First Principles - Free Markets & Civil Society

13-04-11 9:13 PM

The Home of American Intellectual Conservatism — First Principles

April 11, 2013

Free Markets & Civil Society
ISI recommends reading through the introductory essay before following the embedded hyperlinks or before working through the course itself. The essay can orient your reading and reflection so that like Caleb and Joshua you are calm and perceptive in the face of the intellectual giants you will find in this land. The exchange of goods and services through markets is as old as human civilization itself—indeed, depending on what one means by “markets” and “civilization,” it may even be older. But the study of the economy, politics, and society as discrete subjects, together with their relationship, is a relatively recent historical development, beginning only in the eighteenth century—about the time of the American Founding. As the American conservative intellectual movement began to coalesce in the early 1950s, it was natural that economics—the “free economy,” or more broadly, the “free society,” with a rich civil society of associations beyond the reach of state control—would be a central theme of conservative reflection. On the one hand, libertarian-minded conservatives were still contesting the welfare state that Franklin Roosevelt had constructed in the 1930s, seeing it as a centralizing, socialist threat to liberty. On the other hand, the global ideological competitor for America and the West was Soviet communism, and of course, Karl Marx had claimed that politics and culture were merely surface phenomena, reflecting the “relationship to the means of production” in the economic “base” of society. Since Marxist-Leninists deployed economic arguments to address political, social, and moral questions, communism’s adversaries would attempt to meet them on their own terrain, mustering economic arguments of their own. As a result, the intellectual project of American conservatives during the period of the Cold War was substantially shaped by classical liberal economic concepts.

“Classical” economic theory blossomed in the late eighteenth and early nineteenth centuries with such thinkers as Adam Smith in Scotland and A. R. J. Turgot in France (though antecedents can be found in the sixteenth-century School of Salamanca, and even earlier). These early political economists believed that the self-interested choices of individuals in free markets—that is, markets in which buyers and sellers may trade freely and prices are determined by supply and demand rather than by government edict—would lead to greater prosperity for the whole of society. As Smith famously wrote in The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” It was also believed that in a “commercial republic”—a consensual, rights-respecting polity oriented to commerce—the causes of war and civil war would be removed, and so an unprecedented social harmony was to be expected in the new regime. Manners would be “gentled” as “irrational” motives such as glory and religious devotion gave way to the decent, cautious virtues of the secular bourgeoisie. Since we ourselves are inheritors of the legacy of the classical liberal economists, we too often fail to consider what a moral revolution these ideas entailed. The classical philosophy of the Greeks and Romans had affirmed the warrior virtues and generally contemned mere commerce as a servile occupation. Christian theology was wary of self-interest and considered riches a source of sinful temptation. Given the powerful arguments of these traditional perspectives, the theoretical victory of classical liberal economics has never been entirely secure—however successful liberal Page 1 of 11

