Monument -- or Tombstone?

Tuesday, March 02, 2010

A few days ago, one Arthur Kerschen of the Free Market Monument Foundation, sumbitted a comment to an old post here, "Are Principles Optional?" Most of it was lifted from his foundation's web site and that part of it follows, with all formatting removed and with my comments added in bold.

Principles of the Free Market (Draft Version)

1) Individual Rights: "We are each created with equal individual rights to control and to defend our life, liberty and property and to voluntary contractual exchange." Created? By whom? To attempt to base an argument for individual rights, capitalism, or anything else, on faith is to declare intellectual bankruptcy at the outset.

Does a fetus have a "right" to life or not? This question (and others like it) is relevant to capitalism on much more than the basis of whether abortion clinics should exist legally.

2) Limited Government: "Governments are instituted only to secure individual rights, deriving their just powers from the consent of the governed." True, if couched within a proper philosophical context. Otherwise, this verbiage is as meaningless as if a parrot had said it.

What are individual rights? In addition to the above question on abortion, do I have a "right" to own nuclear weapons if I can afford them?

3) Equal Justice Under Law: "Government must treat everyone equally; neither rewarding failure nor punishing success, or the benefits of the free market are lost." This is redundant if the government is truly protecting individual rights.

4) Spontaneous Order: "When individual rights are respected, unregulated competition will maximize economic benefit for society by providing the most goods and services possible at the lowest cost." The proper ethical justification for capitalism is egoism, not altruism. That said, members of a free society will, incidentally, have higher standards of living overall than those not living in a free society.

5) Private Ownership: "Private ownership is the only just and the most efficient way to preserve and utilize the natural resources of our world." See number four above.

6) Subsidiarity: "Larger organizations and governments derive their authority from the consent of smaller organizations, governments and individuals, and no authority should be granted to a larger organization that can be governed by a smaller one." So if the workers in a Toyota plant feel that they could "govern" their plant better than an international corporation can, does this mean the plant should be separated from Toyota? Before we start squabbling over a metric, what happened to Toyota's property rights?

What if a state imposes socialized medicine? Should the federal government intervene on behalf of the rights of physicians and patients? For that matter, what if the physicians decide they are no longer "subsidiary" to the state? This "principle" also sounds like an endorsement of anarchy.

It is not the size of government (or the fact that a government exists) that is a problem today, but its proper scope.

7) The Golden Rule: "Deal with others honestly and require honesty in return." What is honesty?


Many free market and political organizations have issued statements of principle. Everyone has a slightly different idea of exactly what the principles of the free market should be. The order in which they appear here is based roughly on the frequency with which these or similar principles are sighted [sic] as necessary for functioning free markets. The truth or falsehood of a principle is not a matter of popular vote or divine decree, but of adherence to the facts of reality and can be investigated only by reason.

Most statements of free market principles are more elaborate than these seven principles. We have attempted to reduce the principles of the free market to their minimal definition with scientific and legal precision. Philosophical rigor is what is needed here, as my various questions should indicate.
I was at first tempted simply to point out for comparison a far more elegant laying-out of principles by Ayn Rand, history's best philosophical defender of capitalism, but I realized that that would not be enough. Nevertheless, let's start with them, because they still get to the point.
At a sales conference at Random House, preceding the publication of Atlas Shrugged, one of the book salesmen asked me whether I could present the essence of my philosophy while standing on one foot. I did as follows:

1. Metaphysics Objective Reality
2. Epistemology Reason
3. Ethics Self-interest
4. Politics Capitalism

If you want this translated into simple language, it would read: 1. "Nature, to be commanded, must be obeyed" or "Wishing won’t make it so." 2. "You can't eat your cake and have it, too." 3. "Man is an end in himself." 4. "Give me liberty or give me death." [link dropped]
Implicit in the above is a systematic, hierarchical approach to philosophic ideas, of which politics occurs late in the game. Ayn Rand is such an able defender of capitalism because of her method of approaching ideas, which led her to discovering or fleshing out the many principles needed to provide a moral and practical defense of capitalism

This is a point that many people sympathetic to capitalism miss, and which hamstrings them time and time again when they discover (or, against their wishes, it simply turns out to be the case) that principles they wrongly hold (or wish) to be compatible with capitalism turn out not to support it, attack it as immoral, or result in political developments that attack freedom outright.

Oddly, the first goal of this organization will be to carve the above principles "in stone and [mount them] on a hilltop for all to see so that they can never be forgotten."

