A Dim View of Libertarianism
"The economist . . . keeps the motivations of human beings pure, simple and
hard-headed, and not messed up by such things as goodwill or moral
sentiments... [T]here is ... something quite extraordinary in the fact that
economics has in fact evolved in this way, characterizing human motivation
in such spectacularly narrow terms. One reason why this is extraordinary is
that economics is supposed to be concerned with real people. It is hard to
believe that real people could be completely unaffected by the reach of the
self-examination induced by the Socratic question, 'how should one live?'"
Libertarians accept the conviction of neo-classical economists that “the
free market,” unconstrained by government oversight and regulation, will
always produce better results than markets directed by legislation. The free
market, they insist, resulting from the “utility maximizing” transactions of
numerous autonomous buyers and sellers, “spontaneously” establishes prices
and prompts entrepreneurial decisions that yield the best outcome for the
society in general. “Good for each, good for all.”
“The wisdom of the market place” is epitomized by the concept of "the
invisible hand," cherished by libertarians, which has its origin in Adam
Smith’s Wealth of Nations.
[The individual] neither intends to promote the public interest, nor knows
how much he is promoting it... [H]e intends only his own security; and by
directing that industry in such a manner as its produce may be of the
greatest value, he intends only his own gain, and he is in this, as in many
other cases, led by an invisible hand to promote an end which was no part of
An unyielding faith in the infallible beneficence of "the invisible hand,"
leads to "market fundamentalism" – the doctrine that whatever government
attempts, privatization and the free-market can do better.
“[T]he free market allows more people to satisfy more of their desires, and
ultimately to enjoy a higher standard of living than any other social
system... We need simply to remember to let the market process work in its
apparent magic and not let the government clumsily intervene in it so deeply
that it grinds to a halt." (David Boaz)2
"A free market [co-ordinates] the activity of millions of people, each
seeking his own interest, in such a way as to make everyone better off...
Economic order can emerge as the unintended consequence of the actions of
many people, each seeking his own interest." (Milton and Rose Friedman)3
Accordingly, the libertarians argue, governments should never interfere with
markets. Furthermore, governments should not own property, which is better
managed by private individuals. In short: let the free market decide. The
mysterious “invisible hand” of the free market will “[allow] more people to
satisfy more of their desires” (Boas), and “make everyone better off”
The dogma of market fundamentalism gains some credibility from the fact that
it is at least a half-truth. No doubt, the individual’s striving to maximize
self-interested gain accounts for numerous improvements in the quality of
life in industrial countries. Presumably, the inventors and developers of
computers and the internet were more concerned with their own economic
prospects than they were of the "social benefits" thereof. (As a
result of his economic success, Bill Gates’
benevolence was manifested later with
the establishment of The Gates Foundation). Similarly, many scientific,
scholarly, technological and artistic achievements, motivated primarily by
self-interest and self-satisfaction, benefit society at large "as if by an
From the undisputed truth that some, or perhaps even most, market activity
yields benefits, the market fundamentalist concludes that the unregulated market
never fails to be beneficial to all; the belief, in other words, that there
are no malevolent effects of unconstrained market activity, no "back of the
invisible hand." From this belief follows the insistence that the free
market is self-correcting, and that there is thus no need for regulation –
that, in Ronald Reagan’s enduring words, "government is not the solution to
our problems, government is the problem."
Market fundamentalism is a "dogma" in the same sense that creationism and
biblical inerrancy are dogmas; it is accepted "on faith" despite clear and
compelling evidence that it is false. Not that this significantly alters the
convictions of the libertarian and regressive true-believer, any more than
the existence of fossils or the science of molecular biology inclines the
religions fundamentalist to accept evolution.
Be that as it may, for those open to evidence and plain common sense, here
are a few compelling reasons to reject the dogma of market fundamentalism –
reasons to believe that what is good for an individual buyer or seller or
corporate stockholder may not be good for the public in general.
A Fictitious Person in a Mythical Environment.
Neo-classical economic theory, from which libertarian market fundamentalism
is derived, can be seen at once to be inapplicable to the “real world” of
actual economic activity. And, of course, the “real world” is and must
always be the only world that we all live in. This mismatch between theory
and application follows from the central concepts of neo-classical
economics: “economic man” and “the perfect market.” A fictitious person
acting in a mythical environment.
Economic Man (Homo Economicus). In neo-classical economic theory, “economic
man” is a hypothetical individual who is a complete egoist, motivated solely
by the self-interested desire to maximize his “preference satisfaction.”
