ricardo, Malthus, Mill, they all believed in the labor theory of value. It would be more accurate to say that the labor theory of value was a classical economics thing. Same goes for analyzing the economy in regards to class. Read Ricardo, there’s a reason why Marx took so much from him and there were eventually something called Ricardian socialists. Classical economics was a study of class. The capitalists got profits, labor wages and landowners rent. Marx simply used the ideas of classical economics as a weapon against the system.

          Regarding anarchism and its connection to libertarianism: anarchism was from its birth socialist. Proudhon, Bakunin, Goldman, Berkman, Kropotkin, the old IWW, the Spanish Revolutionaries of the 30’s, hell even the American individualist Benjamin Tucker so loved by modern libertarians, they all called themselves socialists.

          Libertarians don’t say dick about centralized private power and their theories are illogical, unscientific and a-historic. It is the type of stuff sophomores in college take too seriously. Usually, people enter the real world, see the complexity, see how much reality clashes with the assumptions of libertarian economics, then change their outlook. Libertarians aren’t unique in filtering absolutely everything through an ideological lens but they are extreme in their denial of reality. Neoclassical economists have their own fairy tails though, like general equilibrium, perfect competition, perfect information, etc. All this garbage should be swept away, we should learn from this reality less nonsense and how it so deluded people. The libertarians are useful idiots though of moneyed interests. I am sure the moneyed interests don’t take them seriously, they love the government to do some things that are in their interests, but the libertarians’ strings can be pulled whenever their interests are threatened. They probably laugh at most of the libertarians behind their backs but when things like regulation or taxes come up, they pick up the phone and call in the clowns.

  6. Whatever

    Arrogant and condescending. All human viewpoints are essentially religious — or at least metaphysical — in origin. (Including your own.) Some model reality better than others. The argument that complex systems demonstrate emergent behavior that cannot be predicted from a study of the individual parts is not unique to Austrian economics. It also underpins much contemporary biological and computational science. The fallacy committed by the (right)-libertarians is in conflating the prevailing corporatist system, which is enabled by massive state intervention in the economy on behalf of capital, with a “free market”, and assuming that the grossly distorted outcomes of this privilege-based externality engine are both necessary and just.

    1. Foppe

      which is enabled by massive state intervention in the economy on behalf of capital, with a “free market”, and assuming that the grossly distorted outcomes of this privilege-based externality engine are both necessary and just.

      But given that every society is historical in this manner, how on earth are you ever going to force a ‘reset’ of good except through heavy redistribution via some form of institution such as the state (which all libertarians oppose)? I mean, sure right-wing libertarians are dishonest in pretending all historical distributions are fair, but what ‘libertarian’ way is there to effect a reset?

      1. Whatever

        Squatting. Adverse possession. Homesteading of (semi-)public property. Kevin Carson does a better job of tackling this subject than I ever could:

        The simple fact of that matter is that not everyone who self-identifies as a libertarian is a capitalist/corporate flack. There are anti-capitalist forms of libertarianism that this article ignores or dismisses in an effort to paint all libertarians are quasi-religious zealots gripped by an irrational distrust of the state and/or faith in the market. That the state can likewise be viewed as an object of idolatrous worship is never considered. Only the libertarian “religion” is false; the author’s own beliefs are True.

        1. RanDomino

          I think it’s time to give up the word “libertarian” to the Propertarians. They got it; which is fine because we don’t really need it anyway.

      2. Self Governor

        Foppe wrote:
        “But given that every society is historical in this manner, how on earth are you ever going to force a ‘reset’ of good except through heavy redistribution via some form of institution such as the state (which all libertarians oppose)? I mean, sure right-wing libertarians are dishonest in pretending all historical distributions are fair, but what ‘libertarian’ way is there to effect a reset?”

        The answer is fairly simple – change the culture. If anybody has ever read PJ O’Rourke’s book, “EAT THE RICH,” they will understand it does not matter what sort of political-economic regime exists that determines “good” or “bad,” but what the culture of the people that constitute such regimes allow/practice. Morals and virtues are encoded in culture, and culture -I submit more or less- determines conduct.

          1. reason

            And I thought Libertarians where starry eyed Utopians. This is the absolute pinnacle of Utopianism!

    2. reason

      “The argument that complex systems demonstrate emergent behavior that cannot be predicted from a study of the individual parts is not unique to Austrian economics.”

      1. That doesn’t actually seem to be emphasized in the methodoly of “Austrian” economics at all, except as an excuse to avoid empiricism.
      2. In other fields that is a reason to study both the individual AND the macro system.

    3. LeonovaBalletRusse

      Indeed, they have *bought the lie*, and their handlers have been well-paid to bring this outcome from their dupes.

  7. Carlito Quesare

    I have to say that the last week’s worth of guest posts are going to push more small “L” libertarians away from NakedCapitalism then it’s going to convert to the guest authors’ equally cultish economic dogmas.

    These are not academic articles or white papers being passed about in parlors, Yves knows her audience and she must know she brings in a good number of small “L” libertarians who don’t really trust Harry Browne any more than Paul Krugman.

    For those productive individuals that are less philosophically educated in the depth and breadth of the last 150 years of ‘economics’ as a (pseudo)-science, small “L” libertarianism IS a rather well thought out explanatory framework of their own personal experiences in the business world and in society as a whole.

    There are many paths to enlightenment and only in Western societies would there be Pilkington’s implied framework that there can only be one correct philosophy to reach a higher state of enlightenment in one’s path in this lifetime. Pilkington is imposing through implications a whole lot of Western philosphies of ‘value’ that are not universally accepted in the Eastern world along the lines of ‘Knight’, ‘hero’, etc.

    1. Yves Smith Post author

      The Pilkington piece can be criticized for being more abrasive than it needed to be. However, you have an insinuation in your comment, which is basically that I had better stop running this sort of post or lose “small l” libertarians.

      I don’t take well to subtle or overt threats.

      I don’t know what you mean by “small l” libertarians, since the doctrines of libertarianism are sufficiently extreme that anyone who says he subscribes to what he thinks is a nicer form is 1. simply throwing his weight in with the others, like it or not and 2. almost certainly has not thought through the implications of the doctrine. That was the big virtue of the Dittmer series. Hoppe in fact merely carries out libertarianism to its logical conclusion. What looks like extremism is in fact simply honesty.

      Moreover, I’m not sympathetic with your contention that “small l” libertarianism is justified because it is somehow validated by the experience of small businesspeople. Huh? No, small businesspeople are NOT isolated Randian heros creating something out of nothing. Studies of successful entrepreneurs show the most common type is someone who worked in an industry, saw a niche opportunity the big dogs missed, and pursued it.

      To pretend the success of an individual is not the result of the contribution of many others requires a special type of blindness. Language, double entry bookkeeping, plumbing, his prior work experience, his access to raw materials, etc. all come from his participation in a broader society. And he owes a debt to it.

      1. F. Beard

        And he owes a debt to it. Yves Smith

        Literally, if his success was financed by loans from a bank. The purchasing power for those loans (since loans create deposits) was taken from every money holder including and especially the poor.

      2. Th3T1ck

        I have to agree with the previous poster. I found the Dittmer posts inflammatory and misleading. I thought they used a strawman (anarchy as libertarianism), based on attribution of right of force to private insurance companies. I also thought the posts deliberately ignored the primary ethical point of libertarianism, which is that personal freedom must be paramount. Furthermore, there was no recognition of the place of justice in a libertarian state. This is another critical tenet that seemed to be misrepresented. Because of these things, the posts seemed like bash jobs.

        I recognize that NC is a progressive oriented blog. I value the insights here, particularly the detailed and knowledgeable analysis on matters of economic fraud. I don’t mind at all seeing libertarianism challenged (it’s always good to test ideas from other views). But I think that the Dittmer posts were lower quality than what I usually see at NC (if it was a test of libertarianism), and seemed more targeted to inflame than to provoke reconsideration.

        1. Piano Racer

          Hear hear, seconded. It’s disappointing to see such low-quality ideologically-driven smear campaign on these hallowed pages. If that’s what I want I read the Huffington Post. I am thankful that a handful of commentators are interested in having an actual discussion, though my respect for Yves and her blog has marginally decreased.

          I hope she can read that feedback without feeling “threatened”.

        2. Marat

          So its based on a book thats quite popular in extremist libertarian circles and its a “strawman”?

      3. Phichibe


        What can I say to your words than: Bravo!

        I come to NC for your absolute integrity and fearlessness. I don’t come because I agree with everything you or anyone else writes. If the libertarians (big L or small l) want to leave, I won’t miss their contributions. Likewise w/t anarcho-syndicalist-blah-blah-blah utopians.

        The truth of the matter is that we are in the worst economic crisis of that last 80 years, and it may be the worst in 200 years if the laissez-faire dogma is not dislodged from its stranglehold on Western societies. I think NC is one of the most vital platforms in the effort to fight this intellectually and morally corrupt ‘cult’, to borrow Pilkington’s term, and I’m with you 100%.

        Philippe B/Phichibe

      4. Jessica

        “Language, double entry bookkeeping, plumbing, his prior work experience, his access to raw materials, etc. all come from his participation in a broader society. And he owes a debt to it.”
        Yes. Very yes.
        This is exactly the point that is lost/ignored/suppressed nowadays. Particularly by rent collectors of various stripes.
        Having read half of David Graeber’s book, I would like to take a shot at rephrasing the last sentence without using the language of debt. Something along the lines of “all those who contributed to the accomplishment should be rewarded and some of that is the contribution of the society as a whole that no one person or company or the government can claim to have made.”
        Well, I admit it was more succinct in the language of debt.

      5. casino implosion

        I for one applaud Yves in tackling the libertarians.

        There seems to be a slowly growing awareness of the danger posed by this ideology.

        The Dittmer series was especially well-done.

        1. Jesse

          There seems to be a slowly growing awareness of the danger posed by this ideology.

          Yeah, remember when libertarians ordered the invasion of multiple countries based on naive ideas (or outright lies), gave the NSA the right to spy on citizens, the CIA the right to assassinate Americans, and then bailed out banking fraudsters who were finally going to have to eat their losses?

    2. Philip Pilkington

      So, you’re saying we’d better not engage the libertarian movement or we might lose readers? That sounds like a threat a cult member would make.

      The criticism above may be sharp tongued, but it is not polemical, it is rational. If your doctrine cannot hold up to rational criticism that is the fault of said doctrine.

      1. Carlito Quesare

        This is a reply to Phillip and Yves.
        First off, I agree with Phillip’s conclusion paragraphs.
        Secondly, I was trying to state that Phillip should have more clearly stated in his article, what he posted in the follwing comment:

        Philip Pilkington says:
        December 7, 2011 at 11:35 am
        I assume that everyone grasped that I was referring to the crowd and not to people who label themselves ‘libertarian’ in a rather vague sense.


        That being said, I already went through the phase of my life and read almost everything on the website as was available in late ’99 to early 2000. Been there, done that, I’m over it.

        Most people do not see any of the -Isms as the pundit class sees them, entrepreneurs just see competing ideas in the marketplace of ideas of which the only constant is no -Ism is perfect.

        The casual NC reader who is inclined towards the ethical/philosophical side of small “L” libertarianism have little in common with Rothbardian large “L” Libertarian Party activists and Porcupine Project activists that Phillip is parrying with here.

        It’s offputting to any casual NC reader who follows a “live and let live” philosophy but hasn’t spent a few hundred hours reading econ papers from prior centuries, the refutation requires intimate knowledge of highly contentious historical accounts of lecture hall debates and parlor papers where there was no clear victor and no clear consensus until decades after the ‘three Austrians’ were either feeble minded or deceased. The lens of hindsight can bend light in either way, in his later life Schumpeter most definitely DID NOT hold the concept of ‘value’ as Phillip described. Almost everything Schumpeter wrote after ’40 that was not a rehash of his earlier works was absolutely the opposite of what Phillip is implying. IDK how many causal NC readers will know that, heck, if it wasn’t for a stalwart big “L” Libertarian also my professor and Econ/Finance advisor taking me under his wing for a few years I wouldn’t have known that… who the heck has time to read about the earliest stabs at dynamic systems when most IT guys use the matured dynamic systems science to regularly create new databases?

        On that, your opponents don’t bring up the position papers from the Second Internationale to describe current failings of neoclassical and modern liberal politics and economic policies. Because no one outside of historians and professional agitators/fifth estaters have time to rehash the socioeconomic political theater of the age of battleships and cavalry charges.

        All -Isms build theoretical ideal constructs to instruct the masses. What’s the rest of the argument?

      2. Dan G.

        I think if you call all libertarians as subscribing to a cult, you cannot expect to us to assume that you asking for a reasoned debate with libertarians, but it’s opposite.

        And no, why would anyone assume you were just referring to the crowd (who are not always fans of Hayek) when you never referred to the website at all in your article?

      3. PL_2

        Rational is not the first word I would use.

        It seemed more like a somewhat opaque philosophical and metaphysical polemic.

        Not that there is anything wrong with that. All of our points of view have philosophical and metaphysical underpinnings. Like ‘value.’

      4. LRT

        “So, you’re saying we’d better not engage the libertarian movement or we might lose readers? That sounds like a threat a cult member would make.”

