Anarchism and Justice (Part II)

VI Legal Positivism

Legal positivism is a school within the ranks of legal philosophy which upholds a complete and radical separation between what is legal (law) and that which is moral. In an attempt to rebel against natural law tradition, positivism attempts to construct a purely descriptive theory of law and the State, without reference to moral concepts. Why then discuss it? Simply because legal positivists, like most “value-free” social scientists, manage to smuggle in moral principles and evaluations in the midst of even the most technical arguments, thus objectively functioning as moral philosophers in the field of law.

I shall briefly consider two representatives of legal positivism: John Austin and Hans Kelsen. I shall concentrate on Kelsen, since it is he who has been confronted with the modern rebirth of natural law ethics in legal philosophy — and thus he who has had to confront the issue of justification to a much larger extent.

John Austin was a British philosopher (1790-1859), the first exponent of modern analytical jurisprudence; his major work is Lectures on Jurisprudence. (14) I want to discuss two aspects of Austin’s system: his opposition to natural law, and his theory of legal obligation.

Natural law theory holds that there is a body of moral principles outside of the State which determines what is just and unjust, and that these principles should be used to judge the existing status quo, and to evaluate its legitimacy. Austin opposes this. He attacks the natural law tradition for holding that if the sovereign of a country promulgates a command (which is Austin’s concept of the essence of a law), then that sovereign’s command is not a valid law — it is naked force. In answer to this, Austin states that “to say that human laws which conflict with the Divine law (natural law) are not binding, that is to say, are not laws, is to talk stark nonsense…But this abuse of language is not merely puerile, it is mischievous. When it is said that a law ought to be disobeyed, what is meant is that we are urged to disobey it by motives more cogent and compulsory than those by which it is itself sanctioned.” What would this lead to, Austin asks. His response — without reference to any value-judgements (so he believes) is that to proclaim that the State should be subordinated to morality, to natural law, and that if it is not its commands are not binding and are not to be tolerated, “is to preach anarchy, hostile and perilous as much to wise and benign rule as to stupid and galling tyranny.” (15)

Note how Austin, who claims that law, and hence the State, must be at least conceptually separated from morality, and who claims to be epistemologically allergic to value-judgements, brings morality and values back into the issue, through the basement door, with concepts like “puerile”, “mischievous”, and the like, by means of making a moral distinction between “wise and benign rule” and “stupid and galling tyranny”. Needless to add, presupposed in this is the very point in question, namely that the State is a justified or valid institution.

I want to bring up just one other point — Austin’s theory of “legal obligation”. Austin begins his non-ethical investigation of the State and its legal system by postulating a body of men who habitually yield obedience to persons from among them, who do not themselves obey any authority. (Note that he does not consider the actual historical origins of the State, which one might expect of a consistent positivist. Yet for one concerned with the actual inner workings of the State apparatus and its system of commands or laws, this would seem to be a key issue.)

Now in traditional political philosophy, ethics and the philosophy of law, the term “obligation” and “legal obligation” as a subset of obligation per se, are meant to delimit actions in conformity with a rule which one ought to follow. Austin retains the term, but switches meanings, in order to avoid the realm of the “ought”, i.e. of values and ethics. Since Austin does not claim to justify the State, we shall take him at his word. But why then does he state of a law that it is a “command which obliges a person or persons”? Obliges? By what standard? The essence of law, according to Austin, is that it is a command. Why should I obey such a command? Because the sovereign will punish me if I do not. “Being liable to evil from you if I comply not with a wish which you signify, I am bound or obliged by your command, or I lie under a duty to obey it.” If this is any kind of a justification for anything, it is surely a strange one. Why should not the subjects of such a sovereign rise up at the earliest possible mement and see to it that his capacity to “inflict evil” upon his subjects is crushed and halted, once and for all? For, after all, this is the whole question at issue — why should anyone obey the commands of the State?

The point is that if Austin was sincere in wanting to avoid ethics in dealing with the law, if he merely wanted to describe what the State did, why didn’t he refrain from using terms in such an equivocal manner? My own theory is that the legal positivists in general have no intention of avoiding values — and indeed they cannot. For values are the motivating power of human actions, they are one’s means of choosing among alternatives in reality. Without values, then, there can be no choosing or action. Yet the positivists, including Austin, have always been eager to work in “reforming” the law, and in “advising” the State on different courses of action. Thus Austin himself was “first on the list” of members of a commission in Britain in 1833 which was nominated to revise Britain’s penal law code. This being true in most cases of legal positivists who rose to any stature whatever, I think that we can say that the real motive of such people is to exempt values from the realm of reason. This constitutes a rebellion against the entire Aristotelian tradition, part and parcel of which has always been the belief that values and purposes are kinds of facts, are factual matters pertaining to man’s nature and its relationship with reality — that facts do not exclude the realm of moral principles, and that these last are kinds of facts themselves. Positivists reject this approach contemptuously, but we still see them smuggling values and moral principles through the back door.

With Austin, then, we have nothing except the positivistic attempt to “analyze” legal concepts — without reference to any moral principles — an attempt which is not successful in steering clear of morality.

With Hans Kelsen, we find that we have gone a step further. Kelsen is a legal philosopher (born in 1881) who works from within a Kantian theory of knowledge, and attempts to espouse what he calls a “pure theory of law”. (Kelsen was a fellow student of Ludwig von Mises, another neo-Kantian, at the University of Vienna.) The “pure theory of law” was only concerned with analyzing the institution of law as it is, without any reference to moral principles. W. Friedman, in his book, Legal Theory, writes that “No theory of justice can form a part of the pure theory of law. Ideals of justice must be uncontaminated by politics, ethics, sociology, history. Its task is knowledge of all that is essential and necessary to law, and therefore freed from all that is changing and accidental in it.” In his book General Theory of Law and State, Kelsen writes that “Every political ideology has its roots in volition, not in cognition; in the emotional, not in the rational, element of our consciousness; it arises from certain interests or, rather, from interests other than the interest in truth…There is no possibility of deciding rationally between opposite values;” (17) Thus Kelsen is in the same class as Ludwig von Mises, who will be discussed later, and who also denied the possibility of values being based on reason.

