Laissez-faire: An Impractical Ideal?

Economics
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I’m not a formal student of economics, however, based on my own readings I think I have modest grasp of the principles of free-market economics.

I find that there are very very few people out there who are willing to entertain the notion of laissez-faire capitalism. Everyone I discuss/debate with, even university economics students, end up saying something to the effect of laissez faire being “idealistic” or “impractical” since it doesn’t account for what it’s like in the “real world.” Even listening to John Ridpath debate on a tape I ordered from ARI, he is faced with the same attack from his opponent and it he doesn’t really tend to it.

How do others respond to this criticism against others?

It seems like the worst opponents are not the outright socialists, who you can easily prove wrong, it is conservatives and liberals who demand the need for a “social safety net” or some form of controls because it is “practical.”

(For those who are interested, Ridpath’s opponent in the debate is Bob Rae, a social democrat who was voted premiere of my province of Ontario and he bankrupted us with his socialist policies).

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The only real way to demonstrate that laissez-faire capitalism is both moral and practical is to demonstrate convincingly that principles must be upheld as an absolute or not at all. Without that backing, no one can or will understand why so-called “social gains”, imagined or real are of no value to anyone.

Do not try to argue for capitalism by accepting the altruist premise that social gains are the goal of any economic system. By conceeding their premise, you have given up the war entirely. Many people still have some kind of understanding of what rights entail: the fact that any other system than laissez-faire capitalism involves a violation of someone’s rights has at least some sway, still.

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Everyone I discuss/debate with… end up saying something to the effect of laissez faire being “idealistic” or “impractical” since it doesn’t account for what it’s like in the “real world…”

How do others respond to this criticism against others?

:ninja: Hmm. The problem here is that opponents (ironically) place laissez-faire and mixed systems on different ends of the “practicality” scale. You can’t compare two things, so long as one is “practical” and the other “impractical”: the “practical” one wins out by force.

So our objective here is to, first, put both ideas in the same space on this “practicality” scale :lol: Start on his turf: the opponent’s premise that mixed is practical, laissez is not. Show that to be wrong, and you’ve succeeded.

You either have to show that laissez is practical, or mixed is impractical. Ultimately, your goal is to do both, but first, remember you want him to accept that laissez is at least as practical/impractical as mixed. If he doesn’t accept that :dough: , then you can’t get the ultimate goal of flipping the script on his argument.

Showing that mixed is at least as impractical as laissez is better shown first. Showing the laissez is practical (i.e. based on reality) presupposes he can or will accept a lot of Objectivist ideas. Not likely.

Okay, the idea that mixed is practical. Laissez is “impractical” because it doesn’t have historical proof of its effectiveness, it assumes people will act in a certain way, it has no concern for the unable and doesn’t check the powerful. I’m assuming you’ve asked why it’s “impractical,” and an answer of one of the former types was given.

“Lack of historical proof,” were it true, wouldn’t make laissez impractical. Spaceships and computers lacked historical proof before they were demonstrated. If laissez is impractical, it’ll have to be proven by more than “it’s never been done before!” :fool:

Ask your adversary what assumptions does laissez make that mixed systems don’t. Laissez makes no more assumptions than mixed systems do about how people will act. What they generally mean by such suggestions is that laissez faire has less concern for the plight of the unable, which :nuke: isn’t an assumption of how people will act in the first place.

The idea that laissez is impractical because it has less concern for the weak and unable of society itself makes some assumptions. It assumes that concern for the weak, at the expense of the strong, should be a value of economic systems. And what basis does that assumption have? This tactic of opponents basically translates to “laissez is impractical because it’s mean.” That may or may not be true, but such an assumption makes it at least as assumptive as laissez. Ask why this mixed assumption is more “practical” than the laissez assumption. Galt would love to hear it :dough:

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The only real way to demonstrate that laissez faire is practical is to show that the specific criticisms made against it are unfounded. If you were seriously interested in doing this, reading a good book on capitalist economics (Mises/Reisman) would be a good idea.

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Everyone I discuss/debate with, even university economics students, end up saying something to the effect of laissez faire being “idealistic” or “impractical” since it doesn’t account for what it’s like in the “real world.”

