[Norwegian]

This article questions whether people like Von Mises were real utilitarians, and discusses the weaknesses of their variant of utilitarian thought.

From the start of the utilitarian movement by Jeremy Bentham, utilitarianism has been considered a fairly liberal movement, or "social liberal" as this school of political thought is often labeled in Europe. This does not hovewer imply, that liberals have a monopoly on claiming that their solutions are the best for creating "the most happiness for the largest number of people". Most libertarians, or classical liberals as they are labeled in Europe, do use some kind of moral argument to legitimize their beliefs. Ludwig Von Mises hovewer were an exception to this rule. He claimed that libertarian policies were the best, because they were the most efficient. That is a claim that more classical utilitarians may question. Even if this discussion is based on the thoughts of Von Mises, it generally applies to most utilitarian libertarian thought.

One of the main problems with way Von Mises tackled this question, is that he does not seem to make any meaningfull distinction between the total economic resources in a society, and the happiness experienced by the population of that society. This can be a problem in two different ways. The first problem is that material wealth does not equal happiness. Of course, this objection can be raised against any form of utilitarianism that somehow deals with the allocation of material resources. Therefore, I need to set a few things straight. Materiel posessions is not the only thing that creates happiness, almost everyone agrees on that point. For the purpose of this discussion, I will only deal with the portion of human happiness, that either are directly or indirectly affected by material possessions and/or economic development. I do not claim that Von Mises did not see this fact.

The point is that even if you isolate the part of our happiness that are caused by material posessions, Von Mises view is flawed. This might seem contradictory, how can more material posessions make people less happy, if we only look at the portion of our well beind directly or indirectly linked to material posessions? One large problem here is the indirect effects of increased material wealth. To make more material wealth, society has to become more productive. This can be achieved by automation, longer work hours or working harder while at work. What can then be the problem with that? The first one, automation of menial tasks can be advantageous for all parties involved. If frees up labour from physically demanding tasks, that can be used for other tasks. This is advantageous for all parties, under the condition that the work those made superflous by the automations get is considered a better job than the one that they lost. This is very often not the case. Many workers made surplus to requirenments by automation does not get a better job, but rather a lower paid job with even worse working conditions in the lowly skilled service sector. At least for they who lose their jobs, this might be a disadvantage, even if it is possible to argue that this increases happiness in the society at large, because of increased productivity all over. The others might be more problematic hovewer. If people work more, they have less time to enjoy their wealth. To overstate the point, if you have a society where everyone works 14 hours a day every day of the week, will they really have time to enjoy the money they make? The same point can be made about working hours in general, doesn`t longer working hours decrease the time people got to enjoy their material posessions?

This leads me to a by point, but a quite important by point in this discussion. If you are to determine what kind of society that makes people most happy, shouldn`t you include the whole day that people are awake, and shouldn`t every hour be weighted equally? Indirectly, libertarians actually omit several hours of almost every day of our lives! Why do the do that? Because the meassure happiness on the basis of the economic resources you accumulate. Why does this omit large portions of our lives? Because we are really only able to enjoy our material posessions on our free time. On most jobs, you can`t bring your stereo with you on the job to listen to your CDs while working, take a break to take your speedboat for a spin or watch movies on your widescreen TV. When you are at work, you gain minimal happiness based on your economic postion, because the advantages of that postion is not available for your use when you are at work. That brings me to another related point, that libertarians does not take into account how those who do the task experience doing those tasks at the workplace. If you meassure human happiness by economic status alone, someone shoveling dirt at a barn for $35 an hour would be more happy than someone playtesting and reviewing computer games for $32 an hour. I do hovewer seriously doubt that that would be the case. That kind of purely economic view does not take into account the gain or loss of happiness caused by actually doing those tasks that are assigned to you at your job. You can argue that this has nothing to do with money, but is has. As the tasks that workers carry out determine what amount of economic resources that will be available in a society. It might hovewer be argued that if extra economic growth goes at the expence of the happiness or unhappiness experienced while at work, the extra economic growth might simply not be worth it.

Some government policies like socialized medicine, economic redistrution and restrictions on working conditions might inhibit economic growth. I must state that I do not take these claims at face value, but the truth of these claims are not the subject here. If there is truth in the proposition, that these programs even in moderate amounts will inhibit economic growth, this does not imply that these programs are wrong. These programs can make people feel more secure, lessen the stress that the subject feels and make people feel more fairly treated. Again, these are non material goods, but the still are relevant for this discussion, because this goods can be brought about by sacrificing economic growth or economic growth can be furthered by sacrificing these goals. Again, extra economic growth can come at a price where it simply not worth it. Lack of such programs or government intervention might also raise the crime rates or destroy the environment, other factors that decreases utility. Some might claim that crime is not that high in the USA compared to other rich countries like Sweden or Denmark. The rates of the population in prison is much higher in the USA than those countries hovewer, so if you remove the effects of more restrictive criminal policies in the US, it is quite possible to claim that the propability of someone becoming a criminal is much higher in the US than Sweden, even if overall crime rates aren`t that different. It would be quite interesting to see how much crime you would have gotten in the US, with the crime policies of Sweden. It would be no pretty sight I am pretty sure of.