        No, I am certainly not saying that. I am drinking my coffee, shaking my head, and asking myself why do they keep banging on about these people they call libertarians, who cares what these guys think? If there really are any out there.

        What on earth has happened to you all? Its like Dr Dobbs journal suddenly starts spending half of each issue furiously denouncing the Guile programming language. Like, who cares? What difference does it make? I know, the Guileists are planning to take over and eliminate C++? Right, sure, sit down, relax, take your pills, you’ll feel better soon….

    3. JTFaraday

      “small “L” libertarianism IS a rather well thought out explanatory framework of their own personal experiences in the business world and in society as a whole.”

      No it isn’t an “explanatory framework” of experience. But it is a way for people situated in certain ways to politically promote their own (increasingly narrowly understood) self interest, which is what it’s been since Locke. ie., it is a justificatory framework.

      And that’s more than we’re going to get with the MMT cult’s Stalinistic austerian minimum wage work farm, so it has that much in its favor.

  8. digi_owl

    Funny how much the articles description lines up with Ayn Rand’s “objectivism”. I wonder if the lady was inspired by Austrian economists, or if her anti-socialism/communism/Bolshevism results in much the same line of thinking as said economists.

    1. Ransome

      Rand was an extreme capitalist and therefore a totalitarian. She was a screen writer and much of her stuff was pinched from All American rags to riches business fables of the 1900’s which were meant to be inspiring, not Masters of the Metropolis sociopathic wealth and power addicts that were the reality. In her world, a capitalist super-class of exceptional people led and mixed genes, while the majority of everyone else was inferior or an obstacle.

      My grandmother was yanked out of school after the eighth grade as was customary. She was enthralled with the rags to riches lore and eventually rented a corner store, becoming a successful business owner. She gave up the store to have kids and became brutally cruel, preferring business to having kids. Mom said she was so frustrated she couldn’t control herself. She had grabbed the golden ring and circumstance made her drop it. Eventually she immersed herself in half-culture magazines to educate herself.

  9. Moneta

    The doctrine that is handed down is then to be conceived of as a way to live one’s life – a project, handed down from Mount Sinai, that one is under the moral obligation to spread far and wide
    Often, this model makes sense but only for a small percentage of the population. If it is forced onto everyone, it breaks down. That’s the part that many followers don’t get. Some do see this but could not care less as long as it works for them.

  10. Moneta

    Furthermore, every cult denies the existence of people who only seek power and will use or destroy the system for their own convenience.

    Just like our central banks have been focusing on one single variable, the interest rate, to fix all of our economic problems, letting all other variables get stretched like elastics, ideologies are based on a simplistic way of seeing the world.

    1. Regulatory Capture

      Ah yes… I would never seek to exploit the political system either… I would never think to exploit the governmental system and write the regulations so they are positive for me… but not for much of anyone else… and especially not the small guys.

  11. John Merryman

    To give a thumbnail sketch connecting religion to economics, I would first point out the basic logical fallacy in the primary western religious assumption of monotheism; That the absolute, the universal state, is equilibrium, not apex, so a spiritual absolute would be the essence of being from which we rise, not an ideal from which we fell. Unfortunately this is a state, not a goal. In order to have anything, you have to have its opposite. Good/bad, up/down, left/right, positive/negative, yes/no, matter/anti-matter, conservative/liberal,dare I say, male/female, etc.
    Otherwise, the happy medium is also just a big flatline on the universal heart monitor.
    Physical reality is a bit of a convection cycle of (bottom up)expanding energy and (top down) contracting/consolidating mass/order/structure. In society, when there is a generally stable relationship between these two, it is a process of general advancement, but more energy than order and things branch out, for better or worse and more order than energy and they tend to break down and fall apart. A bit like riding a bicycle, you have to keep moving forward, or you fall over.
    In large, complex societies these forces interact in innumerable ways. Labor, energy, material resources powering the larger society forward, or channeling into particular directions by those in positions of power.
    The essential idea of unfettered deregulation is profound nonsense. Consider how much regulation and rules it takes to make football work. Otherwise the first player to bring a gun would win and it’s called war. In the body, unfettered growth is called cancer.
    Of course there has to be some balance, because too much order and all growth is stifled and the organism dies. The opposite of cancer would be auto-immune disease. Somalia would be a place with too little order and North Korea a place with too much order.
    Push the pendulum too far in either direction and either it just creates that much momentum in the other direction, or the whole system falls over and you start again.
    Right now, the immediate problem is that we treat money as a commodity, rather than a contract and have manufactured far too many unpayable promises to each other, than can be kept and there is a big reality reset coming. As the various large organizational structures, from nations to corporations, to religious tribes and various other framing devices, go crashing into the earth’s furniture.
    If one puts human civilization into a biological evolutionary frame, life on this planet is attempting to grow a world central nervous system, but we have yet to realize it has to function as a bottom up feedback network, rather than top down control. Not anywhere close yet.

      1. mansoor h. khan


        I agree this is a great comment. It is so wonderful to see America discuss things of true importance rather than Football and Basketball only. I have been waiting for this “awakening” all my life.

        The bottom-up central nervous system may be the internet itself (god willing). Now we just have to come to a “somewhat” of a consensus and then “fight” for change via the ballot box.

        Mansoor H. Khan

    1. Regulatory Capture

      Oh but now you’re equating libertarianism with anarchy. Even the rules most libertarians believe in aren’t currently very well enforced so I have to disagree with the first reply to this comment… it is overall trash and a strawman.

    2. Christophe

      Yes, a brilliant post. The mistake of viewing money as a commodity rather than a contract is the most concise and all-encompassing explanation of the financial crisis I have read.

      The idea of a central nervous system for human interaction is also intriguing. Like any complex life form’s nervous system it would need to feedback vast quantities of sensory information before being able to effectively regulate the organism. Sad how many governments and religions have attempted to control and impose restrictions on human interaction based on unchanging dogma rather than adaptability and awareness.

    3. Fiver

      Don’t ascribe to Life the aims of the always tiny minority of a particularly virulent species. Life, if indeed attempting anything, may well be working on a way to defend the rest of Itself from a failed experiment.

  12. Tom B

    quote from the novel by Robert A. Heinlein

    Prof: “I’m a rational anarchist. . . .A rational anarchist believes that concepts such as ‘state’ and ‘society’ and ‘government’ have no existence save as physically exemplified in the acts of self-responsible individuals. He believes that it is impossible to shift blame, share blame, distribute blame … as blame, guilt, responsibility are matters taking place inside human beings singly and nowhere else. But being rational, he knows that not all individuals hold his evaluations, so he tries to live perfectly in an imperfect world … aware that his effort will be less than perfect yet undimayed by self-knowledge of self-failure.”

    Wyoh: “Professor, your words sound good but there is something slippery about them. Too much power in the hands of individuals–surely you would not want … well, H-missiles for example–to be controlled by one irresponsible person?”

    Prof: “My point is that one person is responsible. Always. If H-bombs exist–and they do–some man controls them. In terms of morals there is no such thing as ‘state.’ Just me. Individuals. Each responsible for his own acts.”

    1. RanDomino

      But then the government’s business of protecting property rights would just re-build the regulatory state, and probably the welfare state as well, sooner or later. A different system has to be *qualitatively* different.

      1. Moneta

        There is no perfect system. The pendulum will always swing too far.

        And even if we came up with some kind of utopic system, it would not last. Someone would try to position himself/herself to take advantage of it… unless we change the human psyche.

        We will always be at the mercy of an ideology. People looking for stability and balance rarely reach the top of the hierarchy. These positions are usually filled by extremists and ideologues who are disconnected from the plight of the average person.

        1. Tom B

          Yes Moneta, someone will come along and bastardize even the best of intentions.

          We should also keep in mind that there are sociopaths out there in the world, and because of their outwardly appearing charm they have the ability and tendency to acheive postitions of authority and power that help to satisfy their inner need to control and abase those around them for their own pleasure.

          I’ve heard it estimated that perhaps 10% of the population are sociopaths. You can never really identify them without clinical analysis. Knowing that they have that tendency toward upward mobility, I have to wonder that as we take a view up the social/political/corproate executive ladder how that percentage might change. For the worse.

      2. Tom B

        See my comment below. If there isn’t some level of regulation and protection then those sociopathic predators would actually be the ones reverting us back to those problems. Perhaps it’s inevitable anyway, just a never ending cycle.

        “Governments, if they endure, always tend increasingly toward aristocratic forms. No government in history has been known to evade this pattern. And as the aristocracy develops, government tends more and more to act exclusively in the interests of the ruling class — whether that class be hereditary royalty, oligarchs of financial empires, or entrenched bureaucracy.”

        – Frank Herbert

        1. LeonovaBalletRusse

          Why is *Big Government* by CorporateM-IMonopolyFinance not mentioned as “government” by anyone on this thread?

          This is the fascist government we have now. It has nothing to do with the Three Branches of government and the Rule of Law which our Constitution and Bill of Rights designate as legitimate *government.”

  13. Timothy Johnson

    What I find interesting in Pilkington’s article is looking to the “1830s” to try and figure out why things have gone wrong recently. While Pilkington is interested in the emergence of Libertarianism I have become interested in the impact of Mill “(political) economics is concerned with [man] solely as a being who desires to possess wealth” in the context of “nature red in tooth and claw”. These ideas have dominated (British) economics and science (through Darwin) for almost two hundred years.

    Financial markets (as has been pointed out) have, for most of their history, been based on principles of reciprocity — the various results of the Ultimatum Game are a matter of fact, utility maximisation is a hypothesis. The change in finance seems to have been slow but reached some sort of watershed in 1950 in the case Buttle v Saunders when an English judge declared that ‘commercial morality’ was not a valid consideration in financial transactions.

    See for another take on the same topic

    1. LeonovaBalletRusse

      “Winner take all” in the Zero-Cum Game became the Global Law of the Universe. Those who were the monopoly *winners* when this putsch began are the mega-winners today, via geometric progression of predatory capital holdings.

      Who needs a *real economy* when “capital” is created from naked derivatives? Capital became completely disassociated from labor with GATT; when Glass-Steagall was revoked, capital from spreads became completely disassociated from *working capital*. It’s totally *pie in the sky*.

  14. JohnT

    Phillip, Go to see that you’re confused. A cult tends to believe in things irrespective of evidence to the contrary. Please give example of where this is the case with the standard bearers of Libertarianism?!? I do think you should maybe focus on doing a bit of historical research. Then you might understand that the writings of Mises, Hayek et al come from thorough historical analysis as well as understanding what was transpiring in the times that they lived.

    You say that we are pseudo scientific!?! Let’s see, where has the “scientific method” gotten us presently. Hmmm. I see banks and their economists who have built their models on the “scientific method” sitting on $700 TRILLION in potential derivative losses when just one of the nations, who also based their economic policies on the “scientific method” and who are all bankrupt goes into default. And is this the result of the free market (i.e. individuals and organisations freely exchanging goods and services)? Alas NO!!! It’s based on the economic policies and organisations that you slavishly defend! And how are they trying to address the problem? BY GIVING US EVEN MORE OF THE SAME!!! And you call libertarianism a cult?!? LOL!!!!

    1. Philip Pilkington

      “A cult tends to believe in things irrespective of evidence to the contrary. Please give example of where this is the case with the standard bearers of Libertarianism?!?”

      I have a second piece ready on just this topic. Look out for it. Maybe tomorrow or the next day?

      1. drugstoreblonde

        I look forward to reading it.

        The dialogue regarding libertarianism has been painfully one-sided in recent years. I am relieved to find that, line by line, thinker by thinker, claim by claim, and fallacy by fallacy libertarianism is being questioned, challenged and, ultimately, refuted.

        Keep up the excellent work, Andrew, Philip, Yves, et al.

    2. reason

      The scientific method doesn’t guarantee that the prevalent ideas at any point will be correct, just that they will converge on being correct as errors are weaned out. Show me where Libertarianism is falsifiable. As far as I can see that just consult the holy book of Hayek when ever there are disputes between the faithful.

      And why do you think neo-classical economics is scientific? And haven’t you noticed that some economists are making noises about the need for revising models on the basis of experience? But all the data isn’t in yet.

  15. ThePaper

    Defining the ‘correct’ value is the problem? I would say that the problem not on defining value but what do you mean by ‘correct’ which an ideological choice whatever way you put it. It can be the value that maximizes the society benefit (socialism), a small group (capitalism), or an individual (libertarians).

    At the end of the day ‘value’ is always subjective.

    The ideological blindness is on all ‘economic’ theories. Because it’s mixing two different topics: what’s the objective (ideology) and what is the way to achieve that objective (‘resource managing’ which should had been the real meaning of ‘economy’ as science).

    1. reason

      i remember meeting a blank when I suggested to Mark Thoma that the difference between progressive and conservative economists was more primary than their interpretation of reality, part of the difference was a difference in understanding about what economics was about. You have put your finger on a very important point.

    2. Piano Racer

      “At the end of the day ‘value’ is always subjective.”

      Yes. This. This is all you need to know.

      A bottle of water is worth little to a man in a bottled water factory on an island in a freshwater lake, but that same man would give everything he had and more if trapped on a desert island dying of thirst.

