25. Mises and His Critics on Ethics, Rights, and Law

CHAPTER 25

Mises and His Critics on Ethics, Rights, and Law*

MISES’S UTILITARIANISM

Ludwig von Mises was a utilitarian and has been criticized for being one. Utilitarianism is a particular approach to ethics in personal life and public affairs. It compares alternative sets of institutions, laws, traditions, patterns and maxims and rules of behavior, and traits of personal character. It approves of those that support and disapproves of those that subvert the kind of society that affords people relatively good opportunities to make satisfying lives for themselves. Institutions and practices and attitudes that facilitate fruitful cooperation among individuals as they pursue their own diverse specific ends score ahead of ones that make for destructive clashes. “Social cooperation” (so called by Mises and other thinkers in the utilitarian and libertarian traditions) is so nearly essential to individuals’ success in their own diverse pursuits that it is a nearly ultimate criterion of institutions, ethical precepts, character traits, and so forth. On this criterion, truth-telling and promise-keeping command approval. So does respect for justice, property rights, and other human rights.

These words are mine, not Mises’s; but his stance on economic policy does rest on an ethical underpinning like the one just sketched out. Mises wrote bluntly. The theory of social cooperation elaborated by British political economy from Hume to Ricardo, he says,

consummated the spiritual, moral and intellectual emancipation of mankind inaugurated by the philosophy of Epicureanism. It substituted an autonomous rational morality for the heteronomous and intuitionist ethics of older days. Law and legality, the moral code and social institutions are no longer revered as unfathomable decrees of Heaven. They are of human origin, and the only yardstick that must be applied to them is that of expediency with regard to human welfare. The utilitarian economist does not say: Fiat justitia, pereat mundus. He says: Fiat justitia, ne pereat mundus. He does not ask a man to renounce his well-being for the benefit of society. He advises him to recognize what his rightly understood interests are. In his eyes God’s magnificence does not manifest itself in busy interference with sundry affairs of princes and politicians, but in endowing his creatures with reason and the urge toward the pursuit of happiness. (Mises 1949/1963, p. 147)

The ultimate yardstick of justice is conduciveness to the preservation of social cooperation ... [,] for almost every man the great means for the attainment of all ends. An eminently human common interest, the preservation and intensification of social bonds, is substituted for pitiless biological competition, the significant mark of animal and plant life. Man becomes a social being.... Other people become his fellows.... As social cooperation is ... a means and not an end, no unanimity with regard to value judgments is required to make it work....[S]ocial cooperation is for man a means for the attainment of all his ends... . The characteristic feature of a free society is that it can function in spite of the fact that its members disagree in many judgments of value. (1979/1985, pp. 54-61)

By its recognition that social cooperation is for the immense majority a means for attaining all their ends, [utilitarianism] dispels the notion that society, the state, the nation, or any other social entity is an ultimate end and that individual men are the slaves of that entity. It rejects the philosophies of universalism, collectivism, and totalitarianism. In this sense it is meaningful to call utilitarianism a philosophy of individualism. (1979/1985, p. 58)

As Murray Rothbard has correctly pointed out (1982, p. 212), no one can ever advocate any policy whatsoever on a purely scientific, value-free basis. Mises would agree. No one can approve or disapprove of a particular policy or of anything at all without holding at least one ultimate or fundamental value judgment. A judgment is ultimate in the sense that its holder, in expressing it, has come to the end of being able to give factual and logical reasons for his attitudes.¹ For Mises and other utilitarians, the fundamental value judgment is approval of happiness and disapproval of misery. (One can argue for or against particular policies, lifestyles, and so forth by trying to show that they tend toward happiness or misery; but I cannot imagine how one could argue for happiness and against misery themselves. But if one could so argue, the argument would necessarily invoke some further, deeper, value judgment, which would then be the fundamental one.)

Mises hastens to disavow hedonism in the narrow sense: despite superficial critics, “happiness” does not mean mere material, bodily pleasures. Advanced utilitarians, he says, interpret pleasure and pain, utility and disutility, in the “purely formal” senses of those words, emptying them of all specific content. They refer to whatever individuals in fact try to achieve or avoid (Mises 1933/1960, pp. 52, 151; Mises 1979/1985, pp. 12—13; Mises 1949/1963, p. 21). Mises recognizes that many people, especially creative workers, are not driven by material desires or narrow self-interest alone. They may also be expressing competence and strength and even heroism (Mises 1919/1983, pp. 193, 213). “There are people whose only aim is to improve the condition of their own ego. There are other people with whom awareness of the troubles of their fellow men causes as much uneasiness as or even more uneasiness than their own wants” (1949/1963, p. 14).

Mises’s remarks about the merely formal content of “happiness” hardly settle all questions about fundamental value judgments. Room remains for discussing whether the utilitarian criterion should be the true happiness of individuals or instead, if there is a difference, the satisfaction of whatever desires individuals suppose they have. Still, Mises is on the right track. “Happiness,” before being unpacked, is an inadequate term for the ultimate utilitarian value judgment. I can only take stabs at labeling what is ultimately desirable: it is individuals’ success in making good lives for themselves, or fulfillment, or satisfaction, or life appropriate to human potentiality. No single word is an adequate label; but when a single word is required as shorthand, “happiness” is the traditional choice.