Here, you have to evaluate how much utility excess growth would create. Off course, I am not in any situation proposing a ban on economic growth, but I do question where is should be placed on the ranking of government policies. Lets take a look at economic development up from the start. Lets say that we have a poor rural country where food supply is unstable, and the inhabitants are often subject to famine. If you could raise growth and get the economy up to the standards of early industrialized society, so that most people would get access to a steady food supply and rudimentary health services, we would in no doubt get an increase in utility, because people would live both longer and healthier lives. Say that this society would progress even further, making people able to own consumer goods like cars, television sets and their like. This would also be a marked increase in utility. This might not be the basic human neccessities, but they do increase utility. Cars make people more mobile making the able to accept work at a large range of locations and use less time to get to and from work. Television sets make people able to enjoy modern entertainment and it gives them possibilites to enjoy their spare time. It also make recreation inside your own home possible, and as such adds possibilites a less developed society could not offer. But then, what if society develops further? Computers and internett certainly adds possibilities you did not previously had, but what after that? What am I getting at? I am referring to the frequent comparisons between Sweden and the USA. On paper, americans have a much higher standard of living than swedes, but is they really happier? The case here is the practical differences between life in Sweden and life in the US. Americans often owns a home, have a car, have a television set and a computer. On their free time they often eat out, surf the internett or goes to a movie. And how is life in Sweden? Much of the same really. Swedes might have a smaller house, a smaller car, an older personal computer, a smaller television set but the extra utility enjoyed by americans are really minimal, compared to the difference in utility by not having these things at all rather than having these things. It is therefore possible to question whether economic growth at the expense of other considerations would be rational in a country like Sweden.

Let`s look at the other main problem with this approach to utilitarianism, the negligence of the relative effects of wealth distribution. It is a reasonable assesement that the utility or happiness caused by a dollar declines depent on the sum of money the subject already have. If you give a homeless person a hundread dollar, that would be like christmas, because he would be able to get a decent meal for once, buy some clothes and even hire some decent shelter for a couple of nights. If you give a well of person a hundread dollar, he would propably not experience any difference of utility from that hundread dollar bill whatsoever. The failure to acknowledge this is a grave error.

Off course, some would argue that a thousand dollars are more worth if a rich person gets it, because the rich person would invest it and multiply it, while the poor person would waste it. This does hovewer miss the point. The point above is the utility gained by the person that have the money, while this counter argument is about the utility gained by society. Also, utilitarianism does take this point into consideration, and is the reason why utilitarians are not egalitarians. The two considerations must be weighted against each other, and not, like the socialists and conservatives/libertarians just cater for one of those two considerations, while ignoring the other. Also, the definition of waste is quite interesting. If the poor person is wasting that money on food, shelter and basic consumer items, isn`t such consumption a waste for everyone? Why is it waste when a poor person eats, and not waste when a rich person eats? If this point is to be taken serious, noone should be allowed to eat, drink alcohol, buy a television set or buy a car, because all these things are just waste, and all the money should be invested instead. Even if we ignore that shortcoming of the argument, invested money does not equal growth. Money can be invested in businesses that fail(as we saw during the IT crash) or businesses that outcompete other older businesses making their employees out of a job. In the last instance, you would propably get some increase in utility, but mostly, invested money will in these circumstances not enhance the wealth of the nation in any positive way. Actually, if invested money equalled economic growth, we would really be much wealthier today that we actually are.

Another argument against redistribution based on utility is that this implies that the government dictates what people shall need. There are two problems with that argument. Firstly, most welfare programs are cash based, so that the recipients actually can buy what themselves think that they need. It should also be noted that the government does not force these services upon everyone. If you are out of a job, you do have the option to not ask for welfare or unemployment insurance. Secondly, the government can actually predict some needs that the population have. Every human being needs to eat and drink to survive. Also, people living in developed countries also need shelter and clothes. Off course, people living in the australian desert does not require shelter or clothes, but the fact that these differences in basic need are geographically and culturally contained, means that the government could still forsee if it`s population would need those goods. Some people does not require shelter, but prefer do live on the street. They hovewer are so few, that they could be discounted. If the fact that a so small minority does not require something means that it should not be delivered by governments, you must also disband the police, because there is a rather large possibility that you would find more people preferring to live in a society with no law and order whatsoever, than people preferring to live on the streets.

But won`t even the poor gain from economic growth? Well, it is not certain that you would get rid off absolute poverty in a libertarian society even if the growth rates are high. Even if we don`t have any libertarian societies in the world today, there is a tendency that the lowest wages in those economies that come closest only rise very slowly. More importantly, the relative status you have can be just as important as your absolute material standard. Yes, that can be called envy. But we should not do the same mistake the communists did, disregarding what can be called human nature. It is quite common, yes it can even be called natural, to meassure ourselves to the people around us. Having less than most people around you do detract from your happiness. Actually, this might not be the primitive envy that libertarians envisage. Your status will to a large part determine your happiness. Reproduction and finding a partner is an extremly important part of human nature. The social status you have will to a large part determine your ability to get an attractive mate. That will not only be a determinant for the happiness you will experience as a result of the relationship itself, but it will also determine the genetic makeup of your offspring. An important factor for your happiness because every animal wants to see it`s offspring prosper. This will also affect the environment your children grow up in. If you do not live in a very little town, kids will more often than not group into groups based on material status. This has the effect that kids often ends up in an environment with kids of their own socioeconomical background. Something that can strengthen the effect of their parents status upon their lives, because destructive attitudes are more widespread in poor groups, just as membership in more well to do groups creates peer pressure to succeed and do well at school.

