Chapter 12 The Economics of Violent Intervention in the Market
1. Introduction
Up to this point we have been assuming that no violent invasion of person or property occurs in society.
We have been tracing the economic analysis of the free society, the free market,
where individuals deal with one another only peacefully and never with violence.
This is the construct or model of the purely free market, and this model, imperfectly considered
perhaps, has been the main object of study of economic analysis throughout the history
of the discipline.
In order to complete the economic picture of our world, however, economic analysis must
be extended to the nature and consequences of violent actions and interrelations in society,
including intervention in the market and violent abolition of the market.
Socialism
Economic analysis of intervention and socialism has developed much more recently than analysis
of the free market.
Some economists, notably Edwin Cannon, have denied that economic analysis could be applied
to acts of violent intervention.
But on the contrary, economics is the praxeological analysis of human actions, and violent interrelations
are forms of action which can be analyzed.
In this book, space limitations prevent us from delving into the economics of intervention
to the same extent as we have treated the economics of the free market, but our researches
into the former field are summarized more briefly in this final chapter.
One reason why economics has tended to concentrate on the free market is that here is presented
the problem of order arising out of a seemingly anarchic and planless set of actions.
We have seen that instead of the anarchy of production that a person untrained in economics
might see in the free market, there emerges an orderly pattern, structured to meet the
desires of all individuals and yet eminently suited to adapt to changing conditions.
In this way we have seen how the free voluntary actions of individuals combine in an orderly
is actually determination of such seemingly mysterious processes as the formation of prices,
income, money, economic calculation, profits and losses, and production.
The fact that each man in pursuing his own self-interest furthers the interest of everyone else
is a conclusion of economic analysis, not an assumption on which the analysis is grounded.
Many critics have accused economists of being biased in favor of the free market economy,
but this or any other conclusion of economics is not a bias or prejudice, but a post judice,
To use a happy term of Professor E. Merrill Roots, a judgment made after inquiry, and
not beforehand.
Is it then surprising that the early economists, all religious men, marvelled at their epical
discovery of the harmony pervading the free market, and tended to ascribe this beneficence
to a hidden hand or divine harmony?
It is easier for us to scoff at their enthusiasm than to realize that it does not detract from
the validity of their analysis.
Conventional writers charge, for example, that the French optimistic school of the 19th
century were engaging in a naive harmony lera, a mystical idea of a divinely ordained harmony.
But this charge ignores the fact that the French optimists were building on the very
A very sound welfare-economic insight that voluntary exchanges on the free market
conduce harmoniously to the benefit of all.
Personal preferences, moreover, are completely separate from the validity of analytic procedures.
The personal preferences of the analyst are of no interest for economic science.
What is relevant is the validity of the method itself.