You can’t refute an argument if you don’t know what the argument is. You should first find out which facts of the real world are being said to be avoided in laissez-faire theorizing.

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I find that there are very very few people out there who are willing to entertain the notion of laissez-faire capitalism.  Everyone I discuss/debate with, even university economics students, end up saying something to the effect of laissez faire being “idealistic” or “impractical” since it doesn’t account for what it’s like in the “real world.” 

Laissez-faire is impractical if the goal is to distribute unearned wealth to the undeserved.

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Laissez-faire is impractical if the goal is to distribute unearned wealth to the undeserved.

BINGO! You cannot argue based on practicality as long as you haven’t established what it is that you want to practice. So first you have to argue for and defend the virtues of productivity and justice.

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I once got into a debate about compulsory taxation which I argued was theft. My opponents attacked me morally at first, but when i showed them that tax is immoral they moved the emphasis to the practical effects and claimed in LF state life could not function - after all who would pay for street lights and flood defences. It was argued that communities could get together to pay for them but than no one would because they would all think ‘why bother, all my neighbours will pay and i’ll still benefit i.e have street lights’. That’s about as strong as an opposition they could put up. I countered with insurance companies exist, increased chairty giving (after all people would have alot more money) would occur, people could buy houses in streets only on the condition that they would pay X amount per year to maintain the lights or if they didn’t want to do that they could buy a house in a street with no such requirement and i’m not going to sacrfice my morals for street lights.

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I find that there are very very few people out there who are willing to entertain the notion of laissez-faire capitalism. Everyone I discuss/debate with, even university economics students, end up saying something to the effect of laissez faire being “idealistic” or “impractical” since it doesn’t account for what it’s like in the “real world.”

I think this has to do more with how people view ALL IDEAS in general , and the possibility of achieving certainty. People don’t seem to think that we can form TRUE broud priniciples and apply them CONSISTENTLY to reality.

How can any idea be SO right?

They seem to tell themselves, "that persons theory couldnt possibly be true and work in all those instances, you have to mix it in with other ideas."A little bit of socialism mixed with capitalism, a little whole language mixed with phonix, etc.

To understant what I mean, just look at the way our modern education establishment treats teaching math and reading.

http://www.aynrand.org/site/News2?page=New…ws_iv_ctrl=1069

The Dept. of Education said that “eclectic compromise” is the best approach, mixing a little whole language and phonix, because " reading is such a complex and multifaceted activity," “no single method is the answer.”

I’ve notice the exact same thing in military theory, our current military tries to mix together a whole bunch of different fighting methods(maneuver, attrition) to try to form a single doctrine. I see this everywhere.

All those attacks on LF seem to be a product of skepticism to me, they just arent willing to take that “leap” and say that any idea or a theory is totally true.

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…  they would all think 'why bother, all my neighbours will pay and i’ll still benefit…

The “free loader problem” rears its head again.

Let’s take the specific issue of things (like street-lights) in a neighbourhood. There are already many neighbourhoods – at least in the U.S. – where facilties are not maintained by the government. There is often a neighbourhood association to which regular dues are paid, and that organization does things like mowing “commons”, planting flowers by the entrance to the neighbourhood, maintaining the play-area, etc. When one buys a house in such a neighbourhood, one takes on the obligation of paying the dues for regular maintenance.

The above works best for regular maintenance-type work because there does not have to be a constant item-by-item contribution. One is contracting to a specific monetary contribution, which will be spent on neighbourhood upkeep.

Other things might be “one-time”. For instance, some people in the neighborhood might want to spend money on a completely new playarea: something that the regular dues would not cover So, they ask if other home-owners would be willing to contribute to this.

Obviously not everyone will want to. Some will think it is a waste of money. Some may even be “freeloaders” (a.k.a. moochers) who really want it, but want others to spend the money building it. It is pretty easy to design such a scheme. Say the new playscape costs between $50,000 and $60,000, depending on features. Also, suppose there are 1000 homes in the neighbourhood. One can agree that each member must contribute $100. If the minimum subscription ($50,000) is not met, all the money will be returned. If the contributions exceed $60,000, the excess will be returned pro-rata.

