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Mises Economics Blog

Utilitarian Free-Market Economics

August 10, 2007 4:10 PM by Weekend Edition (Archive)

  1. Introduction: Utilitarian Social Philosophy
  2. The Unanimity and Compensation Principles
  1. Ludwig von Mises and "Value-Free" Laissez Faire
Murray Rothbard offers a wide-ranging critique of utilitarian economics. While utilitarianism assumes that morality, the good, is purely subjective to each individual, it assumes on the other hand that these subjective desires can be added, subtracted, and weighed across the various individuals in society. It assumes that individual subjective utilities and costs can be added, subtracted, and measured so as to arrive at a "net social utility" or social "cost," thus permitting the utilitarian to advise for or against a given social policy. Modern welfare economics is particularly adept at arriving at estimates (even allegedly precise quantitative ones) of "social cost" and "social utility."

But economics does correctly inform us, not that moral principles are subjective, but that utilities and costs are indeed subjective: individual utilities are purely subjective and ordinal, and therefore it is totally illegitimate to add or weight them to arrive at any estimate for "social" utility or cost. FULL ARTICLE

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Comments (15)

  • Ray G

    I've always been somewhat taken aback by supposedly libertarian thinkers who subscribe to utlitarian thought whether directly or indirectly.

    Utillitarianism rests on the false premise that there is no objective morality. And since one of the stronger draws for many to libertarian thinking is the seemingly loose definition of personal morality, the more shallow minded of the libertarian camp often find themselves enamored of utilitarian thought.

    But a genuine belief in individual liberty doesn't have to hold that there is no objective value system, only that each individual is free to choose their values.

    Published: August 10, 2007 8:57 PM

  • Anthony

    I guess they think their moral code of "whatever maximizes utility for the greatest number" is objective, even if subconsciously. It's somewhat annoying when they try and sneak in Kantian ethics to do away with undesirable conclusions.

    Utilitarianism is fine, when constrained and subordinated by natural rights or something else similar.

    Published: August 10, 2007 9:40 PM

  • Ray G

    Here's an interesting little interview Reason Mag did with Peter Singer, utilitarian's poster boy.

    http://www.reason.com/news/show/27886.html

    Published: August 10, 2007 10:42 PM

  • TLWP Sam

    You raise a good point Ray G about Libertarians who have utilitarian views. It goes like 'if you want worldwide prosperity then free the market'. Isn't that utilitarianism? Similarly I notice there's a fellow who calls himself 'iceberg' who has made entries in various blogs indeed making the same complaint. Yet 'iceberg' quite rightly points out that what if the free market and the greater good do not go hand-in-hand, shouldn't a Libertarian choose the free market anyway? Suppose a universal healthcare system may lead to better health overall than a user-pays system isn't it still theft and it's wrong, period?

    Published: August 11, 2007 1:50 AM

  • Paul Marks

    Of course "universal healthcare" (i.e. government backing) would not lead to "better health" (whether the government went for the "Clinton plan", or the "Romney plan", or the "Edwards plan", or the Donald Duck plan) - but TLWP's point is still a valid one.

    It is interesting that at least one of the Republicans (Mitt Romney) supports this government backed "universal health care" idea. But then the top Democrat candidates support war (they just want it to be in a different place than Iraq - Pakistan for example).

    As for the posting (from the "Ethics of Liberty") yes the late Murry Rothbard's attack on utilitarianism was a sound one.

    Although the majority of townspeople voting to subsidize farmers is not quite the same thing as the majority of non red heads voting to kill red heads.

    If the majority of red heads voted to kill off red heads that would be a bit closer.

    Of course higher food prices in Switzerland are not exactly the same as killing people, I have not heard of anyone starving to death in Swiss towns because of higher food prices.

    A libertarian alternative to the Swiss practice (in order to meet fears of security of food supply in the event of a world problems - and, we should remember, that there are people still living who can remember World War Two and that a farming industry, once destroyed by imports, can not be restored in a hurry) would be a private charitable foundation to support the Swiss farming industry (via voluntary donations).

    Also a marketing campaign "support our farmers, buy Swiss" might help - if people really are prepared to pay higher prices to preserve Swiss farming.

    Published: August 11, 2007 6:35 AM

  • Anthony

    TWLP, I agree that you raise a good point - but usually when something publicly provided is referred to as "more efficient" it is because it is subsidized heavily or it has outlawed competition, meaning... it isn't.

    Natural-rights ethicists would maintain that organizing society in accordance with their principles will maximize prosperity anyway.

    Published: August 11, 2007 7:07 AM

  • Brainpolice

    It starts to get even more absurd when utilitarians start making arguements about "psychic utility", as if we can assign "utility points" or "happiness points" to everyone in some mathematically correct manner and judge everything logically on such a criteria. Whoever has the most happiness points wins! If it'll give me more happiness points than you, then surely it's justified!

    It is impossible to consistantly apply any ethical principle under such a method of looking at things.