This in not the only aspect of your relative position barring envy. Another important aspect that will affect both parent and kids is the areas where they can afford housing. If you are relatively poor, you will have to settle in relatively poor neighbourhoods, with all the negative effects that can have. Poor neighbourhoods are more riddled with crime and social problems than more well to do neighbourhoods. There are reasons to believe that this is caused by relative and not absolute poverty, because those problems are more frequent in poor areas and not very frequent in more rich areas, regardless of the absolute standard compared to other countries. Some might argue that it is failed personal morals and not poverty that causes these problems, but that is not the case here. Even if quite a few people does become poor because of failed personal morals, there are still many that are poor for no reason the can control, and the effects on those people from living together with drug addicts and criminals are just the same, regardles of whether poverty causes social ills or social ills causes poverty. Poor relative status might also deprive you of opportunities, because quite a few jobs are distributed between “friends of friends”, and poor social status makes access to those attractive networks much more difficult. It also affects the way you view yourself. In a sense, your market value compared to the market value of others is a symbol of how high society values you. If you have a much lower market value than most other people, that will often make you feel unvalued by other people, and that is not a feeling that seldom increases happiness. Another related feeling is the feeling of being treated unfair. If you feel that you recieve less than people that have the same abilities as you, or that you do not control those factors that makes your market value low, that will make you feel treated unfairly. This is not normal envy, but a more righteous feeling of being treated poorly.

There is no doubt that technological and economic progress do further happiness. Technology can extend average lifespans and economic progress is important to create the goods that people need to prosper. Here you have to remember that libertarianism is not the only system that promotes economic growth. You can still have economic growth, even if you have some public welfare. Actually, Great Britain had the poor law and later their workhouses during their entire industrialization, and Germany started work on their welfare state relatively early in their development. Also, economic growth does not always cause better health or longer lifespans. Actually, many of the countries with the longest lifespans can be labelled socialdemocrat. Of course, the US dominates medical research. But then again, it might be the fact that this can easily be traded with the US, that make the european countries use their resources for research on other areas.

Related to this, we can question whether people actually becomes more happy by larger TV sets, cooler mobile phones or more expensive clothes. Here, we must see the difference between different kinds of material goods. Some would label those real and artificial needs, a division that I do not agree with. I would rather divide them into absolute and relative goods. An absolute good is a good that gives the same amount of utility, independent on the amount of those goods enjoyed by others. Examples of those are food, machines that do away with physical and other unwanted labour and medical services. Relative goods are examples of goods that gives utility compared to the amount of those goods enjoyed by others. Examples of these kinds of goods are designer clothes and other things whose main aim is to manifest status. Other goods can be labelled as a kind of mixture. It is fun to get a nice car, but you also want it because you want to show off to others and gain status. Increasing the total wealth in society to aquire more relative goods is not very rational, because it will do nothing else than increase the number of these goods you will need to gain a given amount of utility. It will therefore be wrong to let that kind of growth have negative effects upon other aspects of society. On the other end, growth of absolute goods is a high priority. When it comes to the things in between, that is a more difficult decision. The growth of those sectors is important for overall technological development and keeping people employed, but I do not think that it is right to make people live in poverty or preassure people to work 80 hours a week to gain even larger amounts of that kind of goods. Yes, having a larger widescreen TV, a cellphone with a larger screen, a faster personal computer or a faster car is great, but it is an open question if it is so important that it legitimizes sacrificing other interests to gain even more growth in those areas. Having a kind of mixed economy will not stop the development of those things, maybee slow it down a little bit.

This does not mean that I write off economic growth as a bad thing. Classical utilitarians afterall are mostly in the center and not the left, at least by european standards. Utilitarians have since the days of Bentham been aware of the fact that to much redistribution has negative effects on society. I just claim that economic growth should not be a goal of government policies, regardless of whether it will further human well being

[Noumenon]

To make more material wealth, society has to become more productive. This can be achieved by automation, longer work hours or working harder while at work.

The author is forgetting capital accumulation, which makes workers, and thus society, more productive over time. If also makes working longer and harder unnecessary. Capital accumulation could include automation, but it could also simply mean more capital (like bigger factories or a greater number of factories). This would mean more jobs for workers, not fewer.

And automation does not cause either unemployment or a decrease in standard of living for workers. Since the Industrial Revolution, the productivity of labor has increased by an order of magnitude of at least 100 times. This is due in a great part to automation and machines. There has been no corresponding increase in unemployment because of that. And the living standards of workers has greatly increased (see productivity theory of wages).

Also take this example. In 1900, cars were expensive as yachts are today, and the industry was very small and employed few people. Then after Henry Ford and numerous others introduced labor-saving machinery, the industry grew so large that now it is one of the largest, if not the largest, employer in the US. And does anyone think that it was better to be working on cars in 1900 rather than today? Working conditions and standards of living are both better.

If you meassure human happiness by economic status alone, someone shoveling dirt at a barn for $35 an hour would be more happy than someone playtesting and reviewing computer games for $32 an hour. I do hovewer seriously doubt that that would be the case. That kind of purely economic view does not take into account the gain or loss of happiness caused by actually doing those tasks that are assigned to you at your job. You can argue that this has nothing to do with money, but is has. As the tasks that workers carry out determine what amount of economic resources that will be available in a society. It might hovewer be argued that if extra economic growth goes at the expence of the happiness or unhappiness experienced while at work, the extra economic growth might simply not be worth it.

This is a factor in people's happiness, but it really can't be changed. Are you going to have a society in which everyone's job includes testing videogames and test driving Ferraris? That is simply not possible. No matter whether you are talking about state capitalism, free market capitalism, or socialism, some people are going to hate their jobs and many will find them distasteful. Someone has to do the dirty work. Thats just the nature of things.

Some government policies like socialized medicine, economic redistrution and restrictions on working conditions might inhibit economic growth.

Got that right. Resources which are taken up by the government and redistributed are resources which could have gone to capital accumulation, which is essential for economic progress. Capital accumulation causes an increase in the productivity of labor, which causes an increase in real wages.

These programs can make people feel more secure, lessen the stress that the subject feels and make people feel more fairly treated.

