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What Does a Libertarian Economy Look Like?

July 24th, 2010

Quoth the Faux Capitalist, on libertarianism and “Austrian” economists:

For me, a libertarian is someone who believes that limited government is the most likely to protect the liberties of the people whom it governs, and that shouldn’t necessitate an economic system based on a scarce resource such as gold.

Any economy (I do not prefer the term “economic system”) is not “based” on currency. It’s based on the exchange (often consisting in currency) of scarce resources. Some resources happen to be more scarce than others. Historically it is those resources, in particular the precious metals, that have been chosen as monetary commodities. This is so for a number of reasons I need not explain at present.

So it’s a gross misunderstanding, I think, to characterize the Austrians as gold-fetishists (although there are certainly some worthy of that). In fact, it’s not advocacy of an “economic system”, but rather a belief that in the absence of any coerced “system”, a free market settles upon a common medium (or perhaps, media) of exchange.

Anyone who advocates an “economic system” based on anything other than freedom and exchange is not a libertarian.

Comments

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  • Steven Handel says on: July 24, 2010 at 10:24 am

     

    Yeah, I don’t like it when libertarian capitalists just insist on a gold standard. The more “Austrian response” is to let currencies compete in the marketplace. And of course, as you point out, there is more to an economy than it’s monetary system. We use to have gold-silver as a currency but their exchange rates were fixed (bimetalism), which is a big reason the system had to be changed (unfortunately we went in the wrong direction).

    We can have the most sound money in the world but if there are regulations that inhibit free trading than an economy can only do so well.

  • Don says on: July 24, 2010 at 7:11 pm

     

    Have you heard of *Time Currency*?
    Nothing is more scarce than time and it’s value is dependent upon each individual, that is, as you get older your time becomes more scarce and thus more valuable, to you. It’s an interesting concept but I’m not sure about all the details. Anyone know anything more about this? I too have been *trained* over a very long period to think of this stuff in the prescribed manner.

    • David Z says on: July 24, 2010 at 8:01 pm

       

      I’ve heard of time currency although not in the manner you describe. Variations usually rely on the “labor theory of value”. I think it’s put forth by mutualists mostly these days.

  • Gil says on: July 25, 2010 at 1:24 am

     

    Or should that read “anyone who advocates an economic system that includes coercion is inherently immoral”?

    • David Z says on: July 25, 2010 at 11:25 am

       

      @ Gil – yeah, that works, too!

  • Don Sessions says on: July 31, 2010 at 7:51 pm

     

    I agree that currency not backed by Gold or some other commodity of fixed value is responsible for allowing governments to overspend and run up huge deficits. I also believe it was a huge mistake to ever leave the Gold Standard. I am, however, skeptical about the ability to return to a fixed Gold Standard in today’s world without causing much more economic agony and grief than we already have. In examining a return to the Gold Standard we have an example from history of just such an attempt. England attempted a return to the Gold Standard in 1925 after having abandoned it during WWI. The attempt was a dismal failure and is said to have been one of the factors in prolonging the Depression of the 1930?s.

    Editor’s Note: This comment has been edited. I’m not certain whether it is spam or not, but in any case there is absolutely no reason to quote (in its entirety) an entire blog post totaling 1,653 words. Decorum, people. C’mon. In any event, the original post from which I have clipped the quote above, appeared as Libertarians and the Temptation of the Gold Standard.

    • David Z says on: July 31, 2010 at 11:58 pm

       

      Hi Don, thanks for the reply but please in the interest of brevity and tact, refrain from posting entire blogs in the comments. A link or two is fine, but 1,600+ words is overkill.

      As for the comparison to the Pound Sterling… The very problem England faced was their futile attempt to return to pre-war parity when in-fact the Pound’s value had been eroded. We can of course, expect similar consequences always and everywhere a government tries to impose a “standard” price for a commodity where that “standard” deviates from what the markets would otherwise bear. As a matter of pragmatism, would the instantaneous shift from FRN’s to a gold standard cause a great deal of pain and suffering? Without a doubt.

      But then again the track record of the dollar, over the last century, has been pretty fucking poor. So if you’re asking me whether we should trade some short term instability and suffering for the long-term stability that would likely result from a truly free market (and some variant of a gold “standard” — although I’ve blogged before that the only true libertarian “standard” is no “standard” at all…), the answer is yes. But sure, I concede that making that change overnight or however rapidly, would be one almost surefire way to sabotage it. All that’s really necessary is to allow people the freedom to trade without penalizing or favoring certain tender. The market takes care of the rest.

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