To Kelsen, “Law is an order of human behavior. An ‘order’ is a system of rules….Every rule obliges human beings to observe certain behavior under certain circumstances. These circumstances need not be human behavior; they may be, for instance, what we call natural events. A rule of law may oblige neighbors to lend assistance to the victims of an inundation.” (18) Note his use of the word “obliges”, and then his statement that “any attempt to define a concept must take for its starting point the common usage of the word in question.” (p. 4)

One of Kelsen’s major purposes in his work is to determine the meaning of the concept “legal validity”, to determine when a law or command of the State is “valid”. Let us first look at a few of his statements, and then at a more coherent argument.

“By validity” we mean the specific existence of norms…A ‘norm’ is a rule expressing the fact that somebody ought to act in a certain way…The statement that an individual ‘ought to’ behave in a certain way means that this behavior is prescribed by a norm…A norm expressing the idea that something ought to occur…is ‘valid’.” Note that validity is defined in terms of norms, norms in terms of obligations, and obligations in terms or norms. On the face of it, this is not convincing.

Kelsen first states in his work that a command or law is ‘valid’ if it coheres with a system of laws based ultimately on a basic norm, which is similar to a constitution. Now this norm is taken by Kelsen to be the “ultimate hypothesis of positivism”, namely “the norm authorizing the historically first legislator. The whole function of this basic norm is to confer law-creating power on the act of the first legislator and on all the other acts based on the first act….The basic norm is not created in a legal procedure by a law-creating organ…but is valid because it is presupposed to be valid because without this presupposition no human act could be interpreted as a legal, especially as a norm-creating, act.” (20) This means that a legal system is presupposed to be valid because unless it were, it would not be valid! Let us look at Kelsen’s own systematic statement:

This basic norm establishes the validity of positive law and expresses the hypothetical-relative character of a system of norms clothed only with the validity of positive (i.e. State) law. It is not just the hypothesis of a special theory of law. It is merely the formulation of the assumption necessary for any positivistic grasp of legal materials… (Referring to the commands of the State which he calls “norms”, Kelsen states that)

Why should such an act be considered a norm and not merely an event in reality? Why should the subjective meaning of this act also be given an objective meaning? Why, in other words, does one not simply say that a certain human individual demands that another act in a specified way, but actually contends that one is entitled to prescribe and the other obligated to act in accordance with the prescription?....The answer of the positivist jurist is: because this individual human act is based on a norm, on a general rule, a statute, because the statute prescribed that one is to act as the parties have agreed in their legal transaction (!), or, as the judge has ordered in his decision. One may still inquire, why this “statute” represents a norm, why it is objectively valid. Prima facie, the “statute” is a mere factual matter, namely, the event of several people having expressed their will that other people should henceforth act in a certain way. But why should the will expressed by these people under these particular circumstances signify a “statute”, while, if it were done by others under other circumstances, it would by no means have the same significance? Here the answer will be: The event which we interpret as the making of a statute is in accordance with a still higher norm, the constitution, because these persons have been entrusted (!) by the constitution with the power of making laws. This “constitution” is, in turn, nothing else but a prima facie event whose normative meaning can only be found by recourse to the prior constitution according to whose rules it has been created. This recourse must ultimately end in the original constitution which can no longer be derived from a still earlier one. The positivistic jurist, who cannot go beyond the fundamental facts, assumes that this original historical fact has the meaning of “constitution”, that the resolution of an assembly of men or the order of a usurper has the normative significance of a fundamental law. Only by making this assumption can he demonstrate the normative meaning of all other acts which he comprehends as legal acts simply because he ultimately traces them all back to the original constitution. The hypothetical basic norm which established the original legislator expressed this assumption; it consciously formulates it, nothing more. This means that legal positivism does not go beyond this original constitution to produce a material and absolute justification of the legal order. It stops at that point. (!) The basic norm is an indispensible assumption because, without it, the normative character of the basic historical event could not be established. (my emphses)

Here is an excellent instance of the truth of Thomist philosopher Etienne Gilson’s quip that “natural law always buries its undertakers.” It also reminds me of positivist philosopher A. J. Ayer’s statement that the laws of logic are true simply because we never allow them to be anything else!

The path that this attempted justification has taken has not been that of positivism, with “empirical verifiability” being the ultimate criterion of of justification, but that of subjective idealism. From our previous analysis of justification, we can see that the mind does indeed have an active role in coming to justify statements, that thinking is a dynamic, active, integrative process, rather than a passive, static, “mirror-like” event, but this is far and away from becoming a variant of subjective idealism. Subjective idealism grants to consciousness not merely an active or dynamic role in apprehending reality, but a legislative role, as it is called, and rests ultimately upon the premise that reality is consciousness-dependent for its identity which is a variant of the fallacy of holding the primacy of consciousness over existence. Yet this is the premise and root of Kelsen’s argument.

Note the tortuous route that his argument has taken. Here we have a value-free positivistic philosopher making the bald-faced statement that he has “assumed” the State and its entire legal system to be “valid” because without this assumption his theories would make no sense! This is arguing backwards, to put it mildly. What makes a law valid, a State command binding, is that it is part of a grant and integrated hierarchical system of such commands which ultimately grounded on some “basic norm” which is assumed to be valid, so that the validity of the command with which we began could be established. Now if Kelsen were going to go this route, why didn’t he simply eliminate the idea of a “basic norm” and simply begin by asserting that “the commands of the State are valid,” or that “all laws must be obeyed”?