    Published: August 11, 2007 10:01 AM

  • TLWP Sam

    In the fair go department, it is rather unfair to take the worst case scenario of utilitarian thought to rubbish the entire notion. To say it is rubbish because some could demand that a healthy person be forced to donate a kidney to a sickly someone else is being a tad not nice. After all, I don't understand how the concept of 'natural rights' is somehow natural or obvious. Or how many supposed negative rights really are isolationist. My right to breathe does not depend on your right to breathe, then again my right to free speech would be fairly pointless unless someone had to duty to listen (and then tell me to shut up! :P). After all, the notion of natural rights could be trashed because it is natural for some people to kill as their instinct to refrain from killing or be squeamish at thought of killing someone isn't enough to prevent them from killing. All in all there are some rights/duties that probably are necessarily utilitarian and a positive right. The right to life hopefully means the positive duty on others to either reasonably prevent murder if they can do so or at least punish murderers. It would be very uncomfortable to hear in a negative-rights natural-rights world where your only freedom from being killed was your sole ability to defend yourself and nothing more. That to put a murderer into jail was a part positive duty and part infringment of his right to live without interference.

    Published: August 11, 2007 10:51 AM

  • Ray G

    Even leaving off many of the debateable details, just looking at the surface it tells the reasonable thinker that utilitarianism and individual freedom are not truly compatible.

    Genuine libertarian thought has at its core the value of individual freedom. Period.

    Utilitarianism has at its core the value of the community. The ut'es qualify their collective dogma by giving great behavioral latitude to the individual, but that individual's freedoms are quickly curtailed if even a small majority decides that they are expendable for whatever reason.

    That behavioral latitude is perceived as individual freedom to the non-thinking libertarian, but it is a very limited freedom in the long run, under the ute dogma.

    An example would be Peter Singer's mother. He would like to just be done with her, but his sister won't let them get rid of momma. Singer, and many quasi-libertarians see getting rid of a sick relative as simply their individual right if they are the ones taking care of that relative. But they have to first devalue another individual's liberties to arrive there.

    Published: August 11, 2007 12:26 PM

  • Anthony

    "To say it is rubbish because some could demand that a healthy person be forced to donate a kidney to a sickly someone else is being a tad not nice."

    That is exactly why I think it is rubbish. Any system that denies me my full self-ownership deserves to be consigned in a wastebin, as far as I am concerned.

    "After all, I don't understand how the concept of 'natural rights' is somehow natural or obvious. Or how many supposed negative rights really are isolationist. My right to breathe does not depend on your right to breathe, then again my right to free speech would be fairly pointless unless someone had to duty to listen (and then tell me to shut up! :P)."

    Have you ever read Rothbard's description of how rights are essentially property rights (starting at self-ownership and ending with property in goods)? You have the right to dispose of your property in ways that do not impose on others. Notions such as a "right to free speech" become outright contradictory when there is talk of them becoming non-absolute for whatever reasons. A right to free speech means the right to use your body to try and persuade others to listen to you. No more, no less.

    "After all, the notion of natural rights could be trashed because it is natural for some people to kill as their instinct to refrain from killing or be squeamish at thought of killing someone isn't enough to prevent them from killing."

    Only if you misconceive of the origin of a "natural right". Here, "natural" means man's nature as social, [i]rational[/i] animal. Not brute animal nature nor some sort of self-enforcing right.

    "It would be very uncomfortable to hear in a negative-rights natural-rights world where your only freedom from being killed was your sole ability to defend yourself and nothing more."

    And to contract with others to exercise your right to self-defence for you (e.g. mutual defence associations, PDAs etc.)

    "That to put a murderer into jail was a part positive duty and part infringment of his right to live without interference."

    Murderers cannot coherently, as rights-violators, object to their rights being violated, to the extent that they have done harm to others. This is basic Kantian ethics/natural-rights theory. See Kinsella's estoppel approach on the matter.

    Published: August 11, 2007 5:27 PM

  • Brainpolice

    Right. Sam pulled out a classic straw man that is used to argue against natural rights: "Well, it's natural for me to murder you, therefore it's justified under natural rights". This is a misunderstanding of what natural rights means.

    Published: August 12, 2007 9:43 AM

  • TLWP Sam

    Darn tooting Brainpolice. I've read about 'natural rights' and I have yet to see its magic. Indeed how does rugged individualism place a positive duty onto others? Some bloke snuffs me out, why would you risk your life and safety trying to avenge my death? Or alternatively why would you want you tax dollars go to locking up this offender? Presuming no positive duty you'd in reality simply give this guy an angry stare and refuse to do business with him, or something like that?

    Published: August 12, 2007 9:57 AM

  • Scott D

    Sam,

    If you can posit a positive right that does not necessarily limit or infringe upon negative rights, then you might have something. Natural rights are universal. They do not promote conflict or require the lowering of some persons' welfare to raise others'. To me, this is the only tenable approach, as any other requires that you immediately assume a starting position of inequality in rights.

    I get the sense that you misunderstand the core of libertarian theory out of disdain for the more radical theories at the fringe.

    Regarding your earlier post, it is permissible to argue from a utilitarian perspective only if you wish to engage a utilitarian argument to refute it. So, when a utilitarian says that universal healthcare will make people better off, a libertarian can argue why this is false according to the utilitarian's own definitions. Whether "iceberg" argues in this fashion or not, I wouldn't know.

    Published: August 12, 2007 10:22 AM

  • Anthony

    Sam, aside from what Scott has said, the issue of negative/positive rights does not even come up with natural rights; you have the right to punish anyone who violates your rights via the means I referred to. You simply do not have the right (for obvious reasons) to force anyone to defend you.

    Published: August 12, 2007 7:04 PM

  • Jude Chua

    I enjoyed this piece from Rothbard, it's really good! It says very nicely some ideas I've been struggling to develop!

    Published: August 13, 2007 1:10 AM

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