Sunday, January 30, 2011

The Types of Pro-Free Market Libertarians

Pro-free market libertarians, or libertarians who support free markets, come in various kinds. I say “pro-market libertarians” because left-wing libertarians who support anarchism believe that the word “libertarian” has been unjustly appropriated by anarcho-capitalists and other capitalist libertarians.

Pro-free market libertarians can be divided in two main types: (1) Austrians and (2) non-Austrians. I provide a list of such libertarians below, on the basis of this division:
I. Austrians
(1) the Anarcho-capitalists, like Rothbard and Hoppe;

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

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

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

(5) Austrian radical subjectivists like Ludwig Lachmann;

II. Non-Austrian libertarians

(6) Randians;

(7) followers of Robert Nozick’s libertarianism;

(8) followers of David D. Friedman’s anarcho-capitalism.

(9) other non-Austrian libertarians (e.g., Tom Palmer, Bryan Caplan and Tyler Cowen).
I have already discussed the Austrian school and its various subcategories in an earlier post (see “The Different Types of Austrian Economics,” December 5, 2010).

Non-Austrian libertarians also come in various forms. The Randians are followers of Ayn Rand’s Objectivism, an atheist, individualist, and laissez-faire ideology. I must confess that I have never thought much of Randian libertarianism, either in terms of its ethical ideas or its argument for laissez faire. Randians have a cultist feel to them, and this sentiment was famously shared by Murray Rothbard in his now classic play “Mozart was a Red,” which I highly recommend. In fact, I can’t resist quoting part of Justin Raimondo’s introduction to this:
“The Randian ideology was not so much an integrated philosophical system as a mythos, based as it was on Rand’s novels. Unfortunately, as she got older, she imagined herself to be a philosopher, and gave up fiction writing to become the leader of a movement. In her nonfiction tirades, Rand quotes mainly from her own works; this was due not only to her inflated self-estimate, but also to a colossal ignorance. She read almost nothing but detective novels, and her followers, usually considerably younger, were even worse. Although her philosophy of rational self-interest was an eccentric modern variation on a much older philosophical tradition, the only precedent she acknowledged was Aristotle.”
And this was from a fellow libertarian! As an aside at this point, I myself once had a Randian friend in university, and his support for Randian ideology came almost exclusively from reading Atlas Shrugged – so I cannot help but think there is something to Raimondo’s assessment of the Randians. But let’s move on.

Perhaps a more intellectually rigorous libertarianism can be found in David D. Friedman’s anarcho-capitalism, which is based on a consequentialist/utilitarian argument, in contrast to the natural rights/natural law approach of Murray Rothbard.

The various other non-Austrian libertarians seem to be adherents of neoclassical economics – or at least influenced by neoclassical economics to some extent, even when they claim an affiliation with Austrian economics, without completely accepting the ideas of that school. We can include Robert Nozick, Jan Narveson, David Gauthier, Bryan Caplan, and David D. Friedman in this group.

We should note that Austrian economics began as a theory that was not fundamentally hostile to government intervention (see “Friedrich von Wieser and Eugen von Philippovich von Philippsberg: Austrian Economists and Fabian Socialists,” October 21, 2010), but then took a wrong turn to the dead-end of Misesian and Rothbardian thought after World War II.

Of modern Austrians who managed to escape the grip of Mises and Rothbard, the most interesting (in my view) are the radical subjectivists like Ludwig Lachmann. The Austrian radical subjectivists share some ideas with Post Keynesians, and Austrian economics is still haunted by the “Lachmann problem” – the problem of how free markets result in plan/pattern co-ordination under subjective expectations and fundamental uncertainty.

The development of modern Austrian economics amongst the moderate subjectivists (such as Israel Kirzner, Roger Garrison, Gerald P. O’Driscoll and Mario J. Rizzo) is essentially the story of Austrians who have tried to solve the “Lachmann problem,” albeit unsuccessfully. In particular, O’Driscoll and Rizzo’s book The Economics of Time and Ignorance (Oxford, UK, 1985) is one that stands out in the Austrian literature.


  1. Any reason why you haven't included Milton Friedman?

    How Austrian is Hayek and why?

  2. "Libertarian" is such a silly, robotic word!

    It wouldn't sound any different if it were Robolibertarian.

    What are words, in the end? von Mises called himself a progressive, Hayek's fan Helmut Schmidt was a Social Democrat, and Hoppe calls himself conservative. It goes on.

    Karl Marx once actually said, "I don't know what I am. But I am certainly not a MARXIST."

  3. Mike,

    "Any reason why you haven't included Milton Friedman?"

    Yes, that is an oversight! I suppose I could add another category after (9):

    (10) Milton Friedman and the monetarists

    Milton Friedman was certainly a strong advocate of free markets, but I think there maybe an argument for distinguishing him and his theory from these other libertarians.

    Friedman's economics was the macroeocnomic theory of monetarism, which was pretty much mainstream neoclassical theory, with some refinements.

    "How Austrian is Hayek and why?"

    Hayek is undoubtedly an Austrian and self identified as one. His economics was a minimal state classical liberalism, but he differed on methodology and some other points with Mises and Rothbard.


    1. Milton deserves his own category. He's definitely an Interventionist on many things though, most notably monetary policy.

  4. And one more point:
    I am not sure that all modern monetarists would really think of themselves as "libertarians" - although they might be supporters of free markets and conservatives. I suspect many think of themselves just as mainstream economists, although their theory is not as widely held as it once was in the late 1970s/early 1980s.

  5. LK, Bryan Caplan is a good example of such modern mainstream economist, basically agreeing with Austrian School, but in more roundabout ways, never in principle, because Austrian principles would leave him jobless:

  6. Bryan Caplan is not a "mainstream economist".

    He is a libertrian who supports elements of neoclassical theory over Austrian economics.

  7. LK, you are correct, apologies, I have to be more careful about personal accusations, I'm not from US.