involuntary. labor unions. “the chief business of the American people is business. This school of thought was not without its critics both among conservatives and on the newborn socialist Left. W. guilds. including. which could marshal much greater economies of scale by nationalizing entire industries.” What was not always acknowledged. As the institutions of civil society came to be distinguished from both the state and the economy. and economists”—though Burke.First Principles . most decisively. Critics had long attacked the free-market economy along four lines. the direction of change was similar: Franklin Delano Roosevelt’s New Deal expanded controls on the U. Classical liberalism—the political expression of free-market economics that extends a concern for individual liberty to other spheres beyond the economy—supplied the dominant paradigm of political thought in the nineteenth-century Anglo-American world.) Businesses typically were not considered part of civil society. “civil society” was still a near synonym for “political society” or society in general. and as late as 1925 President Calvin Coolidge could justly say. Society and the economy. the term came to signify instead those institutions of the social order which were independent of government—the myriad intermediary groups between the individual and the state. the destitute. Benito Mussolini encapsulated the spirit of the age in his description of fascism: “Everything for the State. arguing that it was unjust because of the unequal distribution of wealth it produced. F. such as G. Liberalism itself. The Soviet Union. was conceived of as merely a framework for supporting the market and society—the economy and daily life would be subsumed under government power. the study of society became a discipline in its own right —“sociology. and the aged. indeed. the liberal social and economic order was approaching a crisis. also gave socialists concrete examples of how governments could centrally plan national economies. inefficient relative to socialism. which seemed to discredit the liberal dream of world peace through free trade. was that the social context in which business flourished was built upon the civil associations Alexis de Tocqueville had described in Democracy in America. the stock market crash of 1929 and the ensuing Great Depression dealt a near-fatal blow to the free-market system. because the family tie is unchosen. the economic downturn of the 1930s fed into socialist movements and new ideologies that proposed to use state power to save society and put people back to which arose as one consequence of that war. appreciated market freedom within its own sphere.Free Markets & Civil Society 13-04-11 9:13 PM economics has been in practice. nothing against the State. immoral because of the free rein laissez-faire gave to acquisitiveness and selfishness. http://www. Around the world. World War I.” as Auguste Comte christened it. classified the family as a precivil institution.firstprinciplesjournal. however. and inherently marred by “market failures” and the business cycle of booms and busts. Already by the time Coolidge spoke. calculators. Though nothing like overt socialism or fascism caught on in the United States. Finally. economy and erected a welfare state to fulfill functions once served by families and free associations within civil society. the British statesman Edmund Burke had warned of the dangers attendant upon replacing an older social order with one conceived by rationalist “sophisters. neighborhoods. Marxism. the state. Nevertheless. such as churches. families. on some accounts. Hegel. after 1848. nor reflected upon.” This was the very inversion of classical liberalism: instead of the economy and civil society existing independently of the state— which. looked to many intellectuals like the wave of the future. and the “dark satanic mills” of the Industrial Revolution marshaled intellectuals into support for emerging working-class movements and various forms of socialism. a friend of Adam Smith. meanwhile. on the theory that they are private rather than civil concerns. it was a liberal age. and. and indeed society itself. Over the course of the nineteenth century. shattering the American public’s confidence in the market’s ability to provide jobs and goods—and shattering as well the public’s confidence in civil society’s ability to provide independently for the sick. As early as 1790. frequently strayed from its laissez-faire ideals into imperialism (in Great Britain) and plutocracy (in the United States). (Some nineteenth-century thinkers. clubs. it held. would flourish best with minimal government intervention. nothing outside the State. trade associations. including. Before long a literary backlash against liberalism.S. In Smith’s day.aspx?article=34&loc=b&type=cbbp Page 2 of 11 . utilitarianism. and existing impediments to social and economic freedom should be abolished.

in the academy. and Great Britain was not an avowed socialist but a defender of capitalism. economic policy through the 1970s.S.” sociologist Robert Nisbet. In the press. put more emphasis on civil society and argued that free markets themselves must be undergirded and regulated by a traditional social order—though not by an intrusive national who pledged to preserve the welfare state—believed in an expansive role for government in structuring the economy and civil society. the British economist John Maynard Keynes. Omnipotent Government. The onus of new regulations such as wage and price controls fell disproportionately on small businesses. Ludwig von Mises. and Henry Hazlitt.S. individuals and civil society would not long remain free. whose owners banded together to resist Roosevelt’s alphabet soup of government agencies. the proper relationship between civil society and free markets was a matter of contention: the classical liberals and libertarians wanted unrestricted markets and saw little conflict between the ethos of the market and the needs of civil society. By the 1950s.” Keynes believed. At the other pole were those who believed that increased state power posed a threat to markets and civil society. Isabel Paterson. emigrated to the U. And Keynesianism would endure as the basis for U. which argued that latter-day preoccupations with individual identity and national community arose from the decline of traditional organic authority and the rise of state power. The one pole. whose adherents ranged from socialists to modern liberals—and indeed “modern Republicans” like Dwight Eisenhower.firstprinciplesjournal. and his magnum opus Human Action he provided a thoroughgoing defense of free markets and a critique of economic planning. on the other hand. in need of life-support from government. and through such works as Socialism. among other things.First Principles .S. such as Albert Jay Nock. the acknowledged dean of the “Austrian school” of economics. stated the case well in his 1953 book The Quest for Community. was already well underway by the time Keynes published his seminal General Theory of Employment. Nisbet contended that the free market itself developed out of the family and civil society: http://www. Among this latter group. two other émigré Austrian economists would provide opponents of Keynesianism and the New Deal welfare state with their most valuable ammunition. in which Hayek argued that socialism led directly to totalitarianism: without private ownership of the means of production. a scattered remnant of classical liberals and Jeffersonians. government must stimulate aggregate demand through public spending—particularly deficit spending. But this man. the free market.Free Markets & Civil Society 13-04-11 9:13 PM Ironically. economists such as Frank Knight at the University of Chicago and the Austrian émigré Joseph Schumpeter at Harvard bucked the tide of Keynesianism and spoke out against the New Deal. believed that capitalism had grown old and decrepit. two poles of opinion had emerged regarding the relationship of the state to the market economy and to civil society. Mises’ younger associate and fellow Austrian-school economist Friedrich Hayek would galvanize even greater popular opposition to statism with his 1944 bestseller The Road to Serfdom. Opposition to the New Deal arose in several quarters. which stalled the engine of the economy. Roosevelt’s New Deal. But Keynes’s theory would provide a coherent philosophy for what had been ad hoc New Deal measures. Interest and Money in 1936. One of the “New Conservatives. with the Depression and World War II long over but the welfare state and the “military-industrial complex” firmly entrenched. In the 1940s. in 1940. To rev that engine back up. His was a vision. itself a project designed to rescue. objected to the New Deal not just on economic grounds but also because they saw in Roosevelt’s interventions the first steps toward the kind of regimented social order that had overtaken Europe.aspx?article=34&loc=b&type=cbbp Page 3 of 11 . that in “late” capitalism the public had a propensity to save too much. The “New Conservatives” who were attaining prominence in the 1950s. as his critic and fellow economist Joseph Schumpeter said. the man who would do most to undermine the free-market system in the U. Meanwhile. of “capitalism in the oxygen tent. rather than replace.