Note also his question-begging devise of talking about a constitution as if it were the sort of thing which needs no justification and has the supposed power of “entrusting” command-making power to those who run the State. Also, notę his frequent use of terms such as “entitled”, “obligated”, “objectively valid” and the like — comparing it with his former statement about taking the common usage of terms for granted. He has simply assumed the point to be proven, in an attempt to fit reality into his preconceived theoretical model. He has, in effect, said that he cannot ultimately justify the commands of the State, nor differentiate them from the commands of a robber band. Everything which he has said in alleged “justification” of the State could apply equally well to a conquering band of criminals whose basic act of conquest would be, no doubt, regarded by Kelsen as “the original historical fact which has the meaning of ‘constitution’ ” or is to be considered (whether it is or not) as identical to the basic norm which justifies the entire political order.

William L. McBride has a telling criticism of Kelsen and the other continental positivistic legal philosophers in his essay “The Acceptance of a Legal System”: “(They have) equated the quality of being in force with ‘validity’; but either they intend to thereby to express approval of those legal systems that are in force, in which case they are resorting to an ethical judgement which may now be examined on ethical grounds, or else they do not intend to express any such approval, in which case they are distorting the previous meaning and logic of the word ‘validity’ so that it is left with no independent role in their languages.” (22)

Kelsen, then, in attempting to do away with ethical principles, and with the natural law approach to politics, has merely succeeded in begging the question. His analysis may be taken as purely hypothetical: if the State and the legal system are to be regarded as valid, then the basis or basic norm must be valid as well. But this proves precisely nothing, for it is that fundamental legitimacy which is in question. Thus, we must look elsewhere for justification of the State. We do not find it within legal positivism. (23)

VII The Ideology of Ludwig von Mises: The Morality of “Wertfreiheit”

Ludwig von Mises was born in Austria-Hungary in 1881; he received his Ph.D. at the University of Vienna in 1906. Mises represents the integration of many of the dominant ideas in social philosophy from 1890-1910 in the same manner as Karl Marx represents the integration of the dominant strains of thought from 1840-1860. If Karl Marx can be said to represent the height and triumph of “scientific socialism”, then Ludwig von Mises can be said to represent the height and climax of “classical liberalism”. In both we find not only a grand power of organization and systematization, but all the virtues and flaws, the insights and limitations, of both schools of thought. It is therefore my intention to dwell somewhat more on the ideology of Ludwig von Mises than I have been and will be on the ideologies of other social philosophers, so that I might consider aspects of his ideology which are generally neglected.

We find in Mises an integration of “wertfrie” or value-free methodology in the social sciences, a neo-Kantian epistemology, utilitarianism or positivism in morality, legal positivism in the philosophy of law, and Austrian economics as developed by Menger and Boehm-Bawerk (though greatly added to and systematized by Mises himself), and the other positions which were part and parcel of classical liberalism throughout the nineteenth century. Here we shall predominantly be concerned with the social philosophy of Mises. His value-theory, ideas about morality and justice, are necessary preconditions to an examination of his attempted justification of the State.

The title of this section reflects the general character of what I see as the paradox of Ludwig von Mises — a supposedly rigourous devotee to value-free economics, he is one who freely smuggles in the kind of assertions which he claims are unjustified. In general, Mises shares the problems which Hans Kelsen (a fellow student at the University of Vienna) has in legal theory. But Mises’s own position is worse: vehemently opposed to value judgements which claim to be based on reason, he himself upholds a utilitarian theory of justice. Adamantly opposed to State intervention, he likewise opposes any attempts to define principles to limit the State’s power.

Directly and indirectly, Mises is a major influence on the libertarian movement. When representatives of classical liberalism are mentioned, it is he and his student F. A. Hayek who are chosen as key representatives. He, more than anyone else, except possibly Milton Friedman of the Chicago school of economists, is responsible for the convictions which most libertarians hold in economic theory. He is the major intellectual upon whom such organizations as the Foundation for Economic Education build their social philosophy. In short, Ludwig von Mises and his works serve as one of the major intellectual forces within the libertarian and conservative movements. It is for these reasons that we must devote so much space to examining his beliefs.

Since the question of values, morality and justice are logically prior to the question of the justification of the State, let us briefly look at Mises’s positions here, and then watch him build his justification of the State.

What are the views of Ludwig von Mises on morality and justice? Specifically, what is the relationship between reason and values? Is there such a thing as a rational ethic?

Mises holds that all values are subjective, that there is no such thing as a rational ethic, that reason applies only to the choice of means to attain previously (and arbitrarily) established ends. In Theory and History, he states that “With regard to (judgements of value) there cannot be any question of truth and falsity. They are ultimate and not subject to any proof or evidence.” Also “what the theorem of the subjectivity of valuation means is that there is no standard available which would enable us to reject any ultimate judgement of value as wrong, false or erroneous in the way we can reject an existential proposition as manifestly false.” (pp. 19 & 22)

With regard to ethics per se, Mises writes in Human Action: “Ethical doctrines are intent upon establishing scales of value according to which man can act. They claim for themselves the vocation of telling right from wrong and of advising man concerning what he should aim at as the supreme good. They are normative disciplines aiming at the cognition of what ought to be. They are not neutral with regard to facts; they judge them from the point of view of freely adopted standards.” (p. 95) This should be contrasted with the Aristotelian-Thomistic view (as well as the view of Rand and, I believe, Rothbard) that ethics or morality is a science, that normative matters, or ought-statements are a kind of facts, that they are statements of relations between a certain kind of entity (possessing the capacity of choice, and which can be harmed or benefitted by choices and actions) and the reality with which it deals.

On the subject of justice, he says that “There is…no such thing as a perennial standard of what is just and what is unjust. Nature is alien to the idea of right and wrong.” He says, regarding those who take a natural law approach: “from the notion of natural law some people deduce the justice of the institution of private property in the means of production. Other people resort to natural law for the justification of the abolition of private property in the means of production. As the idea of natural law is quite arbitrary, such discussions are not open to settlement.” And “it is nonsensical to justify or to reject interventionism from the point of view of a fictitious and arbitrary idea of absolute justice.”

