Your browser has JavaScript turned off.
You will only be able to make use of major viewing features of this page of The Self-Sovereign Individual Project website if you turn JavaScript on.

Discourses on Social Order

Critique of The Machinery of Freedom,
Chapter 42: Where I Stand

This is the second of three essays of comment on the chapters of The Machinery of Freedom: Guide to a Radical Capitalism (MoF), by David Friedman, which I (Paul Antonik Wakfer) consider to be the most important for libertarian theory among those chapters of MoF which are online.

Chapter 42: Where I Stand1

In the previous chapter, I argued that simple statements of libertarian principle lead to unacceptable conclusions and must therefore be rejected. There is no obvious logical inconsistency in a moral principle that implies that nobody should be permitted to breathe, but it is not a principle that many people are likely to accept.>>

1) The fact "that simple statements of libertarian principle lead to unacceptable conclusions" does not imply that there are no possible principles on which to base libertarianism which are logically consistent and will not lead to unacceptable conclusions. Moreover, it is not correct that "There is no obvious logical inconsistency in a moral principle that implies that nobody should be permitted to breathe" since such a principle is antithetical to human life. It cannot be moral on the face of it! All that Friedman has shown in his previous chapter is that the principles which libertarians have brought forth to date have not been able to survive his challenges. In my previous critique essay of Friedman's chapter 41, I furthermore showed that I have discovered a basis for libertarianism which stands up to all the challenges that Friedman presented. I have called that basis Social Meta-Needs theory2 (SMN) and I have designed an implementation for SMN in the form of a social contract, the Natural Social Contract3 (NSC).

One possible response is that libertarianism is an absolute principle, an ultimate value which cannot be overridden, but that it is not adequately expressed by the simple statements I have been attacking. If those statements are only approximations to a much more complicated and subtle description of libertarian principle, it is hardly surprising that the approximation sometimes breaks down in difficult situations.

This is a view with which I have a good deal of sympathy, but it is not very useful for answering real world questions, at least until someone manages to produce an adequate statement of what libertarian principles really are. Moral philosophy is a very old enterprise and its rate of progress has not been rapid in recent centuries, so I do not plan to hold my breath while I wait.

2) Here Friedman once again comes very close to a consistent ethical basis for libertarianism, but as in chapter 41, he gives up short of attempting to seek a solution. Friedman's major error, and his reason for giving up, is to be found in his description of current libertarian principles as "approximations to a much more complicated and subtle description of libertarian principle". His mistake is in thinking that "subtle" necessarily implies "complicated". Whereas in the history of science and theories in general, often more subtle and correct theories are actually much simpler (eg. Ptolemaic epicycles versus the heliocentric theory of the orbits of stars, planets and moons). It is my contention that Social Meta-Needs theory is just such "an adequate statement of what libertarian principles really are", which I have been able to achieve because of new information and methods which are available now but were not available to the thousands of previous thinkers in the field of moral philosophy over the millennia. The reason that the rate of progress of moral social (political) philosophy "has not been rapid in recent centuries" is precisely because the major betterment of social order made by natural rights ideas concomitant with the advances in science and technology has convinced so many thinkers that it is the best that can be, rather than a ledge of liberty below a peak of optimized social order.

A second response, and one with which I also have a good deal of sympathy, is that there are a number of important values in the world. They cannot be arranged in any simple hierarchy, or at least are not going to be anytime soon. Individual liberty is an important value in and of itself, not merely as a means to happiness, so we should not be willing to sacrifice large amounts of it in exchange for small amounts of happiness. But liberty is not the only value, nor is it infinitely important compared to other values, so we should not be willing to sacrifice unlimited amounts of happiness for small gains in liberty.

3) Friedman's reasoning here is faulty right off because any ordering of values hierarchically can only be done for each individual for him or her self. In addition, I disagree strongly with Friedman's conclusion about both the independence of values and the value of liberty as an end. As I have shown in SMN, there is only one empirically valid end for human existence and that is expressed in the Maximum Lifetime Happiness (MLH) purpose.2 All values can be related to that goal and evaluated relative to one another as they tend or do not tend to achieve that goal. Liberty is no more and no less than a major tool necessary for that goal to be achieved. The reason why one "should not be willing to sacrifice large amounts of it in exchange for small amounts of happiness" is precisely because the sacrifice would almost certainly reduce MLH more than the gain of any "small amount of happiness". With respect to the MLH purpose everything else is of secondary value including even one's own life.

