Who is the father of libertarian philosophy

The libertarian reflex

The dangerous post-corona cocktail of the other kind

"The Federal Council acted without a strategy from the start. It is high time that citizens and entrepreneurs took the reins back into their hands." This is how an appeal by the emeritus economics professor Martin Janssen begins in the Neue Zürcher Zeitung on May 13, 2020. Anyone who feels reminded of the yelling of the angry citizens and conspiracy theorists should have a look. Because in fact the author seems to be taking the same line.

But as you read on it becomes clear: No, this blow in the notch of populism comes from another side, from a self-declared liberal. And the essay is not associated with an irrational attack on the sciences, rather it sees itself as an explicit contribution on the part of the noble tradition of economics. But here, too, it is worth taking a closer look: It quickly becomes clear that the corona crisis will be brought in again to raise the flag for an ideology that has long been in ruins, in this case the old worldview of neoliberalism, which failed as early as 2008 at the latest .

It therefore seems as if one has to add another group to the much-described list of right-wing extremists, anti-capitalist left, conspiracy theorists, esotericists, vaccine skeptics, anti-Semites, C-celebrities, reactionary church representatives and general science skeptics who unite in protest against the corona policy add: the ultra-liberal state despairers who want to see the federal government and cantons (in Germany: federal states) trimmed. The entrepreneurs will fix it from here, dear politicians. Just give them more power, or better still: occupy the whole government with them. Then all the evil of the welfare state, "a pension that got out of hand", "a misguided health policy" will be weeded out again.

In view of the damage that this ideology has caused in recent years, as it was recently particularly visible in the USA and England in the Corona crisis, it must unfortunately be stated that this intellectual brother of the angry citizen outbreak is also extremely dangerous and it is therefore a commandment of intellectual honesty to speak out against it.

First of all: It is precisely this welfare state with broad health care in Switzerland and Germany that has ensured that there is no mass unemployment and mass death these days like in the USA or England. And anyone who only goes back 12 years realizes that in 2008/2009 it was the welfare state that allowed us to master a crisis that the "entrepreneurs" in the banks had brought on us.

What a nuisance for the apologists of the unhindered free market that the rescue of the same by the state is now necessary for the second time within a very short time. And what it means to bring a "misguided health policy" on the right course, namely the austerity course, can be seen in the best illustration in Italy and again in the USA and England. Together with the accusation against the governments of having no answer to the question "how much social and economic damage one wants to accept in order to save life", the article reveals an almost incomprehensible cynicism, not only of the intellectual , but also lacks ethical honesty.

The article seems quite harmless at first. The articulated criticism of the measures taken by the Swiss government is partly justified - from today's perspective! Since the scientists do not yet know everything about the Covid-19 virus by a long way, every political decision is based on a risk assessment. The fact that in retrospect (with better knowledge) it turns out that one or the other decision turns out to be less than optimal is in the nature of such considerations. In retrospect, you know a lot better. And Mr. Janssen knows a lot better when two months later (!) He says that the flight connections to China should have been discontinued or the borders to Italy should have closed a few days earlier. Free of charge, Mr. Janssen, or as we say in Switzerland: "Here you come like the old Carnival."

It is becoming increasingly clear: While in the beautifully ultra-liberal USA and the birthplace of liberalism, England, the new case and death numbers have stagnated at an alarmingly high level for more than six weeks, it seems that Europe is shaped by the welfare state, and here in particular Switzerland and Germany to have come over the mountain comparatively lightly. Anyone who strongly reproaches the political decision-makers here overlooks the fact that it was precisely the measures taken by the much-scolded Swiss and German governments that turned out to be particularly successful in an international comparison.

With Hayek, Mises, Popper, Rand and Röpke against Marx and Engels?

But Mr. Janssen does not stop at this cheap criticism of the Swiss government, but now comes to his real concern, for which he unpacks the ideological club: Not "Marx and Lenin, whose understanding of the state is based on robbery, oppression and murder" shouldn't show us the "long way back into a free, market-based future", but rather "Hayek, Mises, Popper, Rand and Röpke". Apart from the fact that Marx's understanding of the state was certainly not geared towards robbery and murder - Mr Janssen, such a clumsy polemic is not worthy of you - one should be the "philosophers and economists who have mapped out the successful organization of a society", as in the Text means taking a closer look. Here, too, the statements made turn out to be imprecise, inconsistent, and sometimes simply wrong.

Karl Popper was an anti-Marxist (as well as an anti-platonist and an anti-conventionalist), but also more of a philosopher than an economist (although he was a friend and, for a few years, was also a colleague of Friedrich Hayes at the London School of Economics). To call him an advocate of the ideal of "people who move in as free markets as possible" is presumptuous, to say the least. In his (political-philosophical) main work "The open society and its enemies", Popper explicitly calls the free market a "paradox" and calls for suitable social structures in an open society (so that today many social democrats like to refer to it).