However, at the point at which he brings in his utilitarianism, he also brings back in the notions of morality and justice. “Morality consists in the regard for the necessary requirements of social existence that must be demanded of each individual member of society.…Everything that serves to preserve the social order is moral; everything that is detrimental to it is immoral.” (Free and Prosperous Commonwealth, pp. 33-34) In Theory and History, he states that “the ultimate yardstick of justice is conduciveness to the preservation of social cooperation. Conduct suited to preserve social cooperation is just, conduct detrimental to the preservation of society is unjust.” (p. 54) And “social utility is the only standard of justice. It is the sole guide of legislation.”

So far, therefore, we find Mises taking both a positivistic position with respect to values and morality and a utilitarian one. His utilitarianism is emphasized in his critique of interventionism: “The problem of intervention is not a problem of the correct delimitation of the ‘natural’, ‘just’, and ‘proper’ tasks of State and government. The issue is: How does a system of interventionism work?” (Human Action, p. 722)

His justification of the State also proceeds along utilitarian lines. “In order to establish and preserve social cooperation and civilization, measures are needed to prevent asocial individuals from commetting acts that are bound to undo all that man has accomplished in his progress from the Neanderthal level. In order to preserve the state of affairs in which there is protection of the individual against unlimited tyranny of stronger and smarter fellows, an institution is needed that curbs all antisocial elements. Peace…can only be attained by the establishment of a system in which the power to resort to violent action is monopolized by a social apparatus of compulsion and coercion and the application of this power in any individual case is regulated by a set of rules — the man-made laws as distinguished both from the laws of nature and those of praxeology. The essential impliment of a social system is the operation of such an apparatus commonly called government.” (Human Action, pp. 280-81)

“Government,” he writes, “is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of decrees by beating, killing, and imprisoning.” However, this is the “price” of having a free market, and Mises states “it is an arbitrary value-judgement to describe it as an evil in the moral connotation of the term.” (Human Action, p. 719)

Although this is Mises’s justification for the State, it does not follow in his case, as in so many others, that he believes in rigidly restricting the functions of government. In fact, as a utilitarian and anti-natural law philosopher, Mises vehemently opposes any attempts to define the limits of the State. He says that “various schools of thought parading under the pompous names of philosophy of law and political science indulge in futile and empty brooding over the delimitation of the functions of government. Starting from purely arbitrary assumptions concerning allegedly eternal and absolute values and perennial justice, they arrogate to themselves the office of the supreme judge of earthly affairs. They misconstrue their own arbitrary value-judgements derived from intuition as the voice of the almighty or the nature of things. There is, however, no such thing as a perennial standard of what is just and what is unjust. Nature is alien to the idea of right and wrong. ‘Thou shalt not kill’ is certainly not part of natural law.” (Human Action, pp. 719–720) Notice the almost sneering attacks on those who believe in principles to guide men’s choices and actions, construing their beliefs as being derived from ‘intuition,’ claiming to represent ‘the nature of things.’ But in order to refute the basic tenents of natural law, and natural rights, one must first misrepresent them. Perhaps if we distill a few corollary arguments we will begin to get a better glimpse of Mises’s position.

First, in attacking those who believe in using the principles of a rational ethic, of justice, to evaluate the laws of the State, Mises lets his legal positivism in through the door. “For those not deluded…it is obvious that the appeal to justice in a debate concerning the drafting of new laws is an instance of circular reasoning. De lege ferenda (with respect to the law that has not yet been made) there is no such thing as justice. The notion of justice can logically only be resorted to de lege lata (with respect to the law which has already been made). It makes sense only when approving or disapproving concrete conduct from the point of view of the valid laws of the country. In considering changes in the nation’s legal system, in rewriting or repealing existing laws and writing new laws, the issue is not justice but social expediency and social welfare. There is no such thing as an absolute notion of justice not referring to a definite system of social organization. It is not justice that determines the decision in favor of a definite social system. It is, on the contrary, the social system which determines what should be deemed right and wrong. There is neither right nor wrong outside of the social nexus.” (Human Action, p. 721)

Now that he has justified the State, what about its means of finance? “The maintenance of a government apparatus of courts, police officers, prisons and of armed forces requires considerable expenditures. To levy taxes for these purposes is fully compatible with the freedom the individual enjoys in a free market economy.” (p. 282) And the draft? “He who, in our age, opposes armaments and conscription is, perhaps unbeknown to himself, an abettor of those aiming at the enslavement of all.…If the government of a free country forces every citizen to cooperate fully in its designs to repel the aggressors and every able-boddied man to join the armed forces, it does not impose upon the individual a duty that would step beyond the tasks the praxeological law dictates.” (p. 282)

So much for Mises’s own doctrines. Let us quickly put these positions in order, and see what sense can be made of them. Mises believes that there is no such thing as right and wrong, as a rational ethic; yet he is a utilitarian, upholding a utilitarian standard of justice. How does he bridge the gap between the two?

He claims that he does so in a purely value-free manner. He is the scientist, the technician, without personal values, who merely advises others on the appropriate means to attain their own ends. He notices that the vast majority of men desire peace and prosperity. The free market can attain these ends. Therefore he recommends to these people that they adopt the free market, free trade, and so forth. The institution of the State is necessary for this to be established, so he recommends a State. Likewise with taxation and the draft. Note that all these recommendations are purely hypothetical and teleological in character; they assume a set of values already established, attempt to show that the free market is a necessary means to these, and then goes on to deduce the rest. If the initial hypothesis or premise is undermined, then so is the entire train of arguments following behind it. That there is no such thing as justice outside of a legal system Mises holds as a doctrine imported from legal positivism. This being so, the only test of a law before it is passed is not any ideal of justice or rights, but the concrete welfare of tie citizens, measured in terms of whether or not the law safeguards the social system (whatever that is). It is on these grounds that Mises opposes government interventionism, and on this basis that he builds his case for the free market, and his justification for the State. Simple enough; is this case valid?