There is nothing novel about such a scheme. This is how companies used to be formed (and can be formed today). There would be a charter, and shareholders would be asked to buy stock. There would also be a minimum subscription, failing which the money would be returned. Such a scheme does not even need neighbours to organize themselves. A third-party entity (e.g. a manufacturer of play-scapes) could be the promoter.

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Thanks for the input, it is all very interesting.

On the issue of applying principles, consistency etc… I came accross a perfect example in a letter to the editor in a newspaper regarding a politician in which someone made the comment re: Prof. Ignatieff becoming the next Liberal party leader here in Canada. They said he is “perfect because he an idealist and a pragmatist” probably not realizing the absurdity and contradiction in that statement.

As for some reading, I’ve picked up some Frederic Bastiat and I find he tends to some of these issues beautifully. I’ve also read some Mises (The anticapitalistic mentality), and of course Rand.

Another thing: I’m not sure if many people really understand what “the market” means. For instance, consider the statements you constantly here from people who oppose the free market: “you have too much faith in the market” or “you must account for market failures” or “when left up to the market, [insert alleged evil] will occur” and many more such phrases.

It’s almost as if they see “the market” as this “thing” as if some sort of metaphysical entity. It’s much like people talking about “society” as if it were something other than a sum of individuals. The market is similar in the sense that it is individuals (or businesses, or corporations which are also comprised of individuals), exchanging values unhampered by force. What I mean is, the market is somehow portrayed, as if by misconceptualizing, as a bogey-man by people who don’t understand what the concept “free market” is.

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It may be possible, by studying the theory of laissez-faire capitalism, to convince some thinking people that it is practical. However, most people will not accept it until their metaphysics and epistemology have changed. Capitalism cannot be justified apart from reason. For example, as long as people believe that science consists in positing arbitrary, “intuitive”, “creative” theories and then checking whether they correspond to facts, they will prefer to try theories that are more “intuitive” than capitalism first.

My particular strategy for improving this situation is based on the observation that many people accept a metaphysics and epistemology that is (or is believed to be) implicit in a special science. This is especially the case with mathematics, which historically was a major selling-point for different versions of Platonism; explicitly for some, implicitly for others. Mathematics always had a “non-observational”, “hypothetical” feel to it, which made people think that if mathematics was so important for science, then the Aristotelian view of science as fundamentally observational could not be correct. (This cultural view affected the philosophical response to Renaissance skepticism, i.e. Cartesianism. And now, take a look at contemporary economists with their arrays of rationalistic theories and mathematical constructs).

Developing rational philosophy of each of the various sciences would be, in my view, the best next move to make. It would also lead to immense progress in the sciences, since they would be rendered objective. Yet, those who are interested in developing a philosophy of economics or mathematics using Objectivism too often (though not always) simply want to graft some classical or contemporary ideas onto Objectivism. We need to check all the premises all the way down, otherwise the contradictions will be detected and the philosophy will not sell.

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It may be possible, by studying the theory of laissez-faire capitalism, to convince some thinking people that it is practical.  However, most people will not accept it until their metaphysics and epistemology have changed.  Capitalism cannot be justified apart from reason.  For example, as long as people believe that science consists in positing arbitrary, “intuitive”, “creative” theories and then checking whether they correspond to facts, they will prefer to try theories that are more “intuitive” than capitalism first.

Yup! That’s right. It all flows from metaphysics and epistemology. I look forward to the Atlas Shrugged movie coming out.

That will help.

How do you change a metaphysical belief on an entire planet?

By mass media. B)

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Hi, I am back, now that I have internet again.

And to the creator of this thread, may I ask what exactly did YOU think was impractical about laissez-faire? I hope you weren’t convinced with all the little theoretical tests that neo-classical economists and keynesians come up with to show how free markets fail given X situation. I swear they sit up all night just trying to find one instance where free markets don’t maximize GDP, they usually mention monopolies, externalities and public goods as a defense of the mixed economy. If you had any questions about any of these issues I would be more than willing to go through each issue and show how that not only would free markets be morally superior, but that their assertion that the markets fail in these situations are fallacious and often based on faulty definitions.

