Tuesday, December 20, 2011

A Classification of Libertarianism

I have written on this subject before. But I think my earlier classification needs re-thinking. It is obvious that not all free market libertarianism is derived from neoclassical theory. The Austrians and the cult of Rand are not really based on neoclassical theory, although, paradoxically, the Hayekian version of the Austrian business cycle theory is heavily influenced by neoclassical equilibrium theory via Hayek’s use of Wicksellian monetary equilibrium analysis.

Here is an updated classification of free market libertarians:
(1) Randians

(2) Austrians
(i) the Anarcho-capitalists, like Rothbard and Hoppe;

(ii) The minimal state Austrians like Mises (with his praxeology);

(iii) Austrian supporters of Hayek’s economics, with a minimal state;

(iv) The “orthodox” Austrians who have a moderate subjectivist position (like Israel Kirzner and Roger Garrison);

(v) Austrian radical subjectivists like Ludwig Lachmann;
(3) Non-Austrian libertarians (but influenced by Austrian economics)
I suspect that it is also possible to put many of the “Free Bankers” in this category.
(4) Neoclassical libertarians (but influenced by Austrian economics and neoclassical theory)
(i) followers of Robert Nozick’s libertarianism;

(ii) followers of David D. Friedman’s anarcho-capitalism, and other non-Austrian anarcho-capitalism (e.g., Jan Narveson);

(iii) other non-Austrian, neoclassical influenced libertarians (e.g., Tom Palmer, Bryan Caplan and Tyler Cowen).
I have not included Milton Friedman’s monetarism here, because Friedman’s economics was the pretty much mainstream neoclassical macroeconomic theory. Moreover, I am not sure that all modern monetarists or new monetarists would really think of themselves as “libertarians.” Although they are supporters of free markets, I suspect many think of themselves just as mainstream economists.

UPDATE

I have taken Professor George Selgin out of category (3). Professor Selgin no longer self-identifies as an Austrian, but also notes in a comment below:
“... I am no less uncomfortable with the libertarian label than I am with the Austrian one. In fact, you will be hard-pressed to find me ever identifying with a "movement" of any sort: I dislike them all, viscerally.”
http://socialdemocracy21stcentury.blogspot.com/2011/12/classification-of-libertarianism.html?showComment=1324413251211#c4718352180192394769
Fair enough. I do like to get these classifications right.

17 comments:

  1. Lord Keynes, economically speaking, what are your differences with Austrians like Ludwig Lachmann?

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  2. The belief that economic interventions by government work, and that there are many such interventions that should be done.

    I suspect that there are differences in the role of uncertainty. I think an economy is a complex set of both ergodic and nonergodic processes and phenomena.

    There is no doubt that a government intervention can affect a nonergodic process reducing uncertainty.

    Perhaps it is even possible to say that the Shacklean / Radical subjectivist / Post Keynesian emphasis on Knightian/radical uncertainty goes a little bit too far at times.

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  3. "The belief that economic interventions by government work, and that there are many such interventions that should be done."

    Too bad they don't work, and that no such violence should be done, or else your faith would have been knowledge.

    "I suspect that there are differences in the role of uncertainty. I think an economy is a complex set of both ergodic and nonergodic processes and phenomena."

    The market is not a mathematical system, it is a process of human interaction based on subjectively determined values.

    "There is no doubt that a government intervention can affect a nonergodic process reducing uncertainty."

    False. Government intervention cannot decrease uncertainty, for it has unintended consequences that mess up the coordination between economic agents, especially between investors and consumers.

    Look up regime uncertainty and why the government cannot itself be certain of what it will do.

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  4. "the government cannot itself be certain of what it will do."

    I wasn't asserting that absolute certainty must exist. In the realm of inductive reasoning, everyone with half a brain knows absolute certainty doesn't exist because inductive arguments only yield degrees of probablity.

    I said : There is no doubt that a government intervention can affect a nonergodic process reducing uncertainty.

    That is correct.

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  5. "Look up regime uncertainty "

    As for "regime uncertainty" that was very probably a problem in the 1930s when the degree of government intervention being introduced in the economy was new, say in the US. New Zealand's experience with Keynesian stimulus in the 1930s shows there were no significant "regime uncertainty" problems: private investment surged as a result of government stimulus.

    The type of regime uncertanty contemplated by Higgs and others has long since ceased to be a significant problem in the modern world.
    The main problem today is an overindebted private sector, delevergaing, a sick financial sector, and insufficient AD.

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  6. "Government intervention cannot decrease uncertainty,

    Yes, it can. And the interventions that ended the freezing up of interbank lending markets in 2008 prove it can.

    "for it has unintended consequences that mess up the coordination between economic agents, especially between investors and consumers."

    That assumes the nonsense of ABCT.

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  7. Hmmmm I accept your characterisation of different strands of libertarianism but you haven't really dealt with the fact that they all share the same traits I listed, and those traits in turn come straight out of the economics textbooks.