      Even irrational reasons, like preferring CRT-based screens for their “nostalgic value” or a cherished teddy bear for its “sentimental value”. The Simpsons episode (and I suppose the film by the same name) “Rosebud” is a great example of this! :)

      All these models that try to predict human behavior will fail, later if not sooner, because the process that people use to make decisions of value are too subjective, too inconsistent, and too random to ever be predicted accurately and consistently.

      Value is subjective, and the name of the game is trading things you value less for things you value more, whether they be dollars, gold, CDS contracts, etc. Often we value things solely because others value them as well (i.e. dollars), but the mistake is when we start thinking that the point where these values converge is the “true” or “correct” value. Especially today, with the enormous and ongoing government intervention.

      To me, Austrian economics and Libertarianism are about this, and about the idea that only individuals are able to make determinations of value, and they make the best decisions when left to their own devices (this is why price controls never, ever work).

      1. reason

        You should do a survey and see how many avowed “socialists” (yes that extreme) don’t actually believe in free exchange by individuals. (Try Stumbling and Mumbling – Chris Dillow – for starters).

        You’re missing the whole point. The point is the extent that interference in a “pure market” is required to offset market failure (e.g. information assymetries, externalities) and inequality.

      2. reason

        “this is why price controls never, ever work”

        Depends what you mean by price controls and what you mean by work doesn’t it. I’m pretty sure that that administered prices (say railway tickets) stay administered. And war time rationing stopped people from starving.

    3. Ransome

      To continue the thought. The Euro crisis and the housing crisis are resource management crises. Money, it’s flow (volume, velocity, direction) is a surrogate endpoint. When a home owner attempts to resolve a mortgage problem, he is resolving a cash flow problem, a where my kid goes to school problem, a skill-set investment problem, a transportation problem, an employment problem, an accumulated illiquid wealth problem, a marriage problem, a health access problem, a life style problem, a job security problem, a mental state problem, a future borrowing problem, a homeless problem, a local community problem, a State problem, a national problem. The bank is addressing a money problem, paper pulled out of the air.

      The Euro and our housing problem are being addressed as bank capital problems, not people problems, not national resource problems. The banks and speculators have declared war on nations and the resulting destruction will be the equivalent of an assault with WMD. Fuck them.

  16. Schofield

    I think you’ll find that the “value” that Libertarians and Marxists want is the same. Namely access to resources that will enable human agency. If you as an individual believe you should have the right to access to these resources together with freedom from coercion in making use of them then it is a self-contradiction to believe these positive and negative rights shouldn’t apply to others. Of course, the kicker is that the application of these rights must be within reason and that is precisely where full democratic governance needs to kick in throughout virtually all of society’s institutions.

  17. reason

    I’m not quite sure this is the most fruitful approach to this at all.

    I agree with some points, for instance that one of the great weaknesses of Austrian economics is their adoption of an extremely mechanistic view of the consumer (i.e. the shove all the uncertainty onto the production side of the economy). But I don’t think this should be projected onto all neo-classical economics (specifically not onto Keynes and his followers).

    But you just need to point out the consequences of a declining marginal utility of money to defeat the “laissez faire” welfare optimising argument .

    The real weakness of Austrian is what they do with the very valuable observation that innovation (whatever the source) means that the economy is never in equilibrium. They then somehow see this a good thing, but see disequilibrium caused by monetary policy (aiming to balance spontaneous disequilibrium) as a bad thing. I can’t quite understand why they can’t see this as being contradictory.

    If they really thought carefully about the concenquences of innovation on the business cycle, they would realise that in a sense it is not only the boom that results in the following bust, but it is just as true that the bust causes the following boom. The bust results in many unemployed resources that are consequently cheaply available. Those industries that are growing can attract these resources, and many entrepeneurs will attempt to take advantage of the profit opportunities there at the same time. As the economy nears full employment – these resources will become more expensive and the growing sector may reach consumer satuation. So did the unsustainable boom cause the bust or the bust cause the unsustainable boom? So what is the story here – that there is plenty of room of monetary/fiscal policy to try and smooth this process?

    1. Philip Pilkington

      “But I don’t think this should be projected onto all neo-classical economics (specifically not onto Keynes and his followers).”

      No way. Keynes and his (true) followers — who were not neoclassical — saw economics for what it is: an open-ended research program and not a totalising view of the world.

      My main criticism of Austrianism is that they saw the inconsistencies in the doctrine and instead of realising that microeconomics was probably gobble-dee-gook they elevated these inconsistencies up to the status of Sacred and kept the whole totalising edifice in place. I suspect they did this for emotional and ideological reasons more so than for any rational reasons.

      1. Timothy Johnson

        But the issue is not in economics, but permeates science as a whole. Economics suffers because it adopts practices from the physical sciences. Neo-classical economists are logical positivists, Austrians rejected mathematics but are still positivists.

        Big science and monolithic theories of everything are embedded in late twentieth century science (unlike the occasional pragmatism of Poincare). This pernicious influence, that has eliminated historicism in economics, is the “root of all evil”. Without addressing the issue, economics will never be able to move on.

        1. reason

          Sorry, this is simply crap.

          Economics is nothing like the physical sciences (if only).

          I agree the search for a theory of everything (are you thinking of String theory) is a distraction, but I don’t consider it science – merely idle speculation. And many scientists think the same. Most science is nothing like that.

      2. reason

        Yes, I think “praxeology” means reversing reductio ad absurdum. Follow assumptions to crazy conclusions, and then accept the crazy conclusions instead of question the assumptions.

    2. Ransome

      Booms and busts are lack of capital controls and on a larger scale, poor resource management. Innovation is a tool or a IED.

        1. reason

          I don’t think this is true (guessing what you mean) – I think there are different sorts of booms and busts – and it is not impossible for their indeed a real cause (see for instance the first oil crisis).

          The current boom and bust that we had was indeed due to poor financial controls (and outright criminality – encouraged by deliberately lax enforcement). But that just hurried it along (see similar events in other countries). This really has an element of a Minsky cycle of declining risk aversion.

          As an remedy, I’m not actually with Keen on debt forgiveness – I think it just won’t work politically. I think the right solution is a cash injection to every household – with (eventually) higher taxes on higher earners, AND tighter lending standards.

          And that is also my innoculation against future problems. Looser fiscal policy (some of it monetarised) and much tighter lending standards. Debt causes increases in concentration of ownership/income causes debt crises.

  18. Dan Duncan

    In these trying times, the vulnerable and disenfranchised are susceptible to Libertarian Cult Indoctrination.

    The scary part is that you might have been indoctrinated into this Libertarian Cult without even knowing it!

    To help, I am providing you with this simple Cult Questionnaire:

    1. We’re you re-christened with a new moniker…something like “John of Austria”?

    2. Did you burn all your clothes in favor of a white-hooded robe and a bright orange sash?

    3. Are you currently in a room with more than 30 lit candles?

    4. Were you told to hand over money and possessions in order protect your soul from eternal damnation?

    5. Did both you and your new girlfriend recently shave your heads?

    6. Do you and three other couples share a bedroom replete with bunk-beds?

    7. Have you recently shared a meal with any cast member from the Star Trek franchise?

    If you answered “No” to all of these questions, then rest easy my friend…and ignore this tedious, Re-Redundant Andrew Dittmer Already Covered This–Six Fucking Times–Post.


    Dan of Rand

    1. Ransome

      The cult tends to be totalitarian in its control of the behavior of its members. Cults are likely to dictate in great detail what members wear, eat, when and where they work, sleep, and bathe-as well as what to believe, think, and say.

      The cult appears to be innovative and exclusive. The leader claims to be breaking with tradition, offering something novel, and instituting the only viable system for change that will solve life’s problems or the world’s ills. While claiming this, the cult then surreptitiously uses systems of psychological coercion on its members to inhibit their ability to examine the actual validity of the claims of the leader and the cult.

      M. Singer

    2. Yves Smith Post author

      I’ve read extensively about cults, and very few of the groups that were listed in the Cult Awareness Network (which was bankrupted by litigations from the Scientologists) fit your list.

      Better straw manning, please.

      1. LeonovaBalletRusse

        Yves, please reconsider your answer. If the *list* you reject came from Mark Singer of “FUNNY MONEY” fame, you are on thin ice to reject it wholesale.

  19. john

    Great post! While Libertarianism’s most obvious failing is its blindness to to the existence of a huge set institutions required both for property to exist and to have value, it’s most important failure is its contempt for humanity as it is.

    Libertarianism is an ideology without empathy. It begins by endowing the classical trope that people are rational wealth maximizers with moral meaning. Ignoring the historic root of the idea in computational efficiency (it made economics mathematically manageable before the invention of supercomputers) and converting it from crutch to crucible of morality, libertarianism’s systematic misunderstanding of humanity makes it the perfect environment for Autistics or cover for psychopaths.

    Defining rational wealth maximization as the legitimate moral basis for action reduces the balance of real human motives and real human values to moral failings. It is the perfect tool to justify extractive and abusive behavior toward that benighted bulk of humanity and we see it wielded as such by most of its proponents. There appears to be a small distance between “value” as computational function in an equation and “value” as a moral human framework, but the difference is in fact everything that makes life worth living. It is the difference between being expensive (diamonds) and being valuable (air).

    Religious thinking always abstracts from the particular to the universal to satisfy our human need for narrative order, but reality has no such need and never tolerates our fictions for long. Theocracy has always collapsed in the face of more practical applications of power. Modern libertarianism is a theology of property that will destroy what it cherishes most by mistaking its utility for “value” and by obsessing about value destroying the utility. But in the short term this is all good for psychopaths who use their winnings to fund the church.

    1. ReaderOfTeaLeaves

      I agree that libertarianism has been a boon to the most amoral; indeed, they use it to absolve themselves of social responsibilty.

      1. LeonovaBalletRusse

        Quite right. They must feel *good about themselves* no matte what atrocities they think, intend, or commit.

    2. PL_2

      You were doing good until you abstracted your observations to generalize about religion without taking into account the spirituality that seemed to suffuse your earlier paragraphs.

  20. Luca

    Exceptionally thought through arguments. May I just ask: for all the limitations of Austrians’thinking, if “democracy” (irrespective of how it is defined) is your primary concern, aren’t we seeing enough horror stories resulting from growing government intervention in the name of the keynesian enthusiasm that has followed the end of the bull market in 2007? Fair enough, neoclassical economics – and capitalism in more general terms – is hardly perfect. But let’s not forget that government intervention under the much vaunted New Deal in the 1930s also failed to eradicate unemployment. The war actually did ! So, do these egregious failures make government intervention at all and any cost any more attractive ??? Please be careful, the liberal use of this generic concept of democracy and government intervention by default is at least equally dangerous.

    1. Lidia

      Luca, I think you are laboring under the false assumption that governments are the result of a democratic process…

    2. Lidia

      P.S. Also, what is modern warfare if not an economic program established by government??

      The New Deal’s intention was to resolve the capitalist “paradox” (I was about to write “paradise”) of want in the midst of plenty, using redistributionist means that were clearly artificial. But such scarcities themselves are artificial, imposed by government in collusion with banks, due to the way their money system is designed. In a system without debt money, the Great Depression could not have occurred, it should be obvious…

      This is a hoot! Look who’s talking here:
      “My major problem with the world is a problem of scarcity in the midst of plenty … of people starving while there are unused resources … people having skills which are not being used” — Milton Friedman

    3. reason

      “horror stories resulting from growing government intervention in the name of the keynesian enthusiasm that has followed the end of the bull market in 2007?”

      What horror stories (I mean beyond the dreadful unemployment due to the crash of the private economy), what growing government intervention and what keynesian enthusiasm? If you would read Paul Krugman you would be aware that exactly the opposite of this has happened.

  21. Daniel Hewitt

    “…they postulated a theory and then when confronted with the inconsistencies of the theory…”

    Forgive me if I missed this, but could you please elaborate on how this theory is inconsistent, if marginal utility is assumed to be subjective?

    1. Philip Pilkington

      That would require a whole other post. I’ve done two posts critiquing marginal utility theory in the past, but the critique referenced is the one that surfaced during the debates between the Austrians and the socialist planners (Lerner et al) in the 1930s.

      You will have to get the relevant literature on this to fully understand it. The Israel Kirzner article linked to in the piece is a good start and lays out a history of the debate and its consequences. The book referenced ‘Modern Political Economics’ also deals with some aspects of the debate.

      1. Steve (the other Steve)


        You’ve hardly demolished the edifice of subjective marginal utility in your prior posts. The question is not whether one can construct a religion or worldview out of subjective utility. Instead, it is whether subjective marginal utility is a useful framework to explain empirical observations about the economy.

        You attack a straw man. Libertarianism doesn’t hold subjective utility sacred. It simply recognizes that is the best, albeit imperfect, explanation for economic behavior.

        My offer of breakfast in NYC still stands. Cheers!

        1. Yves Smith Post author

          He doesn’t need to. Read Steve Keen. It’s already been done (Keen just codifies it better than many).

          1. Steve (the other Steve)


            I have, thanks. I’m not yet convinced by Keen, as he too attacks the straw man of neo-classical economics’ simplifying assumptions.

            Newtonian physics has also been discredited (in part). But a bowling ball still falls on your foot if you drop it. So too is subjective utility a useful paradigm for the real world. It doesn’t have to be perfect to be useful.