” also tried to clarify the terminology.) Other free-market economists at the University of Chicago met with more mainstream success. in his famous essay “Why I Am Not a Conservative. moral. The “Chicago school” of economics. precapitalist. “Is the system unethical that permits the individual to strive to advance himself and his neighbor through his own productive achievement? Is the ethical system the one that is organized to suppress this striving?” At the same time. Röpke emphasized the religious.Free Markets & Civil Society 13-04-11 9:13 PM There is indeed a sense in which the so-called free market never existed at all save in the imaginations of the rationalists. and civil roots of economic freedom—as well as economic freedom’s benefits for the individual and civil society. Ludwig von Mises himself held only a privately supported visiting professorship at New York University’s business school. his ability to serve ends that do not look to his own immediate betterment.aspx?article=34&loc=b&type=cbbp Page 4 of 11 . most notably the family and local community. in every sense. when carefully examined. is not set against but enclosed within the realm in which is developed man’s capacity for devotion. Russell Kirk took great pains to distinguish the conservative tradition from the classical liberal or libertarian one. Friedrich Hayek.First Principles . speedy transportation. Civitas Humana: The Moral Foundations of Civil Society (1944). the fluidity of capital. and Luigi Einaudi. as a “network of personal relationships and local decencies was pushed aside by steam. and the whole factory system were able to thrive and to give the appearance of internal stability only because of the continued existence of institutional and cultural allegiances which were.) Kirk lamented many of the effects that nineteenth-century capitalism had upon civil society. coal.” found theoretical (as well as practical) support for their beliefs in the work of the German economist Wilhelm Röpke and Germany’s postwar “Ordo liberal” school of economics. Kirk and others of the New Conservatives. and the other items in that catalogue of progress which school-children memorize. while a socialist economy ends in social disorder and poverty. neither the Austrian school nor Röpke and the Ordo liberals (who did influence policy in Germany) found much support within the economics profession. In works such as The Social Crisis of Our Time (1942).” he wrote. a special set of political controls and immunities existing on the foundations of institutions. Röpke cautioned that “the defender of a ‘liberal’ economy must make plain that the realm of economy in which self-interest “There is a deep moral reason for the fact that an economy of free enterprise brings about social health and a plenitude of goods. while the University of Chicago’s economics department refused to extend an appointment to Hayek. . What has so often been called the natural economic order of the nineteenth century turns out to be. Society as a whole cannot be based on the law of supply and demand.firstprinciplesjournal. who instead found a position with the university’s interdisciplinary Committee on Social Thought. which had nothing whatsoever to do with the essence of capitalism. Freedom of contract.” While popular with right-of-center intellectuals. founded by Frank Knight and perhaps best represented by http://www. and A Humane Economy (1958). a book that did much to rehabilitate “conservatism” as a political designation and a school of thought in the United States. (Hayek would eventually win much deserved recognition when he received the Nobel Prize for Economics in 1974—though even then. . In his own work of 1953. the mobility of labor. the spinning jenny.” Yet this critique of nineteenth-century political economy did not entail support for the twentieth-century welfare state or rejection of the free market—only a belief that markets should have social limits. the cotton gin. he had to share the award with the welfare economist Gunnar Myrdal. which included such figures as Alexander Rustow. (For his part. Walter Eucken.” and as “personal loyalties gave way to financial relationships. later often called “traditionalists. constrained by legislation and competition. . A question that would come to the fore rather later was whether or not free-market societies had a built-in tendency to erode the civil-social institutions on which capitalist economies (and liberal democratic political practices) ultimately relied. however. The Conservative Mind.

