The State Intervenes To Prevent Mutually Beneficial Exchange
Yes, I know that headline could cover just about every action of the political class since the advent of the nation-state, but somehow the crack down on internet gambling strikes me as particularly egregious. If this story is right, the government is pretty well demolishing a vast industry and for no good reason. Producers, consumers, and everyone else involved will all have the quality of their lives diminished. And while you might say that laissez-faire gambling litters up towns with unseemly billboards, attracts unsavory elements, and the like, internet gambling takes place without anything like a negative externality. Those who don't like it don't need to bother with it. People who enjoy it do so in the privacy of their own home offices. Even Bill Bennett can avoid expensive trips to Las Vegas.
Why do we put up with this gang of thieves that views its job as diminishing the quality of life for so many people? Well, I suppose that too is a question that has been asked since the advent of the nation-state.
Comments (72)
Lisa Casanova
Well, here in NC, the crackdown on internet gambling (and slot machines, as happened recently) is probably to eliminate competition for the state run lottery! In the case of the lottery, apparently gambling is moral because the proceeds are supposedly being spent on the school system. They even call it the "education lottery."
Published: October 2, 2006 10:59 AM
Steven Kane
I don't think they will shut it down for long. There are a zillion ways to pay for something over the Internet.
Published: October 2, 2006 11:55 AM
Vince Daliessio
The state are simply the enforcers of private commercial wishes. Whether it's gambling, drugs, labor, or "intellectual property", the government is simply protecting the monopoly profits of favored interests using overwhelming force.
Published: October 2, 2006 12:15 PM
Reactionary
The libertarian arguments against this legislation are well taken, but I would not call gambling a "mutually beneficial exchange" just as I would not call sales of cigarettes or pornography "mutually beneficial exchange."
Published: October 2, 2006 12:52 PM
Vince Daliessio
According to whom?
"Subjective theory of value. The theory, held by the Austrian economists and by the Anglo-Saxon followers of the English economist, W. Stanley Jevons (1835-1882) and the American economist, John Bates Clark.(1847-1938), that the value of economic goods is in the minds of individual men and therefore is neither constant nor inherent in the goods themselves; that values of the same good vary, as the judgments of the individuals making the valuations vary, from person to person and from time to time for the same person. See "Subjective-value theory" and "Marginal theory of value.""
http://mises.org/easier/S.asp#44
Published: October 2, 2006 12:58 PM
M E Hoffer
Reactionary,
Maybe we should ban advertising, friends, and family, as well??
IOW, Where's the coercion?
Published: October 2, 2006 12:59 PM
Reactionary
Vince,
The subjective theory of value likewise applies to a mugging: the victim is trading something he values more, his physical well-being, for something he values less, his wallet.
M E,
I'm not arguing to ban anything. I'm simply taking issue with the characterization of gambling as a mutually beneficial exchange.
Idiot.
Published: October 2, 2006 1:04 PM
Vince Daliessio
Well Reactionary, I must say that this is a novel application of Austrian Economics to an extremely un-economic transaction!
I suppose next you will prove that taxes, warfare, etc. are additional good examples of the theory at work. Good luck in gaining adherents to your new branch of economic theory!
If I took a position like that publicly, it would be a long time before I had the guts to criticize, much less insult someone here.
Published: October 2, 2006 1:18 PM
Person
If it's to prevent competition with state lotteries, that reminds me of an idea I've had: what if you a) bought options on extremely unlikely events (such as the right to buy oil in a month at $110/barrel), b) sold $1 "shares" in this option like lottery tickets, and then c) redeemed them and distributed the proceeds to sharesholders if it had any value at expiration? How would that be illegal?
Published: October 2, 2006 1:27 PM
Matthew
The difference between the mugging example and gambling is that there are no violations of property rights in the latter. Yes, the odds are in favour of the casino, but people know this before making the choice to act. You cannot look at the expected profit from gambling activity alone, there are also the subjective factors of socializing with others, the thrill of the game, and so on. Just because an action doesn't seem rationizable from an objective point of view does not mean that it isn't beneficial to the actor. After all, they can always choose to not participate.
Published: October 2, 2006 1:27 PM
Reactionary
Vince,
The existence of the welfare state demonstrates that people prefer to trade their liberty for net tax consumption, so my point remains that exchange is not mutually beneficial simply because it occurs. Would you characterize cocaine sales to a cocaine addict as mutually beneficial? Is prostitution mutually beneficial? People part with their money for stupid, self-destructive reasons all the time.
Published: October 2, 2006 1:32 PM
Paul Edwards
Reactionary,
“…my point remains that exchange is not mutually beneficial simply because it occurs. Would you characterize cocaine sales to a cocaine addict as mutually beneficial? Is prostitution mutually beneficial? People part with their money for stupid, self-destructive reasons all the time.”
But what is the significance of your point? It is entirely outside of the subject of economics. Mars bars and big macs may be harmful to us as well, and so might reading gossip magazines, so what? As far as the economist can tell, all market participants feel ex ante that they will benefit from any exchange they voluntarily participate in. There is nothing more to say about it other than perhaps we personally don’t feel the transaction was worth it. And nobody cares about our personal preferences except when we ourselves go to demonstrate them by participating in the market as well.
Published: October 2, 2006 2:02 PM
Reactionary
Paul,
That being the case, a more appropriate headline would be, "The State Intervenes To Prevent Exchange." Otherwise, I think it's a real stretch to describe gambling as mutually beneficial.
I think my point is relevant also because we are assured by anarcho-capitalists that the market can deliver a just society, when in fact the market delivers simply what its participants desire, whether that be slave labor or kitchen cabinetry.
Published: October 2, 2006 2:21 PM
Curt Howland
Reactionary, you are ignoring one of the basic insights of the Austrian economic school:
If it were _not_ mutually beneficial, the transaction would not take place _because_ it is voluntary.
The mugging example is specious, because it is by definition _involuntary_.
Person, your betting scheme isn't illegal for two reasons: It is voluntary, and the legislature hasn't made a law against it (yet).
If it were involuntary, then it can be grouped into some kind of general abuse category such as defrauding investors, false advertising, etc. I would have said "fraud", but I don't want Kinsella descending on it because I didn't use the word right.
Just because something is illegal doesn't mean anyone gets hurt doing it, or threatened, or violated in any way. Illegal does not equal bad, and lots of bad things (like continually drinking alcohol to excess) are perfectly legal.