            The debate is great, but people should be less strident as we are a long way away from the last word on these topics.

    2. Philip Pilkington

      Here’s a relevant passage from Kirzner’s essay that captures this well — note that Mises et al had to move away from a sort of ‘grand picture’ of a market in equilibrium that could be proved through mathematical models, and toward an assertive theory of entrepreneurs setting prices and causing disequilibrium:

      “With the benefit of hindsight, we now understand that in the Austrian view of the market, its most important feature is (and was) the dynamic entrepreneurial-competitive discovery process. We know now that, for Mises, the idea
      of a price that does not reflect and express entrepreneurial judgment and hunch is virtually a contradiction in terms. (It is for this reason that Mises
      rejected Lange’s contention that socialist managers may be able to take their bearings from—and to calculate on the basis of—centrally promulgated nonmarket prices.) We know now that for Mises, the description of states of
      market equilibrium is mere byplay7—the description of something that will never in fact occur and that provides us with little of direct relevance to realworld
      conditions (conditions that at all times display the characteristics of markets in disequilibrium). We know now that for Mises, competition is an entrepreneurial process, not a state of affairs.”

      1. chas

        Seems to me the analyis of cults is pretty much meaningless. What does it accomplish? Seems like the results of any system of analysis is all that matters. For example how many Austrians predicted the subprime crash? How many Keynesians? How many cult analysts?

  22. Tao Jonesing

    “Libertarian” is an iconic word, one that means something different to everyone and rightly so. Most people who self-identify as libertarian are not the hard core “cultists” of which you speak. They generally view themselves as people with a strong sense of right and wrong that does not fit comfortably within the other labels that are available. For example, some people who view themselves as socially liberal and fiscally conservative label themselves “libertarian.”

    For this reason, attacking libertarians generally as being part of a cult is a mistake and greatly misguided. Years ago on this site we got away from tilting at the libertarian strawman when we realized that the “cult” portion of libertarianism is really just hardcore neoliberalism, which actually controls the entire political landscape and both major parties through the so-called Washington Consensus. Once you realize that neoliberal ideas span the political spectrum, you can stop attacking people for the labels they wear and start attacking the bad ideas they hold.

    Hayek, Mises, and Friedman were all founders of neoliberalism, which does NOT date back to the 19th century but only back to the late 1940s. Check out and the great book The Road from Mont Pelerin. The Volker Fund, in addition to funding those three “libertarian” luminaries, also funded Rothbard. It was Rothbard who laid out his idea to employ a Leninist strategy for the individualist cause to counterbalance the collectivist masses. See here:

    The point is that the “libertarian cultists” you see, Philip, are the hard core (and unwitting) “revolutionaries” of neoliberalism that Rothbard deliberately set out to cultivate. But these revolutionaries are not the danger. The danger comes from the mainstream neoliberals who employ the same ideology but not in such an overtly obnoxious way. “Infiltration” was Rothbard’s strategy: by having a hard core to distract critics like you, truly effective neoliberals could quietly infiltrate mainstream politics and take them over.

    Clearly, Rothbard was a genius because his strategy continues to work to this day (and on this site).

    1. Philip Pilkington

      I assume that everyone grasped that I was referring to the crowd and not to people who label themselves ‘libertarian’ in a rather vague sense.

      1. PL_2

        Yes we did see you and the previous series have been attacking a doctrinaire libertarianism.

        And the attack is valuable because it can prevent a casual liberty-loving attitude from identifying with the seemingly malevolent version.

        Still, suggest we always be careful of making it ‘Us vs Them!’

        Unless it needs to be.

  23. readerOfTeaLeaves

    Philip, I can’t get the sound file to work on this post, but would love to be able to listen to it. FYI. rOTL

  24. Dan G.

    This is one libertarian who will stop reading this blog. I always understood and appreciated that Yves was no free marketer, but her rants, and the rants of her allies, have become increasingly ad hominem and snarky as the political climate has not turned as Yves would like.

    Yves, if libertarianism is gone (which is clearly what you want), that will leave you with conservatives (who hold much more power), in favor of never-ending war, lack of civil liberties, and intolerant social policies. But, hey, at least they’re not cultist libertarians.

    1. Philip Pilkington

      I hardly see how you think either my or Dittmer’s ‘rants’ were ad hominem. Both deal with the ideology on its own terms — in my case the economic theory, in Dittmer’s the political project of Hoppe.

      I get a strong sense that some people are trying to silence debate here, and that is very creepy.

      1. Equivocation


        Your article is just a sophisticated rant with a pseudo-intellectual venere. It is biased and ignorant. You either made no real effort to research and understand Libertarian thought or you are being purposely deceitful. Either way, it reflects poorly on you.

        I am not trying to “silence you”. See below my rebuttals. Your mistakes are so basic, that I am surprised you would have the nerve to post on a widely read blog. My best guess is that your only background on Austrian thought is what you read in “Modern Political Economics”.

        Poor scholarship, poor logic, poor article

        1. Philip Pilkington

          You didn’t even read the article properly. In it I clearly quote an eminent Austrian economist. So, I must have read at least one Austrian text.

          But no matter, you didn’t read the article properly and by saying this…

          “My best guess is that your only background on Austrian thought is what you read in “Modern Political Economics”.”

          …you proved to everyone that you didn’t read it properly.

          Typical rant from a typical cultist. No point in taking this seriously.

          1. Equivocation

            Philip. One quote does not a reader make you…

            Really? One quote in the entire article? We did not just quote a third partys source? Frankly, I do not see any evidence you did anything other than write an opinion piece based on a second-hand or third-hand source.

            It is fine and understandable. We cannot read every text that is out there. The only problem is that in those circumstances we should not write a scathing critique of something we have not taken the time to read.

  25. Equivocation

    Like many modern pseudo-intellectuals, Pilkington criticizes what he clearly does not know.

    1) Austrian theory arises from Aristotle and its later interpretation by the Salamanca School who is actually quoted by Adam Smith. It is based on deduction versus the inductive approach used by modern economics. Unfortunately, modern public education does not teach Logic anymore so explaining the difference would be a discussion on to itself.

    2) Marxism and Austrian theory are BOTH based on Labor as the source of value. (Why do you think Mises called his book Human Action?) Austrians hold that individual demand and supply curves (the basis for marginal analysis) are unknowable. Since you cannot aggregate demand, then you must recognize that any economic model with this assumption must be flawed. This is very, very much in line with our understanding of the theory of modern Complex Dynamic Systems (Chaos Theory). Pilkington’s failure to understand this very basic point essentially discredits all his arguments since it clearly shows he has not actually read ANY Austrian text.

    3) Some Austrians do accept the use of quantitative models, but they ascribed little value to these. Why? Because of point 2. If we can only make a gross estimate of aggregate demand, then what use is it for planning purposes?

    4) If you accept the axiom that we cannot know individual demand and supply prefrences, government centralized planning MUST be inefficient. The goal of small government is reducing those inefficiencies and thus maximizing value creation for society. Most Austrians will readily accept some space for Public Goods (just a very reduced one)

    5) Similary Austrians do not believe that markets are informationally efficient in the mainstream academic sense. On the contrary, we only believe that if the market is mostly free, it will accurately reflect the “perceived” consumption time preferences of the economic actors. These preferences need not be logical or efficient. This is perfectly in line with what we now know regarding Behavioral Fiannce.

    6) Andrew Dittmer’s pseudo interviews of Code Name Cain (if the person even exists) have little validity. Apart from not knowing the subject or his credentials, there is the little detail regarding how representative he actually is. You see the Austrian Schools is actually quite a large edifice full of different streams, just like mainstream economics. What he is doing is the equivalent of interviewing Pol Pot in an attempt to discredit Socialism. And yes, even if Socialist hate it, Comunism and National Socialims ARE extreme forms of Socialism. Additionally, let me state that Andrew may be a Harvard Phd, but he is living proof that degrees do not necessarily result in the ability to develop critical thought; his questions and replies to CNC are often childish and emotional. CNC seems like a very smart fellow, though he does have several mistakes in his axioms and conclusions. The main mistake is that he holds property to be the founding rock of mainstream Austrian thought. It is not. Bastiat and others based their argument on Natural Law which dictates man’s pursuit of happiness as the basis (only possible through freedsom which necessitates property rights)

    The Kierkegaard quotes are a nice red herring to throw at the discussion. They add nothing except for a pretense of intellectuallity and for smoke screen to hide the fact that no real Austrian texts are actually analyzed except for passing quotes. Kudos Mr. Pilkington you have the makings of a Sophist (and you know it). You would do well to read Hayek’s Noble Prize Acceptance Speech “Pretense of Knowledge”


    1. Philip Pilkington

      “Marxism and Austrian theory are BOTH based on Labor as the source of value.”

      The Austrians definitely do not accept the labour theory of value. Marxism does.

      “Austrians hold that individual demand and supply curves (the basis for marginal analysis) are unknowable.”

      That’s what the article is about. The shift from marginal analysis based on equilibrium to the theory of the entrepreneur as the basis of price changes in a disequilibrated system.

      “Pilkington’s failure to understand this very basic point essentially discredits all his arguments since it clearly shows he has not actually read ANY Austrian text.”

      I quote a very prestigious Austrian economist in the piece explaining how entrepreneurs are the source of price changes.

      I’m not sure you have tended sufficiently to your own garden, my friend. But, then most ‘Austrians’ I talk to don’t have a good grasp of their own theories.

      1. Equivocation

        Ok. You are either being defensive or you are very arrogant. Read Mises. HUMAN ACTION. Read Bastiat’s On Law. Read Menger. I can quote any author you want with one quick Google search… but I don’t. I actually read the texts. And agains… not all Austrians agree on everything.

        Money for Austrians is the means of exchanging HUMAN LABOR and is representative of human will. That is why we get our panties in a bunch when government plays with it. This is because they are playing with your freedom by denying you free choice.

        1. Philip Pilkington

          “Money for Austrians is the means of exchanging HUMAN LABOR and is representative of human will.”

          That’s very different from the Marxist/Ricardian LTV theory. You can read all the texts you like, it doesn’t mean you understand them properly.

          In the Austrian school it is entrepreneurs who set prices. As I quote above:

          “In this context, the entrepreneur does not treat prices as parameters out of his control but, on the contrary, represents the very causal force that moves prices in coordinating directions.”

          What we see here is a new theory of value emerging — a theory that entrepreneurs create new value, or as Kirzner puts it:

          “[T]he truth is that Hayek opened the door to an entirely new perspective on the “goodness” of economic policies and institutional arrangements. Instead of judging policies or institutional arrangements in terms of the resource-allocation pattern they are expected to produce (in comparison with the hypothetically optimal allocation pattern), we can now understand the possibility of judging them in terms of their ability to promote discovery.”

          1. Equivocation


            You should really recognize when you made a mistake instead of getting defensive and just throwing out red herrings and non-sequitors.

            The entire chapter VII of Human Action is dedicated to Labor. Specifically cited as the only means of production that has the capacity to transform and whose individual preference determines production of goods. Some quotes

            “Labor is the most scarce of all primary means of production because it is in this restricted sense nonspecific and because every variety of production requires the expenditure of labor”

            “It is the supply of labor available that determines to what an extent the factor nature in each of its varieties can be exploited for the satisfaction of needs.”

            I am not stating Mises is the Bible, I don’t even find him a very likeable character). What I am stating is that you clearly have not read Human Action, arguably the most important Austrian text. This is equivalent to writing against Islam without actually having read the Quran.

            Or prove me wrong. What Austrian texts did you read before writing this critique?

          2. Yves Smith Post author


            You are the one getting defensive. You made a claims that Pilkington rebutted and you get pissy. He does not need to give you a bibliography. You stepped in it and are now trying to resort to personal attacks.

          3. PL_2

            There is a lot of name-calling (yes, on both sides) in this exchange.

            It is amazing how a debate that may actually clarify something on NC so often contains both intellectual points and then: ‘by the way, you’re an idiot.’

            Certainly the libertarian in this exchange seemed to be bringing interesting points, but unfortunately did resort to name-calling too, along with Mr P.

          4. Equivocation

            Yves. I do not feel Phillip has debunked anything.

            For my part I will patiently await for him to cite his sources and background reading. For some reason he has not done so. I will weigh his opinion acoordingly.

        2. F. Beard

          That is why we get our panties in a bunch when government plays with it [money]. Equivocation

          Who else should have authority over government money but government?

          This is because they are playing with your freedom by denying you free choice. Equivocation

          Free choice you say? Or just a different form of tyranny? Many of the Austrians I’ve debated insist on some form of government enforced gold standard.

        3. Philip Pilkington

          P.S. For all the other viewers note how similar this is to what I describe above:

          “Read Mises. HUMAN ACTION. Read Bastiat’s On Law. Read Menger. I can quote any author you want with one quick Google search… but I don’t. I actually read the texts. And agains… not all Austrians agree on everything.”

          It’s like being accosted by a cult member in an airport. They don’t argue. They preach.

          1. Carlito Quesare

            If someone came at you and attacked you through the US Labor movement socialism and outright racist American Labor Unions of the 1930’s, you’d be more than a little taken back by the bluntness. IF I then went and mischaracterized the key players in the movement and key constructs of 1930’s Unionism in the US to try to score points on a econ blog, you’d also get your panties in a bunch.

