Thursday, November 10, 2011

The Third Solution - Pragmatarianism

Here's what I posted for the anarcho-capitalists over on the Ron Paul Forums...Choice vs Coercion...


In the thread on political labels CCTelander had this to say about pragmatarianism...
Being allowed to choose my rapist IN NO WAY renders the fact that I'm to be raped more tolerable. - CCTelander
Anarcho-capitalists hate coercion.  But what is coercion?  Coercion is the limitation of somebody's freedom.  And what is freedom?  Freedom is the ability to make choices for oneself.

Pragmatarianism advocates that taxpayers should be allowed to choose how their taxes are allocated.  Giving taxpayers a choice how their taxes are allocated would increase their freedom.  By increasing their freedom we would reduce the degree of coercion to which they are subjected.

So if anarcho-capitalists hate coercion...and pragmatarianism can reduce coercion...shouldn't anarcho-capitalists appreciate pragmatarianism?  Isn't reducing coercion a step in the right direction?

When I was stationed in Afghanistan I had to give capabilities briefings to various commanders.  The point of the briefings was to help the commanders understand how my team could help them accomplish their missions.  It was fairly easy to pick out the ineffective commanders because they did not demonstrate any interest in considering alternative approaches.  Of course, their lack of interest could have reflected my own ineffectiveness at conveying the value of my team's abilities.

In the fight against socialism Ludwig von Mises was an intellectual general.  But in 1922, when he launched his first major offensive, he wrote that there were no third solutions; the choices were either socialism or capitalism.  He steadfastly maintained this position in his later books.  The problem was that his dichotomy was false.

Let's get algebraic...

A = private ownership of the means of production
B = public ownership of the means of production
1 = market economy
2 = command economy

Capitalism: A1
Socialism: B2
Mixed economy: A1B2
Pragmatarianism: A1B1

Our current economy and that of most of the world's is A1B2.  Mises said that A1B2 was unfeasible because it would eventually collapse.  The current problems in Europe certainly seem to lend credence to his predictions.  But is it possible to consider that both A1 and B2 might have their respective flaws?
Extrapolating from these trends, either to the conclusion that "capitalism can't do anything right" (as it appeared in say, 1932) or that "government can't do anything right" (as it may appear today) is simply unwarranted.  The truth could lie somewhere in the middle; that is what makes the social-democratic order so difficult for simplistic forms of libertarianism to challenge effectively. - Jeffrey Friedman, What's Wrong with Libertarianism (PDF)
Mises' tunnel vision prevented him from seeing possible alternatives.  He told the world...these are your choices...A1 or B2.  His failure to offer A1B1 as a possible choice reflected that he had inadvertently intellectually coerced himself...and the the rest of the world.
What, exactly, does it mean for action and thought [to] be individualistic?  Clearly it is possible for people to act collectively, whether through cooperation or coercion; and it is even possible for them to "think" collectively, by learning from, or being brainwashed by, each other and their predecessors.  - Jeffrey Friedman, What's Wrong with Libertarianism (PDF)
What were the unintentional consequences of Mises' unintentional coercion?  What if in 1922 he had offered A1B1 as a possible choice?
When people were committed to the idea that in the field of religion only one plan must be adopted, bloody wars resulted.  With the acknowledgement of the principles of religious freedom these wars ceased.  The market economy safeguards peaceful economic co-operation because it does not use force upon the economic plans of the citizens.  If one master plan is to be substituted for the plans of each citizen, endless fighting must emerge.  Those who disagree with the dictator's plan have no other means to carry on than to defeat the despot by force of arms. - Ludwig von Mises, Socialism
Doesn't pragmatarianism allow for the greatest possible political freedom?  How many bloody wars would have been adverted if Mises hadn't coerced himself and others into believing that there were only two possible choices?  

When I was in a remote village in Afghanistan a very distraught lady told us that a couple days earlier the Taliban had beat her husband to death for refusing to give them his family's only food.  Is it moral for Americans to be thrown into jail for refusing to make small sacrifices towards preventing situations where people in other countries are killed for refusing to make big sacrifices?

Oversimplifying morality is self-coercion.  There will always be lesser evils and greater goods.  If you were given the choice, wouldn't it be wholly immoral if you allowed your taxes to support greater evils?

What is the value to society when each and every taxpayer is given the freedom to either maximize the benefit or minimize the harm of their taxes?  What is the value of forcing taxpayers to consider the opportunity costs of their tax allocation decisions?  What is the value of applying the invisible hand to the public sector?  Here are some additional pragmatarian questions.

When you tell people that their only choices are capitalism or socialism you are engaging in intellectual coercion.  You present a false dichotomy and intentionally limit people's choices.   I'm not asking that you tell people that pragmatarianism is a good choice...I'm just asking that you offer it to them as a possible choice.
The moment a libertarian leaves libertarianism behind, reality loses its threatening aspect; his intellectual marginality becomes a precious sources of fresh insight into every aspect of politics and culture.  It seems paradoxical but true that high seriousness can be enjoyable, and that political disengagement can produce genuine insights into politics.  The paradoxes may be dispelled, however, by realizing that disengagement is equivalent to alientation.  Alienation plants seeds of doubt, doubt nourishes serious thinking, and serious thought is the only alternative to an intellectual complacency that must always be shadowed by fear of its own simplifications. - Jeffrey Friedman, What's Wrong with Libertarianism (PDF)

Here are the passages that I found where Mises directly references a "third solution"...