Published: October 2, 2006 2:23 PM
Reactionary
Curt,
The actual tenet is that if the exchange was not perceived as mutually beneficial it would not take place voluntarily. Big difference.
Published: October 2, 2006 2:30 PM
Curt Howland
Reactionary, I fail to see how that changes the fact that the individual betting _wants_ to place the bet, and the people running the service _want_ the individual to place the bet.
Just because I get 23 in my blackjack hand doesn't mean I didn't ask the dealer for another card _voluntarily_.
Published: October 2, 2006 2:51 PM
Reactionary
Curt,
I'm not arguing that the exchange isn't voluntary. The alcoholic bum with liver failure wants to buy a bottle of rotgut and the liquor store owner wants to sell it to him. That doesn't make the exchange mutually beneficial.
Published: October 2, 2006 3:12 PM
Yancey Ward
But, there is a negative externality! Such gambling competes with existing non-virtual casinos, state-run lotteries, and local church bingo contests. Always follow the money.
Published: October 2, 2006 3:23 PM
Brad Dexter
Reactionary,
It certainly is beneficial, in the short run. People are willing to trade their money for a short term rush or high, that over time, collectively MIGHT have a delitirious effect. One could also say that every action has a combination of positive and negative effects, even the act of eating has its contribution to our ultimate wearing out and demise. Every drink of alcohol incrementally reduces the effectiveness of a person's liver. But in the case of a person with a damaged liver it is much more keen, but such a person may still decide that the short term self medicating is worth more than their long term functioning of their liver. Time/Value is a basic function of Austrian Economics (as I understand it) and people have different combinations of value and timing, none of which are really superior to another.
If a person with a green liver has a limited amount of time to live, some may wish to use it an alcoholic haze, others may tea-total and exit a little later. Human Action in the realm of voluntary action has no rhyme or reason to anyone other than the participants. One can only assume that since a transaction took place, it was mutually beneficial at the time of the exchange. Buyers remorse may settle in at some other point, perhaps. The root of forceful intervention is the assumption by disinterested third party that it is not mutually beneficial EVER. You apparently do not sanction intervention yet. But the seed has been sown.
And calling someone an idiot is neither intelligent nor civil, a requirement that I have never seen breached in the three years I have been frequenting this site.
Published: October 2, 2006 3:46 PM
George Gaskell
the government is simply protecting the monopoly profits of favored interests using overwhelming force
And using our money to do it.
Published: October 2, 2006 3:51 PM
George Gaskell
The subjective theory of value likewise applies to a mugging: the victim is trading something he values more, his physical well-being, for something he values less, his wallet.
It certainly does not.
In a mugging, the person being robbed is threatened with punishment from the mugger -- some form of harm that violates his right of self-ownership -- if he does not comply. That result is only "beneficial" if you measure the benefit from the position the victim would be in if he refused the transaction and was then attacked (i.e., dead or injured).
But mutuality of benefit is measured from the position that the parties would be in if one party refused the transaction AND if neither party then violated the other's rights to life, liberty or property.
That seems obvious from the definition of "coercion."
The existence of the welfare state demonstrates that people prefer to trade their liberty for net tax consumption
No, the existence of the welfare state demostrates that SOME PEOPLE prefer to use proxies to do their stealing for them. Sometimes, it means that this group even consists of a temporary majority within a certain territory, as though that were somehow meaningful.
This all works out very well for the thieves and their proxies/agents, but it is really no different, morally, from doing the stealing in person.
I think my point is relevant also because we are assured by anarcho-capitalists that the market can deliver a just society, when in fact the market delivers simply what its participants desire, whether that be slave labor or kitchen cabinetry.
Your point is neither relevant nor especially intelligent, considering that the problem with slavery is that it is not what the slave desires, thus disqualifying slavery from being part of a free market in the first place.
Published: October 2, 2006 4:07 PM
Vanmind
Does anyone want to bet that mises.org will get shut down if we make a bet about mises.org getting shut down?
My head hurts...
Published: October 2, 2006 8:10 PM
Walt D.
Aren't we missing the point? The bill did not outline gambling, only online internet gambling -in effect, banning outsourcing.
In other words, they are not trying to protect the gambler from his/her own destructive behavior, they are choosing who gets to be the beneficiary. So we're not even getting "nanny state" protection - only the usual state hypocricy and corruption.
Also, wasn't this legislation forced through by attaching it to the "port security(??) bill"?
Published: October 2, 2006 8:53 PM
Reactionary
Brad,
The only point I raised was that while the libertarian arguments against prohibition were well taken, gambling is not mutually beneficial. Anybody who read more into my post is being deliberately obtuse, i.e., an idiot.
Unless you are a moral relativist, the mere fact that an exchange takes place does not mean it is objectively beneficial. Selling your vote for government benefits, prostitution, pornography, and cigarette sales are all examples of voluntary exchange with deleterious effects. The point is salient because the ancaps assure us that the market can deliver justice, when in fact the market simply delivers whatever the participants desire, from child pornography to slave labor to kitchen cabinets. The fact that these transactions may involve force or fraud against third parties is simply not relevant in an economic sense. And, to take this a step further, if all exchange is deemed beneficial simply from the fact of its occurrence, the notion that the exchange must be disqualified because it involves coercion is just silly sentiment.
Published: October 3, 2006 7:38 AM
George Gaskell
gambling is not mutually beneficial
Sure it is.
You are not considering time preferences. You are looking at gambling on a longer time scale than gamblers do. Even people you would consider to be self destructive view their behavior as beneficial -- the drugs they buy, the money they spend on entertainment, etc. The difference between you and them is simply one of time preferences. They are obtaining a short-term benefit at the expense of some long-term detriment (as you see it). You may be in the habit of looking at the world with a longer time scale in mind, but there is nothing about your time scale that is objectively more correct than anyone else's.
I am sure that you engage in behaviors that some other person with an even longer habitual time-scale than yours would consider to be self-destructive. Have you ever paid for entertainment? This is money that you COULD have spent on something more "objectively beneficial," but you considered the entertainment to be more beneficial, on your chosen time scale, than every other possible use of that money.
the market simply delivers whatever the participants desire, from child pornography to slave labor to kitchen cabinets. The fact that these transactions may involve force or fraud against third parties is simply not relevant in an economic sense.