A third possibility is that the conflict between libertarian and utilitarian values is only apparent. Perhaps there is some deep connection between the two, so that libertarian ethics, properly understood, is the set of rules that leads to the maximum of human happiness. The counterexamples given in the previous chapter must then be interpreted as some combination of mistakes about what is possible--for some reason those situations could not arise in the real world--and mistakes about what is implied by a correct statement of libertarian principle. Something along these lines seems to be suggested by the arguments of those libertarian philosophers who claim to get their principles not by generalizing from what seems right or wrong to them but by deducing what set of rules is appropriate to the nature of man.

4) In the second sentence of the above paragraph, Friedman is so very close to the solution which I have discovered and am proposing, that it almost hurts me to think that this was not pursued over 30 years ago. Yes, Social Meta-Needs theory is precisely such a combination of "libertarian ethics" and "utilitarian values" which creates "a set of rules which leads to the maximum of human happiness". However, it is not necessary that the "counterexamples given in the previous chapter ... could not arise in the real world". It is only necessary that the analysis of those situations are "mistakes about what is implied by a correct statement of libertarian principle" for all Friedman's examples to be fully consistent with a correctly based libertarian theory. As I showed in my analysis of Friedman's Chapter 41, all his arguments in the examples there are based on mistakes about what is implied by correctly based libertarian principles.

One argument in favor of this approach is that it fits the observation that libertarianism and utilitarianism, while quite different in principle, frequently lead to the same conclusion. Through most of this book I have used utilitarian arguments to justify libertarian conclusions. By doing so, I provided evidence that the potential conflicts between the two approaches which I discussed in the previous chapter are the exception rather than the rule. In Chapter 31, I tried to show that the institutions of anarcho-capitalism would tend to generate libertarian laws. A key step in that argument was my claim that the value to individuals of being able to run their own lives is typically greater than the value to anyone else of being able to control them--or in other words, that increases in liberty tend to increase total utility.

5) While it is true that "libertarianism and utilitarianism --- frequently lead to the same conclusion", this is just as often not true in very important cases. The reason for this is not so much that they are "quite different in principle" as that the definitions of the basic elements - best, justice, good, bad, value, interest, etc. - are very often different. Social Meta-Needs theory may be viewed as a fully utilitarian approach to optimizing social order based solely on the principle of individual rational self-interest. I agree with Friedman's claim that "the value to individuals of being able to run their own lives is typically greater than the value to anyone else of being able to control them", but it cannot be universally true, because not everything which is of value to one person is even comparable in its value to another. This incomparability is particularly true for such things as the value of one's own body, thoughts, evaluations, decisions and personal actions. On the other hand, there can certainly arise particular individuals and particular situations where any and all of those freedoms of action are not worth as much to a given individual as they are worth to another. Such is the extreme variability of subjective evaluation in the totality of possible humans and situations.

A fourth possibility, and the last which I will consider, is that libertarianism is wrong and we should accept utilitarianism instead. According to the strict utilitarian position, rules, actions, ethics, must be judged solely by their effect on the sum (some utilitarians would say the average) of human happiness. Whatever increases happiness is good; whatever decreases it is bad. Libertarian principles are then valued only as a means, a set of rules that frequently lead to increases in total utility and should be rejected when they do not. This again is a possible interpretation of arguments that claim to derive libertarian principles from the nature of man, although not, in my experience, an interpretation that those who make such arguments are willing to accept.

6) The fundamental problem with the standard utilitarian argument is that comparison of values between individuals is, in general, impossible to be performed by any agency outside of the individuals themselves. What is "good" and "bad" are different to each individual in the same way as the value which each places on any good or service in the marketplace. Any attempt to compute and act on such values by means other than letting the interactions of humans naturally determine them (just as the actions of humans determine the market values of goods and services) is bound to end in the same folly as have all socialist attempts at market computation.

One argument against utilitarianism is that it cannot be a correct moral rule because there is no way we can tell whether we are following it. We cannot observe other people's utility and are therefore unable to judge what will increase it. Even if we could observe individual utilities, we do not know how to compare the utility of different people and so have no way of judging whether a gain in happiness to one person does or does not balance a loss to another.

7) Friedman appears not to understand the problem of utilitarianism as it is generally defined. This misunderstanding and the problem itself are related to the collectivist notion of "we"4 that Friedman and most other people continue to use and think in terms of. It is each individual for himself who must judge his utility and what will increase it. No one else is competent to do so and no one else should override his evaluation. Individual utility evaluations of kinds - whether goods, services, harm or happiness - are compared, exchanged and balanced by the market place of social exchange just as are economic goods and services which are valued in terms of money.