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  8. There is actually a decent small debate about government and uncertainty on that 'Post' Austrian blog: http://austrianomnibus.blogspot.com/2011/03/in-response-to-paul-davidson.html

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  9. "...but you haven't really dealt with the fact that they all share the same traits I listed, and those traits in turn come straight out of the economics textbooks."

    your post realies on the claim that "neoclassical economics is at the heart of libertarianism" which is false, especially if you consider the Lachmann branch.

    Also Lk, I did not notice this before but why do you consider Randians libertarians? They were, and still are, critical of libertarianism.

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  10. "Also Lk, I did not notice this before but why do you consider Randians libertarians? They were, and still are, critical of libertarianism."

    I think you mean critical of all other people who don't follow their narrow cult? Cultists are like that.

    On a general level, there is no doubt that the cult of Rand favours extreme free markets but with a small night watchman state. Something like what Mises wanted.

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  11. LK, you are wrong here. I am no less uncomfortable with the libertarian label than I am with the Austrian one. In fact, you will be hard-pressed to find me ever identifying with a "movement" of any sort: I dislike them all, viscerally.

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  12. "I am no less uncomfortable with the libertarian label than I am with the Austrian one.

    Apologies, then, I'll have to correct it.

    But surely you would regard yourself as a non-neoclassical economist, with a strong free market approach?

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  13. "LK, you are wrong here. I am no less uncomfortable with the libertarian label than I am with the Austrian one. In fact, you will be hard-pressed to find me ever identifying with a "movement" of any sort: I dislike them all, viscerally."

    If you have a set of values, you necessarily adhere to an ideology. Ideologies are self-styled movements. Of course, some movements are larger and some movements are smaller.

    A fear/dislike/avoidance of being labelled as part of a larger group is a movement that is very much akin to individualism.

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  14. This is a perplexing classification because it is incompletely specified.

    (1) First, the unwritten part of the title is that this is a classification of libertarians by their economics, as opposed to their philosophy of anything else.

    (2) Second, it isn't obvious to me that Randians really have their own independent economics: I suspect they overlap several categories.

    (3) You are inconsistent if you allow Seligman to disavow libertarianism and not Randians. That empties category 3.

    (4) You do not diagnose Milton Friedman into any category.

    Could we maybe have something more cladistic?

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  15. 'your post realies on the claim that "neoclassical economics is at the heart of libertarianism" which is false, especially if you consider the Lachmann branch.'

    I substantiated my claim comprehensively, and while I'm aware that libertarianism has evolved into different strands I think they all suffer from many of the same framing issues, which are ultimately derived from neoclassical framing.

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  16. Hi Mike,

    Some quick responses:

    (2) Second, it isn't obvious to me that Randians really have their own independent economics: I suspect they overlap several categories.

    Yes, the cult of Rand has no real independent economics: Rand herself seems to have mostly relied on Mises and Hayek.

    (4) You do not diagnose Milton Friedman into any category.

    I think Friedman and modern monetarists, though some of them no doubt call themselves "libertarians", are mostly just mainstream economists: if I include them I should include the New Classical school (because in fact the monetarists are more interventionist than New Classicals), and then the list is open to the charge it is misrepresenting people.

    You could draw up a list of "extreme, strong or moderate pro-free market ideologues":

    (1) Libertarians
    Randians
    Austrians (Anarcho-capitalists, Misesians, Hayekians, moderate subjectivists, radical subjectivists)
    non-Austrian libertarians
    Robert Nozick’s libertarianism
    David D. Friedman’s anarcho-capitalism
    non-Austrian neoclassical libertarians

    (2) Mainstream neoclassical theorists
    New Classicals
    Monetarists
    Supply-siders
    conservative New Keynesians.

    http://socialdemocracy21stcentury.blogspot.com/2011/01/overview-of-major-schools-of-economics.html

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  17. The belief that economic interventions by government work, and that there are many such interventions that should be done. Characterizing "economic interventions by government" this way is part of the problem though.
    A monetary economy is a government intervention. A job guarantee, a labor standard, full employment is the minimal government "intervention" necessary to balance the unemployment caused by the first 'intervention' of money & taxation causing unemployment. Non-monetary economies run on principles of reciprocity. That's what the JG is, the reciprocity of the otherwise insane government demand called taxation.

    The minimal sane or stable economy would be a night-watchman laissez-faire state, so low taxation but with a job guarantee. The JG would not employ many usually, because of the small size of government & hence taxation. But the small government would lead to financial instability as in the 19th century, so every now & then a crisis would lead to a quickly swelling JG force.

    Many/most Austrians want drastic state intervention: for the government to fix a price of the worthless commodity gold in terms of its intrinsically valuable "fiat" money. But why is the government running a Gold Shoppe so important, rather than buying & selling action figures or spray-on hair? No reason at all.

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