            SO why did you go back to the 1930’s, and not the 1960’s or 1970s, or even back to the 1770s? Seems the 1930’s are the last time your perceived philosophical enemies were still based under one philosophical umbrella name.

            Creeping determinism doesn’t win points.

          2. Equivocation

            I will shut up if you clearly state what Austrian texts you read before writing your opinion piece.

            I am not a fanatic. I will readily debate any point of Austrian theory on which I am knowledgeable. But please let me know that I am not debating the equivalent of a High School student who wrote an essay based only on a Wikipedia article.

            So what was your background research? Please endulge your audience.

          3. PL_2

            Equivocation sounded OK.

            Suddenly both started firing insults. And got pissy.

            Really, personal attacks just aren’t convincing, on either side of a debate.

        4. reason

          “Money for Austrians is the means of exchanging HUMAN LABOR and is representative of human will. That is why we get our panties in a bunch when government plays with it. This is because they are playing with your freedom by denying you free choice.”

          Bwa ha ha ha – please let Dittmer loose on this! What a load of pretentious crap.

      2. Carlito Quesare

        I have read all of your replies so far in this thread.

        You are way off base and my probable guess is lack of knowledge and study of the subject, though I don’t for a second think you incapable of grasping the subjects.

        You basically attacked divergent sub-schools of thought based upon a brief moment in time before dynamic systems , or dynamical systems evolved into what became Mandelbrot’s Nobel Prize and a host of other mathematical theorems that developed into Chaos theory.

        On Chaos Theory itself I do not claim to be knowledgeable, just a hobbyist tinkerer, but you specifically framed your argument based upon a line of reasoning that even at the time it was postulated in the 1930’s circle of your interest in this article, the postulators and their students knew it was a transitory set of descriptions waiting for further developments in science, math, economics, etc…

        Economics was still a utilitarian pseudo-science, and still is today, and Schumpeter’s continuous curiousity expanded throughout his professional career, you are giving more credence to artificial constructs in the student primers and foundational papers of the age than is reasonable.

        I’m exasperated, and it’s your show… so the last word is yours.

        1. Yves Smith Post author

          This is COMPLETELY disingenuous.

          I’ve discussed this in ECONNED, as has Steve Keen at greater length in his Debunking Economics.

          To claim that economics, particularly neoclassical economics (which provides what support there is for libertarian thought), embraces dynamics and Mandelbrot is untrue.

          And you have the temerity to cop a “I know better posture”.

          You’ve been really treading on my patience. Persistent disinformation is tantamount to trolling. Just because you try to wrap it in technospeak does not change the nature of the beast.

    2. Foppe

      this very basic point

      Certainly Chaos Theory is really cool and respectability-lending, but could you please state the positive point you are trying to make? It is impossible for me to tell what austrianism according to you *is* about, if the above isn’t it.

      1. Equivocation

        It is the belief that individuals acting in freedom will make the best utility maximizing decisions.

        The key here is freedom. Lack of structural impediments to those decisions and to execute them, including the respect of other individual rights as per Natural Law.

        1. Yves Smith Post author

          This is dogma. You are proving Pilkington to be correct. “Freedom” as you define it does not result in optimal social outcomes. And people don’t maximize utility. They not only don’t choose to, they lack the both the information and the brain capacity to do so. I debunk that in ECONNED.

          1. Steve (the other Steve)

            You didn’t debunk it. But you (and Keen) raise many very fascinating and valid points about the dangers of creating a worldview and dogma based upon the subjective/marginal utility and the other simplifying assumptions of neo-classical economics.

            So your work and Keen’s are very valuable contributions. But if you have a better theory (than subjective/marginal utility) to explain empirical observations, please advance it.

            Newtonian physics was based upon a frictionless universe. We know this isn’t the case, but his physics is still useful in most daily empirical observations.

            Cheers and thanks for such a lively thread!

          2. Equivocation

            Yves. All knowledge is tautological. This means everything humans hold to be true really depends on a series of axioms that may or may not be true.

            Quite frankly it is you and Phillip who began with a rather insulting article and who have not actually debunkedthe arguments presented.

            Phillip is still avoiding citing his background research regardign his critique of Austrians. Is this a coincidence? Or pehaps has not actually read anything significant from an Austrian author? Until he clearly cites his sources, I will hold his opinion as deeply suspect

        2. PL_2

          Well I don’t know much but it’s clear enough that those beliefs are false, isn’t it?

          This line of blog post should be titled: ‘Libertarianism: Exposed.’ They serve to warn libertarian sympathizers, that don’t know too much about it.

  26. jsmith

    The theories of Karl Marx are the basis of a cult?

    Wow. I mean really.

    Coming from the same person who posted here earlier this week that the actions of the ECB WOULDN’T be a bailout of the banks, huh?

    It’s good to know that a person as immune to “cultish” thinking as Mr. Pilkington claims to be is around to enlighten us about such things.

    Daddy, tell us the fable about how the EU elites really are trying to help they citizens of the EU countries again.



      1. jsmith

        For someone to start out a piece claiming that the writings of Marx were merely the Unabomber Manifesto of the 19th century while ignoring the deeper and more nuanced political machinations that created Stalinism in the former Soviet Unions bespeaks of someone arguing beyond their ken and thus trying to equivocate so as to hit “centrist” argumentative paydirt.

        Although us Americans don’t seem to understand when bankers are being bailed out, we’re now all too familiar with triangulation in any form.

        1. jsmith

          IOW, if you think libertarianism is a bankrupt pseudo-philosophy then say so directly.

          But please don’t thin your position by attempting to engage in the neoliberal-esque moral equivalency arguments that we’ve all grown so incredibly sick of and the fruits of which are the chains of participatory fascism which we now find ourselves straining against.

  27. drugstoreblonde

    Raised Mormon (though thankfully an interrogative adolescence begat a free-thinking adulthood), I feel that I have some insight into what makes heavily dogmatic (read: cult) ideologies dangerous to the body politic, and hazardous to the individual spirit.

    No matter the phenomenon, no matter the data, no matter the event, these ideologies have a means of denying, explaining and/or assimilating/destroying anything that constitutes a threat to the parochial purview by which they experience the world.

    For an ideology that believes in ‘evolutionary markets,’ libertarianism is surprisingly inflexible, intractable, and dogmatically moribund.

  28. Lew Glendenning

    “Money buys power”
    “People are often untrustworthy”
    “Political systems are operated by by people and have power”

    –> hopeless corruption.

    When you geniuses have an answer for that systems-level problem, and can discuss system dynamics as well as you do Keirkegaard, then we can have a discussion with some relevance.

    Meanwhile, this is another irrelevancy wrt both Libertarian thought and the current political debate. Most people commenting here are firmly Establishment and intent on defending it. Establishments are Progressive throughout the world.

    Progressive thinking : “Pass a law and make the world a better place” + “Elect the right people and give them the power” + “Rule by specialists” has produced the enormous economic and social disasters befalling us.

    You guys want it both ways : You want to consider yourselves the 99%, but refuse to acknowledge the entire set of our government, business and social institutions were built by Progressives. No doubt some of those Progressives didn’t intend to enrich the 1%, but that was always the inevitable outcome.

    Progressives have a lot to answer for. Before this is done, historians will credit them with more deaths than any single dictator in humanities sad history.

    Libertarians at least discuss system dynamics.

    1. F. Beard

      Libertarians at least discuss system dynamics. Lew G

      True. But a gold standard is not the answer. The answer is liberty – in private money creation.

      One would think libertarians would know that, wouldn’t one?

    2. drugstoreblonde

      Libertarians at least discuss system dynamics.

      Yes. But so, too, does Copernican cosmology.

      ‘Discussing’ system dynamics should not be confused with ‘accurately describing’ system dynamics.

    3. drugstoreblonde

      …No doubt some of those Progressives didn’t intend to enrich the 1%, but that was always the inevitable outcome…

      Those are some telling teleological assumptions, Lew.

  29. Susan the other

    In a world where an entrepreneur achieved profit by giving consumers what they wanted and needed at the best price, all manufacturing would have to be ever more specialized. Not ever more advertised and monopolized.

  30. Steven Bradley

    I have a simplistic view of economics and all the rest.
    1. There is too much complexity in all the theories and the way they are worked out.
    2. None of the “theories” correctly explains human behavior. Human behavior is clearly a mix of good and evil, of selfish and unselfish, of kindness and cruelty. It is just this complexity that makes economic theories worthless. Human behavior is, furthermore, what one might expect from a human being who is made by a Creator, but is flawed and sinful (sorry for the religious perspective, but there it is).
    ~~~~(Huge leap!)~~~
    3. The only way to adequately protect all parties in any transaction (political, economic, social, religious, or all three) is to have adversaries somewhat equally balanced against each other. IF there is an imbalance of power, there WILL be unfairness. It’s a given. Hence we see the rise of unions, and so on. However. Once an organization exists, it becomes “big,” and then assists in the imbalance, because of Item #2, above.
    4. Human activity is made up of the “BIGS” and the “littles,” with the littles being dominated by the BIGS. This is true in families, in society, in politics, and in everything else in the world, and throughout history.
    5. It is impossible to create a utopian society, but if the “BIGS” are balanced against each other, and the “littles” have advocates among the BIGS, a semblance of fairness can exist.
    6. What has happened in our modern world (and in all of history before it), is that groups of “BIGS” have allied with one another through bribes, interlocking interests, political alliances, and so forth, making the voices of the littles of no moment. We vote, and nothing changes. Why? because virtually all of the “representatives of the people” are part of the same system–that of the “BIGS,” and they control events in a draconian way to benefit themselves.
    7. How to solve this? Certainly not through a “revolution;” that’s been tried, and it turns out that those who revolt do so because they want to be “BIGS.” This is quite clear from the 20th century, and the efforts made by the various revolutionaries in the Communist systems–these systems, like many before them, simply disintegrated into an oligarchy, or a near-monarchy.
    The solutions must come from groups of people allying themselves into “balancing organizations,” of which “Occupy Wall Street” could have been a part, but is now nothing but a bunch of college kids objecting to current conditions, without any real goals, or “refried radicals” touting the same old solutions that have been tried without success. The Tea Party had some potential, but it’s been largely co-opted by the party line from conservative Republicans. So what is needed is an organization that agrees with a set of fair principles, and considers all of us as equals. Sounds disturbingly like a biblical ideal, but there it is.
    Go back to the Old Testament, and you will find the same problems, same complaints, and a single solution: each one of us recognizes that he is “under God” and has a duty both to God and his fellow-man. The New Testament (built on the Old) carries the same view forward, and enhances it in the person of Jesus and his followers. In other words,
    the true answers lie in one’s world view, in one’s integrity, and in the accountability we must share with each other.

    1. Lidia

      This just sounds like escapism to me: replacing all the worldly “BIGS” in your life with a BIGGER, more psychopathic -albeit thankfully fictional- “BIG”.

      This is exactly the problem: giving “BIGS” the time of day instead of doing all we can to subvert them, laugh them out of the room, or I-can’t-remember-the-NC-commenter’s-name who keeps wanting to see them frog-marched to the Hague. ;-))

      1. F. Beard

        albeit thankfully fictional- “BIG”. Lidia

        Really? How can one possibly appease an impersonal, unknowing, uncaring and lethal universe?

        1. Lidia

          “How can one possibly appease an impersonal, unknowing, uncaring and lethal universe?”

          Why would anyone want/need to “appease” the universe?

          The word “appeasement” is already loaded with some sort of impossibly teleological impositions.

          1. F. Beard

            Why would anyone want/need to “appease” the universe? Lidia

            To survive?

            If there is no Creator then the human race is doomed. With a Creator, we at least have a chance. So why ignore/insult Him? Suicidal are we?

          2. Lidia

            FatBeard: face it: your chances of survival have nothing to do with the presence or non-presence of any fictional “savior”.

            Why is *your* survival important in the scheme of things? It simply isn’t!

            Religion is the utterly abstract hubristic elevation of a certain sort of human condition, nonsensically, over all other real situations on the face of the planet. Such human condition is predicated upon so many other, baser, conditions that no-one wants to acknowledge, it’s to cry/die for.

          3. Lidia

            Fatbeard, who do you look toward, exactly, to “survive”? If it’s to “God” (and to those who follow “God”) you know that you are well and rightly fucked.

            If it’s instead to the possibly-atheistic socialists who would concede you tomorrow’s bread, you might live to comment here another day.

          4. Lidia

            FB, if there IS a Creator, the human race is doomed nonetheless. How is this particularly redemptive? My born-again sister is eager for our collective demise (in effect MY perdition, and HER exaltation, N.B.).

            The “God” character in the Bible already once willfully killed off 99.999% of life on the planet. This is the creature to whom we are to look for salvation?


          5. LeonovaBalletRusse

            F. Beard, the only Creator is in your head, its root in your lymbic system, fueled by your testosterone for *survival* — and all the hope, fear, and *faith* that comes with this drive.