What about the high taxes they have to pay for these programs, and the fact that their real wages will be hurt by them? That certainly doesn't increase their happiness.

Again, extra economic growth can come at a price where it simply not worth it.

That is true. We definitely wouldn't want people working 24 hours a day for a little extra economic growth. But welfare programs simply aren't worth it. Milton Friedman estimated that services cost about twice as much when the government provides them rather than the free market. And this enormous cost is paid through very high taxes, deficit spending, and inflation. All those resources are directed away from capital accumulation, which hurts worker's real wages.

Lack of such programs or government intervention might also raise the crime rates or destroy the environment, other factors that decreases utility.

Property rights are an effective check on the ability of corporations to destroy the environment. And how would lack of government intervention is business cause increased crime rates?

Some might claim that crime is not that high in the USA compared to other rich countries like Sweden or Denmark. The rates of the population in prison is much higher in the USA than those countries hovewer, so if you remove the effects of more restrictive criminal policies in the US, it is quite possible to claim that the propability of someone becoming a criminal is much higher in the US than Sweden, even if overall crime rates aren`t that different. It would be quite interesting to see how much crime you would have gotten in the US, with the crime policies of Sweden. It would be no pretty sight I am pretty sure of.

Remember that libertarians would greatly reduce the number of laws, and thus the number of criminals. Many of the criminals currently in prison frankly don't deserve to be there. That includes every non-violent drug offender.

Here, you have to evaluate how much utility excess growth would create. Off course, I am not in any situation proposing a ban on economic growth, but I do question where is should be placed on the ranking of government policies. Lets take a look at economic development up from the start. Lets say that we have a poor rural country where food supply is unstable, and the inhabitants are often subject to famine. If you could raise growth and get the economy up to the standards of early industrialized society, so that most people would get access to a steady food supply and rudimentary health services, we would in no doubt get an increase in utility, because people would live both longer and healthier lives. Say that this society would progress even further, making people able to own consumer goods like cars, television sets and their like. This would also be a marked increase in utility. This might not be the basic human neccessities, but they do increase utility. Cars make people more mobile making the able to accept work at a large range of locations and use less time to get to and from work. Television sets make people able to enjoy modern entertainment and it gives them possibilites to enjoy their spare time. It also make recreation inside your own home possible, and as such adds possibilites a less developed society could not offer. But then, what if society develops further? Computers and internett certainly adds possibilities you did not previously had, but what after that? What am I getting at? I am referring to the frequent comparisons between Sweden and the USA. On paper, americans have a much higher standard of living than swedes, but is they really happier? The case here is the practical differences between life in Sweden and life in the US. Americans often owns a home, have a car, have a television set and a computer. On their free time they often eat out, surf the internett or goes to a movie. And how is life in Sweden? Much of the same really. Swedes might have a smaller house, a smaller car, an older personal computer, a smaller television set but the extra utility enjoyed by americans are really minimal, compared to the difference in utility by not having these things at all rather than having these things. It is therefore possible to question whether economic growth at the expense of other considerations would be rational in a country like Sweden.

Economic growth really isn't that much faster in the US than Sweden. They are both welfare states. Trying to us the US as a model for a libertarian system is quite futile.

Thats all I have time for right now.

[Comrade Ogilvy]

Well, libertarianism is def. not a utilitarian system, because wealth disparsity would be great, due to capitalism. Socialism is a system of utilitarian calculation to say the least.

[Norwegian]

The author is forgetting capital accumulation, which makes workers, and thus society, more productive over time.

No, I am not forgetting capital accumulation, it is mentioned elsewhere. A (proper) utilitarian that doesn`t belive in capital accumulation, would be a communist. Whether taxes inhibit capital accumulation, depends on how they are deployed. Taxes on the very rich decreases capital accumulation, but if more of the tax burden is laid on the middle classes, capital accumulation wouldn`t be that much hurt. Also, when we already are as rich as we are today, i question whether fast growth is the number one priority.

Also, more capital does not automaticly make society more productive. You also have a dimishing effect of utility on capital, because if you have large amounts of investments, you will have overinvestment in some sectors, and quite a large bit of investements will be lost in the long run.

Also, automation is just as much about innovation as capital. If you are going to automate something, the technology would have to be there. Anyhow, there won`t be so much automation during libertarianism, because the low wages will be so low, that further investements in machinery won`t pay off. One example is car washing, that is done manually in the US, but done by machines in Norway.

And automation does not cause either unemployment or a decrease in standard of living for workers. Since the Industrial Revolution, the productivity of labor has increased by an order of magnitude of at least 100 times.

Yes, but you wholly disregard one of the main points of my article, the importance of relative wealth! Yes, during that period, workers were getting more and more utility because of their increased income, and work getting less and less dangerous and physically demanding, but that development have abated during the last decades in the rich countries. Actually, today the "new work" is often less paid and more stressfull than the old traditional industrial jobs.

This is a factor in people's happiness, but it really can't be changed. Are you going to have a society in which everyone's job includes testing videogames and test driving Ferraris? That is simply not possible. No matter whether you are talking about state capitalism, free market capitalism, or socialism, some people are going to hate their jobs and many will find them distasteful. Someone has to do the dirty work. Thats just the nature of things.

Yes, I do not claim that everyone could have "cool jobs", but I do think that it is a factor than in part can be manipulated. In Scandinavia, the government taxes people, so they can afford more workers in kindergarden and taking care of the elderly and disabled. This causes the middle class to not be able to afford "housemaids" and we have less "McJobs" in the public sector because of it. Hovewer, it clearly appears that people would much more have those public sector jobs, than the private sector jobs they replace. Also, much dirty work is actually not that neccesary! Jobs that are being done in the US, like carwashers and housemaids, aren`t done or are done very seldom in the nordic countries. So many of those jobs could simply be removed, without much harm to the happiness of the populace in general.