by providing incentives for greater capital investment. Another key difference between the Chicago and Austrian schools concerned monetary policy: Chicago “monetarists” believed that central banks should suppress inflation and tame the business cycle through control of the money supply. meanwhile. senator). Jude Wanniski. journalist Irving Kristol and Harvard sociologist James Q. most of them had begun their careers. But while politicians proved reluctant to listen to free-market economic theorists.” For his part. unlike libertarians and most old-guard conservatives. In the short term.First Principles . Wilson’s colleague Edward C. the Carter administration began to deregulate industries such as telecommunications. evils which afflicted the poor and minorities—the very people that welfare programs were intended to help—much more severely than they did the middle class. While Keynesianism emphasized the need for government to stimulate aggregate demand. illegitimacy. which documented the effects of thirty years of government intervention into civil society and gave impetus to the welfare-reform movement. a book that further contested the premises of the War on Poverty. By 1996. With so much intellectual firepower arrayed against socialism. failed spectacularly as an explanatory and policy tool in the 1970s. These measures accelerated during the Reagan era. the social democrat Michael Harrington (whose 1962 book The Other America did much to inspire the War on Poverty) dubbed these apostate liberals “neoconservatives. Instead. who believed that inflation and recession should provide natural breaks on one another. Ronald Reagan’s economic advisors included a new school of free-market advocates. were not arguing for a repeal of the New Deal. Murray’s arguments had become conventional wisdom. Keynesianism. and air travel—not. in 1971 Republican President Richard Nixon declared. experienced simultaneously rising unemployment rates and inflation. business-cycle downturns. a policy journal aimed at rethinking the Great Society and examining its ill effects. one might have expected public policy to move to the Right. a 1965 report by Assistant Secretary of Labor Daniel Patrick Moynihan (later a U. before long they were forced to face the consequences of their own policies. had actually expanded the New Deal welfare state under the rubric of the “Great Society. creating new programs for the poor such as food stamps and Head Start. rather than solutions out of any commitment to free-market principles. Keynesian theory itself. as a source of social pathology.” launching new entitlement programs such as Medicare and Medicaid.Free Markets & Civil Society 13-04-11 9:13 PM Milton Friedman. challenged Keynesian and neoclassical policy prescriptions but accepted mainstream economic methodology—unlike the Austrian school. one of whom. with rising rates of crime. the so-called supply-siders.” Neoconservative critiques of the welfare state mounted over the next twenty years. and many remained. which adhered to an older method. and Bruce Bartlett. and the legacy of the New Deal. Democrat Lyndon Johnson. Although it became the pretext for further Great Society programs. but out of necessity. Five years later.” Nixon’s predecessor. to be sure.S.firstprinciplesjournal. on the other handed. 1950–1980. mired in low economic growth. Paul Craig Roberts. The consequences for civil society and the family of decades of welfare economics and social engineering had been objectively disastrous. Nixon instituted unprecedented peacetime wage and price controls and severed the last links between the dollar and the price of gold. when the United States. Banfield published The Unheavenly City.” was one of the first documents to call attention to family dissolution. trucking. Jack Kemp. “We are all Keynesians now. These scholars. That same year. But their criticisms of the Great Society earned them the hostility of their peers. when President Bill Clinton signed welfare reform into law. rather than poverty. who included Arthur Laffer. Reagan’s supply-side advisors. and declaring a “War on Poverty. Wilson launched the Public Interest. tended to favor a gold standard and to see central banks as contributors to. that did not happen. This “stagflation” defied the expectations of Keynesian analysts.aspx?article=34&loc=b&type=cbbp Page 5 of 11 . Austrians. “The Negro Family: The Case for National Action. and urban decay. At the same time that stagflation shook policymakers’ confidence in Keynesianism. argued that cutting taxes was a better way to stimulate the economy. (Like http://www. on the political Left. culminating with Charles Murray’s 1984 book Losing Ground: American Social Policy.