Homo Econ’s motivation is manifested by his willingness to pay for these
satisfactions in a “free market.” Neo-classical theory also postulates that
“all goods that matter to individuals ... must be capable of being bought
and sold in markets” and “anything that is valued instrumentally ... can be
handled by economics, be it acts of friendship or love.”4
“Economic man’s” behavior is described, in neo-classical jargon,
as “rational.” By implication, the self-sacrificing behavior of saints and
heroes is “irrational.”
Clearly, “economic man” exists nowhere outside of Ayn Rand’s novels and,
perchance, on Wall Street. And this is fortunate, for we wouldn’t want him
for a neighbor.
In fact, there is much more to a fulfilled and moral life than
self-interested “preference satisfaction.” Such a life also includes values
that can not be priced in a free market. Among them:
Truth. Scientists and scholars offer evidence and sound arguments, not
bids. In courts of law, purchased verdicts are not only invalid, they are
Civic Values such as justice, due process, civil rights, and the
franchise, are not for sale. The governing impulse of economic man (qua
consumer) is “I want.” The governing impulse of the citizen is “we need.”
Distributive Justice. The economic concepts of “efficiency” and “utility
maximization” do not touch upon the moral issue of the just distribution of
wealth. “Just compensation” and "fair distribution" are moral, not an
economic, concepts. A slave economy can, in classical economic theory, be
perfectly “efficient” (i.e., "Pareto Optimal").6
Love, friendship and loyalty which is bought is less valuable than that
which is given freely. As philosopher Mark Sagoff reminds us, “a civilized
person might climb the highest mountain, swim the deepest river, or cross
the hottest desert for love, sweet love. He might do anything, indeed,
except be willing to pay for it.”
Moral values, which refer to the worth of persons, are
systematically excluded from neo-classical economic theory.
A public policy for “economic man,” systematically detached from criteria of
truth, civic value, distributive justice, friendship and loyalty, is a
policy that any civilized person should reject, and he should reject it on non-economic
The Perfect Market.
Consider next the conditions that define “the perfect
All participants are “perfectly rational,” utility maximizing egoists –
i.e., are “economic men.”
There are many participants in the market.
Competition is “perfect” – there is no collusion, cartels or monopolies.
All participants have access to all relevant knowledge.
There are no transaction costs.
All transactions are mutually beneficial.
There are no externalities – i.e., no consequences to non-participating
and non-consenting “third parties”. (See the following section).
Clearly, there are no “perfect markets” anywhere on earth, apart from the
imaginations of economists and libertarians. For consider:
(a) “Economic man” is a myth, or at the very least extremely rare. As noted
above, most individuals engage in economic transactions for several reasons,
some of them non-economic.
(b) Participation in markets is restricted to those with the ability to pay.
Public policy decisions, on the other hand, should involve the rights and
welfare of many who are excluded from market activity; namely, the very
young, the very poor, animals, and future generations.
(c) Unregulated markets are self-eliminating, because capitalists detest
competition and strive constantly to eliminate it. The remedy? The
enforcement of anti-trust laws and regulation, which means, of course,
“interference” by governments in the marketplace.
(d) The multi-billion dollar advertising and public relations industries are
devoted to the task of persuading rather than informing. And persuasion
involves the withholding of relevant information (e.g. health risks) and the
dispensing of distorted and false information. Caveat Emptor!
(e) All transactions in the real world exact costs. Among them are the costs
of enforcing the laws required for markets to take place at all (e.g. fair
disclosure, patents and copyrights, contracts, civil and criminal courts,
etc.), and this of course means government, which is so despised by “free
(e) Transactions are frequently not mutually beneficial, due to fraud (i.e.,
violation of the “relevant knowledge condition”), the remedy of which is
civil suits, which requires the “transaction costs” of the enforcement of
law and the appeal to courts -- ergo, government.
(f) External costs of market transactions are more the rule than the
exception. Innocent, non-consenting parties are routinely impacted by
economic activity. Among these external costs are environmental pollution,
urban decay, public health costs, etc. Third-party “stakeholders” have no
say in economic transactions. Their only recourse for protection and
compensation is the sole agency legitimately established to represent all
citizens: the government. (See my “Market
Failure: The Back of the Invisible Hand").
Summing up: “Economic man” and “perfect markets” are abstract constructs
which, due to their clarity and simplicity, allow theoretical economists to
devise complex mathematical models. However, they have no counterparts in
the real world, which compromises the application of these concepts in
Case-In Point: Milton Friedman on Free Trade. Foreign trade and currency
exchange rates provide a vivid example of the rule, “The theory is
beautiful, but reality is baffling.”