This formulation might be criticized as being all-encompassing to the point of vacuousness. Yet it is not vacuous: alternative criteria are conceivable. They include conformity to the supposed will of God; or performance of duty for duty’s sake alone, with no analysis of consequences entering into the identification of duties; or conformity to intuited ethical precepts for conformity’s sake alone; or respect for individual rights that have simply been postulated rather than argued for on utilitarian or any other grounds, and again regardless of consequences; or conduciveness to the flourishing of the highest or noblest specimens of the human race, however ordinary people might then fare (a view sometimes attributed, rightly or wrongly, to Nietzsche). Or instead of taking the “happiness” of people in general as the criterion of institutions and precepts and so forth, one might conceivably urge the happiness of oneself or some other specific person.

That these alternatives are conceivable shows that the utilitarian criterion is not vacuous, while their implausibility strengthens its own appeal. As a practical matter, furthermore, utilitarianism does not hinge on any exact spelling out of its fundamental value judgment. Its fulfillment is served by social cooperation—a well-functioning network of beneficial relations among individuals. Institutions, precepts, and so forth may be appraised according to how they support or subvert this crucial means to happiness, without constant appeal to any precise interpretation of “happiness” itself.

With characteristic bluntness, Mises denies that utilitarian philosophy has anything to do with the doctrine of natural rights. He has a point: respect for rights is ill served by a faulty defense. Rights are not merely conferred by government; rather, they derive from ethical precepts, which in turn have a rational underpinning. Utilitarianism, Mises says, recommends “popular government, private property, tolerance, and freedom not because they are natural and just, but because they are beneficial.... [S]ocial cooperation and division of labor ... is beneficial.” With apparent approval, Mises quotes Bentham: “Natural rights is simple nonsense: natural and imprescriptible rights, rhetorical nonsense.” In investigating what ought to be right, Bentham “does not care about preconceived ideas concerning God’s or nature’s plans and intentions, forever hidden to mortal men; he is intent upon discovering what best serves the promotion of human welfare and happiness” (1949/1963, p. 174).

Mises occasionally slipped into repeating slogans about “the greatest happiness for the greatest number” (1919/1983, p. 183). Such a formulation, taken literally, has no precise meaning, of course. All that Mises presumably meant by it is that the happiness to be furthered by social institutions and practices is the happiness of people in general—of the member of society chosen at random, in F.A. Hayek’s formulation (Hayek 1967, p. 163; Hayek 1976, pp. 129-130)—rather than the differential happiness of specific persons or classes. Mises specifically repudiated any numerical utilitarianism such as critics enjoy attacking. He denied that “it is the task of economics to establish how in the whole of society the greatest possible satisfaction of all people or of the greatest number could be attained... . [T]here is no method which would allow us to measure the state of satisfaction attained by various individuals” and make “comparison[s] between various people’s happiness”(Mises 1949/1963, p. 242).

CRITICISM

Mises’s utilitarianism has drawn criticism even from students and others inspired by his work. I do not maintain that Mises expounded the subtlest versions of utilitarianism, complete with distinctions between act utilitarianism and the various “rule” or “indirect” versions. He was writing before most philosophical treatments of these subtleties were published. Furthermore, the subtleties were not essential to his main concerns, theoretical and applied economics. Still, his basic philosophical stance is worth defending (Hazlitt 1964 offers an admirably detailed defense).

One of his critics, Karen Vaughn regretted that

Mises, unfortunately, attempted to refute the collectivists and authoritarians by accepting the terms of their argument and arguing for the superior ability of the free market to provide for the economic well-being of the populace... . Such an attempt to defend freedom is dangerous on two counts. First, it is open to empirical refutation. (Vaughn 1976, p. 109)

Second, such a defense is dangerous because of “nonmaterial items in individual utility functions” (1976, p. 109). Bureaucrats may enjoy controlling and regulating. If their utilities should be taken into account and if interpersonal comparisons are not possible, how can we be sure that a nonliberal system will not provide “maximum social welfare”?

Vaughn seems to approve of the reported intellectual outlook in seventeenth-century England, when liberalism was emerging. Then, she says, “freedom was considered ... desirable for its own sake [as] a natural condition of human beings... . It was a moral value that, as a bonus, also happened to lead to the well-being of society.” The utilitarian argument simply provided “additional fire power.” “By the time of John Stuart Mill, however, the argument became reversed, and freedom was espoused, not because it was a good in itself, but because it led to the ‘greatest good for the greatest number’” (p. 108).

Possibly I have misunderstood her, but Vaughn does seem to say that Mises was wrong to develop arguments for freedom because they might conceivably be refuted and the case for freedom thereby embarrassed. To forestall embarrassment, it is better not to argue any case but simply to postulate freedom as a supreme value. Admittedly, someone who mounts no arguments need fear no refutations; but why, then, should he expect anyone to pay attention? As for freedom’s supposedly just happening, as a bonus, to promote “the well-being of society,” Mises might well ask what could constitute that well-being except the well-being of individuals. And how, apart from entering into or contributing to their well-being, could freedom be a supreme value?