Since you insist on repeating debunked catch-phrases rather than address the basic concepts that are being discussed, I have little hope that you will open your mind to the possibility that you are in error. You seem to be impervious to reason.
In any event, your attempt to dismiss force and fraud as "simply not relevant" is stunningly flawed, considering that the entire premise of this mode of economic analysis is premised on the economic effects of fraud and force.
if all exchange is deemed beneficial simply from the fact of its occurrence
No, all VOLUNTARY exchange occurs because the participants expect it to be beneficial (according to their own subjective criteria, which, by definition, vary from person to person).
Published: October 3, 2006 8:25 AM
Reactionary
George,
Even an inflamed, hysterical review of my posts should reveal that we agree on this point: exchange takes place because the participants deem it mutually beneficial. That does not mean that, in fact, it is mutually beneficial.
All of this is another way of saying that the market is morally neutral, and will deliver results consistent with the morals of its participants.
Published: October 3, 2006 8:49 AM
Reactionary
"In any event, your attempt to dismiss force and fraud as "simply not relevant" is stunningly flawed, considering that the entire premise of this mode of economic analysis is premised on the economic effects of fraud and force."
No, the dismissal of force and fraud results simply from an objective, economic analysis. If two parties transact for a hitman or for the capture of slaves, the economic laws of supply and demand still govern and such transactions can be analyzed accordingly. To put it in simple terms, "force/fraud = bad, no force/fraud = good" results from a value judgment that economics is not strictly concerned with. I am actually the one gauging economic transactions on their moral worth, while it is the anarchists who make the moraly relativistic claim that the transaction is mutually beneficial just because it takes place. When I point out that people bargain for bad things like prostitutes, cigarettes, cocaine, child pornography, and slave labor, the anarchists suddenly rediscover their moral sense and accuse me of gross amorality. It seems that anarchy doesn't always lead where anarchists wish to go.
Published: October 3, 2006 8:58 AM
banker
"slave labor"
I am curious. How does one go about becoming a slave? If you volunteer to become a slave, then doesn't that mean you are not a slave?
Published: October 3, 2006 9:07 AM
banker
"slave labor"
I am curious. How does one go about becoming a slave? If you volunteer to become a slave, then doesn't that mean you are not a slave?
Published: October 3, 2006 9:07 AM
Reactionary
"How does one go about becoming a slave?"
Slavery comes about the way the supply of every other commodity comes about: a demand for slave labor and an opportunity for profit from meeting that demand.
Published: October 3, 2006 9:19 AM
Brian Drum
Reactionary says: "...exchange takes place because the participants deem it mutually beneficial."
Yes. A gives B good X and in exchange B gives A good Y. This exchange will take place voluntarily if and only if A subjectively values Y more than X, and B subjectively values X more than Y. This scenario is "good" in the eyes of the economist, not because the economist likes voluntary exchange, but because it increases utility for both parties. This is NOT a value judgement on the part of the economist.
Reactionary then says: "That does not mean that, in fact, it is mutually beneficial."
Now by this I assume Reactionary means that when his preferences are applied to the scenario, he would consider an exchange of X for Y (or Y for X) to NOT be beneficial. Ok, but so what? The argument is simply that the exchange is mutally beneficial in the eyes of the participants in the actual exchange. Reactionary's personal preferences are completely irrelevant to the entire analysis.
Whether or not there exist objective values that individuals should strive for is completely orthogonal to the analysis. Economics proper is simply concerned with subjective utilities from the point of view of the individual market participants. It has nothing to say in regards to whether their choices and preferences are right or wrong.
Continuing Reactionary says: "No, the dismissal of force and fraud results simply from an objective, economic analysis. If two parties transact for a hitman or for the capture of slaves, the economic laws of supply and demand still govern and such transactions can be analyzed accordingly."
Is this supposed to be an example of the dismissal of force from the analysis? If so then it completely fails, since there was no force/fraud to start with. If a would-be slave owner and a would-be slave capturer come to an agreement then this is simply another case of mutually beneficial exchange between these to parties. So, yes, of course the econmics of supply, demand, utilty, etc apply fully in this case.
The situation DOES change when force is introduced into the equation. If one party, say the would-be slave owner, uses force or the threat of it to induce the slave capturer to go out and find some slaves, then we are no longer dealing with a mutually beneficial exchange. If the exchange would have been beneficial for the slave capturer then no force would have been necessary, and he would have agreed to the arrangment voluntarily. Thus the use of force has caused the slave capturer to pursue a less valued (again, subjectively) end then he would have chosen if free from phycial violence. This scenario is thus deemed "bad" by the economist because it consists of one party gaining in utility at the expense of another losing in utility. Again, it is not "bad" because the economist dislikes force or aggressive violence.
The case of the forced exchange between slave owner and slave is even more clearly "bad" in the sense that it is an exploitative situation. The slave owner gains in utilty by the continual use of violence against the slave, who obviously is forced to accept a MUCH lower utility then he would absent the threat of violence from his "owner".
So yes, force and fraud ARE important in econmoic analysis and are NOT value judgments of the economist. "Exchanges" brought about by the use of force, ALWAYS involve one party's gain at the expense of another and are thus "bad" from the point of view of a strictly value-free economic analysis.
Published: October 3, 2006 9:48 AM
Francisco Torres
Reactionary writes:
The libertarian arguments against this legislation are well taken, but I would not call gambling a "mutually beneficial exchange" just as I would not call sales of cigarettes or pornography "mutually beneficial exchange."
They are as long as the two people involved in the exchange find the trade beneficial. If there was no perceived benefit, the trade would not take place.
The subjective theory of value likewise applies to a mugging: the victim is trading something he values more, his physical well-being, for something he values less, his wallet.
Indeed it does. However, this does not justify your assertion that gambling is NOT a mutually-beneficial trade if such a trade takes place. The point Vance was making is that YOU are making a value judgment upon gambling that is NOT shared by the person that gambles. The fact that you do not like gambling should not bear in another person's right to gamble his or her own money.
If you contention is that gambling is like mugging, then you are making a fallacious argument since a mugging is obviously an act of violent coercion where property is being taken by force, whereas gambling is not - I for one have not seen ONE person being taken at gunpoint to a Las Vegas casino to gamble in craps.
