Ep. 134 David Friedman on Physics, Coase, Anarcho-Capitalism, and Cancel Culture
David Friedman is one of the pioneering theorists of anarcho-capitalism, as laid out in his book The Machinery of Freedom. In this free-wheeling discussion, he discusses physics versus economics, the work of Ronald Coase, his dad’s view of anarchism, and what happened to the SlateStarCodex site.
Mentioned in the Episode and Other Links of Interest:
- The YouTube version of this interview.
- David Friedman’s homepage.
- David’s book The Machinery of Freedom. Heinlein’s classic The Moon Is a Harsh Mistress. #CommissionsEarned (As an Amazon Associate I earn from qualifying purchases.)
- David debates Bob at Porcfest on Austrian vs. Chicago School methodology in economics.
- One of Walter Block’s essays on hanging from an apartment flagpole.
- The website SlateStarCodex. The post Bob mentioned, “You Are Still Crying Wolf,” which defended Trump from accusations of racism.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
A few thoughts I had while listening:
David brought up, and I’ve seen him bring this up many times before (going back quite a long way, perhaps even to the seventies), the problem of these obvious situations that libertarian ethics would say are wrong. In this episode, he talked about the man on the pole. One of the other examples I believe I’ve seen him use is that of someone shining a light onto others’ property.
And I think these are very good points that we ought not try to find some way to weasel out of, like he said he thought Murray probably would have tried to do to justify his not letting go of the pole.
Continuing this conversation, they went on to talk about how courts might compare utility between individuals, and how, though it might make intuitive sense to us, if you think about it for a moment, there really isn’t any reason why you would expect the market value of a good to be treated as its *actual value* in a tort case, at least from an ethical perspective. I would add here my own example for where this might feel wrong, and show the fault in the initial intuition: imagine someone gleefully tortures your beloved dog–your best friend–to death, and the court sides with you and gives you the market price of your dog: three dollars. That doesn’t feel right. And we could then go apply that to everything. And if you think about it, it makes sense that I value my stuff more than the market price, otherwise I would sell it (if we ignored transaction costs; also, behavioral economics shows us that people tend to psychologically value their things more than their market value).
Those are good points. His reasoning is sound. I do believe it’s wrong for my neighbor’s bedroom light to shine through the crack in their drapes and onto my house. It’s wrong for me to hold onto their pole without their consent, even if it means my death.
The thing I come back to every time I encounter David’s ideas here is this: the people in an anarcho-capitalist society, if they believed in those ethics, wouldn’t apply them in individual cases like that. Those ethical beliefs, translated into their desires, would be applied at the foundational legal level.
They would determine the rules for how people should act in those other cases. And this is the point that Bob raised, only Bob talked about the rules of the apartment building, where he should have talked about the rules of the society as a whole!
We expect people to enter contracts with the court system, and for this to determine what “the law” is for them in relation to other people. Maybe there is different law between Bob and Sally and Bob and Sam, but the law is still determined first, and the scenarios in those examples David has come after.
People want to live in a world where they can have bedroom lights that shine onto other people’s property and don’t cause them any real harm, even if they technically violate their property right.
Well, that’s no problem! Everyone consents to those rules as part of their court contract. That desire they have for how society should work becomes the law.
The libertarian ethic of property rights and consent only applies at the base level. Other rules are built on top of that. And it’s all fine so long as people consent.
And this isn’t anything new to David! Far from it! For this is exactly *his* reasoning that he uses to show how an anarcho-capitalist society could function in the first place! People consent to follow a certain court’s judgments and that’s what the law is. This is how the law emerges in the market.
The only thing the ethical beliefs of the participants are doing is influencing how they initially set up the system. If they don’t have the proper desires, then they probably won’t create an anarcho-capitalist society. Ethical beliefs aren’t the only way to get those desires, but they’re *one* way, and just from a practical sense that seems to be *a* use of them that David might have been downplaying a little.
Murray Rothbard lived a long and active life without ever feeling the need to jump over a balcony … so that seems to easily demonstrate that he never needed the flag pole. Come to think of it, anyone who had fallen one story (approx 9 feet drop) would have about a one in a million chance of grabbing a flag pole with their hands anyway … if that’s your plan for a last minute save, it ain’t a good plan.
My position is that when you see the people attempting to “disprove” libertarian principles need to rummage around for amazingly implausible examples … this seems to demonstrate that the principles are quite strong.
Is Friedman so old that he pre-dates the subjectivist revolution? I have to say, my evaluation of him went down substantially after listening to this episode. He’s a perfect example of Rothbard’s law that people specialize in what they’re worst at — Friedman should have stuck to physics, and given economics and philosophy a pass. Someone please send him copies of Human Action, Man, Economy, and State, and Chaos Theory!
In his discussion of the tort-law issue, Friedman was confusing economics with law. It is economics that says that we cannot know how much value someone attributes to something, nor compare it with others’ evaluations. This is different from libertarian law, where we would expect legal systems to develop norms about what is appropriate compensation.
Flagpole example: Rothbard wouldn’t have argued that he had the right to hold onto the flagpole and enter the apartment, more that he would have done so knowing that he would technically be liable to the apartment owner for trespass. In a libertarian legal system, I could imagine that defensive measures/punishments would need to be proportional to the damage caused, so that the apartment owner defending against Rothbard by prying his fingers off the flagpole would be disproportional to the damage the apartment owner would suffer if Rothbard saved himself, and thus the apartment owner would be liable to Rothbard for this excess action.
Charity example: I believe that the correct economic view of charity is that the giver cannot know of the receiver’s subjective value of the charity, but that charity is a case of the giver satisfying his own subjective value — psychic, moral, etc. — in the act of giving. Thus charity is not an example that counters the notion of subjective value.
National defense: the idea that this is a “public good” has been thoroughly debunked, but obviously David hasn’t read any of this literature. One obvious retort to his comment is that if A believes that a geographical area needs to have nuclear weapons for defense, then why should his belief prevail over B who lives in that area and disagrees, allowing A to take B’s money to pay for the nuclear weapons?
Great interview. Besides you, Bob, David is my favorite living economist. I especially loved the discussion about the limits and methods of economics in the beginning. A certain humility in terms of what we think will happen certainly seems in order.
I wonder if the reason is that the subject of economics (and, honestly, most social sciences) is chaotic (in the mathematical sense) and full of emergent and hard-to-predict phenomena, so the classical scientific method doesn’t work very well. And while a priori can give us ideas and trends, it can’t always predict outcomes in the complex real world.
What method would be valid to try and tame this complexity? It seems to me that iterating, observing consequences, and so on would be a good idea. Systems theory might have something to say.
I thank David for the mention. A skeletal outline of my theory is here:
https://philpapers.org/rec/INDNLA
A more detailed explanation is this:
https://www.academia.edu/39115928/The_Heterodox_Fourth_Paradigm_of_Libertarianism_an_Abstract_Eleutherology_plus_Critical_Rationalism
More relevant publications and essays: https://philpeople.org/profiles/jan-clifford-lester
Does anyone know the title of the book about China’s corruption David Friedman mentioned?