Posts filed under ‘Classical Liberalism’
More on Prices as Property
| Peter Klein |
We discussed earlier the status of price information as intellectual property. (We were skeptical.) Now we learn from Michael Perelman that Harvard’s Coop (bookstore) is ejecting students who take “a lot of notes” about book prices, on the grounds that the Coop “owns” the prices. Ouch.
I’m pondering the Hayekian implications. Will the Coop also claim that it owns the knowledge embodied in those prices?
Update: See also the links provided by Tim Swanson here.
Private Disupte Resolution
| Peter Klein |
Brian Caplan and Edward Stringham explore the private provision of dispute-resolution services:
Must the state handle the adjudication of disputes? Researchers of different perspectives, from heterodox scholars of law who advocate legal pluralism to libertarian economists who advocate privatizing law, have increasingly questioned the idea that the state is, or should be, the only source of law. Both groups point out that government law has problems and that non-state alternatives exist. This article discusses some problems with the public judicial system and several for-profit alternatives. Public courts lack both incentives to be customer oriented and pricing mechanisms, plus they face problems associated with the bureaucratic provision of services. When parties can choose their tribunals, in contrast, those tribunals must serve customers and be mindful about conserving resources. Competition between arbitrators also can allow for experimentation and the provision of customized services rather than a centrally planned, one size fits all system. Contracts with an arbitration clause can easily stipulate the choice of tribunal, and we argue that if government courts simply refused to overrule binding arbitration agreements, de facto privatization could easily take place. This article discusses how private adjudication of disputes could enable the market to internalize externalities and provide services that customers desire.
See also these comments about Bruce Benson’s Enterprise of Law.
Chicago School Blogging
| Peter Klein |
Ross Emmett, whose work on the Chicago school of economics we discussed here, has been blogging about a recent conference on Chicago economics. The first two posts are here and here. Stay tuned for more, including a post on Hayek coming in the next few days.
Dissing the Corporation
| Peter Klein |
Several papers in economic history, law, and political economy argue that the corporate form owes its emergence and persistence not to superior performance, but to legal privilege. This two-part series by Piet-Hein van Eeghen in the Journal of Libertarian Studies (1, 2) makes such a case, as do many essays by regular O&M commentator Kevin Carson. I tend to be somewhat skeptical of this literature, finding it insufficiently comparative institutional and not always consistent with the historical record as I understand it.
A new paper by Naomi Lamoreaux, whose work I very much admire, may force me to rethink my views, however. In “Putting the Corporation in its Place” (NBER Working Paper No. 13109) Lamoreaux and her coauthors Timothy Guinnane, Ron Harris, and Jean-Laurent Rosenthal argue that entrepreneurs in common-law countries tended to choose the corporate form over the next-best alternative, the partnership, only because a still more desirable alternative, the private limited liability company, was not available. (more…)
New Mises Biography
| Peter Klein |
Congratulations to Guido Hülsmann for the release of his 1,200-page biography of Ludwig von Mises, titled Mises: The Last Knight of Liberalism. Buy a copy here or read the whole thing online here. I’ve just started and the early chapters are terrific, placing Mises’s scientific ideas in their turn-of-the-century Viennese context and emphasizing the Jewish roots of Mises’s liberal Weltanschauung. I can’t wait to read the rest.
Think Globally, Drink Locally
| Peter Klein |
Railing against corporate dictatorship, delocator.net helps consumers find locally-owned cafes, bookstores, and movie theatres in their area — alternatives to the “invasion” of Starbucks, Borders, and their ilk. The site itself is actually quite an interesting capitalist idea in its freshness and creativity, and people certainly should eat or drink or shop where they are most comfortable. That’s the beauty of competition! And the kind of community-building that often takes place at familiar, time-tested, local shops is to be encouraged.
But to say local businesses possess some kind of moral magic simply by virtue of being family-owned and homey is preposterous.
That’s Brooke Levitske, writing on the Acton PowerBlog. Recently a friend asked what I thought of Wendell Berry and his agrarian, anti-industrial philosophy. My response was similar: If people wish to live according to these principles, more power to them. I object only when materialist urbanites are forbidden by law from pursuing their own path to enlightenment.
