An MMT vs Austrian Debate Post-Mortem Part IV of V: The (Legal) Extension of the MMT Case

By Rohan Grey

[Part I] [Part II] [Part III] [Part IV] [Part V]

Don’t be confused by surfaces; in the depths everything becomes law.”
– Rainer Maria Rilke

As noted at the end of the previous section, I found the debate engaging but ultimately frustrating, as Murphy’s critique of the coercive nature of our modern monetary system, while morally seductive, begged the question: “Ok, but what is your alternative?”

As the debate went on, it became clear to me that this was the critical question that Murphy needed to answer to move opposition to representative government beyond mere ideology and into the realm of actionable policy prescription. Unfortunately, the closest Murphy got was during the following exchange:

Murphy: Most Austrians would say with regard to money that the government shouldn’t be involved in it. . . . Austrians would say they don’t want the government picking what the money is.

Mosler: So there’d be no more taxes. 

Murphy: No. No taxes.

. . .

Mosler: I was just wondering if there was government spending. If there’s no taxing, are they spending? How does this work?

Murphy: Again, we’re getting into Austrian economics versus what political views do most Austrians have.

And so, yeah. Many modern Austrian economists, or people who like that school of thought, do think that everything should be done in the voluntary private sector, and they think that a lot of the alleged horrors of what would happen if we didn’t have government providing police and militaries is actually that there’d be fewer wars, there’d be fewer police beatings of people and so forth, and that free people can voluntarily solve a lot of those problems. And yeah, there’d be crazy things happening, but it might not be as crazy as world war, which is what happens when governments provide those services.

But that’s not all – some Austrians are classical liberal nightwatchman-state, that sort of thing.

This answer was confusing to me, for two reasons.

First, I could not work out whether Murphy’s last sentence was intended as a vicarious defense of the Misesean-Friedmanite-minarchic classical liberal position, or merely an acknowledgment of the internal ideological pluralism of the Austrian School. I expect it was the latter, as I cannot see how one could provision a nightwatchman state without taxation, which would lead to the currency monopoly dynamics described by Mosler and discussed in Part II.

Second, it was unclear how Murphy’s ideal non-coercive system would establish and enforce the system of property titles necessary for a “market anarchist” economy without recourse to an overarching state-like entity with law enforcement power and plenary jurisdiction.

Luckily, I was able (with a bit of digging) to find an answer to the latter query in one of Murphy’s blog posts from the Mises Institute, titled “Law Without the State.” In this essay, Murphy sketches the basic features of what he believes a non-coercive rule of law might look like. The article is long, however I have reproduced the introduction and (in my opinion) key extracts below with the recommendation that everybody read the article to understand his position in its entirety: 

Without question, the legal system is the one facet of society that supposedly requires state provision. Even such champions of laissez-faire as Milton Friedman and Ludwig von Mises believed a government must exist to protect private property and define the “rules of the game.

However, their arguments focused on the necessity of law itself. They simply assumed that the market is incapable of defining and protecting property rights. They were wrong.

In this essay, I argue that the elimination of the state will not lead to lawless chaos. Voluntary institutions will emerge to effectively and peacefully resolve the disputes arising in everyday life. Not only will market law be more efficient; it will also be more equitable than the government alternative.

The central claim of Murphy’s model is that a system of contractually-derived property titles would serve as a jurisprudential kernel upon which an entire “market anarchist” legal system could then be constructed:

Keep in mind that wherever someone is standing in a purely libertarian society, he would be on somebody’s property. This is the way in which force could be brought to bear on criminals without violating their natural rights.

. . .

Some readers may wonder how I can propose a replacement for the state’s “justice” system when I haven’t first offered a rational theory of the source and nature of legitimate property rights.

The answer is simple: I don’t have such a theory. Nonetheless, I can still say that a market system of private law would work far more effectively than the state alternative, and that the standard objections to anarchy are unfounded.