Murray Rothbard repeatedly criticizes utilitarianism, including Mises’s formulations. One of his criticisms is similar to Vaughn’s. The utilitarian

will rarely adopt a principle as an absolute and consistent yardstick to apply to the varied concrete situations of the real world. He will only use a principle, at best, as a vague guideline or aspiration, as a tendency which he may choose to override at any time....[N]ineteenth-century laissez-faire liberals came to use laissez-faire as a vague tendency rather than as an unblemished yardstick, and therefore increasingly and fatally compromised the libertarian creed. To say that a utilitarian cannot be “trusted” to maintain libertarian principle in every specific application may sound harsh, but it puts the case fairly. A notable contemporary example is ... Professor Milton Friedman who ... holds to freedom as against state intervention as a general tendency, but in practice allows a myriad of damaging exceptions, exceptions which serve to vitiate the principle almost completely. (Rothbard 1973, p. 24)

This charge is first, and rather inconsistently, utilitarian itself: utilitarianism tempts its adherents into considering and sometimes even recommending unwise, nonlibertarian, policies. Second, the charge suggests that an alternative philosophical stance can guard its adherents from falling into error. Unfortunately, no doctrine can provide such built-in protection against its being misunderstood or misused or improperly set aside. It is an illegitimate test of a doctrine to expect it to do what no doctrine can do. Nothing can substitute for the constant discipline of fact and logic.

Rothbard called Mises “an opponent of objective ethics” (1976, p. 105). I wonder if this is a fair description. Certainly Mises was not an ethical relativist or nihilist, scornful of all judgments of right and wrong and complacent about however individuals might behave, even violating the rights of others, in pursuit of narrow and short-run self-interest. On the contrary, Mises was concerned with whether behavior and precepts of behavior tended to serve or subvert social cooperation and so serve or subvert happiness. Much scope exists for positive—objective—investigation into the likely consequences of various kinds and precepts of behavior, and the scope for purely subjective ethical judgments is correspondingly narrow.

Mises, says Rothbard, was willing to make only one value judgment: “he joined the majority of the people in favoring their common peace, prosperity, and abundance”; he endorsed “the desirability of fulfilling the subjectively desired goals of the bulk of the populace” (p. 105). Actually, Mises’s fundamental value judgment, instead of simply favoring whatever a majority wanted or thought it wanted, favored the actual happiness of people in general. Nevertheless, Rothbard poses a case in which the great majority wants to murder the redheads. “How could Mises rebut this proposed policy either as a praxeologist or as a utilitarian liberal? I submit that he could not do so”² (p. 108). Or someone might “desire to see an innocent person suffer....Yet a utilitarian must hold that [such preferences], fully as much as the most innocuous or altruistic preferences, must be included in the quantitative reckoning” (1982, p. 213 n. 5).

Who says so? Mises supposedly “cannot quarrel with the ethical nature of [people’s] chosen goals, for, as a utilitarian, he must confine himself to the one value judgment that he favors the majority achieving their chosen goals” (1982, p. 210). (Rothbard makes sweeping references to Mises; but instead of dealing with his actual statements, he criticizes what Mises, as a utilitarian, supposedly must believe.) Now, what even half-way sophisticated utilitarian maintains that preferences and attitudes and character traits must be immune from appraisal? Mises, to my knowledge, never said any such thing.

A rules or indirect utilitarianism is indeed concerned with how attitudes and even character traits, so far as they are amenable to encouragement or discouragement, tend to affect the health of a society and so the happiness of its members (on John Stuart Mill’s indirect utilitarianism, see Gray 1983). For fear of adverse side-effects and for other reasons, a utilitarian does not want to enlist the state’s coercive powers in suppressing all unfortunate preferences and attitudes and traits; but this in no way means that he considers all of them equally worthy of respect and equally entitled to influence public policy. Neither as a utilitarian nor as a libertarian must I myself, for example, deplore psychological and sociological and other positive inquiry into what sorts of preferences and attitudes and lifestyles tend in fact to serve or to undercut social cooperation and happiness. But saying so in no way commits me to wanting the state to implement the supposed findings of such inquiries.

The utilitarian, says Rothbard, “has no conception let alone theory of justice.”³ With regard to property rights in particular, the utilitarian “must fall back on the pragmatic, ad hoc view that all titles to private property currently existing at any time or place must be treated as valid and accepted as worthy of defense against violation” (Rothbard 1982, p.52). “[Utilitarians ... plac[e] an arbitrary and indiscriminate ethical blessing upon every current property title” (1982, pp. 58-59). If the tyrannical king of Ruritania dissolves his rule but first divides up the whole country into the private property of himself and his relatives, “consistent utilitarians ... must bow to this subterfuge” (1982, p. 54).

But where does Rothbard get this notion that utilitarianism requires respect for even patently spurious titles?⁴ Mises’s discussion in Socialism (1922/1951) is quite sophisticated and hardly bears out the suspicion that he would defend even the ethically shabbiest status quo.