Unless you are a moral relativist, the mere fact that an exchange takes place does not mean it is objectively beneficial
This is a silly assertion. NO exchange is OBJECTIVELY beneficial, Reactionary, because there is no intrinsic value in the goods or services being exchanged. The fact that YOU find some things being exchanged not to your liking does not ipso facto make the exchange not mutually beneficial.
Selling your vote for government benefits, prostitution, pornography, and cigarette sales are all examples of voluntary exchange with deleterious effects
If that is your assertion, then your capacity for analysis is lacking. Government benefits are NOT the result of exchanges but of a coercive and violent taking of goods. On the other hand, prostitution, pornography and cigarette sales are ALL the result of voluntary exchanges - and if the parties involved did not feel they are going to be better off after the exchange, then such a trade would not take place.
The point is salient because the ancaps assure us that the market can deliver justice
Huh? Who said that? The market does not deliver "justice", Reactionary - it delivers nothing. The market is simply the network of myriads of voluntary exchanges. The anarcho-capitalists merely assert that a free market delivers goods and services in the most efficient way than a regulated market.
When in fact the market simply delivers whatever the participants desire, from child pornography to slave labor to kitchen cabinets.
The fact that these transactions may involve force or fraud against third parties is simply not relevant in an economic sense.
So your objection to the market is that there are bad people out there? Your assertion that fraud of force are not relevant in an economic sense is incorrect, since force and fraud takes away resources that could be applied to more productive endevours. Nevertheless, I fail to see how this pertains to gambling or cigarette smoking. In both of those instances, there are only two parties involved and not three. You are merely shifting the focus of the argument.
Slavery comes about the way the supply of every other commodity comes about: a demand for slave labor and an opportunity for profit from meeting that demand.
And how does that pertain to gambling or cigarette smoking? Again, you shifted the focus of the discussion in order to assert that gambling and cigarette sales, which involves only two parties in a voluntary transaction, possesses the same moral problem than slavery or child pornography, where a third party is involved involuntarily.
Published: October 3, 2006 9:57 AM
Reactionary
Brian,
Your analysis still measures the transaction against the objective standard of maximizing individual utility. I may not want maximum utility. I may just want the perverse thrill of being able to lord it over slaves, or I may act charitably to employ an old, less-competent friend who's fallen on hard times. But even then, my use of force to capture slaves or my decision to forego profit in favor of charity are simply examples of "maximizing utility" for my desired end.
You are trying to set up the market as an end when it is simply a means.
Published: October 3, 2006 10:08 AM
Reactionary
Francisco,
You commit the same error as Brian: "Your assertion that fraud of force are not relevant in an economic sense is incorrect, since force and fraud takes away resources that could be applied to more productive endevours."
More productive according to whom? In terms of satiating my desire for power, slavery fits the bill exactly. In terms of filling my pocket, selling snake oil to backwards hillbillies works great. Do you realize how much you sound like a Keynesian at this point?
Published: October 3, 2006 10:14 AM
Brian Drum
Reactionary,
I was under the impression that the discussion was about what constitues a mutually beneficial exchange. Of course one's decision to capture and enslave people are examples of "utilty maximization". All individuals' act in a way that they expect will maximize their utility. But we are talking about exchange between two distinct individuals, with two different value scales. In order for an exchange to be mutually beneficial, it must bring about (ex ante) an increase in both parties' utilities.
So since, everyone acts to maximize their own utitilty ,it follows that if an exchange is volutarilly entered into by two people, both see the action as a move upward on their value scale.
By introducing force one person gains in utility while the other is forced to lose in utilty. Therefore forced exchanges are not and cannot be mutually beneficial.
Published: October 3, 2006 10:19 AM
Reactionary
Brian,
What if my sole desire is to engage in a zero-sum transaction? Again, you are trying to elevate the market to an end in itself. There is a market for bestialty, and I hope you'll agree that bestialty is not good. But if an exchange must be mutually beneficial because it has taken place, then there is no valid objection to people leasing their animals out for bestialty. Your objections must spring from a value judgment external to the transaction that not all satiation of impulses is good, and that we are under a duty to act as stewards of God's creation.
Published: October 3, 2006 10:37 AM
George Gaskell
Even an inflamed, hysterical review of my posts should reveal that we agree on this point: exchange takes place because the participants deem it mutually beneficial. That does not mean that, in fact, it is mutually beneficial.
I am quite calm, which is why I can see that we do not, in fact, agree. The source of this disagreement seems to spring from the fact that you have recited not one but TWO points.
As to the first ("exchange takes place because the participants deem it mutually beneficial"), it does appear that we agree.
As to your second, distinct point, such as it is ("That does not mean that, in fact, it is mutually beneficial."), we clearly do not agree.
Your opinion that some transactions are not beneficial is a matter of perspective. It cannot be defined objectively.
Even if the person involved in the transaction later decides that his earlier subjective evaluation of the proposed transaction was distorted, or if he later adopts a different hierarchy of values such that he would not choose to repeat the transaction, it does not mean that, at the time he decided to engage in the transaction he did not value the benefit to him more than the money he was giving away.
Your repeated references to slavery are strange and confused. In an artificially narrow sense, the transaction between the slave-seller and slave-buyer can be voluntary economic transactions (if you consider only these two parties), and such a transaction therefore (to a limited extent) is subject to the same economic laws as the sale of any other goods.
But slavery always involves more than just the one transaction; it is, by definition, a series of transactions involving others: capture, imprisonment, punishment or the threat of punishment for non-crimes, etc.
Thus, one can say that slavery does not violate free market principles, but this is only true as to the narrow act of buying or selling an article of property. If one were to only consider the buyer and the seller, it is reasonable to conclude that the best price for a slave (or any good) will be reached in a free market for slaves, to the extent one could exist.
This analysis, while correct as to the artificially narrow issue of the price of slaves, clearly ignores the elephant in the living room ... slavery violates free market principles because it absolutely and necessarily requires the commission of acts that are contrary to the slave's liberty and property rights. The buyer commits a crime by assuming control over another person against his will. The act of buying the slave is not, in itself, contrary to free-market principles; keeping one is the offense. (Slaves have been bought for the purpose of freeing them; the act of buying them is not contrary to free-market principles.)
The buying and selling of kitchen cabinets involves no such necessary ancillary harms to third parties.
Published: October 3, 2006 10:57 AM
Reactionary
George,
The notion that the slave has liberty and property rights is a value judgment that economics does not supply. Even if the economist asserts that voluntary employees are more productive than slaves, he will have to leave the realm of economics and hire an accountant in order to demonstrate this. And it may turn out, in fact, that slaves are more productive in a given situation.