Got that right. Resources which are taken up by the government and redistributed are resources which could have gone to capital accumulation, which is essential for economic progress. Capital accumulation causes an increase in the productivity of labor, which causes an increase in real wages.

But then again, the government also creates jobs with the money it gets. Also, as I stated in my first post, and which you have not commented, the utility of further economic growth diminishes when society already is well off. That is an important point, which you have made no comment about!

What about the high taxes they have to pay for these programs, and the fact that their real wages will be hurt by them? That certainly doesn't increase their happiness.

No, but on average, the increases happiness for those who recieve the money is larger than the happiness lost for those who pay the high taxes. Actually, the law of dimishing utility is one of the most central parts of original utilitarianism, and I find it kind of funny that Von Mises disregarded that notion, and still called himself an utilitarian!

That is true. We definitely wouldn't want people working 24 hours a day for a little extra economic growth.

Yes, but that would be the logical conclusion if you take your ideology to the extreme, as libertarian quasiutilitarianism have the total amount of money as the only meassure of human happiness.

But welfare programs simply aren't worth it. Milton Friedman estimated that services cost about twice as much when the government provides them rather than the free market.

Well, experience show otherwise, because the US health system is extremly expensive. And if we look at average lifespan, universal coverage does appear to give a better effect on average lifespan, that better quality services that aren`t available to everyone. Also, the important thing isn`t that the government produce the services, but that the government funds them.

And this enormous cost is paid through very high taxes, deficit spending, and inflation. All those resources are directed away from capital accumulation, which hurts worker's real wages.

But people still wants the middle class jobs, also after the effects of taxation. And therefore, I don`t see how taxes should be that much of a problem. Also, money taken in taxes aren`t eaten, they are given to others.

Property rights are an effective check on the ability of corporations to destroy the environment.

We don`t see to much of that in practice though.

And how would lack of government intervention is business cause increased crime rates?

Because an unregulated market would leave the lowest wages so low, that crime is the rational alternative for the poorest.

Remember that libertarians would greatly reduce the number of laws, and thus the number of criminals. Many of the criminals currently in prison frankly don't deserve to be there. That includes every non-violent drug offender.

Yes, but aren`t the drug users the same people that commit other petty crime? Also, the amount of drug criminals is the same in US and nordic prisons.

[Economic growth really isn't that much faster in the US than Sweden. They are both welfare states. Trying to us the US as a model for a libertarian system is quite futile.

But the US is much more utilitarian than Sweden, and it is not a proper welfare state, because it has lifetime caps on welfare benefits. Also, Hong Kong have not developed into an utopia, even if the are the worlds "freest" economy.

[Noumenon]

Whether taxes inhibit capital accumulation, depends on how they are deployed. Taxes on the very rich decreases capital accumulation, but if more of the tax burden is laid on the middle classes, capital accumulation wouldn`t be that much hurt. Also, when we already are as rich as we are today, i question whether fast growth is the number one priority.

Nevertheless, any socialist or large welfare state is going to have to tax the rich a great deal, and that means capital deccumulation, or a much lesser rate of accumulation.

Also, more capital does not automaticly make society more productive. You also have a dimishing effect of utility on capital, because if you have large amounts of investments, you will have overinvestment in some sectors, and quite a large bit of investements will be lost in the long run.

True, but in a free market, businessmen aren't going to buy unproductive capital. You have to assume that people will act rationally. A rational market will result in capital accumulation that makes society more productive.

Also, automation is just as much about innovation as capital. If you are going to automate something, the technology would have to be there. Anyhow, there won`t be so much automation during libertarianism, because the low wages will be so low, that further investements in machinery won`t pay off. One example is car washing, that is done manually in the US, but done by machines in Norway.

Well where I live we have machine car washers, but thats beside the point. I agree that the average wage rate will lower, but only to the extent that it was kept artificially high by the government. If it dropped below the point of free market equilibrium, that would create a labor shortage, and employers would bid wages back up. And this lowering of wages will perhaps replace some automation with manual labor. But if that happens, it will make no difference with regards to the real wages of workers in the long run, since it doesn't change the productivity of labor.

And automation does not cause either unemployment or a decrease in standard of living for workers. Since the Industrial Revolution, the productivity of labor has increased by an order of magnitude of at least 100 times.

Yes, but you wholly disregard one of the main points of my article, the importance of relative wealth! Yes, during that period, workers were getting more and more utility because of their increased income, and work getting less and less dangerous and physically demanding, but that development have abated during the last decades in the rich countries. Actually, today the "new work" is often less paid and more stressfull than the old traditional industrial jobs.

In response to your relative wealth argument, I agree that money is worth more to poor people. But I don't agree that simply redistributing the wealth to them makes them happier in the long run. No, money is not wasted if you give it to poor people. I believe charity serves a valuable function in society. But in the long run, allowing the rich to keep their money results in more investment in capital, and thus greater real wages for the poor. An increase in real wages increases the utility of the poor without requiring a sacrifice in others' utility.

Without evidence, I don't know whether to believe your claim that industrial work now is less paid and more stressful. But if that is the case, the decrease in money wages and additional stress is many times compensated by the great increase in real wages due to the capital accumulation over the last 100 years. Their utility is still much greater.

This is a factor in people's happiness, but it really can't be changed. Are you going to have a society in which everyone's job includes testing videogames and test driving Ferraris? That is simply not possible. No matter whether you are talking about state capitalism, free market capitalism, or socialism, some people are going to hate their jobs and many will find them distasteful. Someone has to do the dirty work. Thats just the nature of things.

