That's an honest question. I consider myself both, but it's also obvious from the way people use the term that different people think of it differently (somewhat like the issue with the term "classical liberal"). Recently some commenter (I think maybe Bob Murphy) used "free market economists" in a way that was clearly meant to exclude my sort of economist, and it was a little odd to read. And here, Jonathan Catalan refers to his "pro-market" response to me. He doesn't come out and call me "anti-market", but again it gives the impression that he has something specific in mind about why his response was "pro-market". What makes someone "pro-market" or a "free market economist"???
Let me pose my puzzlement this way:
- If you refused to give your child food unless they were able to exchange something acceptable for the food, would that make you more "pro-market" than someone who just gives their child food?
- What about respect for elders? Waiters and waitresses are paid to compose themselves in a certain way around customers as a part of their labor market transaction with the restaurant owner. If you require your elders to pay you before you act respectful towards them, does that make you more "pro-market" than if you don't?
- Or of course that most essentialist of human activities: sex. Is a patron of prostitutes more "pro-market" than someone who never transacts for sex in his life?
Why is it that "pro-market" has come to mean "thinking that the market is the appropriate institution for decision making"? Of course these examples are extreme, but they're meant to illustrate the point (so I want to be careful not to detract from that point because of the sheer extremity of the examples): why is it that an economist is more of a "free market economist" if he proposes that more things be done using the market than another economist? Why is Rothbard often considered more a "free market economist" than Friedman? It seems like an odd way of using the term to me. Clearly there ought to be a line somewhere. If you think markets are rubbish and should be used only on the rarest of occassions it doesn't seem sensible to refer to you as "pro-market". But even aside from that concern, the use of the term seems to be absurd.
It's a focused absurdity, though. You won't hear libertarians accuse people of not being pro-market because they give food to their children rather than selling it to them. You'll only really hear it with respect to the government. Under that formulation it's easier to understand why you hear nonsense like "Paul Krugman isn't a free market economist". In plain English, that's a bizarre sentence. But when "free market" means "when there is a choice between government and the market, use the market" it becomes more sensible. Krugman acknowledges a role for government, after all, as do I.
Anyway - it's just a very strange, very unique way of talking about things and sometimes I get the impression people who talk this way don't realize how weird it sounds - not only do they disagree with my points here on a cerebral level, but it actually seems normal to them too.
Some on the left don't help the situation. Joe Stiglitz frequently uses "free market economists" to be synonymous with "libertarians" too, and it bothers me to no end. But for the most part this sort of talk is fairly restricted to libertarians themselves.
To me, the market is just an institution and a particular way of making decisions. I think the market is fantastic, but it's not the only institution and it's not the only way of making decisions and in certain cases it's not the best way of making decisions. It seems weird to me that simply acknowledging that has the potential to invalidate me as "pro-market" or a "free market economist" in some people's eyes. I don't normally think of myself as "pro-government" because in almost every situation I can think of the government is much less than ideal - it's just sometimes the best available option. It's not the same way with markets for me. There are lots of situations where the market isn't just the best available option - it's a really, really great option. So saying I'm "pro-market" makes more sense.
Maybe I'm misreading people and people do consider me and Krugman and most other economists in the U.S. to be "free market economists". But I don't think the people who use that phrase on a regular basis would acknowledge us.
Thursday, May 26, 2011
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Isn't "pro-market" intended as a relative position? E.g. one could say, I am pro-market relative to the mainstream, or, I emphasize markets because I think non-market solutions are increasingly popular and often unjustified.
ReplyDeleteSo it's a way of expressing opposition to a perceived prevailing trend. Like so many labels that people apply to themselves.
I think your discussion about being pro-government is interesting precisely because there's nothing conceptually wrong with being pro-government (e.g. believing that government solutions are under-used relative to their potential for good), and yet the phrase doesn't play well. There could be a lot of reasons for that, but one possible reason is a common belief that government solutions are often ineffectual.
Despite being a centrist and a Keynesian I get the impression that a lot of your reader base happen to be libertarians and possibly also Austrians. If so then I guess one could say it's a matter of making a relative comparison. On the other hand maybe some people do think that by not being a libeterian(AnCap) you aren't pro-market because you see a role for government and are therefore a central planner. I think that's silly(as is oversimplifying Hayek's knowledge problem) since economist in general are probably the most pro-market minded group of individuals you'll find in any given population.
ReplyDelete"If you refused to give your child food unless they were able to exchange something acceptable for the food, would that make you more "pro-market" than someone who just gives their child food?"
ReplyDeleteI am of that ilk that believes that the reason why parents do things for their children is because they get something in return. Profit doesn't always manifest itself monetarily. All action is meant to exchange a present situation with another one which will garner greater satisfaction; the rules don't change with parenting.