” Do these seem like “economic” categories of thought? Why does Aristotle use them in a discussion of property and trade? There is a boundary fixed to the riches needed for a good life because wealth-getting is an art. the intermediary institutions with their attendant habits of association that Tocqueville recognized as the “seedbeds of virtue.) The “Laffer curve”—as legend has it. Politics. of course. The specter that had “haunted” Europe—and the world—since the middle of the nineteenth century (communism) was dispelled. Although entitlement programs such as Social Security in the United States and national health services in many other countries remained politically untouchable (despite their long-term insolvency) the center of gravity in Western economic thought had moved from Keynesianism and soft forms of socialism to a belief that lighter regulations. In both politics and economics. new empirical work by the Harvard political scientist Robert Putnam reinforced the understanding that democratic political systems and vibrant free-market economies— two of the great achievements of the West—depend in decisive respects upon the richness and depth of the associations of civil society.aspx?article=34&loc=b&type=cbbp Page 6 of 11 . chapters 8-10 How does Aristotle’s consideration of an individual or group’s ultimate end shape his discussion of means? What would his economics be like without such a consideration of ultimate ends? Discuss the terms “natural” and “unnatural. what is it? II. Summa Theologica.First Principles . Classical liberalism emphasized the “naturalness” of free-market relations when state restraints on individuals were removed. followed in 1991 by the dissolution of the Soviet Union itself. supply-siders did not see federal deficits as a grave problem. sketched by Arthur Laffer on a napkin at a meeting with Wanniski and Dick Cheney—illustrated how cutting taxes. the habits of liberty must be learned. the collapse of the Soviet empire in 1989. But events in the 1990s also showed that traditional conservative qualifications to classical liberalism had cogency. 2. however. 66. 77. and freer economies were generally more conducive to national prosperity. however. according to Aristotle. could actually increase government revenue. became a buzzword of the late 1990s. Book I. Lesson 1: Classical and Christian ideas of family and property I. It quickly became evident that the benefits of a free-market system depend upon habits and virtues that are not immediately elicited by the mere absence of restraints.” Civil society had effectively been destroyed under communist tyranny. In the wake of communism’s collapse. where columnist Thomas Friedman did much to popularize the phenomenon. even on the Right. Free trade enjoyed similar support on an international scale. Aristotle. Supply-side economics was not without its critics. generating angst in some quarters. q. essentially settled the “great question” of whether or not there should be private property in the means of production. by leading to greater economic growth. q. What was “missing” in the postcommunist countries was civil society itself. II. free-market advocates of all schools could claim a number of successes. 1 & 2. and the United States enjoyed exceptional prosperity. & q. lower taxes. By the 1990s. “globalization. what are its conditions? If not. but throughout the Reagan administration it enjoyed unprecedented influence for a modern free-market economic philosophy.firstprinciplesjournal. If wealth-getting is not an art.” both economic and cultural. At the same time. Thomas Aquinas. innovation—particularly in computers and telecommunications— With tax and regulatory burdens waning. rhapsodies in others—even in the op-ed pages of the New York Times. lawless oligarchies arose in Russia while the economic performance of the nations of eastern Europe was most often disappointing. would they nevertheless be just? Does Thomas write with the individual economic actor in mind? What relationships between the individual and others or between individuals does he consider? Is there such a thing as a just price? If so. what are the implications for economics? http://www. Most decisively. a.Free Markets & Civil Society 13-04-11 9:13 PM the Keynesians. 78 Would anti-usury laws be prudent in a modern economy? Why or why not? If not prudent. The fundamental moral legitimacy of free market economics reached an all-time high.

How are instinct and duty considered by each man? What place do gifts have in increasing or decreasing the wealth of nations? II. “The Family” and “Tyranny and Its Remedies” Compare and contrast Althusius and Aristotle’s respective discussions of the composition and purpose of the family. Thomas’s account of caritas.i-ii Compare Smith’s account of trade’s purpose to Aristotle’s. and what kind of trade (free or otherwise) benefits each? Summary question: Is the possession of liberty inseparable from the right to private property. as Burke thinks? III. Adam Smith. Johannes Althusius. the Papal system of granaries that Burke describes? Must the connection be detrimental to the poor. Why do these two thinkers come to their different conclusions concerning trade? What motivates man to trade. Cooke. Section One. Frederick Wilhelmsen. can patronage exist without the receiving group’s servility and therefore the loss of their freedom? What for Taylor is the economic difference between manufacturers and farmers. Richard Velkley. Small Is Still Beautiful: Economics as if Families Mattered Lesson 2: The Anglophone economists I. e.W. “Unmasking the Protecting-Tariff Policy and Its Advocates from Many Perspectives” Why does Taylor distinguish between the government’s interest and the national interest. Paul Gottfried. without indirectly harming any other group? Whether or not it is possible.g. “Edmund Burke: A Liberal Practitioner of Political Economy” Rod Preece. and what sort of liberty prevents illiberality.g. “The Political Economy of Edmund Burke” Russell Kirk. according to Smith? Compare it to St. and what does the answer to that question mean for both economics and politics? Further reading: 1. and selfishness? Further reading: 1. “Being and Politics” 2. on the one hand. Thoughts and Details on Scarcity How does Burke’s pietas toward the long tradition of English farming affect his views in this treatise? Does pietas have a proper place in economic thinking? Is the sanctity of contract violated by state interference in the market? What is the connection between government intervention in the market and the welfare of the poor. 5. “The Family as the Basis for Political Existence” 3. and stockjobbers on the other? How does each group relate to the national economy. “Old-Fashioned Men” Lesson 3: The Francophone economists http://www. Edmund Burke: A Genius Reconsidered J. John Taylor of Caroline. Tyranny Unmasked. I.First Principles . Joseph Pearce. vice. and what are some possible objections to his distinction? Is it possible for a government to favor one specific group of people. Politica.aspx?article=34&loc=b&type=cbbp Page 7 of 11 .com/print.firstprinciplesjournal. corn farmers. 2. The Wealth of Nations. what extra-economic conditions are required for a market’s free functioning? What sort of market is required for the prince—as opposed to Althusius’ formulation—to support his people? Summary question: How is the family an economic institution.Free Markets & Civil Society 13-04-11 9:13 PM III. and if it cannot. “Adam Smith and German Social Thought” Arthur Kemp. Can a free market frustrate a tyrant. 4. “Legacies from Adam Smith” Frank Petrella. e. 6. 3. Edmund Burke.