Unfortunately, at the crucial moment in constructing his case, Murphy opts for ideology over analysis and simply asserts that markets are non-coercive, and hence a “market” system of law would be non-coercive as well:

There is widespread distrust of allowing the market to “determine” something as crucial as, say, prohibitions on murder. But “the market” is just shorthand for the totality of economic interactions of freely acting individuals. To allow the market to set legal rules really means that no one uses violence to impose his own vision on everyone else.

The premise of this claim is flatly wrong. The “market” is not “shorthand for the totality of economic interactions of freely acting individuals.” Rather, it is – as Karl Polanyi observed many years ago – a socially (and legally) constructed institution embedded in a broader constellation of other social (and legal) institutions, many of which exert coercive pressure (often through law) on their often-unwilling participants.

This point is well understood by left-anarchists like Proudhon, who were acutely sensitive to the coercive origins of proprietarian economic systems such as Murphy’s proposed “market anarchism.” An excellent articulation of this view can be found in Columbia Law Professor Robert Hale’s 1923 article, “Coercion and Distribution in a Supposedly Non-Coercive State,” a brief reflection on which can be found here.

Murphy, to his credit, acknowledges that questions of allocation, definition and enforcement of property titles are politically sensitive issues.  Sadly, his solution is, again, self-referential, in that he argues the problems of equitable market design can be solved by the market itself:

“In market anarchy, who would define property rights? If someone hands over the money to purchase a house, what guarantees does he have?

This is a complex issue, and I won’t be able to give specifics, since the actual market solution would depend on the circumstances of the case and would draw on the legal expertise (far greater than mine) of the entire community. I can, however, offer some general remarks:

Whatever (if any) the abstract or metaphysical nature of property law, the purpose of public titles is quite utilitarian; they are necessary to allow individuals to effectively plan and coordinate their interactions with each other. Specialized firms (perhaps distinct from arbitration agencies) would keep records on the property titles, either for a specific area or group of individuals. Title registry would probably be accomplished through a complex, hierarchical web of such firms.

The fear of rogue agencies, unilaterally declaring themselves “owner” of everything, is completely unfounded. In market anarchy, the companies publicizing property rights would not be the same as the companies enforcing those rights. More important, competition between firms would provide true “checks and balances.” If one firm began flouting the community norms established and codified on the market, it would go out of business, just as surely as a manufacturer of dictionaries would go broke if its books contained improper definitions.

This response is rhetorically effective, but obscurantist. Even if the assertion that “competition between firms would provide true ‘checks and balances’,” since “[i]f one firm began flouting community norms established and codified in the market, it would go out of business” were true, it ignores the more fundamental risk that one or more private individuals will use their political and economic influence over a number of firms to design legal structures conducive to the accumulation of monopolistic control over some scarce resource, and then exploit that monopoly to establish and defend a permanent oligarchy.

This issue was recently explored in detail in a blog post by Mike Konczal at Next New Deal, titled “We Already Tried Libertarianism – It Was Called Feudalism.” I reproduce the relevant portion below:

For liberals, basic rights are fundamental, in the sense that they can’t be compromised or traded against other, non-basic rights. They are also inalienable; I can’t contractually transfer away or otherwise give up my basic rights. To the extent that I enter contracts that do this, I have an option of exit that restores those rights.

. . .

When libertarians say they are for basic rights, what they are really saying is that they are for treating what liberals consider basic rights as property rights. Basic rights receive no more, or less, protection than other property rights. You can easily give them up or bargain them away, and thus alienate yourself from them. (Meanwhile, all property rights are entirely fundamental – they can never be regulated.)

Additionally, since all social norms in Murphy’s utopia are subordinate to contract and property, there is no equitable check on bad common law. Taken together, these features mean that if a monopolist were to emerge, the average person would –  in a dynamic resembling Mosler’s taxation story – be required to accept whatever terms he or she set in order to access the basic means to survive, including, potentially, slavery and/or debt-peonage.