          6. F. Beard

            The “God” character in the Bible already once willfully killed off 99.999% of life on the planet. Lidia

            Then the LORD saw that the wickedness of man was great on the earth, and that every intent of the thoughts of his heart was only evil continually. The LORD was sorry that He had made man on the earth, and He was grieved in His heart. The LORD said, “I will blot out man whom I have created from the face of the land, from man to animals to creeping things and to birds of the sky; for I am sorry that I have made them.” But Noah found favor in the eyes of the LORD. Genesis 6:5-10
            New American Standard Bible (NASB)

            BTW, according to the Bible, we are all descendants of Noah. Genetic studies concur in that they show all humans are descended from a single male ancestor about 44,000 years ago. Eve was about 80,000 years earlier according to other genetic studies.

          7. F. Beard

            If it’s instead to the possibly-atheistic socialists who would concede you tomorrow’s bread, you might live to comment here another day. Lidia

            What’s wrong with you and skippy? I do not desire the end of socialism (and never have). I desire to reduce the NEED for it. Got a problem with that? I bet you do.

          8. F. Beard

            (in effect MY perdition, and HER exaltation, N.B.) Lidia

            Alas, you who are longing for the day of the LORD, for what purpose will the day of the LORD be to you? It will be darkness and not light; as when a man flees from a lion and a bear meets him, or goes home, leans his hand against the wall and a snake bites him. Will not the day of the LORD be darkness instead of light, even gloom with no brightness in it? Amos 5:18-20 New American Standard Bible (NASB) [bold added]

      2. mansoor h. khan


        “doing all we can to subvert them, laugh them out of the room”

        Yes. This is the job that needs to be done over and over and over again by almost each generation. God is an “equal opportunity employer”.

        Mansoor H. Khan

    2. Lefty

      “In a world where an entrepreneur achieved profit by giving consumers what they wanted and needed at the best price, all manufacturing would have to be ever more specialized. Not ever more advertised and monopolized.”

      I am so damn tired of hearing this type of thing. What is the point of discussing ideal situations that don’t and won’t exist? John Bates Clark stated that normal prices are “no profit prices”. Small businesses, he claimed, competed and drove the costs consumers paid for goods down to the costs of production. Nice theory. Does that accurately describe reality, or are most markets dominated by oligopolies and monopolies?

      I could imagine a far off tenth dimensional universe where communism was possible, democratic, productive and the like. I would only have to be given a few assumptions that don’t exist in the real world. What would be the point though of seeing the world I live based on those unrealistic assumptions? At what point do I drop my philosophy and think about the world I actually live in? I am just sick to death of this crappy philosophy. Keep it, it sucks. It has no answers to the world we live in. The philosophy belongs at academic seminars, debate clubs and the like. It shouldn’t be within a mile of anyone crafting actual economic policy.

    1. Equivocation

      Austrians hold that all labor is entreprenurial (or vice-versa). You chose how to deploy you human capital. Employment is simply chosing to hold a long-term low-return contracts with one client.

      It is a pity more people do not understand this, they would likely realize that employment is not the value maximizing strategy for lifetime earnings.

      1. F. Beard

        they would likely realize that employment is not the value maximizing strategy for lifetime earnings. Equivocation

        Yet it should be.

        1. Equivocation

          Why? Enslaving yourself to a corporation is the desirable outcome? How about taking some risks and running your own show?

          True wealth creation comes from the more active entreprenuerial types. “Employment” is the safe route and should/is rewarded as such. Of course both companies and socialist would want you to believe in lifetime employment; it allows companies to pay you less when all you are doing is misallocating your human capital.

          1. F. Beard

            How about taking some risks and running your own show? Equivocation

            By stealing purchasing power from my workers and the general population via the government backed/enforced counterfeiting cartel, the banking system? Or by trying to compete with those who do?

            No thanks.

  31. rotter

    “Marxism” is a “cult”?? Where are its worshippers?? Why is it that liberals/neo-liberals like Pilkington feel they must begin an attack on a similar/freindly-to-thier-own crackpot ideology by ritually sacrificing “Marxism”??
    And im definately not one of Pilkington hater-Crusaders- against-the- Catholic-Illuminati that hang out here

    1. RanDomino

      I’ve spent entirely too much time in the company of Marxist Parties (ISO, RCP, WWP, SEP, SWP…) and “cult” is exactly the word I’ve used to describe them. They demand ideological rigidity. They essentially trick people into joining by gradually coaxing them through front groups. They have book studies of their canonical texts (by which I don’t mean the Marx originals, or even the works of the Bolsheviks- often they read derivative works that have been written within the last few decades by party members, themselves based off earlier degenerate works, with little if any original research, and given the expected propaganda slant), which has a striking similarity to Bible study groups. I’d suggest you learn about the mechanics of cult social dynamics before claiming Marxists aren’t in one!

      1. jsmith

        Oh, I get it. YOU’VE spent too much time learning that Marxists are cultists ergo WE must also understand that as well.

        I get it.

        Your points are sometimes well explained.

        Lose the pomposity, please.

        1. rotter

          Also we have to assume that his/her personal judgement in people and “parties” to associate with is completely scientific. Plllpppppllllpppp.nuts.

  32. be'emet

    putting aside philosophical purities and disputes, what might happen with regulation/taxation that confiscates personal assets exceeding some designated sum. In exchange give the accumulators feudal titles, and lifetime use of a MacMansion, without allowance for staff of servants. Electoral politics ought have some usefulness.

  33. pointbite

    It’s a straw man to equate the market with divinity or something god-like. No libertarian argues the market is perfect or will solve all problems. The “Truth” (with a capital T, as you put it) is that all rational human beings simply argue that heaven on earth is a fantasy. The world has problems. Human nature has problems. There is no system that can establish utopian miracle cures, there can only ever be a series of tradeoffs. The problem with the author of this article and people like him, is a deference to the all mighty cult of human rationalization for things they don’t understand… aka, the Fatal Conceit.

    1. Lidia

      “No libertarian argues the market is perfect or will solve all problems.”

      “no libertarian”?

      You’re incorrect. I’ve run into many RWNJ and nominal libertarians who argue exactly that.

  34. Jim

    Here might be a few things to take into consideration when looking at Libertarian theory, Pilkington theory, Yves theory or my theory–from a metatheoretical angle.

    As soon as theory(macrotheory or microtheory) strays from its preoccupation with and awarness of its own limits it devolves into ideology.

    In order to proceed to a level of even provisional closure and to be able to theorize and explain a particular phenomenon, one must engender the illusion that all the returns are in.

    Theorizing is largely negative, it consists of exposing limitations, rather than in clinching positive points.

    What are considered so-called facts seem to constitute low-level theories.

    There always seems to be a collusion of the descriptive and the normative.

    Hayek, Pilkington, Yves or me or any of the commetariat tend to enjoy presenting our respective frameworks with an air of obectivity which tends to conceal a prior normative choice about the market or the state or the society.

    Is the gap between words and things and events closed by acknowledging that there is an ineradicably normative dimension in every “descriptive” formulation?

    What would be a model of political community built on the acceptance of openness(i.e. infinity) rather than closure?

    1. mansoor h. khan

      Jim said:

      “What would be a model of political community built on the acceptance of openness(i.e. infinity) rather than closure?”

      Just make sure it is closed enough that the rules are not so loose that we lose the “community” itself to something like “USURY” (otherwise known as bookkeeping Armageddon).

      Mansoor H. Khan

    2. Steve (the other Steve)

      Well said. The subtext of all the commentary on this thread is that we presume the existence of an “objective function” we can all agree upon. I doubt this is true.

      1. mansoor h. khan


        All do not have to agree. Just most have to agree.

        Also, the objective function is always:

        “let us have as much fun as possible but let us not drive drunk (i.e., lose our civilization).

        mansoor h. khan

  35. EricJ

    I’m not certain whether Libertarianism grew out of economic theory, or whether it looked back to find some justification for itself.

    It seems to me that a main theme in Libertarianism (wish it had a shorter name) is that Government is force, force is bad, therefore government is bad.

    Agreed upon standards are the means we use to judge value and weigh it against our needs. Government is the mechanism we use to develop those standards and make sure they are being kept.

    If one could find a way to reducing all standards of value into a single standard, then government wouldn’t be necessary.

    Of course, reducing all standards of value into a single standard is as crazy as deriving time and distance from some arbitrary constant velocity, er, never mind.

    1. Equivocation

      Libertarianism originates in Natural Law as best explained by Bastiat (few Austrians understand this). The legitimate goal of government is providing Justice by protecting Individual Freedoms. This is a very narrow mandate. Due vested interest of politicans and bureaucats Governments slowly expand; ever enroaching and exceed their mandate thereby violating your Liberty. They can only do this because they have the initial public mandate of monopoly of violence / coersion.

      Socialist governments must almost by definition continue to grow in complexity and size and this growth will necessarily invade individual freedoms which will lead to violence and repression. Thereby the Path to Serfdom.

      1. F. Beard

        I propose an alternative explanation for the growth of government: It grows to ameliorate the damage caused by the government enforced/backed usury and counterfeiting cartel, our banking system.

      2. Foppe

        Socialist governments must almost by definition continue to grow in complexity and size and this growth will necessarily invade individual freedoms which will lead to violence and repression. Thereby the Path to Serfdom.

        Neat assertion. It sounds rather more like an axiom than like anything falsifiable, though.

      3. reason

        I always like to point out that “natural” law is natural in the same way that “natural” shampoo is natural. Its just advertising. It has no relation to real nature (where holding wealth/territory bears a significant and increasing cost to the individual).

        Anyway it worth pointing out the “naturalistic fallacy” – i.e. even if it WERE natural, that doesn’t mean it is good. It must be evaluated on its consequences the same as any other proposed law. Aristotle seems to have been particularly vulnerable to this fallacy, so perhaps that is where it comes from.

      4. Marat

        I can see why individualists and Marxists both think they have Natural Law correct. Anything either dislikes about the world as it actually exists is deemed “outside natural law.” How convenient..

    2. Jardinero1

      “If one could find a way to reducing all standards of value into a single standard, then government wouldn’t be necessary.”

      But isn’t that what government does, try to impose a single standard on all? Markets allow for multiple competing standards without violence or coercion.

      1. reason

        In fact that doesn’t usually happen. Mostly one standard ends up winning because there are economies of scale on both the production and consumption side. But usually that means we end up with a lousy standard – often worse that what we would have chosen in hindsight. Look at poor America stuck with Miles/yards and inches – and pounds and ounzes.

  36. Paul Tioxon

    Marxism did not lead to any evils. It is not because too many people read the wrong books, then misinterpret them and go way overboard in their behavior. It was the evils of the times that lead writers, agitators, free thinkers, scholars to propose reforms. European kingdoms, empires and corrupt rigid class societies which reduced most people to poverty, even during times of productive industrialization, created the fertile revolution, bloody, deadly, overthrowing social orders and leading to a Stalinist Soviet Society, had their origins in the inhumanity of the powerful against the mass of humanity. Does that ring a bell strident 99ers?

    First we are brutally traumatized by one another, then revolt, search for easing of the pain, and finally blame the bold for taking action. Oh no, the revolution has led to unforeseen consequences in the cult of Marxism with all of its attendant horror, arising from the unnecessary dualism of Hegel or some other doctrinal error! Really, if only our philosophy was better written?

    I find it ridiculous to see the small minded, venal middle class libertarian, jealously guarding his wallet against a taxation holocaust where he is forced to pay for education, health care and a modern infrastructure against his will, calling it tyranny, or the horrors of statism, communist version. Oh, so not free, against their will, against nature, against the inherent rights of man.

    What bullshit.

    And to compare the modern liberal welfare state that delivers social programs that you must pay into for the commonwealth of humanity with being forced to go to war, against your will, to be forced off your land, relocated, herded into death camps, against your will, only connects the goods of society with the nightmare of history by the phrase “against my will”, hence I must seek a solution from the depredation of government activity, against my will, by coming up with hoakum with the word liberty in it and call my pretext a political philosophy.

    Why don’t you just admit you are bunch of self absorbed consumer assholes who do anything for a buck, including tearing down the society, that has been built up by the actions of millions of people before you were ever born. All so you can do your will, to shop for more useless crap that will be eventually divided up after you die and sold on ebay.

  37. Matt

    Yet another silly liberal attempt to interpret Marx. As usual, it centers around skepticism concerning the real existence of “value”, mainly because it can’t be directly measured, and is only indirectly measured through price. Never mind that people everyday use the work “value” in its economic sense, and use it precisely in relation to and in distinction with price – value can’t exist because it can’t be measured!

    That is because what Marx actually proved, as against Ricardo who actually came up with the scheme analytically, is that “value” defines a SOCIAL RELATION, and social relations, such as between mother and child, etc., are notoriously difficult to measure. That doesn’t make them any less real, and it also makes economics as a science a branch of the social sciences, rather than that of the natural sciences as capitalists would like to insist.

    As a pretended natural science, capitalist economics is actually a pseudo-science, pure ideology.

    Of course the typically idealist notion that somehow Karl Marx’s critical analysis of capitalism “led directly” to the Gulag in the 20th century is ridiculous on its face. Example: The thoughts of Thomas Jefferson, James Madison and Abraham Lincoln “led directly” to the mass murder of many millions of innocent people in the Philippines, Japan, Korea and Vietnam in the 20th century.

    1. LeonovaBalletRusse

      “between mother and child” — you mean those mothers who ensure the genital mutilation of their daughters, those fathers and mothers who sell their babes into prostitution by any name, into chattel slavery even today?