To make the case for laissez faire and the free-market economy, says Rothbard,

one must go beyond economics and utilitarianism to establish an objective ethics that affirms the overriding value of liberty and morally condemns all forms of statism, from egalitarianism to the murder of redheads, as well as such goals as the lust for power and the satisfaction of envy. To make the full case for liberty, one cannot be a methodological slave to every goal that the majority of the public might happen to cherish. (Rothbard 1976, p. 109)

But why would anyone want to make a case for liberty, the free market, and laissez faire and against statism, envy, and the lust for power except out of concern for the character of society and, more fundamentally, for the happiness of its members? And how could anyone go about making such a case except in some broadly utilitarian way? It seems backwards to desire a foundation for a particular policy stance before having some idea of its consequences. But Rothbard does think he has another way.

ROTHBARD’S AXIOMS ABOUT RIGHTS

Rothbard identifies three broad types of philosophical basis for libertarianism, first is utilitarianism. Second is emotivism: it adopts liberty, or the libertarian nonaggression axiom, as its premise on purely subjective, emotional grounds. As Rothbard suggests, such a stance abandons the realm of rational discourse (1973, pp. 23-24).

Third is Rothbard’s own approach, emphasizing natural rights embedded in natural law. Each entity, including the species man, has its own distinct nature.

Since men can think, feel, evaluate, and act only as individuals, it becomes vitally necessary for each man’s survival and prosperity that he be free to learn, choose, develop his faculties, and act upon his knowledge and values. This is the necessary path of human nature; to interfere with and cripple this process by using violence goes profoundly against what is necessary by man’s nature for his life and prosperity. (1973, pp. 25-26)

To appeal to what is necessary for man’s life and prosperity, given his nature, sounds like a utilitarian argument. Anyway, Rothbard begins with the right to self-ownership, with the axiom that each man or woman owns his or her own body. Alternatives are conceivable, though barely. One caste of persons might belong to another, an arrangement hardly compatible with an objective, impartial ethics. Or each person might own a tiny equal share of himself and all other persons. Trying to manage people’s lives on such a basis, however, would quickly bring inefficiency and starvation. (Here is another tacitly utilitarian argument.) With these alternatives ruled out, self-ownership remains (1973, pp. 26-28; and 1982, pp. 45-46).

Rothbard’s second axiom concerns ownership of products and land. Everyone has a right to the goods he has produced and to hitherto unowned land that he has transformed by his labor. A person does not acquire this “homesteading” right in all the unowned land that he may claim; his right is limited to the amount of land he actually puts into use. But once is enough. Here Rothbard avowedly follows the doctrine of John Locke, but with modifications; for example, he rejects the “Lock-ean proviso” that homesteading leave “enough and as good” land available for latecomers (1973, pp. 28—37; and 1982, pp. 46—50, 63—65, 240). People may of course acquire and dispose of ownership rights in goods and land through honest trading.

These principles of property rights, especially of homesteading, look detailed or specific enough to raise doubts about whether they are truly axioms. Don’t they have some utilitarian underpinning after all? Rothbard does make comments about ownership of land similar to his comments about ownership of human beings.

[I]f the land is to be used at all as a resource in any sort of efficient manner, it must be owned or controlled by someone or some group, and we are again faced with our three alternatives: either the land belongs to the first user, the man who first brings it into production; or it belongs to a group of others; or it belongs to the world as a whole, with every individual owning a quotal part of every acre of land... In practice, again, it is obviously impossible for every person in the world to exercise effective ownership of his four-billionth portion (if the world population is, say, four billion) of every piece of the world’s land surface. (1973, pp. 33—34)

Notice Rothbard’s references—utilitarian references—to efficiency, practicality, and effectiveness.

Nevertheless, Rothbard maintains that his “two axioms, the right of self-ownership and the right to ‘homestead,’ establish the complete set of principles of the libertarian system. The entire libertarian doctrine then becomes the spinning out and the application of all the implications of this central doctrine” (1973, p. 40).

PECULIARITIES OF THE AXIOMATIC APPROACH

One peculiarity of this approach appears at the beginning, in the supposed axiom that each person owns himself, his body. An argument phrased in such a peculiar way is suspect for that very reason. A utilitarian argument can readily show the importance of property rights; but to put property rights at the very beginning, even ahead of considerations of human personality, seems odd indeed. Someone not intent on a particular chain of deductive reasoning would describe human nature and the human condition more straightforwardly. He would probably speak not of each person’s owning himself but of each person’s being his own self and having his own consciousness and purposes and capacity to feel pleasure and pain, satisfaction and frustration. He would probably assert or argue for each person’s right to personal freedom. Property rights would come into the argument, but not as its very foundation.

A more pervasive peculiarity is the attempt, openly avowed—recall the quotation above—to spin out positions on all sorts of specific issues from the two axioms about ownership of selves and other property. (Although utilitarian points occasionally creep into Rothbard’s arguments, they do not characterize his approach.) Rothbard’s positions on crime, extortion, blackmail, contracts, and bankruptcy provide striking examples, calling his whole approach into question, as I shall try to show. For brevity, I forgo commenting on how self-confidently he spins out firm positions on abortion, boycotts, children’s rights, animal rights, and other issues. Again, my purpose is not to attack Rothbard but to defend Mises.