What I will attempt to do in this short critique is to pick up the essential points in logical order. The thrust of my argument will be to maintain that a value-free economist cannot recommend anything whatever, with the corollary point being made that without reference to ethical principles, one cannot even define such key economic concepts as “voluntary exchange” and “State intervention.” If ethics is needed for the definitions of these concepts, then it will be seen that economics does in fact have to rely on ethics for at least these premises, and thus can never be purely value-free. The importance of this contention for economics as a science should be obvious. (24)

Perhaps the greatest consequence of modern philosophy (at least since Descartes’s ‘revolution’ and the breakdown of a stagnant Thomism) has been a disintegration of two interrelated fields: epistemology and ethics, and of most of the sciences (especially the social sciences) which depend upon them. Nominalism and conventionalism have reigned in epistemology; subjectivism and positivism have likewise ruled in ethics or value-theory. Basically, I think the belief of Rand and the Aristotelians regarding the relationship of the ‘cognitive’ and “normative” realms are correct. Man is an integrated living entity, an organism whose consciousness has three basic biological functions: cognition, evaluation, and regulation of action. These are all interrelated functions, and an attack on one cannot leave the others unscarred for very long. Thus, I agree with Rand when she says that the fundamental fact in post-Renaissance philosophy is its unity in attacking or undermining the objective cognitive validity of man’s conceptual faculty. Mortimer Adler, the distinguished Aristotelian philosopher, makes the same point when he claims that the unifying element of most “empiricist” trends and schools is the attempt to reduce man’s cognitive powers to the sensory level. It is this which is responsible for the death of normative ethics in this century, for the decay and decline of value-theory. Cognitive and normative abstractions (is and ought statements) are closely related, both in

an individual’s psychology and in philosophy proper. The principles which define the proper manner of concept formation can also serve, with a few alterations, as principles defining the proper manner of value-formation. This is said to make the link between concepts and values clear. The attack on the objective validity of man’s conceptual cognitive powers is simultaneously an attack on rationally derived and formulated values and purposes — and vice versa. This point cannot be stressed enough. Value theory, then, as much as epistemology, is profoundly in need of rehabilitation in this century, and without it a rebirth of the social sciences cannot occur. The desire to exempt the social sciences from the sphere of moral considerations is, I believe, profoundly doomed to failure — and justly so. The stock in trade of today’s social scientists (whether they be economists, sociologists, political scientists, or whatever) is at least the announced attempt to proceed in a completely value-free manner, the simultaneous claim that value-judgements cannot be “scientific” or rational, and the subsequent smuggling in of value-judgements in order to make policy recommendations to the government or other organizations.

It is here that the critique of Ludwig von Mises must begin. As great as Mises may be in technical matters of economics, and as much as we should respect this great man for his achievements and his heroic lifelong stand in support of laissez-faire, this should not blind us to his flaws. Too often libertarians have merely been contented to dismiss a few out-of-context flaws such as his advocacy of the draft with the assertion that, well, he’s so good in other areas that this can be ignored. But what they fail to realise is that such positions of Mises are not isolated: they are part and parcel of his approach to economics and social philosophy, to his attack on the very attempt to define the limits of proper State functions. These all follow logically and consistently from his utilitarianism, his positivism in value-theory and legal philosophy, and from his attempt to place economics outside of ethical considerations. The central part of this is his doctrine that all values are subjective and arbitrary. (25)

It should be an obvious fact that from the premise that all values are arbitrary, that no justifications for anything whatever can ensue. (26) An analogy from logic should make this clear. Suppose that one were to assert that the laws of logic, or all factual statements, were arbitrary. Suppose further that somewhere down the line we heard this same person assert that this or that was “justified.” Our immediate response should be: justified by what means? For the very concept of justification does not apply once we dismiss the very things which make the concept meaningful as “arbitrary.” Justifications of actions are like justifications of statements and beliefs; in the case of beliefs about matters of fact, our standards are epistemological law or logic, which are used to integrate and judge the evidence. In the case of evaluations and actions of man (institutions are the products of these), justifications must proceed in terms of moral or ethical standards, which perform the same function by the same means as evaluation as logic and epistemology do in strictly non-normative cognitive matters. Once we make the claim that all values and moral principles are “arbitrary” and “subjective,” there is nothing to justify subsequent actions or institutions in terms of.

If we begin with the premise of subjectivism in cognition, then that is where we end. If we begin with the premise of subjectivism in evaluation, then that is where we end there as well — there can be no sneaking in of “justifications” in actions which are somehow devoid of value-judgements. To use the term of the Objectivists, it is a stolen concept: a concept which the writer is not entitled to use, given his own premises and epistemological law.

It is Mises’s subjective theory of values which invalidates his own social theory.

To begin with, let us consider Mises’s theory of justice, which lies somewhere between that of utilitarianism and that of legal positivism. We have already considered legal positivism, so all that we need state at this point is that one cannot postulate that the system itself, the State and its legal system is just or valid, and then go on to deduce further cases of justice or injustice in terms of the interior working of the ststem. The legal system must be justified by reference to principles outside of itself, which are ipso facto moral principles. Therefore, if Mises’s theory of justice is taken as being predominantly that of legal positivism, it is invalid.

Since Mises himself, in Theory and History and elsewhere, presents his own value-free system as “utilitarianism,” we shall regard this as the school to which he belongs. To Mises, utilitarianism does not succumb to the diseases which plague other systems of morality, which claim to set up a code of values proper for man. Utilitarianism, and Mises’s enture approach, take values and purposes of individuals for granted, and work only from within a previously, and arbitrarily established system of values. Once we have a hierarchy of values, then Mises can go to work recommending this alternative and bidding us to avoid that. Utilitarianism, to Mises, is only concerned with establishing means to ends, once the ends themselves exist. There is, however, no conceivable way in which one can build a social theory, given this approach.