One possible response to this critique is that while this outcome is conceivable, competitive pressures will prevent it from ever occurring. That is an empirical claim, and perhaps it is right – I can’t be sure. However, as was pointed out by an excellent article in Harpers Magazine in October, 2012 about the board game Monopoly, there is reason to believe otherwise:

Sixteen minutes into the game Doug offered Billy a trade. (“The propensity to truck, barter, and exchange one thing for another,” writes Adam Smith in The Wealth of Nations, “is common to all men, and to be found in no other race of animals.”) Land was already growing scarce, and as land becomes scarce in Monopoly—as in the real world—its market value rises, often beyond its nominal value. “This,” said Doug, holding up one of his yellow deeds, “for that,” pointing at one of Billy’s slum deeds, “plus three hundred bucks.”

In what amounted to open conspiracy, Billy then told Eric that if they made a trade and each received a monopoly as a result, they’d share a “free ride”—no rent would be charged—when they landed on one another’s monopolies: a corrupt duopoly, in effect, targeting Doug and Trevis.

Doug shrugged as Eric pondered the deal, but Trevis was aghast. “You can’t do that—it’s against the rules.”

“Rules!” said Billy. “I’m gonna set my price.”



A referee, whistle around his neck, hurried over—the judge with the gavel had disappeared—to decide on the matter as the players barked at each other. “You can’t do that,” he said finally.

A few weeks before the tournament, I’d had a conversation with Richard Marinaccio, the 2009 U.S. national Monopoly champion. “Monopoly players around the kitchen table”—which is to say, most people—“think the game is all about accumulation,” he said. “You know, making a lot of money. But the real object is to bankrupt your opponents as quickly as possible. To have just enough so that everybody else has nothing.”

In this view, Monopoly is not about unleashing creativity and innovation among many competing parties, nor is it about opening markets and expanding trade or creating wealth through hard work and enlightened self-interest, the virtues Adam Smith thought of as the invisible hands that would produce a dynamic and prosperous society. It’s about shutting down the marketplace. All the players have to do is sit on their land and wait for the suckers to roll the dice.

Smith described such monopolist rent-seekers, who in his day were typified by the landed gentry of England, as the great parasites in the capitalist order. They avoided productive labor, innovated nothing, created nothing—the land was already there—and made a great deal of money while bleeding those who had to pay rent. The initial phase of competition in Monopoly, the free-trade phase that happens to be the most exciting part of the game to watch, is really about ending free trade and nixing competition in order to replace it with rent-seeking.

Indeed, real “market anarchy” would likely be even more self-destructive than in Monopoly, as property claims would persist forever rather than resetting every generation.

Perhaps surprisingly, Murphy’s response to path-dependency concerns is to advocate a hearts-and-minds revolution:

The route to a free society will vary according to the history of a region, and consequently no single description will do. The path taken by North Korean market anarchists will no doubt differ from the course of similarly minded individuals in the United states. In the former, violent overthrow of unjust regimes may occur, while in the latter, a gradual and orderly erosion of the state is a wonderful possibility. The one thing all such revolutions would share is a commitment by the overwhelming majority to a total respect of property rights.

All societies, no matter how despotic their rulers, must possess a basic degree of respect for property rights, even if such respect is given due to custom rather than intellectual appreciation. All people know that it is a crime to rape or murder; even rapists and murderers know this.

Such universal, intuitive notions of justice would constitute the foundation for a system of private law. This widespread agreement would allow for more specific, contractually defined rights to evolve. The process would be continuous, with one stage of codified property titles and legal rules forming the basis for the next generation of judges and scholars to systematize and extend. 

Putting aside the anthropologically incorrect assertion that “all people” consider rape and murder criminal and the equally problematic claim that a respect for private property rights is “universal” and “intuitive,” I find it unlikely that Murphy’s revolution would be supported by the “overwhelming majority” of people, either today or in the future. Even if it were, however, such uni-generational support would not, in my opinion, justify the creation of a permanent, undemocratic, proprietarian world order. As far as I can tell, it would only take one dissenter for this system to be guilty of the same sins of coercive majoritarianism that libertarians place at the feet of liberal constitutional republicanism.