All of this is simply to say that, just because a transaction such as gambling or human trafficking takes place does not mean that it is "mutually beneficial."
Published: October 3, 2006 11:07 AM
Foaming at the Mouth Individualist
Reactionary,
The whole purpose of human existence is satiation of impulses. Restraint, frugality, and abstention are artificial human constructs that some people try to impose on others. The market must be an ends because anything else is subjective. Who are you to try and enforce civilization on us? Don't you see that any attempt to elevate humanity above the status of satiated beasts is forcing your values upon us?
The fact is that the majority of economicly-rational animals (also called humans) value base crapulence over your crazy ideas of civilized behavior. The market is the most efficient and moral vehicle for this. Your "tyranny of the minority" has been interfering in this throughout history. Please stop trying to impose your subjective values on us.
Published: October 3, 2006 11:10 AM
Francisco Torres
More productive according to whom? In terms of satiating my desire for power, slavery fits the bill exactly.
You did not understand the criticism. I was indicating that your point, that force or fraud are NOT economically relevant, is not true, since force or violence DOES take away from more productive endeavours. According to whom? According to the person that had his or her property taken by force or fraud - read Bastiat's The Broken Window Fallacy.
In terms of filling my pocket, selling snake oil to backwards hillbillies works great.
Yeah . . . And, pray tell, why would this mean that fraud or force are NOT economically relevant??
Do you realize how much you sound like a Keynesian at this point?
I gave not a reason to insult me ;-)
Published: October 3, 2006 11:16 AM
Brian Drum
Reactionary,
Now first off there can be no such thing as a zero-sum exchange between two people beacuse there is no way to compare utilities between different individuals and thus there is no way to perform the "summing". I think this is somewhat beside the point of the discussion...
So now unto the burning question of bestiality. Economics DOES NOT CARE about the content of the ends of the individuals participating in the economy. In economics a man leasing his goat to be sodomized is EXACTLY the same as a man leasing his house to a tenant. This however does not mean that economics favors goat-humping. It simply means that the question as to whether or not bestiality is moral is outside the scope of the field of study.
The "beneficial" that economics speaks of when talking about voluntary exchanges is simply that whatever good is received by an individual in the course of an exchange is, in the eyes of the receiver, necessarily valued more than the good given up. That is all. No more, no less.
Economics is descriptive of invididual's actions and DOES NOT make prescriptions for what the contents of those actions should be.
NOTE: I have not said that bestiality is a wonderful practice. I have simply tried to explain why it is irrelevant to economics. For what it is worth, personally I find the thought of individuals having sex with animals completely disgusting and would not want to associate with such people in any way, shape, or form.
Published: October 3, 2006 11:45 AM
Brian Drum
Reactionary,
One additional thought...While economics as such has nothing to say about the morality of any behavior, it can be used to shed light on the consequences that such behavior might have for an individual in different societal contexts. I think we may have been down this road before, but it is not outside the realm of economics to postulate that many people dissaprove of bestiality (or any other 'objectionable' behavior) and analyze the actions that may be taken by others in response to one's open practice of goat-humping...
Published: October 3, 2006 12:00 PM
George Gaskell
The notion that the slave has liberty and property rights is a value judgment that economics does not supply.
Incorrect.
The definition of rights is supplied via the concept of voluntarism. The fact that an economic system based on voluntarism produces economically optimal results is no accident.
As you said, people only voluntarily enter into transactions that they believe will be beneficial.
That evaluation of benefit may differ from your evaluation, or mine, but the lack of equivalence of valuation is actually what permits mutually beneficial transactions to occur in the first place.
Slavery violates the slave's liberty and property rights BECAUSE the series of transactions that constitute his enslavement were all involuntary. Voluntarism and the definition of property/liberty rights are thus closely related.
As between the slave-buyer and slave-seller alone, there can be a "free" market, mutuality of their benefit, price equilibrium, optimal supply to meet demand, market-clearing prices, and all the rest.
But, without considering anything more about the nature of slavery, we still know that slavery represents a sub-optimal economic system as to all parties involved, even without having to make any value judgments about the morality of slavery.
I know this because slavery represents a total violation of the voluntary choices of the slave. Thus, when all 3 parties are included in the scope of the analysis (buyer, seller, and slave), it's obvious that there is no such thing as a truly free market for slaves.
To call slavery immoral is really just another way of saying that slavery violates the slave's rights, which is the same as saying that slavery is only achieved through involuntary transactions.
Involuntary => sub-optimal economic productivity => violative of rights => immoral. All connected.
(Incidentally, this correlation among voluntarism, optimal economic productivity, property rights, and morality is applicable across the board, from slavery to taxation to gambling laws. They are different only in degree, not in kind.)
Published: October 3, 2006 12:47 PM
Reactionary
George,
Again, your analysis is predicated on the judgment that voluntary = good and involuntary = bad. While that is admirable and correct, economics is not an ethical inquiry. Even if you are using the terms "good" and "bad" with reference to productivity, the economist is not even qualified to demonstrate that; he has to go hire an accountant. And the accountant could as easily conclude that slaves are more productive than employees in a given situation.
Published: October 3, 2006 1:15 PM
Vince Daliessio
Mises' basis of thought is that "men act". This implies voluntary action. Only voluntary action satisfies this criteria - involuntary action implies force on the part of another - "men are acted upon".
"Men act" is axiomatic, true in theory and observable empirically. Men are only acted upon when they are prevented from acting.
Break it down as far as you want to, "men act" still undergirds any observable human phenomena.
Published: October 3, 2006 1:33 PM
Reactionary
Vince,
I also act when I hand over my wallet rather than get shot. I act when I pay my taxes rather than lose my assets. I act when under addiction to gambling, or alcohol, or cocaine. In all instances, I exercise my preference for one outcome over another.
Try as you might, the market will never take the place of God.
Published: October 3, 2006 1:45 PM
Vince Daliessio
Reactionary said;
"Try as you might, the market will never take the place of God."
Who said economics or praxeology was intended to take the place of God?
More importantly, you seem to be implying that the current positive law regime, as exemplified by Bush Cheney, Foley, Clinton, et al IS supposed to function in the place of God. Is this correct?
"Men act" implies free will, it implies the primacy of a man over physical control of his own body. Do you mean to imply that he doesn't?