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I’ve been doing some reading and investigations of my own and learning plenty; the Mises website is very helpful.

My biggest issue right now is the health care. I am a nurse who currently works in Canada within our soviet-style health care system. It seems like everywhere I look, I see how the free market could improve the situation - from our outdated and overpriced equipment and technology, to inability to control costs along with decreasing value for what we pay, our extensive waiting lists etc…Yet, it is very hard to take a principled stand that a laissez faire sytem (ie. all health care is private) would be the best thing. From my first hand experience, I cannot deny that some sort of “social safety net” is does not have its merits. Considering, for example, how it is most often the poorest and most powerless that require the most health care, I don’t see how the standard “market forces” would allow the “optimum allocation” of the services to those who need them.

So far, my best solution is that those who cannot provide for themselves would require charities (after all, we have a multi, multi-million dollar hospital charity industry) since those who could not afford the bare minimum of health insurance is probably quite small compared to the overall population. But then again, my experience has shown that most people giving to charities will only give to children’s hospitals since no one wants to donate to a 68 year old who need kidney dialysis.

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[…]Considering, for example, how it is most often the poorest and most powerless that require the most health care, I don’t see how the standard “market forces” would allow the “optimum allocation” of the services to those who need them.

So far, my best solution is that those who cannot provide for themselves…

Those who cannot provide for themselves, simply, cannot provide for themselves.

No one is entitled to medicines/healthcare by default. One can only work to be able to pay for care or hope to be of credit with some one for help. This is why insurance is a good idea, you have to prepare for things that could happen. An individual’s plight only hold them, the individual, responsible.

Charities would be great for those who feel responsible for perfect strangers. However, if they don’t meet these “needs” no one can be held accountable. The second quote in my signature plays well here.

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Considering, for example, how it is most often the poorest and most powerless that require the most health care, I don’t see how the standard “market forces” would allow the “optimum allocation” of the services to those who need them.

“Market forces” don’t provide “optimum allocation” of services to those in need, it provides allocation to the largest number of individuals possible, without discriminating by need. Market forces aren’t some magical things that distributes services to everyone who ever wants anything. But what they do, do is provide a service at the lowest possible price (at that particular time) to the greatest number of people. If that price isn’t low enough for some people, that doesn’t mean that they should be favored to get that scarce good above a person who can pay for it. How would you justify that?

Also, nothing says they can’t work on themselves or have you work on them for free. Except maybe government regulations of the medicine industry.

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…most people giving to charities will only give to children’s hospitals since no one wants to donate to a 68 year old who need kidney dialysis.

The thing is, Andrew, if nobody will give charitably, the only alternative is to force them to do so.

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I understand your points, and I do agree.

I guess it’s just that health care, by defenition, is the the care of people in need. You can’t deny the fact that very often, those in the most need are the ones who have the least ability to get care in a system entirely based on ability to pay.

I realize the moral dilemma here. It’s basically a choice between force or choice; in a free society, being forced to pay for someone else’s health care would be banned. I realize that, in principle, the idea that “need as a standard of value” is the basis of altruism. The difficulty though, is that it is harder in health care than any other area to convince people out of their already ingrained premises that altruism is the necessary ethical base in health care.

I’ve been blogging some of my own thoughts on the issue using thinkertothinker blog at prodos.com

Read if you want:

www.therationalnurse.thinkertothinker.com

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You can’t deny the fact that very often, those in the most need are the ones who have the least ability to get care in a system entirely based on ability to pay.

It’s basically a choice between force or choice…

The difficulty though, is that it is harder in health care than any other area to convince people out of their already ingrained premises that altruism is the necessary ethical base in health care.

From the position of the needy, you have to realize you’re dependent, whether you can attempt to force someone to provide for your needs or not. Ultimately, you can take another person’s goods by force, but you can’t force him to create health care needs for another against his will. It becomes a musical-chairs game, attempting to find another victim to manipulate before the current one refuses.

With charity, you have to depend on people choosing to help a person in need.

With force, you have to depend on people accepting their subjugation.