For let us first note that Mises is a methodological individualist, and upholds the metaphysical reality of the individual person, and him alone. There is no such reality, for Mises, as the nation, group, or race. There is only acting man — individual man, and it is he alone who has values.

Given this approach to values, there can be no such thing as interpersonal welfare comparison. This particular doctrine is a standard part of Austrianism, promoted by such economists as Lionell Robbins, Hayek, Rothbard and Mises himself. But its consequences have not been carried out by Mises in his social theory. For according to the theory of values laid down, all values are ordinal, existing in a hierarchy; this being so, there can be no cardinal measurement of values, since there is no quantitative unit which can serve as a standard. Now when we are concerned with two or more people, if one person loses from a change in existing states of affairs, and another gains, then we cannot say that there has either been a net increase or a net decrease in “social utility” or social welfare, for there is no interpersonal unit which can serve as a standard (and hence no measurement is possible). Further, since they are two different value-hierarchies, no comparison is possible at all, there being no common denominator of the things to be compared. The clearest statement of this fact concerning interpersonal welfare comparisons can be found in an essay by Murray N. Rothbard entitled ‘Toward a Reconstruction of Utility and Welfare Economics’: “We can only say that ‘social welfare’...has increased due to a change, if no individual is worse off because of the change, (and at least one is better off). If one individual is worse off, the fact that interpersonal utilities cannot be added or subtracted prevents economics from saying anything about social utility. Any statement about social utility would, in the absence of unanimity, imply an ethical interpersonal comparrison between the gainers and losers from a change. If X number of individuals gain, and Y number lose, from a change, any weighing to sum up in a “social” conclusion would necessarily imply an ethical judgement on the relative importance of the two groups.”

Now from this we can infer that so long as one single individual, from the standpoint of his own value-scale (which is all that Mises is concerned with) is harmed by any change in society, then we cannot say that there is a net social benefit. It cannot be done in any manner without sneaking in the kind of value-judgements which Mises claims have no place in economics. This comes out most strongly in Mises’s urging that those who would destroy the social order must be beaten into submission by the State. (The phrase is his.) Why are the values of the criminal or misfit to be judged as being of less importance than those of the producer? For remember that all values are arbitrary.

Why is this crucial to undermining Mises’s case? Because as a utilitarian, he is committed to some variant of the principle of “the greatest utility of the greatest number.” “It is a fact,” he writes in Theory and History, “that almost all men agree in aiming at certain ends, at those pleasures which ivory-tower moralists disdain as base and shabby.” But almost is not good enough — not if we are to be ‘scientists.’ Those who do not share such values, who share values such as conquest, domination of others, subjugation of others to their own will, cannot be said to be wrong by Mises. Their values must remain as unimpeachable as those of the men whom Mises sees as functioning well in a free market. Those who value destruction and war cannot be censored by Mises for being evil — for without an ethical standard there can be no means of deciding between conflicting value-scales. Mises holds that all values are arbitrary; it is therefore quite meaningless to suggest that there is something wrong about any particular value-scale. If all values are subjective and ultimate givens, not to be questioned by reason, then by what standard can Mises reject one value-system and adopt another, acting as an “advisor” who is value-free? If all values are arbitrary, then that a particular value is arbitrary cannot be held as a complaint or objection against it.

One should remember that Mises’s discussion of justice is utilitarian: “Social utility is the only standard of justice. It is the sole guide of legislation.” If this is so, then given our above analysis, we are left with the view that Mises is a nihilist, with no theory of justice or morality whatever, and that Mises has no justification for the free market at all. (27)

So long as there are conflicting value-systems, and so long as it is impossible to rationally criticize one value-system by means of a standard of value, one can make no judgements about social utility. Thus it is just as “arbitrary” to come out in favor of the values of the majority as it would be to come out in favor of those of the minority. How, then, is Mises justified in dismissing the values of those who cannot attain their values without infringing on the free market? Why is their utility so blithely dismissed? By what standard? And where is our value-free technical advice when it comes to advising Statists as to the most efficient means of extermination, regulation, and so forth? If Mises invokes, like Murray Rothbard, the concept of “demonstrated preference,” then it must be replied that many people have been demonstrating their preferences for centuries — they prefer coercion to liberty, confiscation to trade. And if Mises responds by saying that their means are inappropriate to their ends, we can only respond by saying that he is presuming that they uphold coercion only as a means to ordinary ends. Why cannot they uphold values or ends which require coercion as a means? Such as enslaving others? Mises cannot object or even frown at them qua economist, for all values are arbitrary.

Rothbard introduces at this point the unanimity principle, but presupposes that violence is not a unit of the free market. The point which I would like to make here is a crucial one: remembering our previous analysis of justice in property titles, and of the means of defining such concepts as “voluntary” and “aggression,” we must note that the very concepts of voluntary and involuntary, of aggression and coercion, depend upon and presuppose the concept of justice in property titles. Without such a concept and standard, there is no means of DIFFERENTIATING between aggression and the voluntary, and hence no means of defining such terms as voluntary exchange, interventionism, unanimity and so forth.

In other words, and to repeat, without a theory of justice, of property titles, there can be no means of differentiating between voluntary and aggressive actions. These concepts cannot be defined in a value-free, behavioristic, positivistic or praxeological manner. And since an act of government intervention into the market is a species of coercive action, the very concept of government intervention, so crucial to economic science, cannot be defined without reference to an explicit or implicit theory of justice. And that brings us back to ethics and morality.