etc.Free Markets & Civil Society 13-04-11 9:13 PM I.R. Richard Cantillon. Vol. economic. noting both significant and more subtle agreements and disagreements. i. May 15. “Karl Marx as Frankenstein: Toward a Genealogy of Communism” Stephen Tonsor. social. Thomas? Why or why not? What does Turgot’s beginning with a discussion of land mean for economics in comparison with Aristotle’s beginning with household management? II. David Ricardo. The Positive Theory of Capital. 4. where? If not. Capital. XXXI: On Machinery Why should a man pursuing his rational self-interest be concerned that his business decisions “very materially deteriorate the condition of the labouring classes”? Is the rejection of machinery more detrimental to the poor than its development? Would the worker be in a better position if he owned his machine or tools himself? Consider this from several vantage points. is this a decisive defect in his theory? Further reading: 1. Given the nature of “capital” as an economic “apple of discord. is the term “wage slave” applicable to him? Should the capitalist be responsible for the laborer’s well-being? Should working hours be legally restricted? On what basis? III. Essay on the Nature of Trade in General. “From Kant to Marx: The Perils of Liberal Idealism” John Weicher. familial.g. “Capital and Prosperity” Lesson 5: Free trade in the nineteenth century I. Book Chapters 1 & 2 Compare Böhm-Bawerk’s account of economics’ telos with Aristotle’s.aspx?article=34&loc=b&type=cbbp Page 8 of 11 . Richard Cobden.First Principles . A. 2. “Turgot and the American Revolution” Lesson 4: Statism in the nineteenth century I. Jacques Wendel.J.XV.” how is a definition to be attempted? What implication does Böhm-Bawerk’s account of the powers of men and of nature have for a possible account of how wealth is created and exploited? Summary question: Is the relationship between man and machinery antagonistic. Reflections on the Formations and Distribution of Wealth. and does the machine always benefit the already wealthy? Does the spread of capital diminish class antagonism or merely increase strife? Further reading: 1. Speech on the repeal of the Corn Laws. political.e. 1843 Is protectionism fundamentally injurious to the poor? Does a protectionist law assume that all parties affected are “perfectly angelical”? In view of Cobden’s mention of a connection between long leases and good farming. what conditions are http://www. Eugen von Böhm-Bawerk. II. 1. Karl Marx. Wladislaw Krasnow. “Marxism and Modernity” Joseph Knippenberg.firstprinciplesjournal. e. Part Two According to whose knowledge is a price determined? What does this mean for the notion of price controls? Why does Cantillon base a nation’s wealth on its farms? Is such an account of wealth persuasive? How would the Anglophone economists respond? Does a capitalist or entrepreneur have a place in Cantillon’s system? If so. § 1-31 & 71-75 How and why are men linked to one another in Turgot’s account? Does he consider something more than an individual or a collection of individuals? Does Turgot’s defense of interest successfully refute the points put forward by Aristotle and St. 3. sections 1 & 3-5 What sort of moral (or immoral) logic does Marx’s capitalist obey? Is this code determined by the pursuit of the material and/or moral goods seen in earlier readings? Does the laborer in a factory possess free will in selling his labor. Turgot. Principles of Political Economy and Taxation.