According to free market theory, foreign exchange rates should be
self-regulating, negative feedback functions, like house thermostats. The
heat rises, the furnace shuts off, the heat drops, the furnace kicks in,
Similarly with foreign trade. If there is a “trade imbalance,” say between
Japan and the United States, as dollars go to Japan and consumer goods are
imported to the U.S., the Japanese will acquire a surplus of dollars causing
the value of the dollar to fall with respect to the yen. U.S. consumer goods
will then be less expensive than Japanese products, thus encouraging a flow
of the yen to the U.S. to purchase American goods. Then the value of the
dollar will rise until foreign goods once again become competitive. And so
on, back and forth, like a thermostat. It’s all perfectly automatic – a
“spontaneous order,” as the libertarians call it – no governmental
interference (e.g. tariffs) required.
This is how Milton Friedman describes it:
If foreign exchange rates are determined in a free market, they will settle
at whatever level will clear the market. The resulting price of the dollar
in terms of the yen, say, may temporarily fall below the level justified by
the cost in dollars and yen respectively of American and Japanese goods. If
so, it will give persons who recognize that situation an incentive to buy
dollars and hold them for a while in order to make a profit when the price
goes up. By lowering the price in yen on American exports to Japanese, it
will stimulate American exports; by raising the price in dollars of Japanese
goods, it will discourage imports from Japan. These developments will
increase the demand for dollars and so correct the initially low price.7
In theory, it’s all very neat and so simple: “all things being equal.” But
in the real world, “all things” are never equal. Instead, the ecologist’s
rule applies: “you can’t do just one thing.”
What if that flow of dollars abroad is accompanied by a dismantling of the
U.S. industrial base? Then, when the time arrives for U.S. manufacturing
goods to be competitive with foreign goods (due to the weakening of the
dollar), there will be no more American-made goods on the market. Moreover,
with the outsourcing of U.S. jobs overseas and the decline of median
disposable income, fewer American can afford to buy foreign consumer goods.
Regressive tax rates cause the nation’s wealth to flow to the very rich, who
send their investments abroad in outsourced industries. A shrinking tax base
results in a disintegrating physical infrastructure and a decline in higher
education, followed by fewer scientists and engineers, and less basic
research and development. Thus today the United States excels only in
military technology, as it needlessly spends more on the military than all
the rest of the world combined, building 3.5 billion dollar aircraft
carriers to fight an “enemy” without an air force, and billion dollar
submarines to fight an “enemy” without a navy.
This is what happens when public economic policy is abandoned to “the will
of the free market” – an abstraction with, we are expected to believe, a
benevolent “mind” of its own. This is what happens when a government puts
the fate of the nation’s economy in the hands of wealthy individuals and
corporations; individual agents without social conscience and with nothing
more than their short-term profits in mind.
In the face of such grim realities, the neat “negative feedback” model of
Milton Friedman’s free-trade theory is irrelevant. It belongs to the
abstract world of “theory,” not to the real world. In the real world, the
thermostat is broken, the furnace will not turn on: down, down, down, goes
Market Failure and the Problem of Externalities:
What market fundamentalists (unlike Adam Smith) fail to notice, is that not all
workings of "the invisible hand" are beneficial.8 Some unintended
consequences of free market activity are harmful -- "the back of the
invisible hand." Economists call these "market failures."
One cannot enroll in an Introduction to Economics class, without
encountering the concept of “market failure” – the acknowledgment that a
totally unconstrained and unregulated free market can, at times, have
socially undesirable consequences (as I will exemplify below). It is one of
the most obvious and incontrovertible facts of applied economics. Almost all
of us are aware of market failures, whether or not we have ever studied
Some students of Econ. 101 choose to major in Economics, and a few of these
earn doctorates in the field. Those scholars who go on to work for The
Heritage Foundation, The American Enterprise Institute, The Cato Institute,
and other such “conservative” and libertarian think-tanks somehow manage to
forget about “market failures.” The free unregulated market, they tell us,
always brings about the socially optimum result.
Practical experience tells us otherwise:
The unconstrained chemical industry promoted pesticides and caused
extensive damage to the ecosystem, until the public and then the government,
aroused by Rachel Carson’s book, “Silent Spring,” put a stop to it.