Meanwhile, let us note, a utilitarian would not try to derive all sorts of specific judgments by deducing them in one direction only from a very few initial axioms. Instead, he would check his tentative specific judgments and his tentative generalizations (rules) against one another. In a way, judgments about specific cases would serve as data—tentative, corrigible data—for reaching generalizations. The utilitarian would stand ready to modify any or all of his specific and general judgments until he had achieved consistency among them, as well as consistency with his fundamental value judgment about happiness and misery. He would seek consistency between his judgment about some specific provision of the bankruptcy laws, for example, and his generalizations about honesty, promises, and property rights. At each stage, facts of reality, including the principles of psychology and economics and other disciplines, would be eligible to enter into his reasoning.⁵

Crime provides my first example of the peculiar positions that Rothbard deduces. He regards crime as, in effect, a private transaction between culprit and victim.⁶ Suppose someone mugs me. By his aggression, the mugger has violated my property right in my own person and, if he has taken any valuables, my property right in them also. I am entitled to restitution or compensation. If, however, I waive this right and forgive the mugger, then I have made him a gift of the use (or abuse) he has made of my body and also, if I so choose, of the property he has taken. Because these were mine to give away, the situation becomes the same as if no crime had occurred. No authority has any right to prosecute him, on Rothbard’s view—not if I object (and if the mugger happened to kill me, it is my heirs who have the option of forgiving him, subject to any applicable provisions of my will).

But let’s face reality. In all probability the mugger did not intend to make his “transaction” with me in particular. It just happened to be I who was in the wrong place at the wrong time. By his actions and attitudes, the mugger is a threat to society, to people in general; he contributes to undermining the peace and security and social cooperation on which practically everyone’s well-being depends. Because of the menace he constitutes, and for other reasons, he deserves to be restrained and punished. The accident that I rather than someone else was his victim does not entitle me to forgive him and thereby contribute to perpetuating the general menace that he and people like him pose. In fact—though this is not the main point—I probably do not want the option of forgiving him. Particularly in cases involving criminal organizations, the option to forgive would expose the victim to unwanted pressure. (It is not always true that a wider range of options is preferable to a narrow one. When I was teaching at the University of Virginia, I welcomed the rule that forbade me to change a grade, once reported, except to correct an actual error. That rule sheltered me from appeals to my compassion by students “needing” a higher grade.)

Now for extortion.⁷ Suppose a scoundrel pressures me to pay him $100,000 or to sell him my business firm for a token price; otherwise he will beat me up—or perhaps he just threatens to kick me in the shins or trample my tomato plants. In any case, he is violating my rights in my person or property (for the threat, like the threatened act, is itself a violation). He is properly subject to restraint or punishment. But suppose he makes a different threat, which I find more ominous: he will spread vicious lies to ruin my business and my personal life. He may add, rightly or wrongly, that his credibility with a wide circle of influential contacts will make his lies especially effective. Yet in this case he is not properly subject to legal restraint, for he is violating no property right of mine. I have no right to an unsullied reputation, no matter how much I may have in some sense earned it; for it is other people, not I, who have property rights in the contents of their own minds, even including their opinions of me.

It seems strange that a member of the Austrian school of economists, who put such emphasis on the radically subjective nature of benefits and costs, goods and bads (Yeager 1987), should make such a momentous distinction between threats according to whether they do or do not involve physical harm to persons or objects. But that is what Rothbard deduces from his two axioms.

Rothbard takes a similar position on blackmail, defined as obtaining or trying to obtain money or goods in exchange for silence on some matter.⁸ Again, the supposedly decisive question is who has a property right to the contents of the minds of the blackmailer and other people with whom he might share his information (or misinformation). Not the victim—so runs Rothbard’s answer. It is irrelevant to Rothbard’s judgment that the victim might be better off if the blackmailer had never been born. Roth-bard brushes aside the contention that the blackmailer’s activity might be judged unproductive in some sense. Rights, not assessments of productivity, must prevail. A utilitarian side point enters in: the victim may be better off with than without the opportunity to give the possessor of information an incentive not to blab. The presumption still holds that voluntary transactions—in this case, an exchange of money for silence—benefits all concerned. I would reply (not taking space here to develop the argument) that such a proposition about gains from trade is no more universally valid than the proposition about more options always being preferable to fewer.

Rothbard’s conception of property rights also determines his position on what contracts are properly enforceable at law (1982, chap. 19). Suppose a performer agrees with an impresario to take part in a concert tour for a specified compensation, and the impresario proceeds with costly arrangements. Or suppose a retailing chain agrees to buy 100,000 tables over the following two years at a specified price, thereby inducing the manufacturer to construct a new factory to be able to deliver. Now, for no extenuating reason (whatever one might be), the performer or the retailer defaults on his part of the bargain, leaving the impresario or the manufacturer with heavy expenses that he can hardly recoup. In neither case, we stipulate, has any money or other property yet changed hands between the contracting parties. Tough luck, Rothbard says in effect; the aggrieved party should have drawn up the contract more warily in the first place. The law cannot properly require the defaulter to keep his promise or pay compensation. The reason is that the default does not constitute stealing property (remember, no money has been paid); the defaulter has violated no property right. If, however, the contract had read in such a way that default did count as taking property by force or fraud, then Rothbard’s judgment would be different.