16: Sundry Observations on the Nature of Capital Compare Keynes’ account of capital with Marx’s capitalist. “Keynes as a Conservative” Arthur Kemp.” of what does List’s objection to physiocratic theory consist? Does greater peace between nations come about because of greater economic or greater political interdependence? That is. indifferent. Why or why not is such a central planner inimical. or does it involve moral deliberation? How does someone suffer from another’s saving? What are the implications of this for a theory of economic justice? II. “Rotarian Socialism” http://www. Friedrich List. “Hayek on the Abuse of Method: A Classic Reissued” Frank Chodorov. Selected Essays on Political Economy. 3. Legislation. ch. what is its foundation.g. and Liberty: Hayek’s Completed Trilogy” Bettina Bien Graves. will protectionism necessarily go hand-in-hand with populism? If so. and Money.” What does this distinction illuminate? In a democracy.Free Markets & Civil Society 13-04-11 9:13 PM generally necessary for economic flourishing. 6. for me to dispose of according to my will alone. and is it logically valid? In light of his commendations of free trade and “a universal confederation and a perpetual peace. Donald Boudreaux and Thea Lee. authoritative. and in what senses are they different? Can the State legitimately enter in “as a balancing factor” in order to ensure full employment? Is interventionism purely a matter of economic necessity. 5. “Protectionism and Communism” If my property is naturally my own. Frank Chodorov. “The Revolution of 1913” What does Chodorov mean by “society. “Post-Keynes & Pre-Keynes” Arthur Shenfield. 2.aspx?article=34&loc=b&type=cbbp Page 9 of 11 . according to Hayek? III. Interest. John Maynard Keynes. “The Use of Knowledge in Society” Why is “knowledge of the relevant facts” necessarily dispersed among many people? Does such dispersal preclude the existence of Plato’s philosopher-kings? Are there economic decisions that should not or cannot be made in a decentralized fashion? What is the function of a price? Should government determine price? Why. Frederic Bastiat. Bruce Bartlett. must defense of the free market always be an elitist project in a democracy? Summary question: Both centralized planning and national taxation assume the flow of revenue to a unitary. “Law. “Is Free Trade Good for America?” Lesson 6: Twentieth-century statism I. 4. “Debunking the State” Frank Chodorov. Friedrich Hayek. should economic union precede political union or proceed from it? Summary question: Is unrestricted free trade inseparable from the right to private property and personal liberty.firstprinciplesjournal.” and what distinguishes it from the state? Articulate the principal points of difference between Chodorov’s two “revolutions. or can economic protections be at times justified (and how)? Further reading: 1. “Political and Cosmopolitical Economy” Is List’s distinction between “national” and “cosmopolitical” economy grounded in economic facts? If not. and final central planner. or why not. or favorable to liberty? Further reading: 1. are my government’s taxes on my property a form of plunder? What assumptions about the political order could justify protectionism philosophically? Are Bastiat’s arguments viable if there never was a pre-political “state of nature”? III. the rule of law? II. General Theory of Employment. The National System of Political Economy.First Principles . What do these men or forces have in common.