"Why is Rothbard often considered more a "free market economist" than Friedman?"
Rothbard was more consistent, although Friedman continued to develop his thought throughout his life. I think David Friedman is more consistent than his father, as well.
Octahedron and Robert -
ReplyDeleteI think there's a mix. If it's a relative thing, then perhaps the term makes sense.
But even then - it's still odd. This is why I ask - is the parent who forces their child to pay for their food more "pro-market"? That seems silly. What we mean is that it's relative conditional on the appropriate use of markets - and it's in defining that bolded clause that we have all the disagreements!
Gene Callahan has a great paper coming out soon in (I believe) the journal Politics, Philosophy, and Economics that goes through some of these really absurdist positions on market exchange that guys like Rothbard and Block actually do hold. I'm not entirely prepared to concede that that is "pro-market" at all. There are less absurd disagreements too, but those are just as substantial.
Jonathan: "I am of that ilk that believes that the reason why parents do things for their children is because they get something in return."
ReplyDeleteYou have my sympathies.
Daniel,
ReplyDelete"But even then - it's still odd. This is why I ask - is the parent who forces their child to pay for their food more "pro-market"? That seems silly. What we mean is that it's relative conditional on the appropriate use of markets - and it's in defining that bolded clause that we have all the disagreements!"
This has nothing to do with anything. It's not a matter of the type of action the individual commits, it's about whether the action takes place within the coordination process of the market or outside of the coordination process through the state.
"You have my sympathies."
ReplyDeletePotential parents who don't think the benefits outweigh the costs put their children up for adoption... or kill them (either before or after birth). Sometimes parents walk out of their children's lives by abandoning them. There are reasons why they make these decisions.
Riiight...
ReplyDeleteBut that begs the question of the appropriate use of the coordination process of the market. What I think we see is that lots of people use "market" when they mean "not the state". That's bad enough from simply the perspective of clarity, but even if we consider the scope of non-state coordination processes, clearly there are lots of non-state, non-market coordination and governance processes we implement. Opting for one of these processes over the market generally doesn't get someone considered non-pro-market. It is odd that the case is different with the state.
Jonathan -
ReplyDeleteYou seem to be discussing rationality with Gene, not market or exchange activity.
People assess costs when they deal with the government too. That doesn't make it a market relationship.
Re:Rothbard was more consistent, although Friedman continued to develop his thought throughout his life. I think David Friedman is more consistent than his father, as well.
ReplyDeleteConsistent about what? I don't know much David, but Milton's methodology was strictly positivist and I assume you're talking about anarchy. He's stated in an interview that the reason he isn't one is because there isn't much empirical evidence to even support it.
But, to Austrians economics is not the study of wealth, or the accumulation of wealth. So, for something to be "termed" economic it doesn't have to involve monetary profit. Therefore, a parent is not necessarily "more market oriented" if he makes his son pay for his food. To Austrians, the root of economics is rationality, or that man acts to remove further uneasiness.
ReplyDeleteThe presence of government does not mean the absence of a market. The presence of socialism does not mean the absence of a market (it just means the absence of a pricing process). The market continues to exist, because the market is just a web of interacting individuals.
A pro-market person is a pro-free market person, in that they support a market free of interventionism. That's the only thing it means; it's as simple as that.
"...clearly there are lots of non-state, non-market coordination and governance processes we implement."
Based only on a limited understanding of what a market is.
Octahedron,
ReplyDeleteWell, there's another inconsistency, because M. Friedman did plenty of derivation of ideas based on the theory he held to be true (whether this theory was empirically derived or not). Surely, early support of central banking was not based on any extensive empirical evidence (in A Monetary History he supports central banking as a means of meeting an increase in demand for money).
1. I don't think economics is the study of wealth or the accumulation of wealth for anyone.
ReplyDelete2. Isn't that praxeology - the study of human action. Again you seem to just be talking about rational human action. Even Austrians don't say that economics encompasses all rational human action. Perhaps praxeology does, but not economics.
3. re: "So, for something to be "termed" economic it doesn't have to involve monetary profit." Right, but you need some sort of transactional exchange. When I pick whether I'd prefer to wear a blue or a red shirt in the morning depending on which benefits me most in a non-pecuiniary way, that's not economics simply because we're talking about benefits. Nobody said it needs to involve money. It does need to involve a transaction of some sort, I would imagine.
4. re: "To Austrians, the root of economics is rationality, or that man acts to remove further uneasiness." To everyone the root of economics is rationality and seeking out utility or whatever it is you like and want to maximize. That doesn't mean that every rational decision is an economic decision, does it?