Similarly, the chemical industry strenuously resisted demands that it
cease the manufacture and distribution of chloro-fluorocarbons (CFCs), when
atmospheric scientists discovered that the CFCs were eroding the
stratospheric ozone, which protects the earth’s inhabitants from
ultra-violet radiation. Once again, the federal government, joined by the
governments of other industrialized nations, enforced a ban on CFCs.
Scientific warnings about global climate change (“global warming”) were
countered by “junk science” sponsored by the energy industry. Now, at last,
as the fact of climate change becomes undeniable and widely acknowledged,
the same industry is promulgating the “line” that climate change may not be
all that bad, and might even be beneficial. Clearly, mankind can not count
on private enterprise to solve this grave crisis. Only international
agreement among the industrial nations will suffice. Meanwhile, the
regressive right, on behalf of its “sponsors” the energy industry, is
resisting international action.
Reduced labor costs yield increased profits and increased dividends to the
stockholders of the corporation. Thus, if workers abroad accept wages that
are a fraction of the wages demanded in the United States, then the
"responsible" policy of the corporation executives is to re-locate jobs
abroad: "outsourcing." In fact, the law stipulates that the
primary responsibility of the corporation is to its
stockholders. (It's called "fiduciary responsibility,"
about which much more in the fifth essay). The consequences to the displaced workers, and
eventually to the national economy, is devastating. But strictly speaking,
that is not the concern of the corporation. Not, that is, unless the
government intervenes with tariffs, tax incentives, regulations, and laws.
Finally, the tobacco industry, whose corporate responsibility to its
stockholders is to maximize profits, successfully marketed its products to
the point where half of the US population were smokers. As a result, almost
a half million Americans die prematurely each year – nearly twice the total
US casualties in World War II. Today, only a fifth of adult Americans are
smokers. No thanks to the industry. Once again, government intervention,
vigorously and persistently opposed by the tobacco industry, has curtailed
marketing and has publicized the health hazards of smoking, saving the
health and lives of millions.
We are all quite familiar with these “market failures,” and many more. It is
obvious that, in numerous undeniable cases the unregulated free market fails
to “make everyone better off,” as Milton Friedman would have us believe. So
why, if market failures are so compellingly obvious, should we even bother
to mention them? The answer is that our present government is dominated by
individuals who behave as if they don’t recognize these malevolent
consequences of free markets. So one after another, regulations and laws
designed to correct market failures are being dismantled, as government
regulatory agencies are staffed with lobbyists and officers from the
corporations that these agencies are charged to regulate.
But why do markets fail to produce optimal results for society at large?
Railroad tycoon, William Vanderbilt (1856-1938), said it all: “the public be
damned, I work for my stockholders.” ("Fiduciary responsibility"
again). Moreover individual entrepreneurs and
workers also want and strive for what is best for themselves. Indeed, as any
neo-classical economist will insist, personal want-satisfactions (e.g.,
profits) are what drive an economy.
Implicit in market fundamentalism
and libertarianism is the belief that what is best for each
individual and each corporation is best for all individuals – in
other words, for “society at large.” As President Eisenhower’s
Secretary of Defense, Charles Wilson, allegedly put it: “What is
good for General Motors, is good for the country.”
Because market fundamentalism, like "young-earth creationism" and biblical
literalism, is a dogma, it is untouched by hard evidence and practical
experience. "Market -- good; Government -- bad. Period! Now don't confuse us
with the facts."
Those who are not captivated by the dogma of market fundamentalism (i.e.,
most of us), know better. We trust the scientists who tell us that
pesticides damage the ecosystem, that CFCs erode the ozone in the
stratosphere, that the continuing use of fossil fuels is changing the
climate. And we know that smoking causes lung cancer and premature death –
the cigarette packs tell us so, not because the tobacco companies warn us
out of a sense of social responsibility, but because the government requires
them to print the warnings.
Government regulation, and laws restricting commercial activity, arise, not
from dogma, but through accumulated practical experience and political
action. As human institutions they are imperfect, which means, to be sure,
that they are sometimes excessive. The appropriate response to “insolence of
office” is reform, not abolition of the office – reform guided by the same
processes of practical experience and enacted through political action.
The Third Parties Problem.