What good would this do if said principles are wrong -- or not even wrong -- or not grasped by enough people to affect the overall trends of the culture? The membership of this organization would do well to spend less time carving stone and more time understanding the philosophical basis of capitalism or what they will create will be a tombstone rather than a monument -- which is no substitute for a fully free society anyway.

-- CAV


Mo said...

not to mention this statement

"Free market principles are derived from experience – not ideology"

Gus Van Horn said...

There is no such choice as between ideology (read: philosophical rigor) or experience. You need both.

Steve D said...

Ideological or philosophical principles are induced from experience (observation) as is all knowledge but I think that statement Mo quotes was meant to mean ideological principles are deduced from experience which makes no sense.

Once again you’ve done a great job analyzing an article so there is not really a lot to comment on. For a number of these points the simple question ‘why?’ would bring the issue up to the front. Apart from that a couple of other things come to mind.

1) In this context, I would say that how we came into existence whether created by god, a super computer, natural selection or my next door neighbor is irrelevant . So far as individual rights is concerned the only issue is what we are now. This is not usually well understand but the rights flow automatically from our nature as conceptual beings. The word used in the Declaration of Independence ‘endowed’ is not really correct in so much as it implies the possibility that endowment was somehow optional (any more than say for example the Law of Gravity is optional)

6) Even given that it is coming from the philosophically challenged, I find this a very confusing statement. Is it an attempt to justify State rights? In any event, there is nothing fundamental about the size of an organization anymore than there is anything fundamental about the size of a man. Even given an agreement about the scope of the government I suspect that how large it has to be to adequately serve its purpose would be debatable.

However, overall sense I get from that comment is one of simple refusal to think to the bottom of things of taking a bunch of nice sounding statements, calling them principles and leaving it at that. It would be as if you advocated honesty without understanding that it is simply a species of rationality and that if you started with rationality instead you not only automatically get honesty but a bunch of other good things as well. (of course more needs to be said about rationality as well but that’s another story).

“What good would this do if said principles are wrong -- or not even wrong -- or not grasped by enough people to affect the overall trends of the culture?”

With the exception of #6 none of the principles is really wrong. However, principles which are correct but derivative are treated as if they are correct but fundamental. If they only have to oppose concrete minded collectivists they might be able to hold their own. If however they come against an opposing principle which is more fundamental (e.g. altruism) they will falter.

Gus Van Horn said...

"[P]rinciples which are correct but derivative are treated as if they are correct but fundamental."

That is a nice summary of a very common error, and I appreciate your posting it. In about a sentence, you made explicit what I hadn't in a post.

Arthur Kerschen said...

I appreciate all your criticisms of the proposed "principles of the free market".

These rough principles were derived by looking at free market principles as advocated by the Republicans, Libertarians, The statement of principles of the Heritage Foundation, the Acton Institute, the Objectivists, the Ludwig von Mises Institute etc. When George Bush announced that the United States was "abandoning free market principles to save the free market system", we were left asking what exactly are "free market principles". The most reasonable means of determining the consensus view of “free market principles” seemed to be to look at many organizations interpretation of free market principles and extract the common elements.

It's easy say that free market principles are derived from experience, not ideology. Having derived free market principles, by whatever means, is it possible to state them simply? Or are they too complex to be explained concisely?

Individual rights are the most frequently sighted principle forming the foundation for a free market system. We need to define individual rights if they are part of the definition of free market principles. The declaration of independence of the United States and the Constitution have some of the most well understood definitions of individual rights and the text we’ve included here was adapted from those documents in large part.

The golden rule, as a principle, has existed in almost every culture through-out history. It was probably derived from experience. The repeated evolution of reciprocal altruism in higher mammals suggests that it is a net benefit to many species. While we originally included the standard golden rule, do unto others as you would have done to you, we were persuaded by the arguments of several academic economists that this literal golden rule has repeatedly been used as a justification for Marxism. The heritage foundation and many other organizations who approach the free market from a religious viewpoint, consider the golden rule to be a core principle, if not the one over-riding principle, that defines the free market. This version of the golden rule takes their expressed intent for the golden rule rather than the literal golden rule they reference. “Deal with others honestly and require honesty in return.” If you don’t believe there is a standard definition of ‘honesty’, we probably can’t come to any agreement on that one.

Can the principles of the free market be defined precisely? Are they different for each person based on his experiences? Are they different for each culture? We believe that even if there are differences in every interpretation of free market principles, the principles can be defined. There are recurring elements in different views of free market principles regardless of particular experiences or cultures. We welcome all criticisms and suggestions for improving these principles, but rather than simply stating that they are wrong and why, please provide us with principles that you feel are more accurate.

