Man, Economy, and State with Power and Market

1. Introduction: Praxeological Criticism of Ethics

PRAXEOLOGY—ECONOMICS—PROVIDES NO ULTIMATE ethical judgments: it simply furnishes the indispensable data necessary to make such judgments. It is a formal but universally valid science based on the existence of human action and on logical deductions from that existence. And yet praxeology may be extended beyond its current sphere, to criticize ethical goals. This does not mean that we abandon the value neutrality of praxeological science. It means merely that even ethical goals must be framed meaningfully and, therefore, that praxeology can criticize (1) existential errors made in the formulation of ethical propositions and (2) the possible existential meaninglessness and inner inconsistency of the goals themselves. If an ethical goal can be shown to be self-contradictory and conceptually impossible of fulfillment, then the goal is clearly an absurd one and should be abandoned by all. It should be noted that we are not disparaging ethical goals that may be practically unrealizable in a given historical situation; we do not reject the goal of abstention from robbery simply because it is not likely to be completely fulfilled in the near future. What we do propose to discard are those ethical goals that are conceptually impossible of fulfillment because of the inherent nature of man and of the universe.

We therefore propose to place a restriction on the unlimited validity of anyone’s ultimate ethical valuations. In doing so, we still are not pushing beyond the bounds of praxeology to function as ethicists, for we are not here attempting to establish a positive ethical system of our own or even to prove that such a system is attainable. We believe only that praxeology should have the right of veto, to discard any ethical propositions that fail to meet the test of conceptual possibility or internal consistency.

Furthermore, we maintain that whenever an ethical goal has been shown to be conceptually impossible and therefore absurd, it is equally absurd to take measures to approach that ideal. It is illegitimate to concede that X is an absurd goal, and then to go on to say that we should take all possible measures to approach it, at any rate. If the end is absurd, so is the approach toward that end; this is a praxeological truth derived from the law that a means can obtain its value only by being imputed from the end.1 A drive toward X only obtains its value from the value of X itself; if the latter is absurd, then so is the former.

There are two types of ethical criticisms that can be made of the free-market system. One type is purely existential; that is, it rests on existential premises only. The other type advances conflicting ethical goals and protests that the free market does not attain these goals. (Any mixture of the two will here be placed in the second category.) The first type says: (1) The free market leads to consequence A; (2) I don’t like consequence A (or consequence A is objectively unlikable); (3) therefore, the free market should not be established. To refute this type of criticism, it is necessary only to refute the existential proposition in the first part of the argument, and this is, admittedly, a purely praxeological task.

The following are brief summaries of very common criticisms of the free market that can be refuted praxeologically and that, indeed, have been refuted, implicitly or explicitly, in other writings:

(1) The free market causes business cycles and unemployment. Business cycles are caused by the governmental intervention of bank-credit expansion. Unemployment is caused by unions or government keeping wage rates above the free-market level. Only coercive intervention, not private spending, can bring about inflation.

(2) The free market is likely to bring about monopoly and monopoly pricing. If we define “monopoly” as the “single seller of a product,” we founder on insoluble problems. We cannot identify homogeneous products, except in the concrete day-to-day valuations of consumers. Furthermore, if we consider such monopoly as wicked, we must regard both Crusoe and Friday as vicious monopolists if they exchange fish and lumber on their desert island. But if Crusoe and Friday are not wicked, how can a more complex society, one necessarily less monopolistic in this sense, be at all wicked? At what point in the reduced scope of such monopoly can it be considered evil? And how can the market be held responsible for the number of people inhabiting the society? Moreover, every individual striving to be better than his fellows is thereby trying to be a “monopolist.” Is this bad? Do not both he and the rest of society benefit from his better mousetrap? Finally, there is no conceptually identifiable monopoly or monopolistic price on the free market.

Hence, a monopoly price and a monopoly by any usable definition arise only through the coercive grant of exclusive privilege by the government, and this includes all attempts to “enforce competition.”2

(3) The government must do what the people themselves cannot do. We have shown that no such cases can exist.

There are other criticisms, however, which infuse various degrees of ethical protest into the argument. This chapter will be devoted to a praxeological critique of some of the most popular of these antimarket ethical contentions.

• 1In short, we are saying that the means must be justified by the end. What else but an end can justify a means? The common conception that the doctrine, “the end justifies the means,” is an immoral device of Communists, is hopelessly confused. When, for example, people object to murder as a means to achieve goals, they are objecting to murder, not because they do not believe that means are justified by ends, but because they have conflicting ends—for example, the end that murder not be committed. They may hold this view as an end-in-itself or because it is a means to other ends, such as upholding each man’s right to life.
• 2For further discussion, see Man, Economy, and State, chapter 10.