A utilitarian must wonder. Why, especially with “subjectivist” Austrian economists, should so great a difference hinge on the relatively materialistic issue of whether and when property had actually changed hands? The opportunity for people to make enforceable contracts in which promises serve as consideration for each other serves social cooperation, just as it undermines it to urge peculiar axioms as reasons for tolerating default on such contracts.

Rothbard condemns bankruptcy laws. They “compel the discharge of a debtor’s voluntarily contracted debts, and thereby invade the property rights of creditors. The debtor who refuses to pay his debt has stolen the property of his creditor.” Fraudulent concealment of assets makes the offense even worse. “But even if the defaulting debtor is not able to pay, he has still stolen the property of the creditor.” Bankruptcy laws “virtually confer a license to steal upon the debtor.” Instead, the legal system should enforce payment through, for example, attachment of the debtor’s future income (1982, p. 142).

Of course default is regrettable. So is resort to bankruptcy; so is the poor planning or bad luck that results in its appearing necessary. But regrettable things do happen. Instead of just condemning them with simplistic axioms, the utilitarian considers how best to forestall them and how best to deal with them if they do happen anyway. He asks how the world would work and how social cooperation would flourish or would suffer if no legal means were available for distributing the assets of a hopelessly indebted debtor in an orderly way and for clearing away obstacles to his future productive activity.

MORALITY AND LAW

Murray Rothbard and Walter Block try to ward off outrage over their positions on crime and blackmail and other issues by distinguishing between rights and the morality of exercising them and between law and morality (1982, pp. 23—24; Block and Gordon 1985, pp. 47, 53; Block 1986, p. 73). To say that I have a right to exempt a mugger from prosecution is not at all to say that I should do so. To say that it should not be illegal for a scoundrel to extort money from me by threatening to spread scurrilous stories, whether false or true, is not to deny that he is indeed a scoundrel. On the view of Rothbard and Block, apparently, two categories coincide—the violation of rights and what should be illegal. Immorality is a separate question. Rothbard and Block apparently believe they can hold to their distinctive theories of rights and law while holding fairly standard ethical views and waxing just as indignant as any of the rest of us over the forgiving of muggers, extortion accomplished by threats of verbal as well as physical action, blackmail, and default on contractual promises.

I wonder if their theories can be rescued so easily. The trouble is too deep-seated: it stems from trying to deduce all sorts of specific policy positions from the two axioms about property, with no more than incidental attention to the consequences of alternative rules and policies.

I see a closer relation between ethics and law than Rothbard and Block do. (Mises 1922/1951, pp. 397—399, makes sensible comments on this relation, as does Hazlitt 1964, chap. 9.) A long process of evolution and selection has yielded ethical precepts that, by and large, praise or condemn kinds of behavior and traits of character according as they tend to serve or subvert human survival, social cooperation, and happiness. By a similar process of evolution, which in some cultures involves the accretion of precedents set in court decisions, law has come to reinforce the observance and penalize the violation of ethical precepts in the relatively most clear-cut cases. This evolved law has been codified and modified by legislatures. Ideally, these strands of law proscribe acts that are “wrong in themselves.” Other strands establish acts that are “wrong because they are prohibited.” Ideally, their purpose is to improve each persons opportunities to predict other people’s actions and so to mesh his own actions with theirs. Traffic laws are the standard example (driving on the left side of the road is wrong not intrinsically but because the law prohibits it and because the violation would now infringe the warranted expectations and the rights of other people and endanger their lives). Technicalities of real-estate and inheritance law also provide examples of law intended to improve coordination.

Here, though, we are emphasizing the relation between law and ethics. Why shouldn’t reinforcement be total, with the law prohibiting and punishing absolutely all immoral behavior? Imagining such a state of affairs—a utilitarian exercise—provides the answer. Legally prohibiting all sorts of undesirable actions, including inappropriate sulkiness, and legally requiring all sorts of desirable actions, including kind words when appropriate, would be downright impossible. The very attempt to make law completely coincide with ethics, though doomed to failure, would bring an oppressive totalitarianism and would give the rulers vast opportunities to prosecute individuals selectively and arbitrarily. We should be chary about applying and threatening violence, on which enforcement of the law ultimately rests. Use and threat of force is tolerable only when—but not whenever—the cases in which it is applied are clearly specified and when individuals can know how they must behave to avoid having force applied to them. The law must content itself, therefore, with proscribing and punishing acts that can be defined fairly definitely and detected fairly straightforwardly, without unacceptable side effects.

The greatest range of human behavior must remain outside the direct purview of the law—kind words and charitable actions on the one hand, perverted ambition, careless gossip, and malicious lies on the other hand. Encouragement and discouragement of most actions and attitudes must be left to the flexible, informal, and decentralized application of ethical precepts. Ethics, by its very logic, must be flexible in its application to particular cases and capable of evolving as knowledge grows and conditions change (Hazlitt 1964, pp. 184—185). Whether the law should forbid certain unethical actions, such as blackmail and default on contractual promises, cannot sensibly be decided directly from first principles alone. Utilitarian considerations must carry weight, including the importance of keeping the law definite and concentrated power constrained.

