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Defending economics Do economists have much to tell us about war, terrorism, interventionism and the pros and cons? It strikes me that there is a bit of a dearth of stuff on this area from the libertarian-orientated economics camp, though I would be very happy to stand corrected.
After all, if we are going to invade Iraq as part of a grand strategy to bring liberalism, prosperity and free internet access to the Middle East, does this not in a way smack of the kind of hubristic utopianism which the likes of F.A. Hayek warned against when applied to socialism and central planning?. Do issues of defence and foreign policy inhabit seperate intellectual universes from business?
Discuss.
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I recommend reading the chapter _Is there a libertarian foreign policy?_ in David Friedman’s _The Machinery of Freedom_.
An interesting analogy is between insurance and assuming responsibility for another state’s defence. Both suffer from the problem of moral hazard – an insuree is likely to take fewer precautions against the insured risk; a protectorate is likely to spend less resources on its own defence. Furthermore, since the state providing the protection is spending resources on somone else, it’s possible that a potential enemy will gamble that the defender is unlikely to honour its obligations and will attack the protectorate none-the-less.
An implication of this is that a world consisting of a few superpowers who defend everyone else is likely to be less stable than one consisting of many smaller states, each responsible for its own defence.
I think this implication is consistent with European history, if we compare the century or so preceding the Franco-Prussian war with the century following.
I suppose it’s worth pointing out that military strength comes from economic strength and not the other way around. The left would argue that the US uses its military strngth to grab oil, resources and ‘force globalistion’ upon the world. This is of course total crap and the power comes the money spent on defense that comes from a vibrant economy. In my simple (but nonethless correct I think) view of the link it goes something like:
True freedom of politics, markets, economics leads to wealth leads to military, diplomatic and cultural power.
Those socieites and cultures that are not capable of true freedom (from an overbearing state, for women, of religion, of movement, of capital, etc) just have zero hope of ever being rich or powerful.
Governments can choose to move their countries in the virtutous or vicious cycle direction on a spiral that thay are otherwise powerless to avoid.
Isabel Paterson might not have been an economist in the strict sense, but she did point out in The God Of The Machine that a war economy always runs at a loss, that every war is launched on the hope that the aggressor will triumph before he exhausts his productive sector with the dead load of war.
That having been said, economics, the study of the patterns people make as they pursue what they want, cannot speak to any of the moral questions about war, either specific or general.
“does this not in a way smack of the kind of hubristic utopianism which the likes of F.A. Hayek warned against when applied to socialism and central planning?. ”
I suppose it does, but I don’t think anyone in Washington or anywhere has any delusions about the difficulties involved. But, the U.S.’s current policy is really based on a big strategy that is simply trying to learn a few lessons of history while also taking a big gamble that people with democracy and individual rights will lead to a culture of hope instead of the deathcult currently taking hold in much of the middle east.
Is it hubristic? I guess. But, isn’t hubris at the core of anyone fighting for something they believe in? Brian’s post from a couple of days ago (which at last count had over 130 comments, WTF?) puts the U.S. strategy into focus. The Bush administration is going to use the power of the U.S. and “the coalition of the willing” (God, I hate that description) to remake the Middle East into something resembling the modern world.
If it’s hubris to think that free market capitalism combined with liberal democracy is a better option for the Iraqis than fascism or Islamism, then so be it. But, I also don’t think it’s a bad bet.
Sure, it may bother some libertarian philosophies that the U.S. is intervening in OTHER people’s lives, but please, this is the real world. We can’t close up the borders and restrict our own rights and the libertarian version of utopia is a long way away from reality. IF we have to gamble that bringing liberal democracy to Iraq and possibly creating a domino effect via force, then I think it’s worth a shot given the very unattractive alternatives.
As to the question of foreign policy being different than business, hell I don’t know. I don’t see why they should be. But, like anything it probably depends on the circumstance.
I think it’s about time I got off my butt and read some Hayek.
Ditto Patrick and Russ.
go to
http://www.mises.org
for numerous articles by economists against war.
I agree with Francis: what’s missing here is taking morality into account.
You guys obviously spent a lot more time in philosiphy classes than I did, but:
In a libertarian society, anyone may do anything as long as no other is harmed. Hence, if the Ummah wishes to behead Christians or Jews, within their own borders, than one can only recommend to the Christians and Jews to leave. If, however, they engage in behavior that directly and adversely affects an outside country, then the aggrieved party has every right to pursue whatever actions will most expediciously end that behavior.
On an individual level, if you want to experiment with Smallpox in your basement, fine, but you have no right to visit the supermarket after you’ve come down with it, and are contaigous.
Self-defense is a valid arguement, and it covers responses ranging from polite requests to stop, to the use of nuclear weapons, as the situation warrants.
Common sense suggest that war is a net economic boon if it is waged against a government whose policies a) impede its own economic growth or b) threaten to destroy parts of another nation’s economic infrastructure – and if the benefits to the economy outweigh the cost of the war.
“If it’s hubris to think that free market capitalism combined with liberal democracy is a better option for the Iraqis than fascism or Islamism, then so be it. But, I also don’t think it’s a bad bet.”
Nope. The hubris comes in thinking that the Iraq-and-whoever-else war will _deliver_ these things. It may also be hubris to think that _we’ll_ still have free market capitalism combined with liberal democracy at the end of the process.