Incidentally, does anyone remember the WSJ article a few years back suggesting that local cafes benefit when Starbucks moves to town? The theory is that the presence of a Starbucks increases local demand for premium coffee, providing spillover benefits to local stores. I haven’t seen any systematic evidence on this, however.
Act versus Rule Self-Interest
| Peter Klein |
Ethicists commonly distinguish between “act” and “rule” utilitarianism. Act utilitarians believe that individual actions should be evaluated according to some standard of overall well-being, while rule utilitarians maintain that such standards need apply only to general rules, not specific acts. (Here is an argument that Ludwig von Mises was the latter type of utilitarian.)
By analogy, one can think of act and rule self-interest. Consider the standard repeated prisoner’s dilemma game in which a player can increase his payoff in the current period by defecting, but in doing so would trigger a matching response by his opponent, thus reducing his overall payoff relative to that in the Nash equilibrium in which each player cooperates every period. A merchant may refrain from cheating his customers today not out of moral obligation, but because the long-term gains from establishing a reputation for trustworthy behavior outweigh the short-term losses from honest dealing. (more…)
Men of Wealth
| Peter Klein |
John T. Flynn’s 1941 classic Men of Wealth is back in print, courtesy of the Mises Institute. I’ve had an old copy on my shelf for years, having once stumbled across a rare first edition at Bell’s Books in Palo Alto. The book profiles Jacob Fugger, John Law, the Rothschilds, Robert Owen, Cornelius Vanderbilt, Henry Green, Hachirobei Mitsui, Cecil Rhodes, Basil Zaharoff, Mark Hanna, John D. Rockefeller, and J. Pierpont Morgan. Unlike the typical business history text (ahem), it is written in a lively and engaging style. To get the flavor, consider this excerpt from chapter 9 on the little-known but highly influential arms dealer Basil Zaharoff:
Zaharoff played a leading, if not the leading, role in that strange world comedy of the arms makers leading the double life of chauvinists and internationalists. They gave us the spectacle of Boers mowing down English regiments with Vickers’ pom-poms, Prussian surgeons picking out of Prussian wounded Austrian shrapnel fired by Krupp’s cannon, French poilus massacred by shot poured out of guns made in Le Creusot, English Tommies killed by weapons produced by Armstrong and Vickers, and American ships sent to the bottom by U-boats built on models supplied by American submarine builders. Zaharoff was the master of what one biographer has called the “principle of incitement,”under which war scares were managed, enemies created for nations, airplanes sold to one nation and antiaircraft guns to her neighbors, submarines to one and destroyers to another. He did what the cigarette people did, what the liquor industry, the beauty industry did — created a demand for his merchandise. The armament industry became a game of international politics, the arms salesman a diplomatic provocateur, the munitions magnates of all nations partners in cartels, combines, consolidations; exchanging plans, secrets, patents. He was the greatest of all the salesmen of death, and, as one commentator has observed, if you would see his monument, look about you at the military graveyards of Europe.
You can read the rest of the chapter here.
More Podcasts: Gordon, Weingast, Salerno-Klein
| Peter Klein |
- The History of Political Philosophy: From Plato to Rothbard by former O&M guest blogger David Gordon. A ten-lecture series delivered in June 2007 covering Plato, Aristotle, Aquinas, Hobbes, Locke, Rousseau, Kant, Hegel, Mill, Spooner, Spencer, Rawls, Nozick, Rothbard, and more. Only David Gordon could be an expert on all of these.
- Russ Roberts’s interview with Barry Weingast about the new book by North, Wallis, and Weingast, A Conceptual Framework for Interpreting Recorded Human History (what a title!). Weingast has become so prominent in political science it is easy to forget that he has an economics PhD (from Cal Tech) and started his career as an economics professor at Washington University in St. Louis. (His critics have not forgotten.)
- Fundamentals of Economic Analysis: A Causal-Realist Approach. Economics in the tradition of Carl Menger, starting with the basics of scarcity, choice, value, and exchange then moving to pricing, entrepreneurship, capital, competition, money, banking, and the business cycle. Joe Salerno and I give the lectures. You can also get these as videos in a handsome DVD set.