Ludwig von Mises, on the other hand, wanted to find economic laws a priori through purely deductive inferences and without empirical observation, in which he followed the philosophical tradition of Immanuel Kant. Relying on this method, he considered capitalism to be a guarantor of human freedom and the only functioning economic system at all. Now Kant was a philosopher and not an economist. And what works in philosophy does not automatically work in economics. Almost all contemporary economists, including Mises's student Friedrich Hayek, therefore rejected the orthodoxy of such a priorism (which, incidentally, also stands in opposition to the understanding of Karl Popper's critical rationalism). And it gets worse, because von Mises wrote of fascism: "It cannot be denied that fascism and all similar dictatorship aspirations are full of the best of intentions and that their intervention has for the moment saved European morality. The merit, that fascism has acquired with it will live on forever in history. " From which moth box Mr. Janssen brought Ludwig von Mises out remains his secret.

Also hard to blame is the attempt to call the actress, author and self-proclaimed philosopher Ayn Rand to the stand of economics as a reference. Their philosophy of "objectivism" - packaged as far as possible in the form of a novel - was mostly ignored in the academic mainstream and generally rejected where it was perceived: too naive, ideologically unreflective and a step backwards into the pre-Kantian philosophy was both its epistomological- ontological conception of a reality completely independent of perception as well as its ethics, according to which the real moral goal of life is the pursuit of one's own happiness. Accordingly, her theses found little echo in academic economics. Nonetheless, with her view that the only social system compatible with morality is laissez-faire capitalism, she became a heroine of the American neoconservative right. Today she is better known as the ideological pioneer of libertarianism as a serious economist. It is more indicative than an expression of argumentative strength that Janssen distinguishes her so prominently here.

Wilhelm Röpke, on the other hand, was an intellectual father of the social market economy, who saw it as the task of the state to protect the weak "beyond the market", to balance interests, to set the rules of the game and to limit economic and political power. For him there was a "third way" between capitalism and socialism, an economic order that Röpke also saw as "economic humanism". This stands in stark contrast to the neo-Darwinian thinking of Ayn Rand, with which Janssen lacks consistency in his enumeration so that one has to assume that it is more about "name dropping" than about argumentative power.

Why the free market is far from ideal

But let's take a look at the state of economics, of which Mr Janssen is the representative. It has long been known here that the neoliberal ideal hardly corresponds to the real market economy conditions. Essentially, five forces prevent the "market-economy equilibrium" propagated by libertarian economists from becoming a socially acceptable condition.

Externalized costs: The economic activities of a person or a group of people can affect other (under certain circumstances even all other) people without the acting person bearing the full costs. Polluting the environment costs little or nothing even today. The climate-damaging emissions of CO2 are still not associated with major costs for the producers; The general public also largely bears the safety risk of nuclear power or natural gas fracking. Another example are the activities of the banks before 2008, which took massive risks (and for a long time also achieved corresponding returns), but which finally allowed the risks to be socialized.

Rent Seeking: Powerful groups often succeed in shaping political and economic rules for their own benefit alone, without increasing social prosperity as a whole. One example are companies that obtain subsidies, grants or customs protection, which in many countries is also associated with political corruption. But lobbying is also a branch of its own in Berlin, Brussels and Washington that employs tens of thousands.

Unequal allocation of production goods: Produced goods can be accumulated in the hands of a few - this insight is a core element of Marxist economic theory. The result is extreme differences in income and wealth within a society and, ultimately, less economic competition.

Information asymmetries: As early as 1970, the later Nobel Prize winner (2001) Georg Akerlof showed in his essay "The Market for Lemons" that free markets cannot function optimally if buyers and sellers do not have equal access to information. In many markets of our everyday life, however, there is an information asymmetry.

Cognitive biases: The classical economic theory assumes that we know what is good for us and always act accordingly rationally. But behavioral economics has shown that we act far more thoughtlessly and less rationally than free market advocates assume. We are often guided by short-term urges rather than long-term, deliberate considerations. Apple makes billions by releasing a new iPhone every six months and benefiting from the fact that we like to be seduced by the latest technology gadgets and greatly overestimate their benefits compared to the price.

With these five forces, the free market behaves anything but optimal and overall welfare-optimizing. It's time we finally mothballed this neoclassical orthodoxy. The corona crisis gives us another opportunity to do this.

Lars Jaeger studied physics, mathematics, philosophy and history and researched quantum physics and chaos theory for several years. He lives near Zurich, where - as a busy lateral thinker - he has built up two companies of his own that advise institutional financial investors and at the same time maintain regular blogs on the subject of science and current affairs. He also teaches at the European Business School in Rheingau. In September 2019 his latest book "Daring more future!" at the Gütersloher publishing house.

(Lars Jaeger)

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