Yes, I do not claim that everyone could have "cool jobs", but I do think that it is a factor than in part can be manipulated. In Scandinavia, the government taxes people, so they can afford more workers in kindergarden and taking care of the elderly and disabled. This causes the middle class to not be able to afford "housemaids" and we have less "McJobs" in the public sector because of it. Hovewer, it clearly appears that people would much more have those public sector jobs, than the private sector jobs they replace. Also, much dirty work is actually not that neccesary! Jobs that are being done in the US, like carwashers and housemaids, aren`t done or are done very seldom in the nordic countries. So many of those jobs could simply be removed, without much harm to the happiness of the populace in general.

I think you are underestimating the decrease in utility resulting from increasing the price of goods via an increase in the cost of production (eliminating "McJobs", or replacing low-paying jobs with higher cost machines). An increase in the general price level means lower real wages, which means lower utility. And you have to take into account the decrease in utility caused by the much higher tax rates resulting from huge government programs to "create jobs."

Got that right. Resources which are taken up by the government and redistributed are resources which could have gone to capital accumulation, which is essential for economic progress. Capital accumulation causes an increase in the productivity of labor, which causes an increase in real wages.

But then again, the government also creates jobs with the money it gets. Also, as I stated in my first post, and which you have not commented, the utility of further economic growth diminishes when society already is well off. That is an important point, which you have made no comment about!

The government creating jobs is not a good thing for the utility of the poor. The government cannot determine the most productive things for a worker to do, since it has no profit incentive. And many government jobs are useless bureaucracy with no real benefit to average people. Thus, an increase in government-created jobs comes at the cost of more productive jobs in the private sector. And that means a lesser productivity of labor, which means lower real wages for the poor (according the the productivity theory of wages).

And I agree that economic growth results in dimishing utility for more well-off nations. But that doesn't mean the potential of economic growth for increasing utility isn't still extremely large in those countries. As I've said before, the desires of consumers are virtually limitless. We want newer products, better products, and cheaper products. Our utility could be increased by a very large amount if we doubled our real wages, which is entirely possible under a free market system.

What about the high taxes they have to pay for these programs, and the fact that their real wages will be hurt by them? That certainly doesn't increase their happiness.

No, but on average, the increases happiness for those who recieve the money is larger than the happiness lost for those who pay the high taxes. Actually, the law of dimishing utility is one of the most central parts of original utilitarianism, and I find it kind of funny that Von Mises disregarded that notion, and still called himself an utilitarian!

In the short run, yes. The rich get less utility from their money than the poor who recieve their money. But as I described above, in the long run this will hurt their real wages.

That is true. We definitely wouldn't want people working 24 hours a day for a little extra economic growth.

Yes, but that would be the logical conclusion if you take your ideology to the extreme, as libertarian quasiutilitarianism have the total amount of money as the only meassure of human happiness.

No, libertarians recognize that utility comes from other sources. But at the same time, we recognize that in a world of scarcity, material things are perhaps the most important measures of human happiness. You can't satisfy your higher needs and desires without satisfying your lower material ones first.

But welfare programs simply aren't worth it. Milton Friedman estimated that services cost about twice as much when the government provides them rather than the free market.

Well, experience show otherwise, because the US health system is extremly expensive. And if we look at average lifespan, universal coverage does appear to give a better effect on average lifespan, that better quality services that aren`t available to everyone. Also, the important thing isn`t that the government produce the services, but that the government funds them.

The US healthcare system is nowhere near being free-market. In 1992, government expenditures accounted for 51% of the overall medical spending in the US. Free market healthcare would be cheaper and better for a greater number of people. Since the US government got heavily involved in healthcare, the number of people covered by healthcare has decreased from above 80% to below 70%. Back in the 1950's, health insurance cost just a few dollars per month.

But people still wants the middle class jobs, also after the effects of taxation. And therefore, I don`t see how taxes should be that much of a problem. Also, money taken in taxes aren`t eaten, they are given to others.

They might as well be eaten. Redistributionism requires a huge wasteful government, which is an enormous drain on the economy. Much of the money directed to the government could have been put to better use producing goods. Since the total quantity of consumer goods is lowered by a great amount, the productivity of labor and therefore the real wages of workers is lowered.

Property rights are an effective check on the ability of corporations to destroy the environment.

We don`t see to much of that in practice though.

Thats because property rights are respected enough. For example, government can pollute all it wants and violate your property rights while its at it, and you can't even sue them. And courts wouldn't take you seriously if you tried to sue a company for putting smog in the air on your property. That is a legitimate property rights violation.

And how would lack of government intervention is business cause increased crime rates?

Because an unregulated market would leave the lowest wages so low, that crime is the rational alternative for the poorest.

They would not drop any further than the point of equilibrium, which depending on which labor market you're talking about, could be high enough. And in the long term, the increase in real wages would negate this problem.

Remember that libertarians would greatly reduce the number of laws, and thus the number of criminals. Many of the criminals currently in prison frankly don't deserve to be there. That includes every non-violent drug offender.

Yes, but aren`t the drug users the same people that commit other petty crime? Also, the amount of drug criminals is the same in US and nordic prisons.

I don't see the relevance of the US Sweden comparison. In any case, the number of prisoners would be greatly reduced. And you forget that the reason many drug-users commit other crimes is that drugs are illegal. Illegality makes drugs more expensive, which sometimes makes people steal to support their habit. And a large percentage of drug-offenders in prison are non-violent, meaning they are much less likely to commit other crimes.

[Economic growth really isn't that much faster in the US than Sweden. They are both welfare states. Trying to us the US as a model for a libertarian system is quite futile.