Do you mean to imply that government, as some kind of perverse, corrupt substitute for God, is instead to rule over the actions of men?
Exactly why did God get dragged into this argument, anyway?
Published: October 3, 2006 2:01 PM
Reactionary
Vince,
This thread represents a strenuous effort by anarcho-capitalists to conclude that the market can necessarily supply a moral outcome. But the market is morally neutral. It will operate to supply a demand for gambling or prostitutes or bestialty as it will to supply a demand for the Gospels of Christ. So if the market can't do it, what can? I have seen Reason proffered as a substitute, but Reason still doesn't say why men should act logically, or even "reasonably." So what's left?
Published: October 3, 2006 2:16 PM
Brian Drum
Reactionary says: "This thread represents a strenuous effort by anarcho-capitalists to conclude that the market can necessarily supply a moral outcome."
Huh?? Who is talking about anarchy? Reactionary, the whole discussion sprung from your failure to grasp the fundamentals of the economic analysis of exchange. Please search for anarchy in this thread. You will find that you are the only one that keeps mentioning it.
The "market" is not a thing! It is not something that exists! What is meant by the term 'market' is simply the pattern of exchanges made between real acting individuals. A free market is simply a market marked by the absence of aggressive violence. You are mistaking a metaphor for reality when you speak of the market providing this, or the market providing that. Individuals produce things. Individuals consume things. Individuals exchange things. That is all that is meant by 'market'.
Published: October 3, 2006 2:31 PM
Reactionary
Brian,
"Individuals produce things. Individuals consume things. Individuals exchange things. That is all that is meant by 'market'."
My point exactly, and those things can be casinos, slave labor, pornography, copies of the Holy Bible, etc.
The thread started with Jeffrey's description of internet gambling as "mutually beneficial," a loaded phrase with which I take issue, not in an economic sense (though I imagine somebody could demonstrate that gambling extracts more in social costs than it supplies in benefits) but in a moral sense. You may disagree, but in any event the market does not necessarily supply a moral outcome.
Published: October 3, 2006 2:41 PM
Brian Drum
How on earth is "mutually benefitial" a loaded phrase? I was under the impression that this was pretty standard terminology in economics...No? I have explained repeatedly what is meant by "mutually benefitial exchange" and why all voluntary exchanges are necessarily mutually benefitial, ex ante. Please point to the error in my analysis.
"but in any event the market does not necessarily supply a moral outcome."
Who said that it did? There is no such system of societal organization that can guarantee a moral outcome, whatever you think that may be.
Published: October 3, 2006 3:04 PM
Vince Daliessio
Brian said;
"There is no such system of societal organization that can guarantee a moral outcome, whatever you think that may be."
Amen, brother!
Published: October 3, 2006 3:10 PM
Reactionary
Brian,
"Mutually beneficial" patently means that both parties derive benefit. Your qualifier is that this benefit is subjective with which I agree. But we also invite inquiry into the issues of beneficial to whom and for how long and whether this "mutually beneficial" activity imposes costs on others.
If Jeffrey meant "mutually beneficial" in terms of perceived benefits to the participants then I agree with him. Otherwise no, I think many (but certainly not all) forms of gambling are socially destructive and enabling credit to cover gambling losses is like passing out free booze to bums. That does not mean I think the activity should be prohibited. In fact, I'd argue strenuously that the cure is far worse than the disease.
Now, the reason I consider the issue to be an important one is that the premise of anarcho-capitalism--this site, really--is that a truly free market can supply justice. But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution. The fact that the slaves or prostitutes may be under coercion is not relevant so far as the buyers and sellers of slaves and prostitutes are concerned since they are acting out of their own perceived benefit, and that perception could be mistaken or just simply perverse.
Published: October 3, 2006 3:30 PM
George Gaskell
But the market is morally neutral.
I disagree. I believe that behavior in accordance with free market principles is also inherently moral. Non-aggression and mutual respect for life, liberty and property are not only economically beneficial (yielding tremendous material abundance), but are also moral and ethical goods.
I submit that our cultural senses of moral and ethical good were, over time, informed by the social and economic benefits of free markets, which helps explain the similarities between morality and free-market economics.
It will operate to supply a demand for gambling or prostitutes or bestialty as it will to supply a demand for the Gospels of Christ.
Yes, it will.
I further submit that using aggressive force to stop these things is morally unacceptable and economically counterprodutive.
Speak out against them. Disassociate yourself with anyone who does not agree with you, and encourage others to do the same. Ostracize people who behave in ways of which you disapprove. All of these things are ways to exercize your right to free speech and free association.
But using force (even superficially-sanitized force-by-proxy in the form of the State) is morally wrong. It is also economically harmful, which, as I said, is pretty much a way of saying the same thing twice.
So if the market can't do it, what can? I have seen Reason proffered as a substitute, but Reason still doesn't say why men should act logically, or even "reasonably." So what's left?
Aggressive force is what's left. You should at least admit it.
You seem to be working backward from the proposition that these things must be stopped, and so you are looking for a philosophy or social order that will accomplish this desired result.
That's post hoc rationalization, not a form of moral, legal or scientific reasoning.
Published: October 3, 2006 3:34 PM
George Gaskell
since a truly free market can also supply plenty of unjust things, like slave labor and prostitution
Prostitution can be, but is not necessarily, the product of slavery or coercion. So, let's set that aside for the moment.
As has been discussed at length, slave labor cannot, (pretty much by definition) be supplied by "a truly free market." This is patently false, and has been rebutted several times already. It is not free because there are at least 3 parties to the slave-trading transaction, one of which is 100% unfree.
You have not addressed this error of yours one time, and if you would like to be taken seriously, you should either attempt to do so or concede the point.
Published: October 3, 2006 3:39 PM
George
George,
I don't concede the point so I'm afraid you will not be able to take me seriously.
In times past there was no question that a man could purchase the forced labor of another person, and there was a free market in the trade of human beings. The fact that the slaves had to be captured and kept by force was simply another factor in the buyers' and sellers' calculation of profit and loss. It was no more considered immoral than you and I would consider the buying and selling of a horse immoral.
The fact that, in 2006, the Western world considers slavery immoral does not mean a market in slaves is not truly free. For market actors not operating under such assumptions, or even for market actors operating solely under a desire to exercise power over other human beings, the fact that slavery may be morally wrong is completely external to the transaction. Indeed, in an economic sense, the fact that the object of the transaction is immoral is just not relevant.