State-Owned Firms: Still Inefficient
| Peter Klein |
Generalissimo Francisco Franco is still dead, and state-owned firms are still inefficient. A survey of over 12,000 Chinese firms finds that “even after a quarter-of-century of reforms, state-owned firms still have significantly lower returns to capital, on average, than domestic private or foreign-owned firms.” This from “Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China” by David Dollar (great name!) and my former Berkeley classmate Shang-Jin Wei. “By our calculation,” they write, “if China succeeds in allocating its capital more efficiently, it could reduce its capital stock by 8 percent without sacrificing its economic growth.”
The paper is light on theory and interpretation, but there is a substantial literature on the problems of state ownership to which one can easily refer (good starting points here, here, and here.)
Open-Source Political Campaigns
| Peter Klein |
Republican Ron Paul’s presidential campaign — a highly decentralized, small-budget, bottom-up effort — is like an open-source software project, writes Jay Roberts. As such, he notes, it has strengths and weaknesses compared to traditional modes of organzation.
Here are some earlier posts on the open-source model.
Did Solzhenitsyn Win the Cold War?
| Peter Klein |
[A]ny news account, biography or political history of the twentieth Century that talks about who “won” the Cold War — a complicated historical reality for sure — and does not include Solzhenitsyn with Reagan, Thatcher, and Pope John Paul II is not only incomplete but wrong. Solzhenitsyn was the inside man.
That is John Couretas, writing about Edward Ericson and Daniel Mahoney’s Solzhenitsyn Reader (ISI Books, 2006). Here is a longer review in the Occidental Quarterly. Here is editor Mahoney writing about the book.
Garrett on Ford
| Peter Klein |
Garet Garrett’s 1953 book on Ford Motor Co., The Wild Wheel, is now available as a free e-book at Mises.org. Garrett, the iconoclastic American journalist who wrote for the New York Times, Wall Street Journal, and Saturday Evening Post and is best known as a critic of Franklin Roosevelt, was trained as a financial reporter and covered Ford for many years. Worth a read.
The “Age of Cobden”
| Peter Klein |
Leonard Liggio reviews a new collection of essays on Richard Cobden, the great English liberal and free trader who led the movement to eliminate the protectionist Corn Laws. Notes Liggio:
The contemporary world is focused on the issues Cobden raised. According to co-editor, Anthony Howe’s “Introduction”: “For the modern preoccupations with globalization, free markets, the retreat of the state, the importance of civil society are all ideas which took political shape in the ‘age of Cobden.’ While post-modernists may find in Cobden’s liberalism too many of the emblems of the ‘modernity’ project from which they are keen to distance themselves, historians and the public may still have much to learn from one of the first practical attempts to implant the ‘Enlightenment project’ within the fabric of the world order.” Cobden’s affinity with European Liberals reflected their shared heritage of the Enlightenment in the works of Vattel, Grotius, Voltaire, Rousseau, Franklin, Jefferson, Bentham and James Mill.
For more on Cobden and his contemporaries John Bright and Charles Dunoyer see these papers by Liggio and Ralph Raico and listen to Raico’s 2005 lecture “Classical Liberalism in War and Peace: The Case of Richard Cobden” (scroll down).
Are Economists Free-Market Apologists?
| Peter Klein |
This New York Times piece describes contemporary economics as a rigid free-market orthodoxy, challenged by a few courageous iconoclasts who question free trade, support minimum wages, favor tax and spending increases, and the like. To the author: What color is the sky on your planet?
I was to blog a more detailed reaction but Alex Tabarrok, Larry White, and Greg Mankiw, among others, have beaten me to it. Note that Alex and Larry both refer to Dan Klein’s work on the ideological views of economists, which we’ve discussed often here at O&M. The Times piece did not bother to include any data, of course.