I find this argument unconvincing. Consider the act of buying a present. If you really have no knowledge at all about what makes other people happy, then buying a present is pure guesswork; you might just as well open a page of the Sears catalog at random, throw a dart at it, and buy whatever you hit. Nobody believes that; if we did, we would not buy presents.

8) Friedman errs here in thinking that he can disprove a general statement - that people do not generally have adequate knowledge of individual utility for it to be useful in maximizing total human happiness - with an example merely showing that people sometimes have some such knowledge. In general, what one person can know of another's values is insignificant compared with what that other person knows of his own values. The only exceptions are when either that person clearly communicates his values in detail or the first person has intimately known the second for a long time. The fact that one person may have some knowledge of the worth of something to another person is no more adequate to allow the computation of total human value relating to specific situations and what decisions/actions should be taken to increase that value, than is such information adequate to allow a decision concerning how many widgets should be produced and what should be their market price.

Consider a court awarding damages. If we really know nothing at all about other people's utility, how can a court decide how much someone owes me for breaking my arm? For all the judge knows, I enjoyed having my arm broken. Assuming that I disliked it, he has no way of knowing whether my disutility for a broken arm is measured by a penny or a billion dollars.

We give presents and award damages, and we do not believe that other people's utility is entirely unobservable. What we do believe, or at least what many of us believe, is that each of us knows more about his own values than most other people do, and that people are therefore usually better off deciding what they want for themselves. That is one of the main arguments in favor of a free society. It is a long step from that to the claim that we know nothing at all about other people's values.

9) Friedman appears to have created a straw man to flail and once more confuses the issues by his constant us of a collectivist "we".4 No one claims that he knows nothing of the values of another. As Friedman himself states, what most people (libertarians at least) think is "that each of us knows more about his own values than most other people do", as I have stated previously in these comments. But from this it follows (just as with the market of goods and services bartered or exchanged for money) that "people are therefore usually better off deciding what they want for themselves". Not only are they better off individually, but just as economic socialism leads to disaster because, while the planners know something about the values of goods and services to people, they do not know those values sufficiently well, so too will collective justice evaluation fail if it attempts to determine for others what is the value of any harm done to them.

Even if we were entirely unable to observe other people's values, that would not necessarily prevent us from constructing a society designed to maximize total utility. Each person knows his own values, so all of us put together know everybody's values. In order to maximize the total utility of the society, we would construct rules and institutions that utilized all of that information via some sort of decentralized decision making system, with each person making the decisions that require the particular knowledge he has.

This is not, of course, merely an abstract possibility. One of the strongest arguments in favor of letting people interact freely in a market under property rights institutions is that it is the best known way to utilize the decentralized knowledge of the society--including the knowledge that each individual has about his own values. The field of welfare economics largely consists of the analysis of the rules that lead to optimal outcomes under specified circumstances, where the outcomes are evaluated in terms of the preferences of the individuals concerned. One originator of modern economics, including much of welfare economics, was Alfred Marshall, an economist and utilitarian who viewed economic theory in part as a way of figuring out how to maximize total utility.

10) Far from being the top down planning of socialist societies, the "decentralized decision making system" which will operate to accomplish this is one which is entirely similar to the natural order of free markets shown by praxeological science, and for the very same reasons. Such a natural order can and should be allowed to reign and to establish itself within the arena of all human social interactions, not just economic ones.

Even if individual preferences can be observed, either directly or as reflected in actions, we are still left with the problem of comparing them. How can we say whether something which makes one person worse off and another better off produces a net increase in human happiness?

11) Here once more, I must protest Friedman's constant use of "we" and "us".4 I resent such usage and I refuse to allow Friedman to include me as one of the referents! I am not left with such a problem. I do not wish to even attempt to decide "whether something which makes one person worse off and another better off produces a net increase in human happiness", except and unless I am one of those involved in the value exchange. I have no respect for anyone who thinks that they can do any such thing for others and I do not even sanction their attempt to try to do so.

The answer, I believe, is that we may not be able to make such comparisons very well or describe clearly how we make them, but we still do it. When you decide to give ten dollars worth of food and clothing to someone whose house has just burned down instead of sending a ten dollar check as an unsolicited gift to a random millionaire, you are expressing an opinion about which of them values the money more. When you decide where to take your children for vacation, you are making a complicated judgement about whether their total happiness will be greater camping in a forest or wading on the seashore. We cannot reduce the decision to a matter of precise calculation, but few of us doubt that the unhappiness A gets from the prick of a pin is less than the unhappiness B gets from being tortured to death.