It is an article of faith among libertarians, a faith undiminished by the
historical record or practical experience, that the unregulated free market
of self-serving buyers and sellers will, “as if by an invisible hand,” yield
the optimum social benefits. Accordingly, as Milton Friedman notoriously
proclaimed in the title of his 1970 New York Times article, "the social
responsibility of business is to increase its profits.”9 End of
This reassuring dogma conveniently neglects the “third parties” to economic
transactions: the “stakeholders” – individuals affected by the transactions
without their informed consent. These include individuals residing downwind
and downstream from polluting industries, taxpayers who must pay for the
medical costs of smoking, citizens at risk of injury or death from toxic
chemical releases, homeowners near airports, and most recently, the
tax-paying public, present and future, that has been presented the bill for
rescuing Wall Street. Add to these, the customers who are not informed of
the consequences of their purchases: teen-agers induced to take up smoking,
consumers of insufficiently tested drugs, etc. If the stockholders of a
corporation are dissatisfied with the profit-making of the corporation, they
can fire the managers. But who, other than the government, speaks for the
stakeholders? The costs of these third-party “externalities” do not figure
into the profit-maximizing plans of corporations, unless those costs are
imposed by force of law and regulation, which is to say, by government.
There is another remedy, say the libertarians: the threat of law suits by
individuals harmed by corporate irresponsibility. Unfortunately, the
regressive Congresses and administrations have pulled the teeth from this
watchdog by enacting so-called “tort reform” – limitations on awards to
plaintiffs. So today, damage claims by customers and stakeholders are simply
regarded by large corporations, as “the cost of doing business.” I will have
much more to say about “the courts and torts” remedy for market failures in
the next essay.
Why Not A Free Market in Murder?
If, as the
fundamentalists insist, the unregulated free market always results in
benefit for "everyone" why not allow a "free market" in child pornography,
or extortion ("the protection racket"), or murder for hire?
The libertarian is compelled to reply, "because such activities harm or
violate the rights of innocent persons." With this admission, the
libertarian gives away his dogma. For by this admission, he concedes that in
some readily identifiable cases, what Robert Nozick dubs the right to engage
in "capitalist acts between consenting adults" can, at times, be trumped by
the rights and the welfare of innocent, unconsenting and non-participating
But if so, if there are legitimate reasons to outlaw extortion, child
pornography and murder for hire, why then not also outlaw, or at the very
least regulate, the sale of tobacco products and junk food, for-profit
health insurance, junk bonds (CDOs) and hedge funds, and why not forbid the
privatization of prisons, of warfare, and most fundamentally, the
privatization of government through unlimited corporate campaign
I submit that while there may be a difference in degree between the
prohibition of murder for hire on the one hand, and the sale of cigarettes
and junk food and the privatization of warfare and government on the other,
there is no difference in kind. All these activities harm and violate the
rights of innocent and unconsenting victims.
Between, say, the "free market" in such services as auto repair and hair
styling (acceptable) and the "free market" in extortion and murder
(unacceptable) there is a vast "gray area" of economic activity in which the
advantages of market activity may or may not be outweighed by harm to
innocent others. Toward the "light gray" end of this continuum, caveat
emptor ("let the buyer beware") may suffice to minimize abuses by sellers
and entrepreneurs without the intervention of the law and government.
However, in the "dark gray" side of the continuum is found those
transactions that cause unacceptable harm to innocent and unconsenting third
parties. Also in the "dark gray realm" are those transaction wherein the
potential customers are totally incapable of knowing the consequences of
their transactions (e.g., the sale of prescription drugs) or whose judgment
is overwhelmed by the black arts of public relations and advertising (e.g.,
junk food sales to children and cigarette sales to teen-agers). According to
"free market theory" of neo-classical economics, each participant in an
economic transaction possesses "perfect knowledge," which is one of several
reasons why it is compellingly obvious that there is no such thing as a
"perfect market" outside of the publications of these economic theorists.
And all of us, neo-classical economists included, are compelled to live in
the real world.
Once the high-pressure political rhetoric and the high-fallutin’ scholarly
jargon is set aside and undeniable economic and social facts are brought to
the fore, the conclusion is inescapable: totally unregulated, laissez-faire
capitalism cannot work, and attempts to make it work lead to oligarchy:
opulent wealth for the very few, poverty for all others, and the
disintegration of social order and the just rule of law. In addition to all
that, oligarchy leads, paradoxically, to the destruction of the free market
for, as history testifies and we are discovering anew in the daily news,
oligarchy detests competition and leads to monopolies. Hence "mergers and
Equally obvious is the remedy for all this: government regulation and the
rule of law – law based, not on neo-classical economic theory, but on
historical experience and fundamental moral principles.
Government is essential, for no complex social activity, markets included,
can take place without rules, referees to enforce the rules, and sanctions
to deter the violations of these rules.
