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NOTE 12.01. The Economics of Violent Intervention in the Market: Introduction

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Chapter 12 The Economics of Violent Intervention in the Market

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1. Introduction

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Up to this point we have been assuming that no violent invasion of person or property occurs in society.

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We have been tracing the economic analysis of the free society, the free market,

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where individuals deal with one another only peacefully and never with violence.

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This is the construct or model of the purely free market, and this model, imperfectly considered

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perhaps, has been the main object of study of economic analysis throughout the history

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of the discipline.

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In order to complete the economic picture of our world, however, economic analysis must

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be extended to the nature and consequences of violent actions and interrelations in society,

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including intervention in the market and violent abolition of the market.

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Socialism

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Economic analysis of intervention and socialism has developed much more recently than analysis

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of the free market.

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Some economists, notably Edwin Cannon, have denied that economic analysis could be applied

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to acts of violent intervention.

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But on the contrary, economics is the praxeological analysis of human actions, and violent interrelations

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are forms of action which can be analyzed.

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In this book, space limitations prevent us from delving into the economics of intervention

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to the same extent as we have treated the economics of the free market, but our researches

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into the former field are summarized more briefly in this final chapter.

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One reason why economics has tended to concentrate on the free market is that here is presented

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the problem of order arising out of a seemingly anarchic and planless set of actions.

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We have seen that instead of the anarchy of production that a person untrained in economics

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might see in the free market, there emerges an orderly pattern, structured to meet the

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desires of all individuals and yet eminently suited to adapt to changing conditions.

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In this way we have seen how the free voluntary actions of individuals combine in an orderly

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is actually determination of such seemingly mysterious processes as the formation of prices,

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income, money, economic calculation, profits and losses, and production.

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The fact that each man in pursuing his own self-interest furthers the interest of everyone else

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is a conclusion of economic analysis, not an assumption on which the analysis is grounded.

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Many critics have accused economists of being biased in favor of the free market economy,

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but this or any other conclusion of economics is not a bias or prejudice, but a post judice,

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To use a happy term of Professor E. Merrill Roots, a judgment made after inquiry, and

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not beforehand.

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Is it then surprising that the early economists, all religious men, marvelled at their epical

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discovery of the harmony pervading the free market, and tended to ascribe this beneficence

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to a hidden hand or divine harmony?

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It is easier for us to scoff at their enthusiasm than to realize that it does not detract from

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the validity of their analysis.

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Conventional writers charge, for example, that the French optimistic school of the 19th

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century were engaging in a naive harmony lera, a mystical idea of a divinely ordained harmony.

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But this charge ignores the fact that the French optimists were building on the very

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A very sound welfare-economic insight that voluntary exchanges on the free market

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conduce harmoniously to the benefit of all.

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Personal preferences, moreover, are completely separate from the validity of analytic procedures.

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The personal preferences of the analyst are of no interest for economic science.

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What is relevant is the validity of the method itself.