5. re: "The market continues to exist, because the market is just a web of interacting individuals." I agreed with the first sentences of this paragraph, but not this sentence. Is a Congress a market? Is a family a market? Is a group of friends deciding where to go for dinner a market? No. And this is what is so weird about the discussion sometimes. It seems like I'm always running up against people redefining markets to be "all voluntary action", or redefining government to be "non-voluntary action" or just omitting non-government, non-market action from consideration as potential voluntary action. Anyway, the point is - no. Markets are not "just a web of interacting individuals". They are that, but you need more than just that to make a market.
6. re: "A pro-market person is a pro-free market person, in that they support a market free of interventionism. That's the only thing it means; it's as simple as that." Right this is how it seems like it is being used by a lot of people, which is what I think is so confused. Thinking that other institutions have legitimate roles besides markets and in concert with markets doesn't seem to me to be cause for saying I'm not pro-free-market. It's like me telling someone not to bang in a screw with a hammer and being asked "why are you against using hammers".
Despite being a centrist and a Keynesian I get the impression that a lot of your reader base happen to be libertarians and possibly also Austrians.
ReplyDeleteThat is to Daniel's credit. His willingness to engage his ideological rivals needs to be praised. Only major complaint I have about Daniel's style is his unwillingness to admit a mistake, but all of us suffer from the same disease.
Jonathan,
I kind of agree with your statement on child rearing. Before I became a parent, I didn't think it would be such a satisfying endeavor. I have to say, if happiness is profit, then I'm doing everything because I want to be happy. You just get some inexplicable pleasure from seeing, being around, and pleasing your child. Every little success of my child brings me joy, and my child's pain is mine. I guess we are wired that way.
I can't speak for people who abandon child or give it away for adoption. I guess it depends largely on their circumstances, and their emotional/mental condition.
2. Economics is a category of praxeology. Economic theory is held within the axiom of human action. Economics studies the objective relationships of action, although most economics deals with catallactics or action with money.
ReplyDelete3. All action involves an exchange. You are exchanging your present state of being for another state of being. So, economics can exist on a one-man island, such as is the case with the Robinson Crusoe example.
4. Yes, all decisions involve economization of means and ends.
5. What more do you need to be a market? Why be so ambiguous with your claims?
6. I'm sorry, but you're the one who's confused. You can be generally free market, but there are degrees at which people support markets. An anarchist can prob. be considered more free market than you could, even if you're both generally-speaking free market economists.
Daniel,
ReplyDelete3. Wrong. This is economics and this is a market exchange. You have a scarcity problem - you cannot reasonably wear both shirts - it is therefore economics. You are exchanging your present condition, constrained by scarcity, for a future condition, unconstrained by scarcity as you have chosen a shirt. That you do not see this is a market economy is why you can't understand why you are not a market economist.
sandre -
ReplyDeletere: "That is to Daniel's credit. His willingness to engage his ideological rivals needs to be praised. Only major complaint I have about Daniel's style is his unwillingness to admit a mistake, but all of us suffer from the same disease."
No, everyone knows my fault is that I stubbornly pursue things.
Just the other day I admitted to both Jonathan and Bob that I made a mistake in saying that we underinvest in the future. I also admitted my mistake to Bob Murphy in the Civil Rights era survey post that I was mistaken in not counting that other category as "libertarian".
I admit mistakes when I make them - I just don't admit the mistakes you all really want me to admit to because you're mistaken on the question of whether those are mistakes!
Jonathan-
ReplyDeletere: "Economics is a category of praxeology. Economic theory is held within the axiom of human action. Economics studies the objective relationships of action, although most economics deals with catallactics or action with money."
Right - what I'm trying to impress upon you is that all economics is action but that does not mean that all human action is economics. And nobody said economics was about money to my knowledge.
re: "What more do you need to be a market? Why be so ambiguous with your claims?"
How are my claims ambiguous? Markets require a transaction between two actors. What is ambiguous about that? You're the one trying to stuff any sort of rational human action into talk of markets.
re: "You can be generally free market, but there are degrees at which people support markets. An anarchist can prob. be considered more free market than you could, even if you're both generally-speaking free market economists."
No, no, no. I can argue with marginally mainstream and libertarian-leaning economists on the issue. That might be an open question. But I'm not playing second fiddle to an anarchist on this question. Children who run around banging on screws with hammers are not "pro-hammer".
aaron -
ReplyDeleteEconomics has pushed its way into a lot of psychology and sociology. I could potentially accept this as an "economics" question in the sense that it's a tradeoff question. I would prefer to just call it "psychology". Let me put it this way - if this is economics is there such a thing as "psychology"?
So it may be "economics", but that's pushing it.
One thing it is definitely not is a "market exchange". It's a choice, yes. But not an exchange.