Markets, after all, are essentially
games: they are cooperative, rule governed, and goal
oriented, and the success of each "player" is contingent upon the behavior
of the other players. Thus a market without rules, referees, and sanctions
(i.e., laws and regulations) is unthinkable. And as with games, the
referees, rules and sanctions must be supplied by a neutral and unbiased
entity. What else could this be, but government – that institution
established by the public at large to protect each individual’s rights not
to be harmed by "capitalist acts by consenting adults."?
How then have the regressives succeeded in foisting a belief in the dogma of
market fundamentalism upon a sizeable portion of the United States
population, including the media and a majority of the U.S. Congress?
They have accomplished this through the expenditure of vast sums of private
money in support of "think tanks," in the purchase of media, and in
political campaign contributions.
But what cogent arguments have been presented in support of the dogma? Very
few, I submit. The widespread acceptance has been accomplished through
simple repetition, devoid of argument and rich in the rhetoric of "freedom."
About the only supporting argument forms of note are anecdotal evidence and
false generalization. Supporters of market fundamentalism cite examples of
the benefits of free markets, and from that conclude that all "free markets"
are always benign. However, as noted above, the fact that free market
activity is often beneficial is not in dispute. Yes, we are all better off
due to innovation, entrepreneurship and competition in the production of
goods and the performance of services. This is the aforementioned
"half-truth" of market dogmatism. But this half truth does not yield a whole
truth. It does not follow from the admitted advantages of free market
activity that there are never any harmful consequences thereof. Simple
reflection, as noted above, yields abundant examples of what economists call
"market failures" and "negative externalities."
"The Reagan Revolution" of 1981 ushered in the grand experiment in
applied market fundamentalism. Before more and greater harms befall
us all, it is past time for the people and the government of the
United States to recognize and to proclaim that
experiment has failed.
We have learned what we need to know about the attempt to institutionalize
this dogma, and it is time now to return to proven modes of governance: the
rule of law, the protection of the environment and common resources, just
distribution of the fruits of our combined and coordinated labor, and the
subordination of economic activity in the service of the public good. It is
time, in short, to bring back the rules, the umpires and the sanctions. Time
to scrap the ethic of "you are on your own," and to restore the ethic of
community: "we’re all in this together."
The liberal economist,
James Galbraith, concurs:
“A new spirit of pragmatism surely requires that we discard the metaphor of
market determinism – whole and entire. No more, let us bow and scrape before
that altar. Markets have their place – they are a reasonably open and
orderly way to assure the distribution of services and goods. They are not a
general formula for the expression of social will and the working out of
Markets and privatization. If, as the market fundamentalists insist, free
markets will always produce superior results than government management,
then it follows that all government activities (with the exception of the
protection of life, liberty and property), should be privatized. And so
today, we constantly hear and read about regressive proposals to privatize
the national parks, the postal service, Social Security and Medicare, etc.
And half of the traditionally military functions in Iraq have been turned
over to so-called “private contractors.”
So why not privatize practically every public function? We will address that
question in the next essay.
4. The Privatization Panacea
NOTES AND REFERENCES
1. Amartya Sen, On Ethics and Economics, Oxford: Blackwell, 1987, pp 1-2.
2. David Boaz, Libertarianism, a Primer, New York: Free
Press, 1997 p. 40, 185.
3. Milton and Rose Friedman:
Free to Choose, New York: Harcourt Brace Jovanovich, pp 13-14.
4. A. Myrick Freeman, "The Ethical Basis of the Economic View of
the Environment," The Environmental Ethics and Policy Book,
Belmont, CA: Wadsworth, 1994. P. 307, 309.
5. Steven Edwards, "In Defense of Environmental Economics,"
Environmental Ethics, 9:1 (Spring, 1987), p. 79.
This reduction of all values to economic costs is the foundation of economic cost-benefit analysis, upon which much
legislation and government regulation is based. For my critique of economic
cost-benefit analysis, see my
“Why Economics Fails as a Sole Foundation of
Public Policy,” in Chapter 10 of Conscience of a Progressive.
6. “Pareto optimality” obtains when no transactions are possible that do not
result in some individual ending up worse off.
7. Milton and Rose
Friedman, Free to Choose, p. 47.
8. In words that libertarians are reluctant to cite, Adam Smith also wrote
in The Wealth of Nations: "People of the same trade seldom meet together but
the conversation ends in a conspiracy against the public, or in some
contrivance to raise prices."
9. Milton Friedman: “The Social Responsibility of Business is to Increase
Its Profits,” The New York Times Magazine, September 13, 1970.