Finally, even assuming Murphy’s revolution were possible and likely to be universally popular, his proposed post-revolutionary legal system needs a lot of development:

A sophisticated critic may charge that my proposal rests upon a circular argument: How can people use contracts to define property rights when a system of property rights is necessary to determine which contracts are valid? After all, Smith can’t sell Jones a car for a certain sum of money, unless it is established beforehand that Smith is the just owner of the car (and Jones the owner of the sum of money).

To see the solution, we must break the problem into two parts. First, we should ask, “Could the free market provide a foundation for social interaction?” I believe the previous sections have demonstrated this. That is, I have shown above that if we had a system of property titles recognized by competing firms, then a contractual system governing the exchange of those titles would form a stable basis for private law.

Now, it is an entirely different question to ask, “How are these titles initially defined and allocated?”

This is a broad topic, and it will be addressed in the next section. But to deal with the issue as it relates to the alleged infinite regress, let us consider contract law.

Contract law is a specific branch of law, much as tort law or constitutional law. It is used, for example, to determine whether a contract between two parties is legally binding. Now surely contract law can’t be established in an anarchist system of contractual law, for wouldn’t this beg the question?

No. The contractual pledges made by individuals would contain provisions for all of the contingencies handled by today’s contract law. For example, the insurance company backing up a customer would be promising, “We will make good on any debts that our client fails to pay, so long as the obligations have been spelled out in a valid contract, according to the terms described in the Standard Contract Law pamphlet published by the Ace legal firm.”

This pamphlet would perhaps require signatures in black ink, notarized oversight for large sums, and that the signers to a contract were of sufficient age and sobriety, and were not under duress, when the contract was made. As with all elements of private law, the precise rules governing contract interpretation would be determined by the (possibly conflicting) desires of everyone through the profit-and-loss test.

Finally, keep in mind that the ultimate judge in a given case is … the judge. No matter how voluminous the law books, or how obvious the precedents, every case will ultimately depend on the subjective interpretation of an arbiter or judge who must deliver the ruling.

We must never forget that written statutes as such are powerless unless used by competent and equitable individuals. Only in a competitive, voluntary system is there any hope for judicial excellence.

As far as I can tell, Murphy’s utopian system of law would thus adhere to the following basic contours:

1) All laws would be derived from overlapping private legal systems of overlapping, private contracts, interpreted by overlapping private judicial systems, and enforced by overlapping private agencies, all of which would be mutually agreed upon by all affected parties.

I take this to mean that every individual would be presumed to have consented to not only the explicit and implicit terms and foreseen and unforeseen effects of any and all contracts they signed, but also any and all contracts made by their contractual co-parties that directly or indirectly affect any of their interests, and any and all contracts made by those responsible for interpreting and enforcing their contracts. Thus, the legitimacy of the system would ultimately derive from the (implicitly presumed) consent of every individual to the meta-contractual legal clearing system in which every one of his or her contracts was embedded. This is, in my opinion, almost tautologically utopian.

2) Contractual disputes would be resolved in accordance with contingency provisions established by . . . the same contract.

I take this to mean that a dispute between parties over the interpretation and jurisdiction of a contingency clause, such as regularly comes up regarding arbitration clauses in conventional contracts, would be determined in accordance with some sort of meta-contingency clause, the interpretation of which would then be subject to a meta-meta-contingency clause, and so forth in an infinite chain of hierarchically nested contingency clauses. It is hard to see how Murphy’s system avoids this infinite regress, despite his valiant attempt to do so.

3) Disagreements over theories of contractual interpretation would be determined on the basis of the subjective interpretation of judges, whose jurisprudential principles would be determined through a competitive, for-profit market in accordance with the “profit-and-loss” test.

As I see it, this would mean that those who can afford to pay more would be assumed to deserve a higher quality of judicial decision-making. Murphy’s proposed system would be even worse, however, since as a profit-seeking agent, a judge would be free to modify his or her judicial methodology in order to solicit any form of bribery compensation deemed acceptable with the terms of the contract in question. This determination of acceptability that would, in turn, be made by . . . another judge.