  38. Matt

    Philip Pilkington, what a load of rubbish this is!

    Trying to think scientifically about human society is held to be a sign of membership in a cult.

    This attitude – for that is all it is, an ignorant unreflective attitude – is required to believe in the pseudo-science of capitalist economics.

  39. Fiver

    Categorizing an historical driver as huge as “Marxism” as a cult is just absurd. It was the most powerful set of ideas aimed at freeing the permanently downtrodden developed perhaps since Christ himself, but certainly of the 19th and early 20th centuries. That it played out so poorly was as much as function of the instant, relentless counter-attack of capital it everywhere met, leading straight into the sort of post-revolution, paranoid (with reason) “security first” outcomes we see also see in non-Marxist revolts of all manner and description. Cuba poses zero threat of any kind, yet is STILL the object of endless US misery-making.

    But worse, Marxism and pretty much all it did accomplish through its many social democratic variants, has been all but obliterated NOT by Libertarianism, but by a complex of corporate/financial and technocratic power, operating freely within all key, captured US institutions, and have NOTHING WHATEVER TO DO WITH LIBERTARIANISM. The people currently running things, and very likely will continue to run things, are the “cults” of management, science, technology, military power, in pursuit of the real cults, i.e., “growth” and “progress”

    1. LeonovaBalletRusse

      Not that either. See “ADAM’S CURSE” by Brian Sykes. This is the eternal cult: “My DNA uber alles forever.”

      As to Marx’s place in the Global Reich universe, see: “CONJURING HITLER…” by Guido Giacomo Preparata.

      The DNA *power* of Third-Fourth Reichs is the *power* of the Medieval feudal system and the Corporate Feudal System today, the “NOBILITY and Analogous Traditional Elites in the Allocutions of Pius XII,” the *royal blood* of all totalitarian empires from Genghis Kahn, through the *British East India Company-British Empire* Opium Wars UberLords in the West from Victoria through the Russell Foundation’s YALE, Skull and Bones, and Bush’s CIA *Security State* from Olde Confederate Holy Roman D.C.

      The *Libertarians* are the fanatic slaves of this *Power*.

  40. steelhead23

    I tend to agree with Pilkington that the church of libertarianism is a cult. What truly distinguishes this cult is absolutism. That is the real rub. You see, when a libertarian argues that government has no right to control abortion or recreational drug use, I agree with them. When they suggest lassiez faire economics, I wince. I don’t know where this absolutism originated, but my guess is that there is a biological tendency for humans to show fealty to their group and it takes intellectual energy to overcome this tendency. Cultist of all stripes are intellectually lazy – or perhaps insecure.

    One last statement. NC is perhaps the very best blog I follow for one simple reason – synthesis. It is not uncommon to see views collide here, but often there is enough curiosity among the bloggers to take seemingly conflicting concepts and find enough commonality to forge an arena of general agreement, or at least grudging acceptance. Y’all enjoy Yves little soiree at Trinity. You are a great bunch of people and I’d love to meet you all. Regrets.

    1. Lidia

      The particular thing about current “libertarianism” is instead that it weighs in heavily AGAINST autonomy in reproductive activity.

  41. Aquifer

    Well, can’t say as I can offer a cogent critique – but will say that anyone who can include a reference to Campbell, one of my all time favorites, in a critique of Marxism and Libertarianism as cults certainly deserves, IME, a thorough reading and i do appreciate it.

    Has been a good day, for me, on this site ….

  42. craazyman

    It’s amazing how easy it is to use the Albert Camus REBEL iPhone app.

    I just pointed my iPhone camera at Phil’s post and the comments, all 161 of them, and then I touched the REBEL app’s “Go” button on the screen and it called up this quote. In only 4 seconds! It’s an amazing app.

    It’s especially useful for lazy people who don’t want to have to paw through books for that special apropos passage. Who has time for that? What a waste. That’s so 20th century and we’re already almost at 2012. Pretty soon it’ll be the 22nd century and then what? I don’t know, personally.

    “But total freedom is no more easy to conquer than individual freedom. To ensure man’s empire over the world, it is necessary to suppress in the world and in man everything that escapes the Empire, everything that does not come under the reign of quantity: and this is an endless undertaking. The Empire must embrace time, space, and people, which compose the three dimensions of history. It is simultaneously war, obscurantism, and tyranny, desperately affirming that one day it will be liberty, fraternity, and truth; the logic of its postulates obliges it to do so.”

    -Albert Camus, THE REBEL, Totality and Trials

    And while everyone is on the topic of the ascendancy of the absolute and the tyranny of the strangulation of the mono-whatever, It may be that an iPHone app can solve the libertarian fixation by providing a substitute fetish of thinking upon which the mentality can lean and peacefully rest itself. The entire project is one of leisure. Thinking can be so tiring and anything that avoids it is a great monument of efficiency.

  43. LeonovaBalletRusse

    This is why Ayn Rand moved to *America* by Hollywood. Our soil and *prepared people* have attract and created cultists since the beginning. Hence, we are greatly at risk of disaster from cults and their fanatic strivers. SEE:

    “THE PURSUIT OF THE MILLENIUM: Revolutionary Millenarians and Mystical Anarchists of the Middle Ages” by Norman Cohn;

    “SACRED CAUSES: The Clash of Religion and Politics, From the Great War to the War on Terror” by Michael Burleigh;

    “STALKING IRISH MADNESS: Searching for the Roots of My Family’s Schizophrenia” by Patrick Tracey;

    “THE FAMILY: The Secret Fundamentalism at the Heart of American Power” by Jeff Sharlett;

    “SACRED MATTERS: Celebrity Worship, Sexual Ecstasies, The Living Dead, And Other Signs of Religious Life in the United States” by Gary Laderman;

    “METAPOLITICS: The Roots of the Nazi Mind” by Peter Viereck.

    The U.S.A. is fertile ground for totalitarian cults.

    1. Lidia

      Just as Hayek was lured to the US by reassurances that Social Security would take care of him in his Golden Years.

      1. LeonovaBalletRusse

        Yes, Lidia, the hypocrisy goes with the *affectation of innocence* that shields the cult striver.

  44. JTFaraday

    “By now we are far outside the realm of anything even remotely resembling a science of ‘value’. What we have instead is a vast metaphysical and moral system that is built around a very specific – not to mention very narrow – conception of value, together with a sort of existential appendage in the form of the hero-entrepreneur”

    This straight from the poopy diaper baby and the newest member of the MMT heroic policy-entrepreneur cult, which manages to reduce all value down to keystrokes in one centralized office, an imperializing reduction so grand even Lloyd Blankfein hasn’t (quite) managed to conjure it up in his fevered imagination. (Yet).

    Very Wizard of Oz.

    “the cult of Reason that Robespierre erected in revolutionary France upon the intellectual architecture that Jean-Jacques Rousseau had constructed for him. All of these cults espouse liberty and freedom and end up creating regimes of pure tyranny. Why? Because in their violent desire to turn reality into a Utopia, they stamp all over reality as it fails to conform to the images in their minds.”

    You get this from Rousseau? Have you read Rousseau?

  45. LeonovaBalletRusse

    The real question is WHY has the topic of *Libertarianism* through the eyes of Pilkington been dominating the conversation, monopolizing the time, of NC participants?

  46. Intellectual Outlaw

    Isn’t “trust” the basis of human relations? The requisite for “cooperation” among people, is first the establishment (and maintenance) of “trust” between them. As “trust” is gained among the “cooperating” people, they necessarily prosper and advance toward their own ultimate individual goals of “self-actualization.”

    If “trust” is not established (nor maintained) among people, then “cooperation” is a fruitless endeavor for all involved.

    Imagine for a moment that no “government” existed. All that exists are people and the physical world they inhabit – a “blank slate” if you will. What must an individual human do to survive, having no common language with any other human, or any sort of relation what so ever. You have no prior knowledge, you are “uncertain” about everything. You have no skills; you have nothing, but your existence in a foreign reality. Presumably you are left to your own devises, but what is it that you devise? Is devising anything even a possibility?

    How is it that we came to be the way we are today? Did we gain knowledge on our own, or were we imparted with some at the beginning of our existence? Were we able to reason/think or was that ability bestowed on us from whence we came? Are we organisms that evolved out of some primordial soup or did some “thing” put us here? If we came from primordial soup, who made it? How did we humans really get our start?

    Philip evidently does not place much “trust” in his fellow man whom identifies with Austrian/Libertarian thought, and rightly so. However, I would surmise Austrians/Libertarians probably don’t “trust” Philip all that much either. With Philip’s position so firmly established in opposition to that of the Austrians/Libertarians, one might be so inquisitive to ask why? Why is it that Philip has a different doctrine than say, the Austrians/Libertarians? Is it because Philip’s belief system is anymore valid than that of the Austrians? No. Is it because Philip has a pretense of knowledge about the world? Not necessarily. So what causes Philip to differ in his beliefs about the world as opposed to the Austrians/Libertarians? I hate to say it, but Philip’s differing opinion is the result of his own devised doctrine of reality. In other words, Philip engages in the very idea he finds so reprehensible: “subjective valuation.”

    My point in having written this, is not to criticize Philip’s short-comings when it comes to recognizing the discontinuity between his opinion of subjective value and his own actions which impute the practice of it, but to show that our whole edifice of reality is based on placing our “trust” in some “thing,” (which we “subjectively value” as the so-called “truth”). By definition we do not know the “truth,” for if we did; neither Philip nor anyone else would be wasting time discussing this very “subject.” That subjective “thing” we FIRST place our “trust” in, is central to our reality. “Trust” is not and cannot be reduced to a science as some might like. “Trust” is divinely encoded in culture. Who you “trust,” what you “trust,” and how you “trust” are very much dependent on the culture of the individuals attempting to relate to one another. We don’t just reciprocate to reciprocate, we reciprocate because the other person made a good faith effort to establish “trust” with us and we want for whatever (subjective) reason to do the same.

    “Trust” is at the heart of everything we do and yet, it is our Achilles’ heel as humans. Just think, do you inherently “trust” people, or do they have to gain your “trust?” When you do “trust” somebody, have they ever broken it? What do you do when somebody breaks your “trust?” Do you “trust” the violator more or do you rescind your “trust” in them?

    Every time someone decides to break the “trust” of another, whether it be lying, cheating, stealing, defrauding, etc. the level of “distrust” increases and the level of “trust” decreases. Once the level of “distrust” exceeds the level of “trust,” the cooperative relationship in question ceases to exist. For many, the cooperative relationship between government and the people ceased to exist a long time ago. All we are doing now is waiting for this realization to reach critical mass so that a “trustworthy” relationship can be instituted, so that people can advance closer to reaching self-actualization.

    “Trust” is established (and maintained), it does not exist outright. The Tea Party crowd and the Occupy Wall Street crowd exist as an indictment against the government’s violation of “trust” it had with “the people.” Once “trust” is broken, it is very hard to gain back. I believe history can be understood as a series of “trust expansions” and “trust contractions” among and between people and their institutions.
    To Philip: I wish you well on your intellectual journey. To everyone else: where do you place your “trust?”

    1. reason

      This once again falls down because of the identification of the “government” as though it was a continuous person with a constant character and unity of purpose. This is not the case. We should always strive to make OUR government better. Making it the enemy is self-defeating (like voting for people to run the government who don’t believe in government). Vote for people who want to make the government better.

  47. BenP

    It’s usually good practise to have honestly engaged in the writings of the people you criticise – talking here about Marx.

    “In Marxism this Evil Being is the capitalist”.

    I reccomend you start with ‘The Communist Manifesto’ widely available for free online. In there you would see Marx *praises* capitalism and capitalists for the increase in wealth and productivity that working people created under it’s direction.

    This is not to say there isn’t much to discuss around the topic “All I know is that I am not a Marxist”.

    Sorry I wasn’t able to get much further which is not my normal experience at NC.

    1. mansoor h. khan


      “It’s usually good practise to have honestly engaged in the writings of the people you criticise”.


      Caring for the “truth” is the first step to a truly open mindedness.

      Mansoor H. Khan

  48. JohnT

    Sorry if I’m posting a second comment but this article is so daft that it merits multiple responses or maybe one long response to the delusions of the Mr. Pilkington.

    The author implies that so called economic values are only foundational for a cult. He seems oblivious to the fact that values, economic or otherwise play an important role in how we create our reality. So straight off it’s a bit silly to imply there’s a problem with individual having values. It’s the values which come out of their shared experience which makes the Irish the Irish, the Brits the Brits, the Americans the Americans, etc. It’s one’s subjective values that motivates the individual to act!

    But returning specifically to what the author believes is a clearly defined scientific method of determining economic value. I would be interested to know what scientific method he is speaking about? I’ll give a simple example using simple products that are sold to final consumers as an example. A customer can go to market during several weeks in which with their limited resources, they prefer apples to oranges. Then subsequently they suddenly prefer oranges to apples. And after another few weeks, the customer wants neither. These sort of things happen all the time with clothes, jewellery, food, etc. You also have situations where people don’t even know that they value something until they encounter it for the first time. Libertarians recognise and work within the limits of what can be explained. That’s why one speaks of subjective theory of value and the ‘Law of Diminishing Marginal Utility’. What you show in using Bukharin as well as in your own essay is that you don’t understand the subject. May I point you to Theory of Money and Credit or Human Action since as Mises shows, the many flaws in Bohm Bawerk are well known within the Libertarian community. So choosing the work of someone whose work is viewed as flawed by the community you’re seeking to criticise is just daft!