But the US is much more utilitarian than Sweden, and it is not a proper welfare state, because it has lifetime caps on welfare benefits. Also, Hong Kong have not developed into an utopia, even if the are the worlds "freest" economy.

If not a proper welfare state, it is at least a highly interventionist and non free-market state.

Laissez faire isn't supposed to result in a utopia, and its results do take time. Hong Kong is close to a free market, but still quite interventionist. Its growth has been excellent, but not as good as it could be if it were completely laissez faire. If many cities could emulate the success of Hong Kong, wouldn't you agree it would result in a great increase in total utility?


One other thing that I thought of during my post: what about the utility of freedom? The freedom to make choices and not be controlled by others surely results in a lot of happiness for both individuals and society. This has to be factored in when determine how utilitarian a libertarian society is.

And another thing: I may lean towards supporting libertarianism on utilitarian grounds, but its hardly the only reason I support it. Even if libertarianism were somehow shown to be less utilitarian than, say, socialism, I would still support it. The concept of rights and freedoms is very important to me.

[Norwegian]

Firstly, why the heck doesn`t this forum have a "quote" button?

Nevertheless, any socialist or large welfare state is going to have to tax the rich a great deal, and that means capital deccumulation, or a much lesser rate of accumulation.

No, not necessarily. The nordic countries places the most heavy tax burdens on the upper middle class, while the really rich often get off quite easy. It might be unfair, but it does appear that such taxes hampers the economy less than other forms of tazation. Denmark, the most economically successful nordic country(Norway has to much oil and gas relative to the population to count) almost all the taxburden is on wage earners, and have fairly low taxes on capital.

Actually, the whole incentinve thing is grossly overrated when it comes to wage earners. When it comes to choice of education and jobs, with a slight exception of engineering(but that has only become a problem lately, and might just be a trend, and it is not a problem in nearly all egalitarian societies) people choose to take just as much education and go for high status jobs in countries with small economic differences, as in large economic differences. The whole thing that people need incentives to take a higher education is therefore highly overrated. The problem sole problem rather seems to be limited capital accumulation.

True, but in a free market, businessmen aren't going to buy unproductive capital. You have to assume that people will act rationally. A rational market will result in capital accumulation that makes society more productive.

Actually, the assumption that people react rationally is regarded as one of the main shortcomings of libertarian theory. A large problem is that indiviudals simply does not posess the cognitive capabilites to act a hundread percent rationally. Take a look at all those who invested in .com companies that went bust. How the heck were the investors able to determine what capital would be wasted? Because when new markets appear, a whole lot of people invest in new companies, attempting to capture that niche. We have seen that since the birth of capitalism, you had a hell of a lot more record companies, car manufacturers and TV manufacturers when the technology was new. And most of them dissaperad after a couple of years. Before the business is established, and you only have new companies, acting rationally is simply not possible, because it is damn impossible to not have a lot of investments wasted in companies that will go bancrupt after a few years. We can hovewer expect that if the amount of capital i lessened somewhat, the amount that is left will be invested more rationally. Therefore, some lessening of the amount of capital isn`t really that harmful.

Also, it is possible to get capital with a more even distribution of income, by basing a large part of pensions on "forced saving" in stocks and bonds.

I agree that the average wage rate will lower, but only to the extent that it was kept artificially high by the government. If it dropped below the point of free market equilibrium, that would create a labor shortage, and employers would bid wages back up.

Yes, but that is exactly the problem. That more money to the poorest create extra utility, and that utility is lost if the wage market is completely free. Also, the lowest wages really doesn`t affect the economy that much, people don`t start quitting their engineering job to work at Wal-Mart if the wages go up, so it wouldn`t really do that much harm.

And this lowering of wages will perhaps replace some automation with manual labor. But if that happens, it will make no difference with regards to the real wages of workers in the long run, since it doesn't change the productivity of labor.

Yes, it might not do "economic harm", but it will harm utility, because the effect if that people have to do assignements that they doesn`t want to do, while the job could be done with machines, and that hurts utility. And it does change the productivity of the labour doing the tasks, but it could hurt productivity of labour though. Anyhow, this shows the fundamental flaw with libertarian utilitarianism, "more material goods in society" is the only REAL goal! Actually, the majority of people outside the US would rather have more interesting job assignments and more free time than more material goods.

But in the long run, allowing the rich to keep their money results in more investment in capital, and thus greater real wages for the poor. An increase in real wages increases the utility of the poor without requiring a sacrifice in others' utility.

When it comes to economic growth, the economy is the separate "games". The first game is the absolute wealth game, the material posessions that people own. This is not a null sum game, and your point is valid here. The second game is the status game, and that to a large degree, is a null sum game! Actually, I think that what motivates people aren`t wealth per se, but the status it gives. Status is important for a number of reasons. It give self respect, what you earn in comparison to others really is a meassure on how society values you, and if you earn a lot less than the median, you are really a "piece of shit" regardless of how much you own compared to the bushmen of Africa. Also, sexual selection is largely determined by status. Having a low social status reduces the possibilities of both getting a mate and having many children, and the urge to reproduce is one of the prime motivations of any living being. In east asian countries where labour wages are relativly low for a rich country, many workers have problems getting married at all. This might show that it is more easy for working class people to get "accepted", if the relative differences between them and the rest isn`t that large. Also, your status affects your ability to make the right friends and being able to live in a constructive environment. I really feel that all these things are more important than having a bigger car or cooler DVD player. You see, even the things in life that comes for free, is often indirectly purchased! Therefore, if everyone except the lowest 20 percent double their wages, the lowest 20 percent aren`t standing still, they are losing out.

