Study Guide to Man, Economy, and State with Power and Market

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Chapter 2: Fundamentals of Intervention 185 Technical Matters 1. Some have objected to Rothbard’s claim that the free market maximizes utility because protection agencies necessarily make criminals less happy through their protection of clients. To elaborate on Rothbard’s defense (p. 1068), consider that once someone initiates aggression, it is impossible to achieve Pareto improvements (relative to the starting point of the analysis). If just one person is willing to violate property rights, we can no longer achieve unanimity in value judgments regarding the desirability of particular actions, and economic analysis alone can say no more. However, as Rothbard points out, there is still a presumption in favor of private defense agencies, because in principle they could exist in a crime-free world, where social utility would be maximized. (This is because the defense agencies would have contractual, voluntary arrangements with their customers, and thus we would still have an unblemished free market.) In contrast, under a State even if all of the citizens respected property rights, the State itself would still be initiating aggression and hence the economist could make no welfare claims. 2. Some economists have criticized Rothbard’s defense of his utility maximization claim from the “envy” objection (pp. 1068–69). For example, Bryan Caplan has argued that, were we to follow Rothbard’s logic, we also could not conclude that people signing a contract really wanted to cement a deal; perhaps the signers were merely practicing penmanship. And yet this is no contradiction on the part of Rothbard: as praxeologists, we can’t say that someone signing a
186 Study Guide to Man, Economy, and State with Power and Market contract agrees to the terms it spells out. After all, the person could be illiterate, force could have been threatened earlier, etc. (It is not praxeology that spells out the conditions for a legally enforceable contract.) What praxeology can say is that, at the moment of choice, the person thought that signing the contract would yield more utility than any rival course of action. Remember, the reason the praxeologist can also comment on coercive outcomes is that they necessarily differ from voluntary scenarios. (If they didn’t, then the aggressor wouldn’t bother threatening force.) That is why praxeologists conclude that voluntary actions increase utility while coerced ones harm at least one party. If at gunpoint two people agree to an exchange, then the praxeologist has no “ironclad proof” that they really possessed a reverse valuation for the items; Rothbard is thus not being pedantic just to rescue his welfare theory.
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CONTENTS INTRODUCTION . . . . . . .
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In June of 2004, I became convinced
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Introduction ix appropriate, I have
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Chapter Summary In a money economy,
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Chapter 4: Prices and Consumption 4
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Chapter Summary Consumer preference
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Chapter 10: Monopoly and Competitio
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Apriorism, 1, 9 Ability-to-pay prin
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Index 251 Equilibrium, 47, 104 macr
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Index 253 Medium of exchange, 27, 3
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Index 255 See also Economy, Evenly
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