I will concede we are coming at this issue from different ends. From the Christian perspective, there is no right to view pornography or engage prostitutes so whether and to what extent government should forbid such activities is simply a policy question.
Published: October 3, 2006 4:03 PM
ns
Reactionary -
[i]...enabling credit to cover gambling losses is like passing out free booze to bums...[/i]
And instead you propose...?
Published: October 3, 2006 4:04 PM
Brian Drum
Reactionary,
Well at least I think that we have settled what is meant by "mutually beneficial" in the context of economics. So on to your further concerns...
You say: "...that a truly free market can supply justice. But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution."
A 'free market in slaves' is an oxymoronic phrase. There can be no such thing since slavery is predicated upon the use of aggressive force against another individual. Now of course there can be a 'market' for slaves, but never a 'free market'. That just doesn't make sense.
Prostitution qua prostitution, however, does not imply aggressive violence. So yes, there can be a free market in prostitution. Not in sex slaves, but in the voluntarily provided services of prostitutes, yes.
As for your claim that an ancap society cannot produce justice, I think that first you should offer up a definition of justice.
Published: October 3, 2006 4:08 PM
ns
follow-up on the prev question
...and who would pay for whatever you propose?
...and what to do with those who disagree?
Published: October 3, 2006 4:08 PM
Reactionary
ns,
Did you read my whole post, or did the reflexive jerk of your knee knock over your computer monitor?
Published: October 3, 2006 4:11 PM
Francisco Torres
"Mutually beneficial" patently means that both parties derive benefit. Your qualifier is that this benefit is subjective with which I agree. But we also invite inquiry into the issues of beneficial to whom and for how long and whether this "mutually beneficial" activity imposes costs on others.
Ah, I see. The "externalities" canard. If you searched hard enough, you would find "costs" on almost everything, including breathing (which is why the "externalities" concept is NOT a concept but an absurdity).
Otherwise no, I think many (but certainly not all) forms of gambling are socially destructive and enabling credit to cover gambling losses is like passing out free booze to bums.
This gives an indication of your own ethics - you would rather have people not exercise their free will because you do not like what they do to themselves. This "socially destructive" concept you wield is odd - how can the activity of ONE person become socially destructive? What YOU do with YOUR money in Las Vegas does NOT affect me, and that I can prove. I think you are just being puritanical.
Now, the reason I consider the issue to be an important one is that the premise of anarcho-capitalism--this site, really--is that a truly free market can supply justice.
A free market does NOT supply "justice". You are misapplying a concept. "Market" is simply the network of the myriads of voluntary transactions that people generate each day, and free market is the same network except now people are not hindered by external forces.
But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution.
Again, a free market does not supply anything. Only suppliers supply a thing.
The fact that the slaves or prostitutes may be under coercion is not relevant so far as the buyers and sellers of slaves and prostitutes are concerned since they are acting out of their own perceived benefit, and that perception could be mistaken or just simply perverse.
Indeed. Bad people exist and crap happens. You have not answered my question, however: What does this have to do with gambling?
Published: October 3, 2006 4:13 PM
Brian Drum
"From the Christian perspective, there is no right to view pornography or engage prostitutes "
Well first of all, no one has the right to anything. I'd also say that from the Christian perspective no man has the right to forcibly prohibit another man's viewing of pornography, or has modern Christianity moved completely from "let him who is without sin cast the first stone" to something like 'blessed is he that first strikes the sinner'?
Published: October 3, 2006 4:16 PM
George Gaskell
In times past there was no question that a man could purchase the forced labor of another person, and there was a free market in the trade of human beings. The fact that the slaves had to be captured and kept by force was simply another factor in the buyers' and sellers' calculation of profit and loss. It was no more considered immoral than you and I would consider the buying and selling of a horse immoral.
However accurate this may be as a history lesson, this does not advance your argument.
The fact that others, in times past, may have considered their dealing in slaves to have been either moral or part of a free market does not prove that it is either.
the fact that slavery may be morally wrong is completely external to the transaction. Indeed, in an economic sense, the fact that the object of the transaction is immoral is just not relevant
You are artificially restricting your view of what consitutes "the transaction" in order to reach your tortured conclusion.
If you expand your analysis to include ALL of the parties involved (i.e., the buyer, the seller and the slave), then you would include not only the economic aspects of the passing of money between buyer and seller, but also the life that the slave would have led had he not been, well, enslaved.
What he would have done with his life had he not been enslaved is economically relevant. What would have happened if the slave-owner had to hire paid employees is economically relevant.
By failing to account for how slavery affects everyone involved (including the slave and the employee not hired), you reach the conclusion that trading in slavery is morally neutral. But you have gone to great lengths to artificially exclude all of the morally objectionable elements from consideration!
You still have not given a reason why excluding these elements from your economic analysis is warranted or meaningful. It certainly makes your pre-conceived conclusion easier to hold, but that does not make it correct.
Published: October 3, 2006 4:25 PM
Reactionary
Brian,
Christians are instructed by the Apostles Peter and Paul that all earthly authority derives from God, and governments are duly ordained to reward the good and punish the wicked, and we are to fear God and honor the king. It follows that a king may outlaw pornography or any other immoral activity and Christians have no complaint under such statutes. Certainly we may point out the wisdom or undue expense of such a policy.
Published: October 3, 2006 4:34 PM
Reactionary
George,
"You still have not given a reason why excluding these elements from your economic analysis is warranted or meaningful."
Because, absent some forbearance based on such an analysis by the market actors, the transaction will take place regardless. As noted, for such people, the force necessary to keep the person enslaved is simply part of the costs.
"you reach the conclusion that trading in slavery is morally neutral."
No, I said the market is morally neutral. The market (which is simply a construct, or a process) does not draw moral distinctions. There is a market for targeted assassinations, there is a market for pornography, there is a market for self-mutilation (believe it or not, people will pay to have a hole put in their skulls or be hung by the folds of their skin), there is a market for bestialty, etc.
Published: October 3, 2006 4:48 PM
Brian Dum
Reactionary,
So whatever the king says goes? Why would you question the wisdom of the king's policies if they are the ordained proxies of God? What is one to do if the king outlaws Christianity? The whole idea of the king as God's proxy on earth seems to be a very self-serving doctrine for those in power...