Gus Van Horn said...


The commenter Steve D above actually outdid me in my criticism of your site's statement of principles when he noted that many of them (within a proper intellectual context, of course) are not actually wrong, but that you are treating them, as if they are more fundamental than they are.

For example, in this comment, you refer to "reciprocal altruism." Altruism is a moral viewpoint (and morality cannot exist without free will, something whose existence in lower species is questionable at best). That phrase is at best a muddled endorsement of the trader principle, which is a consequence of egoism, not altruism.

Furthermore, of what value is consensus? At one time, consensus held that the earth was at the center of the universe.

If the consensus on what capitalism is is wrong (and I think it is), then how does one correct the mistaken consensus so we will stop drifting towards statism?

Regarding correct principles, I advocate those outlined by Ayn Rand, who has already stated them better than I can. More importantly, I recommend her inductive approach to ideas in general, of which capitalism is an important, albeit non-fundamental example.


Steve D said...

AK, I am not sure that you completely understand what we are trying to get across. I am in no way criticizing a free market, nor am I saying your principles are wrong nor am saying that stating them in a simple manner is unreasonable. In fact with the exception of #6 (which is really confusing) these are principles are mostly correct and well stated.

What I am asking is what are the principles BEHIND your principles?

“Having derived free market principles, by whatever means”

How you derive them is crucial. Otherwise you can’t know how correct they are or assuming they are correct how fundamental they are. Taking a consensus doesn’t work. One example I like: In 1492 almost everyone believed that the world was only 10,000 miles in circumference even though there was definitive evidence this figure was about 2.5 times too small. People simply ignored the evidence.

“Individual rights are the most frequently sighted principle forming the foundation for a free market system.”

Absolutely, but what is the principle forming the foundation of individual rights? For example what if I said to you that 1) basing a society on individual rights will lead to a free market and a more efficient society; but 2) I don’t care because I don’t think it is moral to base your society on individual rights, anyway. How would you answer this? You would have to prove to me that recognition of individual rights is moral.

If you were able to do this you could imagine I could take this argument to an even more fundamental level if I said something like “so what, ethics is imaginary and doesn’t apply to humans anyway”. Then you would have to explain to me why that statement was wrong.

“Are they different for each person based on his experiences? “

The actual principles do not change but what a person believes they are might change.

“There are recurring elements in different views of free market principles regardless of particular experiences or cultures. “

This is a very interesting observation and if true I think a good thing for us. This perhaps suggests that at some level people are using the more fundamental principles even if they are not explicit.

“please provide us with principles that you feel are more accurate.”

An individual is best to start with the most basic questions of philosophy (metaphysics) and go from there but for a Foundation website (or a mountain top) how about prefacing what you already have with a statement relating to an individual’s absolute right to live for his own sake. That would be a strong first step in the right direction.

“I recommend her inductive approach to ideas in general”

Gus, I agree but this seems particularly hard for most people to grasp or pull off. Even scientists who do this every day tend to compartmentalize this to a narrow field. It seems to me that the idea that even causes must have causes must be deductively obvious, although figuring out what they are certainly is not.

Gus Van Horn said...


Thank you for taking the time to post this comment. Again, you have outdone me on this post.


Arthur Kerschen said...


Regarding the principle of subsidiarity (#6), I have never been entirely satisfied with the text of this principle. It is advocated as a core principle of the free market by the Acton Institute, and earlier as a general principle of any good society by the Catholic church and the ancient greek philosophers.

Subsidiarity is the principle that authority should always be vested at the lowest, most local possible level, where local knowledge and concerns can best guide decisions. Our existing text has been criticized by some economists as a possible justification for government anti-trust laws, while others thought it was a necessary principle, if not perfect. Adam Smith implied that some version of subsidiarity was necessary to keep a marketplace free. There are other examples, but not many explicit, concise statements of what exactly constitutes the principle of subsidiarity.

Pope Pius XI probably had the best statement of the principle of subsidiarity we found: "Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do."

We attempted to adapt some text from the constitution with the teachings of the Catholic church to create a precise principle, but the result is either incomprehensible or as you say “really wrong”. Tyrants and free market opponents very frequently advocate the opposite principle, putting all authority (business, legal, educational etc) in some one-world government or even a single individual. Ann Rand’s own principles of objectivism offer no guidance beyond the role of the individual. Many local governments or a single one-world government “acts only as a policeman that protects man’s rights”.