Rather than directly addressing the fact that a purely profit-based legal system is inherently prone to corruption, Murphy’s solution is simply to shift the risk around, from lawyers to judges to the press. According to Murphy, this approach mitigates the risk due to – you guessed it! – market forces:

Just because an arbitration agency ruled a certain way wouldn’t make everyone agree with it, just as people complain about outrageous court rulings by government judges. The press would pick up on the unfair rulings, and people would lose faith in the objectivity of Agency X’s decisions. Potential employees would think twice before working for the big firm, as long as it required (in its work contracts) that people submitted to the suspect Agency X.

Other firms would patronize different, more reputable arbitration agencies, and workers would flock to them. Soon enough, the corrupt big firm and Arbitration Agency X would suffer huge financial penalties for their behavior.

This argument relies on a number of assumptions I view as highly problematic, including a) that the public would be able to differentiate between an objective and ethical press and hired propaganda agents, b) that the average person would be able to parse complicated legal arguments to determine whether or not judges and enforcement agents were acting in a corrupt way, and c) that markets for judges, enforcement agencies and the press would remain fragmented, rather than vertically integrating and producing monopolistic agencies that provide little real choice for consumers.

4) Private contractual enforcement agencies would be presumed to be exerting legitimate violence in instances of contractual non-compliance, as determined by a particular judge whose jurisdiction would be contractually determined according to the interpretation of . . . the same particular judge.

As far as I can tell, there is no mechanism in Murphy’s system to protect an individual who, similar to a sovereign head of state facing charges in the International Criminal Court, simply refuses to recognize the authority of a particular contract, judge, or enforcement agency. It is consequently feasible that an individual could find himself or herself imprisoned or coerced by an enforcement agency they never chose, as a result of a decision by a judge whose authority they never submitted to, for the violation of a contractual provision they never thought they’d agreed to – all in the name of the non-coercive, voluntary, market.


Murphy’s proposed system of “private law,” as much as I can make sense of it, raises plenty of jurisprudential and logistical eyebrows. These concerns have mostly been explored extensively in the relevant legal and political science literature, but my comments above provide a general idea of what I perceive to be some of the main issues.

It is possible that Murphy and/or others have answers to these critiques, and that his model will turn out to be a feasible alternative to a state-based rule of law. At this point, however, I see little evidence that is the case.

41 responses to “An MMT vs Austrian Debate Post-Mortem Part IV of V: The (Legal) Extension of the MMT Case

  1. Gerry Spaulding

    This is quite an excellent critique of the ‘private law’ aspect of Austrian ‘political-economic’ theory that Dr. Murphy unfortunately found necessary to lean on when he could not figure out how to contrast a libertarian view of money system operations with what Warren was positing as MMT.

    I think it was Warren’s premise, that a sovereign nation in a fiat monetary operation places the government in a position of being monopoly issuer, which triggered Murphy’s resort to his familiarity with the market-made law notion, something not widely written on, even in Auburn.

    But the whole market versus public law discussion is rather arcane in respect of the money system questions. If the Austrians had a viable monetary model that could claim and show concern for the general doing of no harm they seem to hold paramount, then that system deserves, at least, an understanding.

    The debate lacked such a presentation, but for anyone wanting to waste the time and money trying to grasp the ‘modern’ Austrian ‘monetary’ construct, I suggest just reading two books: Rothbard’s “The Mystery of Banking” (available in pdf from the Von Mises Institute) and Huerta de Soto’s “Money, Bank Credit and Economic Cycles”.

    In the Conclusion of Rothbard’s piece, he lays out a proposal for a transition to “sound money” that, IMHO, has some merit. Likewise, a much broader and more specific methodology is laid out in Huerta de Soto’s critiques of Keynesianism and Monetarism, and his broad proposal for banking system reform that, of necessity, involves structural and institutional changes to the money system.

    It’s a bit of a pity that we didn’t hear more about the money mechanics involved in these proposals from Dr. Murphy.