“Right. 6. a “third way” that Mises specifically attacks in our readings.? Is the right to property a convention. Milton Friedman.g. Part 6. “On Equality and Inequality” Israel Kirzner. “The Political Economy of Milton Friedman” William Peterson. 5. Wilhelm Röpke. XXVII Do all laws enforced by a government carry with them “violent action or the threat of such action”? Is this the essence of law? Compare Mises’ account of natural law to earlier ones. St. Mises. the religious congregation. similarly sized. Does voluntary exchange presume a prior supra-economic order? Is exchange voluntary without the governmental guarantees of safety and liberty that Friedman enumerates? Summary question: What place do politics and public deliberation have in Mises’ and Friedman’s respective accounts of the relation between government and the market? What could be legitimately debated within each thinker’s proposed public sphere? Is this a smaller. “Philosophical and Ethical Implications of Austrian Economics” Is economics a science? What reasons does Kirzner provide for an affirmative answer to this question? Are these reasons persuasive? Are there instances of value-free economic writing in any of the readings we have considered? Is Mises himself wertfrei. and to what purpose? Is Darwinism essential to Mises’ thinking about liberty? Must commitment to liberty always go hand-in-hand with a commitment to laissez-faire capitalism? III.aspx?article=34&loc=b&type=cbbp Page 10 of 11 . for instance. or larger sphere than that found in Aristotle’s Politics? What are the implications? Further reading: 1. How do differing conceptions of natural law play out in economic thinking? Why does Mises reject “righteousness” as a standard for judging the market? Is his argument persuasive? II. “The Economic Necessity of Freedom” Röpke was a proponent of the soziale Marktwirtschaft. Justice and Its Surroundings. and Economics” Is economics necessarily wedded to an instrumental view of reason that forswears morality? Does a free market need virtuous participants or merely utility-maximizers? Does de Jasay imply that economics is not wertfrei because thinking about human action categorically excludes http://www. “Austrian Views” Arthur Kemp. 2. Ludwig von Mises. the family. How does a “believer in freedom” reckon with institutions and groups outside of the individual/state dichotomy. “Capitalism versus Socialism” Ludwig von Mises. II Compare Friedman’s account of the family to Aristotle’s. Are Mises’ criticisms answered in Röpke’s essay? Why or why not? How is Röpke’s self-identification with the “classic-Christian heritage of Europe” borne out in this essay? Would Mises or Friedman also identify with that same heritage? What is the “restricted vision” of the economist? Is such a label a compelling claim on Röpke’s part? II. The Anti-Capitalistic Mentality. Capitalism and Freedom.First Principles . how is this achieved or not achieved? Can an economist not “imbued with the value judgment that scientific truth is worth pursuing and disseminating” do economic research? III. “The Noneconomic Objections to Capitalism” Is capitalism inimical to beauty in the practical arts such as architecture and furniture design? To what degree does Darwinism appear in this chapter. Thomas’ defense of property. 4. Anthony de Jasay. Human Action. Ludwig von Mises: The Man and His Economics Murray Rothbard. Wrong. i. Israel Kirzner. “The Humaneness of the Market” Lesson 8: The ethics of economics I. 3. as well as.Free Markets & Civil Society 13-04-11 9:13 PM Lesson 7: The Austrian school & the Chicago school I. and depending on your answer. positive law. Ludwig von or is it a natural law? Think of Friedman’s account.e. e. etc.

Inequality.firstprinciplesjournal. how are ethics and economics to be integrated? Further reading: 1. Paul H. and would such an awareness give rise to a notion of the common good? Is the family a communal organization prior to and therefore more important than the individual? Is the “seduction” of the individual by the market ineluctable? Are there familial ties strong enough to escape erasure? Summary question: How is economic thinking affected by beginning with the isolated rational individual (Robinson Crusoe)? Does this produce a different economics from one that assumes the family’s centrality to human beings or even begins with the family (cf. Primitivism. 4. Family-Style” How does the family support capitalism? Is the support mutual? Does “Creative Destruction” evince an account of the family’s relation to capitalism different from “The Family and Liberal Capitalism. and what then does that tell us? If not. 3.isi. Economic Evils Lesson 9: Individualism and the common good I. 6. ”The Family and Liberal Capitalism” and “Creative Destruction. Please direct all inquiries regarding First Principles to firstprinciples@isi. “Murray Rothbard: In Memoriam” Allan Carlson.g. http://www. Wilhelm Röpke. ch. and the Division of Labor” Harry Veryser. “Voices in the Wilderness” Take the Quiz Intercollegiate Studies Institute • 3901 Centerville Rd.aspx?article=34&loc=b&type=cbbp Page 11 of 11 . Third Ways Allan Carlson. “From Cracks in the Liberal Edifice to the Rediscovery of the Common Good” Can “awareness of the Other” come about naturally in a Rothbardian “Crusoe” scenario. Dembinski. “European Economic Integration and its Problems” Wilhelm Röpke. loans without interest) play into Rothbard’s thinking? II. Human Goods. and Modern Mercantilism” Murray Rothbard. Allan Carlson. “Money. 5. Delaware 19807 • www. Wilhelm Röpke: Swiss Localist. gifts. The Ethics of Liberty. 3. “Divergent Approaches in Libertarian Economic Thought” Edward Hadas. 6. Murray Rothbard. “Agrarianism Reborn: On the Curious Rebirth of the Small Family Farm” Thomas Woods. A Humane Economy: The Social Framework of the Free Market Wilhelm Rö Principles . why does Murray Rothbard. “The Romanticism of Wilhelm Röpke” Israel Kirzner.Free Markets & Civil Society 13-04-11 9:13 PM Wertfreiheit? Summary question: Does economics necessarily eschew ethics or morality? If so. “Freedom. 7.” written twenty years earlier? If so. 6 & 7 What role does virtue play in Rothbard’s free society? Is Rothbard’s concept of natural law similar or dissimilar to what we encountered in the first lesson? In Mises? How does thinking about unprofitable forms of exchange (e. “The Place of the Nation” John Zmirak. • Wilmington. 2. Global Economist Ralph Ancil. how? Are feminism and capitalism enemies or allies? III. 4. 2. Aristotle’s household manager)? Further reading: 1. the State.