12) Once again, I do not make such comparisons for others and I do not sanction them being done by anyone else. The fact that one cannot precisely compute the values of another does not create any more problems with voluntary actions between individuals (although they will generally always be less than optimal) than does the fact that a given individual often errs in his own evaluation of a good or service that he purchases. The problems of making such evaluations about others only comes about when those others are restricted from making such judgments for themselves. While this can reasonably be different for children since they are not competent to understand all the parameters related to their choices, even so a wise parent will allow his children a growing amount of input into family choices as the children grow older and more competent.

Utilitarianism is a possible moral rule. The difficulties of applying it to real world problems are substantial, but so are the difficulties of applying an alternative rule such as minimizing coercion. One would face very similar problems in defining and measuring the amount of coercion and in judging the tradeoff between increased coercion for one person and decreased coercion for another.

Utilitarianism is a possible moral rule, but it is not one that I am willing to accept. Why? For the same reason that I reject all simple statements of libertarianism--because I can construct hypothetical situations in which it seems clear to me that the rule gives the wrong answer.

13) The reason why Friedman "can construct hypothetical situations in which it seems clear to me that [a utilitarian moral] rule gives the wrong answer" is because neither he nor anyone else (until now) has found and clearly defined the correct basis and method by which to implement utilitarianism as a moral rule which does not give wrong answers - as I will show in response to the example that he now presents.

You are the sheriff of a small town plagued by a series of particularly brutal murders. Fortunately, the murderer has left town. Unfortunately, the townspeople do not believe that the murderer has left, and will regard your assertion that he has as an attempt to justify your own incompetence in failing to catch him.

Feeling is running high. If no murderer is produced, three or four innocent suspects will get lynched. There is an alternative. You can manufacture evidence to frame someone. Once he has been convicted and hung, the problem will be gone. Should you do it?

On utilitarian grounds, it seems clear that the answer is yes. You are killing one innocent person but saving several--and you have no reason to believe that the one you kill values life any more than the ones you save. You yourself may receive disutility from knowing that you have framed an innocent man--but if it gets bad enough you can always kill yourself, leaving a profit of at least one life's worth of utility.

14) This is another rather unreal self-inconsistent example which depends on a lot of unlikely factors all of which have other solutions than the one proposed. Here are some of those solutions:

  1. If the sheriff knows that a certain person is the murderer and that he has left town, then he must have evidence of those effects which he can present to the town's people to convince them. If he does not have such evidence of these facts then how can he really know them?
  2. Unless the sheriff has a record of incompetence (and then how can be sure he knows anything), then why would the town's people not believe him, especially when he gives them the evidence for his conclusions?
  3. If no evidence of innocence (alibis, etc) can be found for the 3-4 people who are for some reason town suspects (what reasons are not given), then instead of framing someone would it not be better to frame evidence which will show that none of them could have been the murderer. This should be especially easy since it was a "series of particularly brutal murders".

15) However in the end, if a sufficient number of people in society are going to act irrationally, there is really nothing that can and should be done to better the situation except:

  1. To try to convince the town's people of the facts of the situation.
  2. Talk to all the suspects who are certain to be lynched and have them draw straws to decide which one is to say he is guilty (or be framed) and to be lynched.

I am not willing to accept the conclusion. In an earlier hypothetical, I said that I would steal; in this one, I would not frame. To save a million lives, perhaps, but for a net profit of one or two, no. It follows that I am not a utilitarian.

16) I do not see why after the drawing of straws, Friedman or anyone else should not be willing to manufacture false evidence against the remaining man particularly if there is a chance that by doing so his death might be sufficiently delayed to allow things to cool down, more convincing evidence of the real murderer surface, and the eventual acquittal and saving of his life also. Finally, I see no moral difference between sacrificing one life to save two others or to save a million others. The principle is the same; each life is invaluable to its holder. In all cases, only the person himself can judge whether his own life is worth more or less than the sum of a number of other lives. No one can or should ever judge for him unless there is simply no other possibility. Yes, there are possible examples where such a decision will have to be made (much more plausible that Friedman's example). Where that is so and one knows nothing about the individuals involved, one most certainly would always choose to save the greater number of humans over the lesser. If one knows about the humans involved then some evaluative comparison would certainly be used. However, one would always attempt to avoid such situations and would never design a social order to encompass them automatically.