1922 - Production can either be directed by the prices fixed on the market by the buying and by the abstention from buying on the part of the public.  Or it can be directed by the government's central board of production management.  There is no third solution available.  There is no third social system feasible which would be neither market economy nor socialism.  Government control of only a part of prices must result in a state of affairs which - without any exception - everybody considers as absurd and contrary to purpose.  Its inevitable result is chaos and social unrest. -  Ludwig Von Mises, Socialism

1922 - The notion of fairness is nonsensical if not related to an established standard.  In practice, if the employers do not yield to the threats of the unions, arbitration is tantamount to the determination of wage rates by the government-appointed arbitrator.  Peremptory authoritarian decision is substituted for the market price.  The issue is always the same: the government or the market.  There is no third solution. - Ludwig Von Mises, Socialism

1940 - It is frequently asserted that a third form of social cooperation is feasible as a permanent form of economic organization, namely a system of private ownership of the means of production in which the government intervenes, by orders and prohibitions, in the exercise of ownership. This third system is called interventionism. All governments which do not openly profess socialism tend to be interventionist nowadays, and all political parties recommend at least some degree of interventionism. It is claimed that this system of interventionism is as far from socialism as it is from capitalism, that as a third solution to the social problem it stands midway between the two systems, and that while retaining the advantages of both it avoids the disadvantages inherent in both.  - Ludwig von Mises, Interventionism

1944 - The Führer, the vicar of the "German God," will become their Supreme Lord. If they do not acquiesce in such a state of affairs, they must fight desperately until the Nazi power is completely broken. There is no escape from this alternative; no third solution is available. A negotiated peace, the outcome of a stalemate, would not mean more than a temporary armistice. The Nazis will not abandon their plans for world hegemony. They will renew their assault. Nothing can stop these wars but the decisive victory or the final defeat of Nazism.  - Ludwig von Mises, Omnipotent Government

1944 - The alternative is humanity or bestiality, peaceful human coöperation or totalitarian despotism. All plans for a third solution are illusory. - Ludwig von Mises, Omnipotent Government

1945 - But the term planning is also used in a second sense. Lord Keynes, Sir William Beveridge, Professor Hansen, and many other eminent men assert that they do not want to substitute totalitarian slavery for freedom. They declare that they are planning for a free society. They recommend a third system, which, as they say, is as far from socialism as it is from capitalism, which, as a third solution of the problem of society's economic organization, stands midway between the two other systems, and while retaining the advantages of both, avoids the disadvantages inherent in each. - Ludwig von Mises, Planning as a Synonym for Socialism

1949 - Today it is no longer difficult for intelligent men to realize that the alternative is market economy or communism. Production can either be directed by buying and abstention from buying on the part of all people, or it can be directed by the orders of the supreme chief of state. Men must choose between these two systems of society's economic organization. There is no third solution, no middle way.  - Ludwig von Mises, Laissez Faire or Dictatorship

1949  - What alone matters is which system of social organization is better suited to attain those ends for which people are ready to expend toil and trouble.  The question is market economy, or socialism?  There is no third solution.  The notion of a market economy with nonmarket prices is absurd.  The very idea of cost prices is unrealizable. Even if the cost price formula is applied only to entrepreneurial profits, it paralyzes the market.  If commodities and services are to be sold below the price the market would have determined for them, supply always lags behind demand.  Then the market can neither determine what should or should not be produced, nor to whom the commodities and services should go.  Chaos results. - Ludwig von Mises, Human Action

1949 - It is difficult to find out how many of the supporters of interventionism are conscious of the fact that the policies they recommend directly lead to socialism, and how many hold fast to the illusion that what they are aiming at is a middle-of-the-road system that can last as a permanent system—a “third solution.” - Ludwig von Mises, Human Action

1951 - A third solution of the problem would be to confiscate all the profits earned by entrepreneurs for the benefit of the state.  A one hundred per cent tax on profits would accomplish this task.  It would transform the entrepreneurs into irresponsible administrators of all plants and workshops.  They would no longer be subject to the supremacy of the buying public.  They would just be people who have the power to deal with production as it pleases them.  - Ludwig von Mises,  Profit and Loss

1955 - People can consume only what has been produced. The great problem of our age is precisely this: Who should determine what is to be produced and consumed, the people or the state, the consumers themselves or a paternal government? If one decides in favor of the consumers, one chooses the market economy. If one decides in favor of the government, one chooses socialism. There is no third solution. The determination of the purpose for which each unit of the various factors of production is to be employed cannot be divided. - Ludwig Von Mises, Inequality of Wealth and Incomes

1957 - When people who aim at the substitution of socialism for the market economy advocate interventionist measures, they are consistent from the point of view of their aims. But those people are badly mistaken who consider interventionism as a third solution of the problem of society's economic organization, a system which, as they say, is as far from socialism as from capitalism, while combining what is "good" in each of these two systems and avoiding what is "bad" in them. Ludwig von Mises, Economic Freedom in the Present-Day World


  1. Take a closer look at the reasons Mises gave before you discount them. I think you'll find that your suggestion of having A1B1 and A1B2 economies are unsustainable as he correctly pointed out nearly 100 years ago.

  2. Mises discounted A1B2 because of the "2"...but he never once considered A1B1. His argument was against "planners"...but pragmatarianism applies market principles to the public sector by allowing taxpayers to directly allocate their individual taxes.

    What could possibly be unsustainable about forcing taxpayers to consider the opportunity costs of their tax allocation decisions?