Critique of Impure Reason. The Battle Over What Libertarianism Is

Some time ago, Kalin Mikov commented that informed critics of libertarianism are practically nonexistent. Unfortunately, Dr. Svetoslav Salkin also fails in his attempt to fill the niche. Like his predecessors, yet another attack on libertarianism is not distinguished by information, let alone originality.

From the first paragraph of the article by the doctor of political science, we understand that through it he is trying to "wedge" himself into the discussion between Vladimir Karolev and Petar Volgin, and as a higher authority: "... Volgin tries desperately to criticize the Bulgarian 'libertarians'."; "An even more desperate article follows, "In Defense of Statehood," by Vladimir Karolev, one of the prominent Bulgarian libertarians."; "... the naive dispute between Volgin and Karolev ..." If we use his own logic for the "desperation" of Volgin's article, who made a "desperate" attempt because he was not an economist, then Salkin's article itself is also a "desperate" (and desperate) attempt to spit on libertarianism - the author himself presents himself as a political scientist, not an economist. Of course, the fact that libertarianism is not an economic theory or school, but a political one.

After this (self-)exaltation over Karolev and Volgin, the author continues with his extremely naive political-scientific reading of economic science. His point of view starts from extremely strange assumptions of credibility (whether the authors are alive), one-sidedly passes through the theories of economists like Stiglitz, accepting them as a priori true, and reaches completely wrong, bordering on absurd, statements ( "... it is worrying that libertarian economists clearly strongly dominate the economic debate in Bulgaria."). Let's see why.

One of Salkin’s lines of argument is “the complete absence of arguments and ideas from contemporary economists in both articles.” Such a claim is, to put it mildly, naive. The truth of ideas does not die with their author. Nor does their validity. Salkin conveniently omits libertarians and advocates of laissez-faire economics, many of whom—such as David Friedman, Hans-Hermann Hoppe, Ron Paul, Steve Horvitz, Tom Palmer, Lew Rockwell, and others—are alive. The advocates of free economics do not end with Adam Smith, who is the only thinker cited in the article who was not a libertarian at all.

Salkin tries to ironize and insult libertarians (“I do not mention the research of economic sociologists at all, because it is beneath the dignity of a market fanatic to read sociology.”) and even openly calls us superficial (“However, this literature is quite voluminous and descriptive and is unlikely to appeal to libertarians.”), without himself demonstrating any knowledge of libertarianism or the authors of the Austrian School, whom he does not mention at all. Perhaps because he has not read about them at all – Ludwig von Mises and Eugen von Böhm-Bawerk are also neither short to read nor easy to understand, although they do not use overly complex mathematical models.

And such mathematical models, it seems, are very popular with the political scientist. But he misses something extremely important for economics – it is not a natural science. Unlike physics, where an object can be isolated and by changing one or another indicator and repeated experiments, some mathematical dependence can be proven, economics is driven by people. And people are different from atoms – we have will and reason and make individual decisions. This cannot be covered by mathematics. It is no coincidence that representatives of the Austrian school are skeptical of the use of mathematics in economics. And the “heavy artillery” – the Arrow-Debru model – is among the many weak links in Salkin’s line of defense. The model assumes that under certain conditions there are prices at which aggregate demand will meet aggregate supply for each good in the economy. The model is entirely theoretical, from the point of view of economics (its only applications are in finance, for minimizing risk). It could in no way be an argument against market efficiency.

Освен непознаване на австрийската школа, което изисква специална подготовка по икономика, Салкин демонстрира и непознаване на Адам Смит. Да се твърди, „че той е меко казано скептичен по отношение на пазарите и конкуренцията” граничи с фунционалната неграмотност. Като доказателство за тезата си, Салкин цитира самият Смит, след което разпалено тълкува шотландския икономист, удобно пропускайки уточнението на самия Смит. Ето какво четем в „Богатството на народите”:

„By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it”.

The third sentence is omitted from the article. It completely refutes the claim that Smith was skeptical of the free market and competition. After this failed attempt to refute the free market, Salkin abdicated from further attempts to defend his thesis that there is a better solution for allocating resources than voluntary exchange. All that followed was an attack on “market fundamentalists,” ignoring the fact that the defenders of laissez-faire economics are a minority and that textbooks are largely written by their opponents.

