One response to my post on Neoclassicism and Libertarianism was made by ‘Lord Keynes‘, a prominent critic of Austrian Business Cycle Theory. He provided a list of the different types of libertarians. Though the list is useful, I feel he is simply begging the question: where are these types of libertarianism ultimately derived from? Though the strands they may appear separate at first, it is rarely difficult to link them to neoclassical economics. Here is LK’s list:
Ayn Rand’s primary ‘philosophical’ conclusion is that everybody should pursue their own rational self interest. Do I really have to say it? This is lifted straight out of the textbooks.
(1) the Anarcho-capitalists, like Rothbard and Hoppe;
(2) The minimal state Austrians like Mises (with his praxeology);
Praxeology strikes me as the ultimate copout to justify neoclassical modelling. Allow me to explain:
Person A: “People are rational and self interested and so are best left to pursue their own goals.”
Person B: “No, they aren’t – look at various experimental evidence showing that they are altruistic and also often make mistakes.”
Person A: “OK well they maximise their own utility, and whatever they do fulfills the objectives that make them happiest.”
Person A: “OK, well all human action is purposeful and all actions are justified as they are the rightful response to stimuli. The end result of the action is not as important as the valid agency created by the actions that achieved it. Thus, people should be left to pursue their own actions. Trying to falsify this will only result in its validity.”
Person B: “Erm, OK.”
Randians and praxeologists have their ideas about human action ultimately derived from a neoclassical framework – in Rand’s case, she is seeking to make people behave like the textbooks; in the case of Mises/Rothbard, they are seeking to justify ‘market’ transactions by whatever means possible, the ‘market’ itself being a creation of neoclassicism.
(3) Austrian supporters of Hayek’s economics, with a minimal state;
LK concludes himself that:
paradoxically, the Hayekian version of the Austrian business cycle theory is heavily influenced by neoclassical equilibrium theory via Hayek’s use of Wicksellian monetary equilibrium analysis.
As you can see, wherever a libertarian analysis exists, neoclassical economics is not far off.
His final groups are areas where his knowledge far outweighs mine:
(4) The “orthodox” Austrians who have a moderate subjectivist position (like Israel Kirzner and Roger Garrison);
This is the area where I am willing to concede the most ground. These are the Austrians who have stayed closest to the birth of their school, which genuinely sought to create a non-equilibrium alternative to neoclassicism. However, the fact is that they seem unable to come to conclusions other than ‘government = bad’, and persistently frame issues as governments versus markets, both of which are things that neoclassical libertarians do. After all, is it no coincidence that many libertarians who followed neoclassicism before the crisis have had no trouble choosing the Austrian school over evil Keynesianism? The two schools are simply too compatible for me to consider them completely separate.
(5) Austrian radical subjectivists like Ludwig Lachmann;
II. Non-Austrian libertarians (but influenced by Austrian economics)
e.g., George Selgin
It strikes me that the positions of these economists are not particularly ‘libertarian’, given the amount of ground they are willing to concede. In fact, George Selgin no longer identifies as an Austrian and is also uncomfortable with the libertarian label, which offers some conformation of my point.
Scratching beneath the surface of the different types of libertarians often reveals foundations that can also be found in neoclassical economics: consumer sovereignty; the economy as separate from the political and social spheres, the assumption of an entity called ‘the market’ that is in or close to ‘equilibrium’ and is ‘distorted’ by the hand of government. Until libertarians can prove to me that there is something fundamentally different about the different strands of their ideology, I stand by my argument that it is closely interlinked with neoclassicism.