Although I reject utilitarianism as the ultimate standard for what should or should not happen, I believe that utilitarian arguments are usually the best way to defend libertarian views. While most people do not believe that maximizing human happiness is the only thing that matters, most do believe that human happiness is important. Libertarians are not the only ones who avoid conflicts by believing that the system they favor works both morally and practically. To the extent that I can show that a particular libertarian proposal--abolition of heroin laws, or minimum wage laws, or all government--produces attractive results, I have an argument which will have some weight in convincing almost anyone to support it.

17) Friedman here exhibits contradictory viewpoints. Until there is some clear standard of "best" (utilitarian or otherwise) how can he possibly use arguments about what is good or bad? As I have argued above, the total of human happiness for all humans in some group has no direct means of computation for the same reason that the total for such a group of the value of widgets, TV sets, or hair cuts has no direct means of computation. In fact, the only aspect of human happiness to which a maximum can be aimed is the lifetime happiness of each particular individual as evaluated and computed for himself. This fact does not destroy the value of practical arguments that some alteration of choice will benefit more people than is currently the case. However, these arguments work only because and to the extent that they increase the individual lifetime happiness of some individuals without reducing the individual lifetime happiness of any who have not initiated a violation against another.

Therefore, I must take major exception with Friedman's intimation that there must necessarily be problems with the practical implications of any social theory, and that it is therefore necessary to appeal to something outside of that theory to show that it produces "attractive results" in order to make the argument for it strong enough to be acceptable. Instead, there can be no conflict between valid theory and practice. If a theory of reality is valid then it must be practical by definition of the meaning of "valid"; and a theory which is not valid cannot be practical. The reason why natural rights theory is impractical is because it is not valid!

So one reason to base my arguments on consequences rather than justice is that people have widely varying ideas about what is just but generally agree that making people happy and prosperous is a good thing. If I argue against heroin laws on the grounds that they violate the addicts' rights, I will convince only other libertarians. If I argue that drug laws, by making drugs enormously more expensive, are the chief cause of drug-related crime, and that the poor quality control typical of an illegal market is the main source of drug-related deaths, I may convince even people who do not believe that drug addicts have rights.

18) Since gaining justice, both spiritually and materially, is a major part of happiness and prosperity, how is it possible that "people have widely varying ideas about what is just but generally agree that making people happy and prosperous is a good thing"? Such a statement is self-contradictory in the face of it! The reason that such practical arguments work with respect to people with many different overt philosophies is precisely because of the fundamental ethic of rational self-interest which every human must have and which extends to the interest of others for most people because they see that such interest is ultimately beneficial for them also.

A second reason to use practical rather than ethical arguments is that I know a great deal more about what works than about what is just. This is in part a matter of specialization; I have spent more time studying economics than moral philosophy. But I do not think that is all it is. One reason I have spent more time studying economics is that I think more is known about the consequences of institutions than about what is or is not just--that economics is a much better developed science than moral philosophy.

19) Once again, I would contend that this is contradictory. How can one know what works until one has a clear definition of good, bad, better, worse, best and worst! Thus, in order to use economic arguments for what works one must already have a moral basis. However, once one has made a consistent definition of these moral terms, then one will also be able to clearly ascertain what is just and what is not just.

If so, the implications are not limited to the best choice of arguments with which to convince others. In the previous chapter I gave a long list of questions which I saw no way of using libertarian principles to answer. In the next chapter I will argue that they are all questions that can, at least in principle, be answered by using economic theory to discover what rules maximize human happiness. If so, then economics is not only a better way of persuading others. It is also a better way of figuring out what I myself am in favor of.

20) As I showed in my critique of Chapter 41 of MoF, Friedman's long list of questions could not be answered based on the current libertarian principles of his time because those principle were not complete and consistent in themselves. But economic theory cannot give any better result, until one has an ethic of morality (good and bad), at least for oneself, in order to decide what one is in favor of. To the extent Friedman can succeed in using economic theory to better figure things out for himself and to persuade others, this is only because he and they have similar ethics. Therefore, as I have been arguing all along, a complete and consistent ethical foundation is primary to any rational analysis of what human actions will maximize human happiness mutually for all together.

Footnotes and References:

1. The Machinery of Freedom: Guide to a Radical Capitalism: Chapter 42.

2. Such a theory is explicated in the essay: "Social Meta-Needs: A New Basis for Optimal Interaction".

3. For complete definitions and details see: the "Natural Social Contract".

4. For more detail concerning why such undefined plural usages have negative effects on logical thought see: "Essential Collectivism in Language: its Effects on Rational Thinking".

Previous Page
Next Page