Why don’t we want to go to the other extreme, with law so divorced from ethics as not to exist at all? Not even actual anarchists like Rothbard would go that far. (Rothbard expects law to persist even in the absence of government; private enterprises would ascertain and enforce it; 1973, chap. 11.) Allowing even murder and theft to go legally unpunished would put relatively ethical people at the mercy of the unethical, and a Hobbesian war of all against all would rage. When it can be framed and applied fairly definitely, furthermore, the law has educative value: it can help teach ethically rather dense people that certain acts are wrong, or at least that committing them puts themselves at risk.

On one point I emphatically agree with what I think is Rothbard’s and Block’s position: the law does not and should not be expected or thought to determine morality. It is not true that whatever the law permits is morally right and whatever it forbids morally wrong. Ethics is prior to law, logically and probably also historically. Ideally, law serves a good society by reinforcing the precepts of morality in certain clear-cut cases, doing so through the duly restricted exercise and threat of governmental coercion.

Unfortunately, actual law is not ideal law. Particular laws can be unwise in their conception and wicked in their consequences and even in their intent. Laws should always be subject to appraisal on ethical grounds. For reasons I won’t take space to develop here (see Yeager 1985, pp. 280—283), a strong presumption runs in favor of obeying the law, even laws one thinks should be changed. In cases of exceptionally wicked laws, however (a particular U.S. law of 1850 comes to mind), ethical considerations may call for disobedience. In some such cases, furthermore, it may even be the lesser evil for judges to render decisions contrary to the actual law; at least I can sympathize with arguments to that effect.

The foregoing is what sense I can make of the concepts of “natural law” or a “higher law.” So interpreted, I do not disparage those concepts; they are legitimate and important—enough so to deserve a sensible grounding. Actual laws, merely by being actual, do not acquire ethical force beyond what their content warrants and beyond the force of the general presumption in favor of obeying them. Laws are always properly subject to appraisal not only in view of their purposes, consequences, and side effects but also on broader ethical grounds. They should ordinarily be changed only by regular legislative and judicial processes; but in exceptional and extreme cases, to repeat, ethical considerations may properly lead ordinary citizens and perhaps even judges to disobey them.

These truths should not be perverted into supposing that actual common law or statutory law is not actual law after all if it is deemed contrary to some natural or higher law. For the sake of clear thinking, we should maintain the distinctions between actual and ideal law and between law and ethics.

Although, then, I accept and insist on a distinction between law and ethics, mine is not the one that Rothbard and Block make. They invoke theirs, it seems to me, in an unsuccessful attempt to confer plausibility on their highly questionable positions concerning crime, blackmail, and other topics mentioned above. Their errors are not so easily plastered over, since they stem from trying to deduce all sorts of detailed positions from two supposed axioms; and their errors threaten to spread from their legal theory to their ethical theory.⁹

I am tempted to deliver a sermon, particularly to Walter Block, author of Defending the Undefendable, who portrayed the pimp, the drug pusher, the litterbug, and other unsavory types as heroes (Block 1976; also Block 1986 and Block and Gordon 1985). Much speaks in support of a society’s prevailing ethical norms, the norms that support social cooperation. A certain “squareness” is admirable. To recognize this is not to want to dictate people’s lifestyles. Still, honesty and civility, including a decent respect for other people’s rights and even their feelings, do deserve encouragement. The more generally people behave decently out of respect for ingrained ethical precepts, the less is the need or apparent need for applying the coercive force of law. For these reasons, someone who wishes well for mankind should avoid writing in a style that appears, though unintentionally, to disparage traditional ethical values.

UTILITARIANISM AGAIN

I have reviewed Rothbard’s “natural rights” approach because it seems to be the leading alternative to utilitarianism as a philosophical basis for policy espousal. (I do not regard the “contractarianism” of James Buchanan and his school as a genuine alternative, for it seems to me to be a version of utilitarianism disguised by fictions; see my 1985.) In rejecting Rothbard’s approach, I do not at all ridicule or dismiss the concept of rights. It is vital to a healthy society and thus to happiness that rights (very roughly, the ones mentioned in the U.S. Declaration of Independence and Bill of Rights) be respected in public policy and private life. Conducting public policy or living one’s own life according to what seems narrowly expedient in each particular case would be disastrous.

The question that separates utilitarians from other theorists of rights is how to ground them philosophically. Rothbard (1982) observes that Robert Nozick (1974) does not give rights any grounding; he simply intuits them. Rothbard does attempt a grounding, which, however, fails, as suggested by the peculiar policy positions that his approach grinds out. The utilitarian, in contrast, compares alternative institutions; he investigates what conceptions of rights and justice, what rules, what restraints on government, and what other institutions are most conducive to a good society and so to happiness.

Obviously I am referring to so-called “rules” or “indirect” utilitarianism. The supposed utilitarian who goes around looking for opportunities to frame and execute innocent men to pacify raging mobs, or to torture redheads for the amusement of the multitude, or to approve of rape when the rapist’s pleasure outweighs the victim’s distress, is an invention of superficial critics. The shallow, act-oriented versions of utilitarianism occasionally encountered may once have offered critics a target, but one must wonder why anyone still pursues worthless triumphs over doctrines that are hardly better than straw men.

Nevertheless, cheap shots at utilitarianism continue. Years ago, already, Mises noted the phenomenon.