Francis Hutcheson’s Classic Text on Natural Law
| Peter Klein |
O&M readers interested in the Scottish Enlightenment (and who isn’t?) may enjoy this new volume from Liberty Fund, Francis Hutcheson’s Philosophiae Moralis Institutio Compendiaria, with A Short Introduction to Moral Philosophy. Hutcheson, of course, was Adam Smith’s teacher at the University of Glasgow. Writes General Editor Knud Haakonssen:
Hutcheson’s Institutio was written as a textbook for university students and it therefore covers a curriculum which has an institutional background in his own university, Glasgow. This was a curriculum crucially influenced by Hutcheson’s predecessor Gershom Carmichael, and at its center was modern natural jurisprudence as systematized by Grotius, Pufendorf, and others. . . . The Institutio is the first major [published] attempt by Hutcheson to deal with natural law on his own terms. . . . It therefore encapsulates the axis of natural law and Scottish Enlightenment ideas, which so many other thinkers, including Adam Smith, worked with in their different ways.
The book includes both the Latin original and an English translation, so you can brush up on your Latin as you work through the text (an added bonus!).
A World Without Supermarkets
| Peter Klein |
It might be like Detroit, now the only major US city without a national chain supermarket. (Thanks to Cliff for the link.)
I’m sure these guys will produce a study soon showing how Detroit residents are better off without the big retailers.
Industrial Recycling: Nothing New
| Peter Klein |
Popular myth holds that pre-industrial societies were models of environmental sensitivity, practicing “sustainable development” and minimizing waste. Industrialism, it is said, upset the delicate balance between man and environment, encouraging overproduction, overconsumption, and a disregard for the natural world. To many environmentalists, capitalism’s primary legacy is the strip mine and the garbage dump.
Shephard Krech’s Ecological Indian: Myth and History has done much to debunk the fable of pre-modern environmentalism, at least in the North American context. Pre-industrial societies produced massive amounts of garbage and cared little for environmental stewardship. Now we learn from Pierre Desrochers and Karen Lam that industrial recycling — a key component of modern sustainable development programs — was widespread during the Gilded Age. In “‘Business as Usual’ in the Industrial Age” (Electronic Journal of Sustainable Development, vol. 1, 2007) Desrochers and Lam describe how woollen rags, old iron, manure, animal parts, butter-making waste, and other byproducts were recycled, for profit, in the UK and US. Here’s but one of many colorful examples (not for the feint of heart or weak of stomach): (more…)
Should We Axe the (US) Small Business Administration?
| Peter Klein |
The entries don’t have references, but there is a large literature on small business lending. See in particular papers by Phil Strahan here and here, showing that bank deregulation and consolidation has helped small business lending and entrepreneurship.
Formation of Beliefs About Markets
| Peter Klein |
What explains differences in beliefs about social and political institutions across groups? Are such beliefs learned from experience, acquired through rational persuasion, or given exogenously? Empirically, it is difficult to distinguish the effects of location or occupation from selection. Does living in Berkeley, for example, or studying sociology turn people to the Left, or do Lefties congregate in places like Berkeley and in sociology departments?
To gain insight into this problem, suppose you could take two virtually identical groups of people, place them in different institutional environments, and look later for differences in beliefs about market and society. Rafael Di Tella, Sebastian Galiani, and Ernesto Schargrodsky’s paper “The Formation of Beliefs: Evidence From the Allocation of Land Titles to Squatters” (Quarterly Journal of Economics, February 2007) investigates exactly this natural experiment.
We study the formation of beliefs in a squatter settlement in the outskirts of Buenos Aires exploiting a natural experiment that induced an allocation of property rights that is exogenous to the characteristics of the squatters. There are significant differences in the beliefs that squatters with and without land titles declare to hold. Lucky squatters who end up with legal titles report beliefs closer to those that favor the workings of a free market. Examples include materialist and individualist beliefs (such as the belief that money is important for happiness or the belief that one can be successful without the support of a large group). The effects appear large. The value of a (generated) index of “market” beliefs is 20 percent higher for titled squatters than for untitled squatters, in spite of leading otherwise similar lives. Moreover, the effect is sufficiently large so as to make the beliefs of the squatters with legal titles broadly comparable to those of the general Buenos Aires population, in spite of the large differences in the lives they lead.
Thanks to Dan Benjamin for the pointer.
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