In Austrian terms, I think economics clearly refers to everything they put under catallactics, but certainly not everything that falls under praxeology. I'm willing to countenance disciplinary imperialists who want to call it "economics", but I don't think it's very productive to overextend the discipline like that, and I'm definitely not going to concede that it's market exchange.
aaron -
ReplyDeletethis is hogwash: "You are exchanging your present condition, constrained by scarcity, for a future condition, unconstrained by scarcity as you have chosen a shirt."
You aren't exchanging those two things and your future condition is still exchanged. You get both those things - you don't trade one for the other. There's no "exchange" to speak of. All there is is a choice made under a constraint. That's the most you can say for this scenario.
*and your future condition is still CONSTRAINED
ReplyDeleteRe: Well, there's another inconsistency, because M. Friedman did plenty of derivation of ideas based on the theory he held to be true (whether this theory was empirically derived or not). Surely, early support of central banking was not based on any extensive empirical evidence (in A Monetary History he supports central banking as a means of meeting an increase in demand for money).
ReplyDeleteWell I'll have to concede this for now since I honestly don't know the history behind central banking and why it became widely accepted when it first started.
"Potential parents who don't think the benefits outweigh the costs put their children up for adoption... or kill them (either before or after birth)."
ReplyDeleteWell, if they have no moral sense that's what they'll do!
But, to Austrians economics is not the study of wealth, or the accumulation of wealth. So, for something to be "termed" economic it doesn't have to involve monetary profit.
ReplyDeleteI wish someone would explain this to Ron and Rand Paul, when it comes to matters of civil rights. They defend individual freedom (even if supposedly used for "abhorrent" means), but when faced with the moral counterargument that, no, it is simply wrong to permit overt racism, they try to weasel their way out of by saying, "Oh well, anyone who bans other races from their property would just be stupid because they would lose business."
This is a quite spectacular to avoid the issue. Someone who thinks that racism is about monetary profitability is wholly disconnected from underlying problem. (Say nothing of the inconvenient fact that racist institutions persist quite handsomely through the patronage of racist clientèle.)
---
Unrelated, but a question that someone might be able be to shed light on for me: What is the anarcho-capitalist stance as regards competition commissions or regulation on price collusion?
"I think David Friedman is more consistent than his father, as well."
ReplyDeleteI don't.
Both my father and I believed that there were arguments for and against having government do things. Both of us agreed that we do not know enough to prove, in any rigorous sense, where the line should be drawn--exactly what activities should be controlled through the political process and what should not.
My opinion was that a society in which the production and enforcement of law was done on the market rather than by government would probably work, would under some (but not all) circumstances be stable, and if it worked would probably be more attractive than the alternative. My father's view was that such a society might work but probably would not. That's a different judgement of a hard question to which nobody can give a rigourous answer, not a matter of consistency or inconsistency.
So far as the question of central banks, I can't remember my father ever arguing that a system with a central bank was superior to the sort of competing private system that existed in Scotland in Smith's time--perhaps the poster can point at the relevant passage?
I remember pointing out to him that the equilibrium of a perfectly functioning system of competing private issuers would give precisely the behavior of the money supply that he had argued was theoretically optimal. I don't think he disagreed.
David -
ReplyDeleteWelcome to the blog! Please come back.
Stickman -
I like the point about the persistence of discriminating establishments. A lot of people misunderstand Becker's argument on this - I should post on this soon, although I'm a little busy this morning.
"There's no "exchange" to speak of. All there is is a choice made under a constraint. That's the most you can say for this scenario."
ReplyDeleteDaniel, you should check out Collingwood's Economics as a Philosophical Science on this point.
"What is the anarcho-capitalist stance as regards competition commissions or regulation on price collusion?"
ReplyDeleteGenerally that price collusion is fine -- it's just a step on the road to a merger.
Reading the first page I'm already befuddled by him.
ReplyDeleteWhy is philosophical thought that which conceives its object as activity and empirical thought that which conceives its object as substance or thing?
Monkeys walking around and flinging poop is an activity. Is studying that "philosophical primatology", while studying monkey anatomy "empirical primatology"?
I'm confused why empirical study of activity isn't empirical thought.
Stickman,
ReplyDeleteI'm an anarchist (in, I like to think, the style of, say, David Friedman as opposed to your average Internet an-cap--i.e., I'm not fucking stupid), and I absolutely hate "the anarcho-capitalist stance" on anything. Society is complicated, and there are multiple approaches to every issue.
As for your hypothetical challenge to Ron and Rand Paul, if I were them I'd say something like, "Permit? I think the word you're looking for is 'tolerate'". I don't know why they always switch to a utilitarian argument.
"I admit mistakes when I make them - I just don't admit the mistakes you all really want me to admit to because you're mistaken on the question of whether those are mistakes!"
ReplyDeleteLOL Daniel I recommend Kathryn Schulz' TED talk on being wrong and how damnably similar it feels to being right.