Published: October 3, 2006 5:48 PM
George Gaskell
Because, absent some forbearance based on such an analysis by the market actors, the transaction will take place regardless.
I think I am beginning to see your reasoning process:
1. Slavery is bad.
2. In an an-cap society, market actors would engage in slavery because it benefits them, regardless of the cost to the slave.
3. The only thing that stops slave-traders is self-imposed forbearance (which you can't count on) OR a State that punishes slave trading.
4. Therefore anarcho-capitalism is bad/wrong/misguided/etc.
You might take a moment to re-think point No. 3.
Nowhere does slavery thrive as it does under a nation-state that sponsors and protects it. To date, no social order has been invented that rivals the State in its promotion of slavery.
In the absence of the bureaucratic organization that States are created to provide, slavery would never have existed in the West as it did.
Published: October 3, 2006 8:08 PM
Vince Daliessio
Back to gambling, and morality;
The state, in this case, is in NO WAY outlawing gambling is most definitely NOT taking the moral high ground here - they are simply outlawing competition with their favored licensees. They have absolutely NO problem with gambling - only with those who would compete with their favored interests.
It is the same everywhere - casinos in Atlantic city and rural Mississippi, horse racing in Pennsylvania, "Powerball" lotteries in two dozen states, dog racing and Jai-Alai in Florida. Most of these statist enterprises are located in the poorest areas possible. How is this moral? How is it preferable to freedom?
Similarly with prostitution - the only prostitutes who are getting busted are streetwalkers. Escorts, callgirls, and other professional women are mostly left alone. Again, the state is simply eliminating competition with its favored enterprises.
Similarly with drugs - street-level dealers and users go to jail, alcohol producers, pharmaceutical companies, and even large-scale illegal drugproducers are protected.
Once you recognize this, I don't see how you can confuse the state with moral authority or action.
Published: October 3, 2006 10:42 PM
Peter
Who says gambling, prostitutes and bestiality is immoral, and Gospels of Christ aren't?
As far as I'm concerned, gambling and prostitutes are good things, bestiality is disgusting but at worst morally neutral, and teaching nonsense to children who don't yet have a proper grip on reality with the intention that they should believe it is definitely immoral and abusive!
Now why are your opinions about what is and isn't moral, and what "the market" should provide (taking Brian Drum's response into account), more correct than mine?
Published: October 3, 2006 11:47 PM
Reactionary
George,
The state is a human institution. If there is a demand for slavery, then the market will supply it, and all other things being equal, the state will extend the same legal recognition to the trade as it may to the trade of textiles, canned goods, etc.
The reason there is no market for slavery now is due to the fact that so many people regard it as morally repugnant: nobody is willing to buy slaves and nobody is willing to be a slave. (Note too that the state, reflecting the mores of its citizens, has outlawed slavery.) So, no demand for slaves and the costs of subduing people and forcing them to be slaves (and the costs of engaging in a criminal activity) will be higher than simply employing wage earners.
Where such attitudes do not persist, the market operates to hook up slave buyers with slave sellers like it does any other commodity, all other things being equal. Slavery was not dropped out of the blue on an innocent human race by a malevolent socialist. The slave trade started because there was a demand for slave labor and an opportunity for entrepeneurs to profit from meeting that demand. If there is a demand for hit men, crack, child pornography, snake oil, you name it, and an opportunity for entrepeneurial profit from meeting that demand, then the market will operate to hook up buyers and sellers there as well.
The market can only reflect the morality of its participants. The reason anarcho-capitalists resist this basic truth is because they have put the market where God should be.
Now, regarding the debate over morality, there is no resolution other than to let us Puritans be over here in our fundamentalist stew, and let the libertines stay over there and party. I am an enthusiastic advocate of irreconcilable cultures going their separate ways.
Published: October 4, 2006 9:19 AM
Francisco Torres
If there is a demand for hit men, crack, child pornography, snake oil, you name it, and an opportunity for entrepeneurial profit from meeting that demand, then the market will operate to hook up buyers and sellers there as well.
It may do this. It may also provide its own safeguards in the form of protection services for potential victims of hitmen or pornographers, would it not? Or do you think only a State can provide those things?
The reason there is no market for slavery now is due to the fact that so many people regard it as morally repugnant: nobody is willing to buy slaves and nobody is willing to be a slave.
This begs the question as to how do you know people did not find slavery morally repugnant before - you simply assume they did not. The fact that some people held slaves does not mean they did not find the practice morally repugnant, only that they found excuses for it, like slaves should be only people of lower status (i.e. prisioners of war or from a different race or religion). The practice dissapeared not because people found it morally repugnant now, but because it is economically unsound, the productivity of slaves being much less than that of paid workers. It is also more costly to capture slaves that to hire workers.
The market can only reflect the morality of its participants. The reason anarcho-capitalists resist this basic truth is because they have put the market where God should be.
This is a classic example of a Non Sequitur.
As well, we can argue that the State only reflects the morality of its participants. How can the State become moraly superior to a market, if it is composed by the same people (unless you think the State is populated by superhumans)?
Published: October 4, 2006 3:41 PM
George Gaskell
The market can only reflect the morality of its participants.
The market IS its participants. The "market" is a mode of behavior, not a group of people.
All forms of behavior reflect the morality of the person in question. This is a tautology.
The difference between those participating in a free market and those "participating" in a nation-state is that EVERYONE in a free market is, by definition, acting voluntarily.
In a nation-state, only those who classify themselves as government agents and their supporters can be said to be "participating" in said State. Everyone else "participates" only by force, under coercion.
So, in a sense, a State reflects the morality of its participants as well. It reflects a sense of morality so grotesquely twisted and evil that it tolerates (and even actively PROMOTES) the coercive use of force to take a portion of the incomes of non-participants, and the threat of force to make these victims do or not do various things regardless of whether anyone involved is actually harmed.
Can one expect crime to exist in a market-based society? Of course. No anarcho-capitalist I have seen has suggested that the inclination of some minority of people to commit crimes will magically be erased by the abolition of the nation-state.
The proposition by market anarchists is that the State is a far more egregious perpetrator of crime, in that it organizes its criminal activity to a high degree, than any other criminal enterprise yet witnessed in history.
The proposition of market anarchists is that behavior based on FREE market principles is morally superior to those who act as agents (or promoters) of a nation-state.
Published: October 5, 2006 2:22 PM