    What’s even more daft, is that you even seem to imply that the book, Modern Political Economics: Making Sense of the Post-2008 World, that somehow it was a failure to not be able to derive a mathematical model similar to useless attempts to apply models for say game theory to politics or war or highly developed mathematical models of information theory for psychology or sociology!?! The really dumb thing is that the authors assume that Austrians are trying to come up with a mathematical model when Austrians know it’s not possible!?! Even despite that Austrians (from Mises to Ron Paul) have been correctly predicting these economic crisis world wide for more than 100 years!!! So it’s clear that the model is rigorous enough for it to have a great deal of utility despite the well known limitations in the economic model due to the subjectivity of value.

    Then you go on to say that the libertarian ‘airy theory of market prices’ has been undermined by… what? And that it has no basis in reality and fact. So I guess the lack of price discovery in the Soviet Union or the rest of the Communist Bloc in Eastern Europe was a resounding success and completely undermined what the Austrians had predicted of these types of socialist planned economies!?!

    And you go on quoting Kirzner about the whole price discovery process trying to prove that as their is no science of ‘economic value’ based in mathematics in Austrian economics that it is only based on faith!?! I again urge you to put forth this mathematical model of economic value that seems to be the running theme of your whole article and which is the basis of your criticism of Austrian Economics and Libertarianism.

    What’s truly risible of your analysis is that it shows an utter lack of faith in human beings to manage their own affairs exchanging goods and values deciding on their own the exchange values (i.e. prices) which provide ‘benefit’ both parties without the intervention of government or some other collective agency!?! And maybe if you learned a bit of history, you would see that it is because of libertarian values that America exists. You might know of it especially since so many of your countrymen immigrated there to become entrepreneurs. It’s what allowed the first settlers to survive, it’s why they fought the war of independence, it’s what allowed for the majority of americans to triple their purchasing power from the later half of the 19th century through the beginning of the 20th century, as well as growth of the economy after WWII.

    And to finish off, I’m going to give you a secret that given your views, it’s obvious that you are not aware of. Businesses hate the free market. Why is that? Because innovating and reducing costs while satisfying customers costs businesses especially in areas where startup costs are relatively low requires alot more in brain power than buying a politician who can put up barriers to entry to their market through regulation. That way the profits are insured while limiting or eliminating competition. Anywhere there is outsized profits, you can bet there is little to no competition through government mandated barriers to entry (i.e. banking, medicine, energy, etc). And here’s an even bigger secret, if you had a free market in banking (and no, a central bank isn’t an indication of a modern economy but proof that theft of the wealth of the public is mandated by the government), do you seriously think you would here of any banker getting the sort of bonuses that one hears of regularly in the media. NO! Because with no entity to bail them out since just about all of them are technically bankrupt since their asset cash flows are all in the future but their liabilities are immediate, as well as the threat of a bank run if they try to print money, they would have to live through honest banking (i.e. warehousing of money, and only investing funds that individuals or organisations provided them specifically for investing). Banks can only do what they do with the benediction of government officials. Made all the more clear by the present crisis.

    What’s clear from you diatribe, that unless you wake up, you will continue to be exploited by both of the two parties one of which you seek to defend (i.e. the government) because you see one of the two groups that are exploiting you for its own benefit as your saviour!?!

    1. reason

      “Even despite that Austrians (from Mises to Ron Paul) have been correctly predicting these economic crisis world wide for more than 100 years!!! ”

      Yes they predict them over and over again, so at some stage they must be right. But I know that there was a careful study of who did predict this particularly precisely and most of them were Post-Keynesians.

    2. reason

      “asset cash flows are all in the future but their liabilities are immediate”

      You don’t know what you are talking about. Most businesses are like that.

      1. reason

        Interestingly insurance companies (which may well be bankrupt) – are exactly the opposite (i.e. they have large unknown liabilities in the future).

    3. reason

      “Anywhere there is outsized profits, you can bet there is little to no competition through government mandated barriers to entry (i.e. banking, medicine, energy, etc).”

      Now this might make sense (read for instance Dean Baker) if you were in fact lobbying to have government change this specific regulations to enhance competition (for instance by limiting the period of claims to mineral resources or subsiding medical studies, or through an active anti-trust policy). But that doesn’t actually seem to be the main concern of Libertarians.

      “Because innovating and reducing costs while satisfying customers costs businesses especially in areas where startup costs are relatively low requires alot more in brain power than buying a politician who can put up barriers to entry to their market through regulation. ”

      Yes that is why the major big business lobbies are pushing for more government regulations. And why small businesses never lobby local government to keep out competitors.

      1. reason

        Its also of course why the Koch brothers support the Democratic Party and not

        (Do these guys ever actually think about what they write?)

  49. Peter Hofmann

    Dear Mr. Pilkington,

    Although I studied jurisprudence, I pursued it as a subject subordinated to philosophy and history. In the year 1842-43, as editor of the Rheinische Zeitung, I first found myself in the embarrassing position of having to discuss what is known as material interests. The deliberations of the Rhenish Landtag on forest thefts and the division of landed property; the official polemic started by Herr von Schaper, then Oberprasident of the Rhine Province, against the Rheinische Zeitung about the condition of the Moselle peasantry, and finally the debates on free trade and protective tariffs caused me in the first instance to turn my attention to economic questions. On the other hand, at that time when good intentions “to push forward” often took the place of factual knowledge, an echo of French socialism and communism, slightly tinged by philosophy, was noticeable in the Rheinische Zeitung. I objected to this dilettantism, but at the same time frankly admitted in a controversy with the Allgemeine Augsburger Zeitung that my previous studies did not allow me to express any opinion on the content of the French theories. When the publishers of the Rheinische Zeitung conceived the illusion that by a more compliant policy on the part of the paper it might be possible to secure the abrogation of the death sentence passed upon it, I eagerly grasped the opportunity to withdraw from the public stage to my study.

    The first work which I undertook to dispel the doubts assailing me was a critical re-examination of the Hegelian philosophy of law; the introduction to this work being published in the Deutsch-Franzosische Jahrbucher issued in Paris in 1844. My inquiry led me to the conclusion that neither legal relations nor political forms could be comprehended whether by themselves or on the basis of a so-called general development of the human mind, but that on the contrary they originate in the material conditions of life, the totality of which Hegel, following the example of English and French thinkers of the eighteenth century, embraces within the term “civil society”; that the anatomy of this civil society, however, has to be sought in political economy. The study of this, which I began in Paris, I continued in Brussels, where I moved owing to an expulsion order issued by M. Guizot. The general conclusion at which I arrived and which, once reached, became the guiding principle of my studies can be summarised as follows.

    In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.

    In studying such transformations it is always necessary to distinguish between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, artistic or philosophic – in short, ideological forms in which men become conscious of this conflict and fight it out. Just as one does not judge an individual by what he thinks about himself, so one cannot judge such a period of transformation by its consciousness, but, on the contrary, this consciousness must be explained from the contradictions of material life, from the conflict existing between the social forces of production and the relations of production. No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.

    Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation. In broad outline, the Asiatic, ancient,[A] feudal and modern bourgeois modes of production may be designated as epochs marking progress in the economic development of society. The bourgeois mode of production is the last antagonistic form of the social process of production – antagonistic not in the sense of individual antagonism but of an antagonism that emanates from the individuals’ social conditions of existence – but the productive forces developing within bourgeois society create also the material conditions for a solution of this antagonism. The prehistory of human society accordingly closes with this social formation.

    With best regards

    K. Marx

      1. Peter Hofmann

        “Then again, we could assume a can opener. What could go wrong?” everything. it’s not an automatism. the alternatives are socialism or barbary.

  50. SH

    I have no idea where we are at in this discourse. I’m too lazy to read the comments, but I’m going to offer one “immutable truth.”

    “High bid wins”

    It does not matter if you worked two years to get enough money to buy a product, ten days, or you found a diamond on the beach, prices are determined by the highest bid.

    That was the revolution from Adam Smith and the ultimate labor theory of value killer. Marginal utility is just the ensuing side show trying to explain this. This is why Menger is considered the father of Austrian economics. Utility may be a concept he helped to define, but his argument is nothing more than a description of how a buyer and seller end up at a price.

    Next, overlooking Hayek’s Nobel Winning trade cycle theory completely ignores that facet of this argument. Yes it’s theory, but it’s an entirely different theory than marginal utility. Maybe the pricing building blocks are the same, but it’s still simple high bid wins, nothing crazy.

    Finally, there is a school of libertarianism that is not significantly married to economics. It’s the I want to do what I want school. The focus is not on what the correct way to run an economy is, the focus is on preventing people like the author from telling other people what is right for them. Plain and simple, no cult.

    I always bite on these. It looks like from the number of comments other people do too, but this site has taught me a differentiation between cult like Keynesianism and progress thought and I think there are lots of shades of grey in all schools of thought, including Libertarianism so I would see this type of argument as equal to the same argument the author is arguing against.

      1. SH

        Hi Lambert:

        I think you read my argument well. There is the economic argument and then there is the I’ll do what I want argument. Wasn’t that the point of what I said? Your link only restates what I’m saying.

        As an aside, I’ve had more trouble understanding Mises prexeology argument than any other. I may try again, it’s been a few years since my last go at Human Action, but the Hayek and Menger stuff to me seems pretty straight forward as a description of economic activity, as do the mainstream theorists. I don’t see any problem with using those tools up to the point of description. If you get a cheap loan to buy a house because you think you can make more money and pay back the loan but you’re stuck with a house that is a capital intensive good and the deal goes bad and you can’t pay the loan then you’re screwed. A little respect to Hayek could have saved a lot of people some pain on a personal basis. I think accounting for that in decision making only adds value.

        1. SH

          Just to cover, “high bid still wins”. A lay down example does nothing to refute that simple fact.


          1. Skippy

            Many people choose emotion over price ie won’t do business (like – dislikes), cultural reasons (only like doing biz within own ethnic group), quasi price – barter transactions ( where barter is represented as additional services or goods exchanged without price affixed {drugs, sex, trips, recreational stuff}).

            Skippy…“high bid still wins” is a result of arm chairs, smoking jackets and pipes. I do services for free, thousands of dollars of price at a time…. it feels good.

          2. SH

            Skippy, point taken. I would love a world of barter and work for emotional value, but we live in a debt based economy and we work to pay debts. I think we both could be happy under the same regime but we live in a debt based economy. That’s where Mises comes in…

    1. mansoor h. khan

      SH said,

      “It does not matter if you worked two years to get enough money to buy a product, ten days, or you found a diamond on the beach, prices are determined by the highest bid.”

      The real reason people have very had time accepting the “highest bid” truth stated above is because they see this as being so unjust.

      SH, what you really have to explain is why is life so unjust?

      I would say life on earth is unjust by intentional design (from the creator of universe).

      Mansoor H. Khan

    1. mansoor h. khan

      SH said:

      “Just to cover, an MMT society based on the liability of future taxpayers is still a debt based society.”

      It is not the liability of the future tax payers only. It also depends on future productivity and the future savings rate and future total population of working.

      The point is that the gov will have to balance supply and demand (i.e., control inflation).


      A. Savers (non-producers) trying to spend and consume
      B. Workers (producers) trying to spend and consume
      C. Gov spending and gov consuming


      A. Workers producing real stuff
      B. Gov producing gov services (military, licencing services, etc.)

      Therefore, all the production is from workers and gov and if workers don’t save (postpone a portion of their production) then there will be inflation if savers tried to spend.

      If future population high and future productivity is high and future savings rate is high then not much (if any) taxation will be needed.

      Mansoor H. Khan

  51. Paul Marks

    You make the claim that the marginal revolution (of around) 1870 was about “justifying the supposedly free market system we live under today”.

    There were three leading “marginalist” economic theorists at that time. Leon Walras (very much a mathematical and abstract thinker), William Stanley Jevons (who was close to being a socialist – so he does not fit with what you claim), and Carl Menger – who was indeed a free market supporter.

    However, claiming that Carl Menger developed the subjective theory of economic value in its “marginalist” form because he supported the free market is NOT the same as refuting Menger.

    If you wish to refute Carl Menger’s “Principles of Economics” (1871) then please do so – but claiming he had a poltiical motivation is not a refuation.

    As for calling his work (and that of other Austrian School people – some of whom were SOCIALISTS) a “cult” is not an argument, it is just abuse. I might as well call your work a “cult”.

    As for “justifying the supposedly free market system we live under today”. A basic point of the modern Austrian School of economics (which, in the following respect, goes back to Ludwig Von Mises) is to ATTACK the present economic system

    How can a system which is based upon vast amounts of government fiat money being pushed out through the banking sytem be called “free market”. And how can a system where government spending takes up about half the economy in most major countries be called “free market”. Ditto the vast web of regulations that strangle modern Western societies.

    Whether modern Austrian School people are anarchist (private property supporting anarchists) in the politics, in the tradition of Rothbard, or are minimal state (minarchist) in their politics (in the traditon of Mises) they are radically OPPOSED to the present order of things because it is NOT free market.

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