Hedonism, eudaemonism, and utilitarianism were condemned and outlawed, and whoever did not wish to run the risk of making the whole world his enemy had to be scrupulously intent on avoiding the suspicion that he inclined toward those heretical doctrines. This must be kept in mind if one wants to understand why many economists went to great pains to deny the connections between their teachings and those of utilitarianism. (Mises 1933/1960)

Mises was forthright, even courageous, in his utilitarianism. For this his reputation continues to suffer even among eminent economists and social philosophers who in other respects are carrying on his work. I urge them to reconsider. I am not saying that Mises developed the distinction between the act and rules or indirect versions of utilitarianism and fully articulated the latter version. I am not saying that he examined and demolished the axiomatic rights approach offered as an alternative by some of his disciples. Doing all this was not necessary for his work in economics. However, a sophisticated utilitarianism does fit within and extend the philosophical framework that Mises adopted. Hazlitt, for one, extended it. Mises was on the right track.

REFERENCES

Alexander, Sidney S. “Human Values and Economists’ Values.” In Human Values and Economic Policy, edited by Sidney Hook. New York: New York University Press, 1967.

Block, Walter. Defending the Undefendable. New York: Fleet, 1976.

———. “Trading Money for Silence.” University of Hawaii Law Review 8 (Spring 1986): 57—73.

Block, Walter, and David Gordon. “Blackmail, Extortion and Free Speech.” Loyola of Los Angeles Law Review 19 (November 1985): 37—54.

Edwards, Paul. The Logic of Moral Discourse. New York: Free Press, 1965.

Gray, John. Mill on Liberty: A Defence. London and Boston: Routledge & Kegan Paul, 1983.

Hayek, Friedrich A. Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press, 1967.

———. The Mirage of Social Justice. Chicago: University of Chicago Press, 1976.

Hazlitt, Henry. The Foundations of Morality. Princeton, N.J.: D. Van Nostrand, 1964.

Mill, John Stuart. Utilitarianism. 1863. In Selected Writings of John Stuart Mill, edited by Maurice Cowling. New York: New American Library, 1968.

Mises, Ludwig von. Socialism: An Economic and Sociological Analysis. 1922. New enlarged ed. Translated by J. Kahane. New Haven, Conn.: Yale University Press, 1951.

———. Epistemological Problems of Economics. 1933. Translated by George Reisman. Princeton, N.J.: D. Van Nostrand, 1960.

———. Human Action. 1949. 2^nd ed. New Haven, Conn.: Yale University Press, 1963.

———. Nation, State, and Economy. 1919. Translated by Leland B. Yeager. New York: New York University Press, 1983.

———. Theory and History. 1979. Auburn, Ala.: Ludwig von Mises Institute, 1985.

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, 1974.

Rawls, John. A Theory of Justice. Cambridge, Mass.: Belknap Press of Harvard University Press, 1971.

Rothbard, Murray N. For a New Liberty. New York: Macmillan, 1973.

———. “Praxeology, Value Judgments, and Public Policy.” In The Foundations of Modern Austrian Economics, edited by Edwin G. Dolan. Kansas City, Kans.: Sheed and Ward, 1976.

———. The Ethics of Liberty. Atlantic Highlands, N.J.: Humanities Press, 1982.

Sen, Amartya K. Collective Choice and Social Welfare. San Francisco: Holden-Day, 1970.

Vaughn, Karen I. “Critical Discussion of the Four Papers.” In The Economics of Ludwig von Mises, edited by Laurence S. Moss. Kansas City, Kans.: Sheed and Ward, 1976.

Yeager, Leland B. “Rights, Contract, and Utility in Policy Espousal.” Cato Journal 5 (Spring/Summer 1985): 259—294.

———. “Why Subjectivism?” Review of Austrian Economics 1 (1987): 5—31. Reprinted here as chapter 2.

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*From The Meaning of Ludwig von Mises, ed. Jeffrey M. Herbener (Auburn, Ala., and Norwell, Mass.: Ludwig von Mises Institute and Kluwer, 1993), 321-344. A few pages have been cut out here.

¹On fundamental value judgments, see Paul Edwards 1965; Sidney S. Alexander 1967, esp. pp. 105-107 and 114-115; and Amartya K. Sen 1970, esp. pp. 62-64.

²This example of the redheads turns up repeatedly in Rothbard’s writings against utilitarianism.

³ Rothbard 1982, p. 52,—but what about John Stuart Mill’s Utilitarianism, 1863/1968, chap. 5?

⁴Rothbard 1982, p. 60 n. 2, does cite Mises’s Socialism 1922/1932/1951, pp. 45-47.

⁵This method of seeking consistency between specific judgments and general rules is what John Rawls, not himself an avowed utilitarian, has called the method of reflective equilibrium; Rawls 1971, esp. pp. 20—21, 48—51.

⁶Rothbard 1982, chap. 13. I hope it is legitimate to draw, also, on personal correspondence with Rothbard.

⁷On this and the closely related topic of blackmail, see Rothbard 1982, chap. 16; here too I draw on personal correspondence.

⁸Rothbard 1982, chap. 16 and pp. 241—243; similar arguments appear in Block and Gordon 1985 and Block 1986.

⁹Rothbard’s 1982, by the way, is not really a book on ethics; it is a book advocating a particular type of libertarian political philosophy.