Note that if we are to take such things as “voluntary actions” or property titles in a purely praxeological sense, then the exchange of one’s title to another human being will be on the same level as exchange of different goods, i.e. one would not know whether or not slavery was a unit of the free market. For exchange in the praxeological sense means that purely physical control is being transferred. And exchange of stolen property titles is also a ‘unit’ of the free market. This means that slavery could be considered a unit of the free market unless we presupposed the judgement and ethical premise of self-ownership, i.e. unless we presupposed the ethical premise that people are not property in the same manner as other entities. But once this presupposition is made, then we are no longer value-free; in fact we have lain the groundwork for a rational and radical ethic of man in society.

What this means in turn is that economics can never be a purely wertfrei or value-free science, because there is no means of defining intervention or voluntary exchange in a value-free manner.

We have earlier distinguished between three alternative concepts, and hence means of defining, property titles: the praxeological (whatever a person actually does exercise control over at a given time), the juristic (what the State or some other social group says he should control) and moral ownership (what a man has a just title to control).

Let us briefly see why the first two fail as a means of defining the property titles which economics is concerned with — remembering that exchange is exchange of property titles, or of titles to ownership, and hence cannot be analyzed without reference to them.

If we adopt the praxeological approach to defining property concepts, then whatever a man exercises control over he ipso facto owns. If this is the case, then it is impossible to differentiate between voluntary and involuntary exchange, between theft and trade, and hence to investigate the consequences of coercive interference with the network of exchanges. Why? Simply because this theory does not allow for an evaluation of the means by which one obtained his title; all that matters is that he can control the property involved. For theft means the taking of another person’s just property, i.e. it implies some kind of a differentiation between concrete possession and rational entitlement. Whether the particular means of making the distinction is correct or not is irrelevant in this context. But unless we make such a distinction, we are simply describing that someone holds and controls something. If someone should happen to ‘steal’ it from him, well, then, the property has just changed hands, in as what we are inclined to call an ‘exchange’, and that is all that we can say about it.

If we adopt the juristic method, which such economists as Milton Friedman apparently do, then whatever the State defines as a man’s property is his property, pure and simple. What this would imply is the impossibility of defining government interventionism. For if we are to allow the State a monopoly on defining property titles, than any act of confiscation, redistribution, regulation or prohibition is merely the State’s act of changing its mind about what property belongs to whom, i.e. the State is choosing to redefine property titles in some manner or another. Restriction of production or sale of commodities amounts to the State changing an unlimited title to the property to a limited one, i.e. it is merely redefining the limits to which the property can be put. Confiscation and taxation are merely the State’s deciding to place titles in its own hands instead of leaving them with the previous owners. In fact, as Murray N. Rothbard has brilliantly pointed out, with this concept of property, the State can retain de facto confiscatory taxation and in fact, any regulations it wants, through the simple process of assuming the title to all the land in the country, and proceeding to act as an owner, collecting rents, placing restrictions on actions permissible on its property, etc. (More on this shortly.) Thus with this concept of ownership, there can be no distinction between intervention and non-intervention, for all intervention can be analyzed in terms of property redefinitions by the State. And there can be no outside standard by which to judge or criticize the State’s actions, for that would be a natural law or ethical approach to property, which is not admitted by the juristic approach to be valid.

The third concept, of course, is the moral concept of property, and must uphold some theory of justice in defining and establishing what is or what is not a man’s property. This is of course blatantly value-full, a matter for ethics and the philosophy of justice to consider.

But what is not generally recognized is that to uphold either of the previous theories of property also involves an ethical judgement. Mises gives this point away when he discusses ownership in his Socialism, only differentiating between the praxeological and the juristic concepts (as I have called them). He himself seems to use both, depending upon the context. But his earlier discussion of justice and law make it clear that he really upholds the juristic concept. Whether he upholds this or the praxeological concept for the purpose of economic analysis is not important. What is important is that without ethics, he cannot define what constitutes intervention, or “private property.” He, like most right-wing economists, wishes to make the fundamental distinction in property between private property and public property, speaking of “private ownership of the means of production.”

But this is truly inadequate, and shows what happens when one attempts to define things in terms of non-essentials. For anything which the State now holds could very easily be turned over to a ‘private’ lackey for management and decision making and preserve de jure private ownership and control of industry while actually maintaining de facto State management. Anything which the State had been previously able to bring about through the tool of “public property” it could easily bring about by transferring titles to ownership from one group of individuals in society to another privileged group which, by virtue of its LEGALLY UNOFFICIAL connection with the State, would be considered, by Mises or anyone else with his approach, to be truly private owners of property and the means of production.

As an historical aside, this is precisely what has happened in the United States in many key industries. The RAND Corporation, a so-called ‘think-tank for the U.S. government, was set up purposefully as a non-governmental agency so that it could evade civil service laws; General Dynamics, a so-called ‘private’ corporation, takes in over 90% of its income from the government. Instances of the integrated nature of this brand of American statism can be multiplied enormously. But my point here is that Mises’s error is far from being academic, and blinds him to the actual nature of many political societies resting on the foundation of ‘private property’ which is coercively acquired. I believe that this is one of the major reasons for the general ignoring of Austrian economics today by radicals interested in understanding economic reality.

It is clear at this point that the essential distinction is not between private and public ownership, but between just and unjust property titles, and that to retain the public/private property dichotomy robs one of the ability to make any analysis of intervention. If the State seized all the means of production and transferred (juristic) title to an elite not officially connected to the State, then this would have to be regarded by Mises as being “private property” when it would actually be de facto SOCIALISM. Is a criminal’s possession of a piece of property to be regarded as private property? Either way, one has made a choice between alternatives, between values, and hence has smuggled in ethics.

Yet all of these distinctions are essential to the science of economics; without them, and without the ethics upon which they rest, economics woule be robbed of many, if not all, of its key concepts. And how one can conduct a science without concepts fundamental to it being defined is beyond comprehension.

Now if such concepts can only be defined by reference to a theory of justice in property titles, and if Mises’s own theory of utilitarianism is invalid, then this means that Ludwig von Mises has no justification for the free market, that his preference for the free market is just as much an arbitrary value-judgment as any other, and that Mises, who has spent his entire life combatting government intervention into the market, can logically have no DEFINITION of what constitutes intervention.