Without evidence, I don't know whether to believe your claim that industrial work now is less paid and more stressful.

No, expressed myself clumsily. I didn`t mean the new industrial work, but the McJobs that replaces the lost industrial work in the rich countries. Much of this might not be the work itself, but the fact that strong unions in the manufacturing sectors have been able to have a larger influence on their work environment that those employed in the service sector.

But if that is the case, the decrease in money wages and additional stress is many times compensated by the great increase in real wages due to the capital accumulation over the last 100 years. Their utility is still much greater.

But then again, capital have been taxed for the last hundread years, and most of the rich world really haven`t had anything close to a completely free market since 1870. It really shows that the economy CAN grow even if it`s taxed, even if some countries suffer from some degree of capital flight. Actually, I think that most problems from taxation stems not from the loss of captial, but from capital flight to other countries. The problem with a free marked, is that countries does not only get rich from being a free market, but being a freer market that many richer countries. Much of the wealth produced in free markets is made possible by capital investments from more regulated and high cost countries.

Also, I`m really not that certain that greater wealth actually increases utility. Yes, utility increases when lifespan is increased and the amount of physically and mentally hard labour is removed. But as wealth further increases in the rich countries, those things are improving less and less. When it comes to other things, related to status, human beings seem to have an urge to "have everything everyone else have". An increased amount of wealth in society, might therefore not increase utility, but increase the amount of goods you must have to experience a set amount of utility. Ten years ago people really didn`t bother about the poor VHS quality, but today, people just gets depressed by watching it, because someting better is available, DVD.

Also, a to high growth rate might actually be harmful, because when the growth is fast, the changes in the economy will get faster, so fast, that it is extremly difficult to plan ahead for the future. Job skills and education will be obsolete faster, and more people will go from comfortable jobs into insecurity.

I think you are underestimating the decrease in utility resulting from increasing the price of goods via an increase in the cost of production (eliminating "McJobs", or replacing low-paying jobs with higher cost machines). An increase in the general price level means lower real wages, which means lower utility. And you have to take into account the decrease in utility caused by the much higher tax rates resulting from huge government programs to "create jobs."

Actually, tax dollars aren`t "eaten", they go to pay someone else. Higher prices for the "low level jobs" means a more egalitarian income distribution, and that might not harm utility at all. As I have stated earlier, you overestime the gained utility from more material goods, while underestimating the realtive value. I have seen no evidence, that people are more happy in the "poor rich" countries than the "rich rich" countries. Actually, when measuring lifespan, education and other such quality of life standards, the lack of US superiority over Sweden is extremly interesting.

The government cannot determine the most productive things for a worker to do, since it has no profit incentive.

Yes, but it might determine some of the most utility creating things for a worker to do. Working at a daycare so more working class women can work might create more utility than if it worked at cleaning middle class houses, even if the productivity of cleaning houses would have been greater. Also, nurses, lawyers and doctors usually makes less money in a regulated than a more free market system, without creating problems of recruitment to those professions. Actually, a free market tends to "overpay" such status professions.

And many government jobs are useless bureaucracy with no real benefit to average people.

Actually, the private sector also have a huge number of "office employees". I actually find it funny, that somehow the public sector are to manage without administrative personell, while the private sector needs a whole army of them. Actually, the private sector have their own kind of such personell than the public sector hasn`t, sales and marketing people.

As I've said before, the desires of consumers are virtually limitless. We want newer products, better products, and cheaper products.

Yes, but does that increase utility? I am not sure. Actually, the growing amount of consumer goods actually increases the phenomenon of poor kids being excluded and singled out by the "good company", thereby increasing class barriers. If your parents can`t afford a mobile phone, you are not part of the gang, and have to hang out with the "loser kids" with poor and often alcoholized parent.

The US healthcare system is nowhere near being free-market. In 1992, government expenditures accounted for 51% of the overall medical spending in the US.

Yes, but it is more privatized than healthcare in most other countries, and it is still a not near the cheapest, it is actually more expensive that the wholly socialized systems in other countries.

Back in the 1950's, health insurance cost just a few dollars per month.

Well, that is easy to explain. Back then, people died younger, and there were a hell of a lot les curable diseases and treatments. It is therefore natural that it was cheaper then. Actually, health was also extremly cheap in Norway during that period.

They would not drop any further than the point of equilibrium, which depending on which labor market you're talking about, could be high enough. And in the long term, the increase in real wages would negate this problem.

No, it wouldn`t, because people think poverty in relative and not absolute terms.

In any case, the number of prisoners would be greatly reduced. And you forget that the reason many drug-users commit other crimes is that drugs are illegal.

Or, they sell drugs because they can`t get a legal job, and will resort to other crime if drugs are made legal. Also, many drug users would not be productive enough to earn a living in a free market, and would still have to make crime to make a living.

Economic growth really isn't that much faster in the US than Sweden. They are both welfare states. Trying to us the US as a model for a libertarian system is quite futile.

And the communists claimed Russia wasn`t really communist.

The freedom to make choices and not be controlled by others surely results in a lot of happiness for both individuals and society

Actually, freedom in the utilitarian sense doesn`t make you free to make choices. Because to make a choice you need resources, you can`t even live without aquiring food and have a normal life without somewhere to live. During libertarianism, you only get those resources if other agree to trade with you. Therefore I support "guaranteed basic income", to assure that everyone gets some basic choices, regardless of the opinions and choices of other people.

[nach0king]

Yes, but it is more privatized than healthcare in most other countries, and it is still a not near the cheapest, it is actually more expensive that the wholly socialized systems in other countries.

May I ask, more expensive for whom?

[Norwegian]

May I ask, more expensive for whom?

For those who pay for it, whoever that might be.