Salkin is right that academia is dominated by Keynesians and that they win Nobel Prizes en masse. This is not surprising. Keynesians prefer the state to feed them and, quite naturally, they dislike competition. Under these conditions, it is logical for university professors to advocate strong state intervention in the economy. The opposite would be unnatural - they would come into conflict with their own interests. When the academic community is dominated by people with such views, it is quite normal for them to win the Nobel Prize in Economics. The relationship between economists and politicians is not one-sided. Economists are useful to politicians because the majority of them advocate a strong state and government spending - something that the "elected people" love.

Capitalism is based not on government institutions, but on the simple principles of inviolable private property and individual liberty. Regardless of the institutions, capitalism is capitalism, and it always works when these two principles are respected. Historically, the free economy of classical liberals is exactly that – complete freedom from government and individual inviolability. There should be no other type of capitalism. Any other form of capitalism is a statist justification for the “welfare state.”

Thus, from alogism to alogism, the author arrives at the most absurd statement in the entire article: “The market mechanism sometimes really does a wonderful job and Adam Smith’s idea is ingenious and original, but it must be understood that the market itself is a public good and cannot exist, except in the most elementary form, without state regulation.” The market, in itself, is not a “good”. Goods, in the economic sense of the word, are goods and services. A definition of the term “public good” can be found in any textbook.

I will quote an excerpt from perhaps the most popular macroeconomics textbook in Bulgaria – that of Stoyadin Savov: “Public goods are used jointly. If they are available to some, they will simultaneously be available to others. Since people cannot be excluded from the consumption of public goods, the system for forming their value is broken. Would you voluntarily pay your share in the consumption of national defense, police or judicial protection if these goods were supplied through the market? What would their production and consumption look like in purely market conditions? Everyone would like to consume such goods, but few would pay for them voluntarily. That is why they simply will not be produced.”

Savov's statement is wrong, but it points us to what public goods are – these are goods or services that the state "must" provide, because otherwise people would not pay for them. As mentioned, the market is neither a good nor a service, and even less is it a good or service provided by the state and unable to exist without it. On the contrary – the market has been with us since the first exchange, long before the existence of states and long before anyone came up with any regulations for it. The deregulated market was so effective that it connected people from China to the Middle East and Greece – the Silk Road existed regardless of the countries it passed through, no matter who they were. Market decisions also have no connection with the state. They are made by individuals and only they, not a centralized body, have the knowledge of what to produce.

The free market is an extremely important prerequisite for increasing the well-being of the population – this is both a theoretical and practical axiom. There are many examples of this, but the most significant is the total collapse of the USSR. Unlike the undeniable failure of the Soviet Union, the failed markets that Salkin talks about are never named. The truth is that for a significant part of human history, markets have existed despite states. Illegal (from the state’s point of view) markets are called gray or, if the government is completely unaware of the businesses, black. Salkin’s theory, which contradicts all logic, is completely incapable of explaining the oxymoron: markets are a “public good” (i.e. created by the state), but nevertheless they are contrary to the principles of the same state. Although Salkin cites the names of many economists in his article, this sentence completely shows that he is a layman in the field of economics.

Compared to the untruth synthesized in this sentence, the end of the article is downright disappointing: “The topic is very long and the concern of Karolev and Volgin is understandable and justified – and they are actually talking about the same thing. I would be very happy if Volgin became familiar with the modern criticism of market fundamentalism, and Karolev stopped rereading Adam Smith and started commenting on authors he doesn’t like.” All that remains for us to remember is the mystery of what Salkin wants to say in the first sentence: “The topic is very long and the concern of Karolev and Volgin is understandable and justified – and they are actually talking about the same thing.”

There have always been laypeople in the field of economics, and there is no prospect of this changing. Ignorance of elementary economic principles is not a crime. High self-esteem is also. But the ability to use Wikipedia is not enough to discuss economic phenomena. Sociologists and political scientists commenting on economics could discuss topics from any other field with the same confidence. This undermining of the division of labor, despite high self-esteem, leads to funny comments. And it does not improve the quality of critics of libertarianism and the Austrian school.

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