Many advocates of free markets believe households, communities, corporations, city-states etc should have rights as well, different from strictly individual rights. As Lord Acton himself said “Absolute power corrupts absolutely.” The theory that one world government could ever work, if only the right principles were advocated, doesn’t correspond to actual experience. Many smaller governments operating under the principle of subsidiarity may be necessary, so that corruption can be detected and overcome.

I would welcome a clearer text expressing this as a principle.

Gus Van Horn said...


Obviously, I disagree with the whole premise of incorporating anything "based" on faith (i.e., arbitrarily) into an argument which must properly be based on evidence and logic.

Also, the fact that you claim that Rand offers no guidance beyond the role of the individual indicates that you are unfamiliar with her ideas or do not appreciate how to apply them.

Regarding philosophy, Rand once said, "Philosophy would not tell you, for instance, whether you are in New York City or Zanzibar (though it would give you the means to find out)."

For that reason, Objectivism appears to offer little or no guidance on many things even beyond "How large should an organization be?" There are no dietary laws. Rand offers no (explicit) guidance on how to dress, either. And yet, rational principles governing all these areas can be discovered and applied.

If Rand seems to offer little guidance, it is only because she doesn't tell people what to do. Rather, she helps people figure these things out for themselves. It works, but you have to adopt her approach to ideas.


Steve D said...


Thanks for the comment. I think I understand now what you mean by subsidiarity. You mean it as both a justification and an organizational principle for a free society. I’ll grant you that in a practical sense it may make a lot of sense to organize government in this manner. Perhaps some type of federal system with different governments taking care of the different PROPER functions of government is necessary. Perhaps you are right and these functions should be made as local as possible. This makes some sense to me.

So as an organizational principle it is fine but I don’t agree that it can justify a free market/society. For that you need an ethical principle. That’s what I mean by the principle behind your principle. Why in blazes would we even want to implement a free society in the first place? Because until we can get a significant number of people to want to implement a free society, arguing the details on how to organize is mostly a waste of time. In order to get them to agree to this we have to show them why a free society is morally correct.

“so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do”

I don’t agree with this. At most it is simply a mistaken organizational model. Potentially it could lead to injustice but it is not an injustice itself.

“The theory that one world government could ever work, if only the right principles were advocated, doesn’t correspond to actual experience.”

I don’t know if you can be certain of this since no one has ever had a one world government or a government which was kept strictly to its proper purpose. I’ll grant you that having a smaller jurisdiction might make it easier or more efficient. for a government to protect individual rights.

Gus Van Horn said...

I agree: How a free society is organized is secondary (although important) to providing an intellectual justification for it.

Arthur Kerschen said...


Lord Acton said "Liberty is not a means to a higher political end. It is itself the highest political end."

Both you and Gus have suggested a need to provide an intellectual justification for a free society. Free market principles, if they can be defined precisely, are a formula for achieving a free society. Justifying our desire for freedom sounds like an interesting philosophical or religious endeavor, but not a practical one.

Gus Van Horn said...


The problem with dismissing the need for an intellectual defense of the highest political end is precisely that when you do, you have no answer for the inevitable time when someone says, in effect, "I don't give a hoot in hell what [your favorite defender of capitalism] says. [Whatever excuse to destroy capitalism] is more important."

While you can't persuade everyone, of course, you forfeit those who can be persuaded and reduce yourself, as one who would like to defend capitalism, to brute force or attempting to trick people into accepting capitalism.

Nothing is more IMpractical than writing off philosophy as a parlor game, although it is an understandable impulse, given that that is what most thinkers have treated it as for the past couple of hundred years.


Steve D said...

Gus: Thanks for your encouraging words about my comments. These ideas seem pretty straightforward to me. However, obviously they are not to a lot of other people and sometimes I think it may be just a problem of my communication. However, since you understand and appreciate my comments something else is going on. There is a block in their thinking somewhere; inductive reasoning is part of it but perhaps not everything?

AK: “Liberty is not a means to a higher political end. It is itself the highest political end”

It may be the highest political end but it is not the highest human end. A desire for freedom or anything else is not a justification for it at least not by itself. Also, I know from experience that a lot of people simply do not desire freedom. If you need examples of this I have plenty.

“Justifying our desire for freedom sounds like an interesting philosophical or religious endeavor, but not a practical one. “

Just to be clear, I am not suggesting we justify our desire for freedom. We need to justify freedom itself. If you want to change the culture to acceptance of the free market this is a very practical undertaking because people by their natures must consider moral principles in their decisions (especially for the big ones).

So my question to you is: Is liberty moral and if so why? Because I want to do what is right.