The structure of the remainder of Mises’s arguments should now be clear: since it was values which were the given, the irreducible, and since it was supposedly the values which most people held which made the free market necessary (in a strictly teleological and hypothetical sense), and the free market which made the State necessary (and taxation, the draft, etc.) Mises has no justification for the State, on his own terms and by his own premises.

I must hasten to add that I do not conceed that if Mises had justified the free market that he would therefore have been successful in justifying the State as well — most of his arguments here for the State and against anarchism have the character of mere assertions. What would he have had to show if he were to prove that the State was a necessary condition of having a free market? That the State was completely consistent with the principles of justice and non-aggression which we set down earlier. Since no State in historical reality has been consistent with them, the burden of proof lies doubly on him. Can the State exist without aggressing against non-aggressors? Can it exist without violating people’s rights to freedom of action over property which they morally own? These are the questions to which Mises would have to address himself. But, as we have seen, he even goes so far as to repudiate the very attempt to define the limits of State power.

One point remains to be considered in this vein: why cannot Mises play the role of the value-free economist and technician, advising a group of the appropriate means to attain its ends, and why does this have to involve value-judgements? This is also answered brilliantly by Murray Rothbard, in the above mentioned essay:

This view holds that someone else may set the ends, while the economist is justified in telling that person (and to be hired by that person) the correct means for attaining these desired ends. Since the economist takes someone else’s hierarchy of ends as given, and only points out the means to attain them, he is alleged to remain ethically neutral and strictly scientific. This viewpoint, however, is a misleading and fallacious one. Let us take an example suggested in a passage in Professor Philbrook’s seminal article; a monetary economist advising the Federal Reserve System. Can this economist simply take the ends set by the heads of this System, and advise on the most efficient means to attain them? Not unless the economist affirms these ends as being positively good, i.e. not unless he makes an ethical judgement. For suppose that the economist is convinced that the entire Federal Reserve System is pernicious. In that case, his best course may well be to advise that policy which would make the System highly inefficient in the pursuit of its ends. The economist employed by the System cannot, therefore, give any advice whatever without abandoning ethical neutrality. If he advises the System on the best way to achieve its ends, it must be logically inferred that he supports these ends. His advice involves no less an ethical judgement on his part if he chooses to “tacitly accept the decisions of the community as expressed through the political machinery.”

This brings our argument against Mises to a close. He cannot even function as a technician or advisor without inserting his own values into the picture.

There are many other arguments which could be made against Mises’s position at this point, but the essentials have been covered. What we have shown is that once we begin with the thesis that all values are subjective, there is no such thing as a rational ethic, there is no place to end up except a dead end. Mises begins by regarding every man’s values as ultimate givens. But if that is so, since values are the motivating power of human action, the present state of the world, which is a product of human action, is also a given. There is no way to change the world short of by reference to moral principles, and standards of evaluation. Evading that, one ends up nowhere. Mises can have no justification of anything. Value-free social sciences are a dead-end for man.

Thus we must look elsewhere for a justification of the State.

Footnotes

1. Analytical jurisprudence is a school whose main focus is to determine the meaning of legal terms.
2. Quotations from Austin here are from the selection “Law as the Sovereign’s Command” in M. P. Golding, The Nature of Law, New York, Random House, 1966.
3. W. Friedman, Legal Theory, London, Stevens & Sons, 1960, p. 228.
4. Hans Kelsen, General Theory of Law and State, Cambridge, Harvard University Press, 1945, p. xvi.
5. Ibid., p. 3. Kelsen’s book is filled with tortuous circular arguments and obfuscations which I will take up in another essay.
6. Goldind, op. cit., pp. 104-134.
7. Ibid., p. 129.
8. Kelsen, op. cit., p. 395-96.
9. McBride, “The Acceptance of a Legal System,” in The Monist, July 1965, pp. 378-79.
10. It is interesting to note the similarity between the positivistic theory of law which Kelsen holds and the Hegelian or Idealistic coherence theory of truth in epistemology. Both maintain that the legitimacy of any one judgement (command in law) is derived from its consistency with and entailment by a coherent system of judgements (commands) which is internally self-consistent. What justifies the system itself, and on what foundation is it built? Nothing except the coherence of the system itself with each of its parts. This, I submit, is not a sufficient justification.
11. I shall be drawing heavily in my critique of utilitarianism, on two works of Murray N. Rothbard: The Ethics of Liberty, an unpublished work which also contains a critique of utilitarianism, and an essay entitled “Toward a Reconstruction of Utility and Welfare Economics”, in Mary Sennholz, ed. On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises. I would like to state that I have profited immensely from these and from private conversations with Rothbard on related issues, despite the fact that I here take issue with his and Mises’s contention that economics can be a wertfrei or value-free science. All Rothbard quotations are from “Toward a Reconstruction”, etc.
12. For works laying the foundation for a rational ethic, I recommend the following: A. Rand, Introduction to Objectivist Epistemology; Rand’s essay “The Objectivist Ethics”; Mortimer J. Adler’s The Time of Our Lives; Henry B. Veatch, Rational Man and Two Logics; Michael Cronin, The Science of Ethics (2 vol.); Nathaniel Branden, The Psychology of Self-Esteem; and Murray N. Rothbard, Man, Economy, and State and Power and Market, especially the chapters on ownership in the former, and the Chapter “Anti-Market Ethics: A Praxeological Critique” in the latter.
13. This critique will also hold true of other subjective theorists, including such anti-Statists as Robert LeFrvre.
14. Rothbard states that praxeology can criticize “Existential errors made in the formulation of ethical propositions” and that “ethical goals must be framed meaningfully.” (Power and Market, p. 151). In essence, we have shown that both utilitarianism in general and Mises’s specific formulation of it in particular is utterly meaningless and is thus a vacuous social philosophy.