  2. golfer1john

    Wow. Can’t we all just agree that anarchy would lead to chaos? Do we need a complex legalistic analysis to say that absent a law enforcement authority, gangs of thieves and murderers who did not agree to the social compact would terrorize the land? Who would stop them? Other gangs of thieves and murderers, competing for “turf” in the free market? How would the weak enforce their basic rights and property rights in such an environment? It’s madness to think that real people could live in peace without the rule of law, enforced by a government that had the sole power to enforce it. What would be the state of black people in the US today if there were no Federal government to enforce human rights?

    If this is an accurate portrayal of Austrian views, then why do we dignify them by debating with them?

    • One of the reasons that I specifically contrasted Murphy’s position with left-anarchism is that I don’t think Murphy’s issue is his critique of statism per se, but rather a failure to integrate his one non-negotiable, absolute respect for private property rights, into an otherwise non-coercive framework.

      I’m willing to explore the possibility of alternative forms of social organization than the status quo – David Graeber’s recent book Democracy (etc etc), for example, talks in a lot of detail about what genuine anarchist forms of self-organization may look like. But that’s a very different question/issue than what is being discussed here, so short answer to your first question is “no”, and to your second “no, but I think the legalistic analysis said something different that was also important to say”. The rest are addressed by my answer above.

      • Dan Kervick

        Non-coercive minarchism is wildly implausible. But I think it’s at least less implausible than Graeber’s anarchism.

    • Joe Firestone

      I must admit I wonder the same thing. Austrain views are ridiculous on their face, and only continue to exist to rationalize overweening greed and the Randian romanticism of The Fountainhead and Atlas Shrugged.

      Having said that Rohan, I do appreciate your reconstruction, but would also recommend more moral outrage and less “cool” in the writing even though that’s not the academic way. Seriously, this economic philosophy is contemptible.

    • Sunflowerbio

      For a somewhat different view of how “free market” anarchism might evolve, I recommend reading some of Bill Blacks’ commentaries on accounting control fraud and Gresham Dynamics in the FIRE sector. My bet is that this would be at least a thousand times as likely an outcome as Murphy’s utopian wet dream.

  3. Rohan, I really appreciate your thorough dissection of the debate. This was my favorite part so far of this essay. I’d already read and heard lots of Mosler, so this is a helpful explanation of where Murphy is coming from.

    One thing that bothered me throughout the debate – and I think others have commented on this as well – was Murphy’s use of the third person. He always talked about “Austrians economists think this.” and “people who subscribe to the Austrian philosophy believe that.” It was almost infuriating that he wouldn’t clearly place himself in a school of thought. It almost seemed like he knew Warren was going to mop the floor with him and wanted to separate himself from the ideas that he was defending.

    About Murphy’s paper: Murphy in particular (and IMO Austrians and Libertarians in general) have this naive notion that everyone will just come together under a free market and it will all work out. In their head (and their models) perfect competition rules the day. There are no monopolies, no barriers to entry, no collusion among market participants, no fraud. There are an unlimited number of competitors just waiting in the wings for one of the established firms to slip up. And all market participants have perfect information about all aspects of the market. If only we would remove this corrupt government sector holding back people good intentions.

    In reality we know almost all of the above to be demonstrably false. Monopoly rules the day, often through force (e.g. OPEC, DeBeers). Murphy’s paper reads like a giant fairy tale that someone read to Rand Paul as a child.

    • golfer1john

      ” In their head (and their models) perfect competition rules the day. There are no monopolies, no barriers to entry, no collusion among market participants, no fraud. ”

      It was a long time ago, but when I studied economics we did study monopolies, including real world examples, and oligopolies, including real world examples, and free markets, including real world examples.

      The issue of “perfection” was addressed. No market is perfect, information is always imperfect, and small deviations lead to small changes in results, but there are many real-life instances of markets that produce results very close to the theoretical perfect free market.

      In the real world, monopolies that persist for very long are very rare, and almost always require government sanction in order to continue to exist. OPEC and DeBeers are good world-wide examples, but cheating on quotas by OPEC members is rampant, and events in the US are going to spell the end of OPEC’s price-setting capabilities within a few years. Even monopolists that do manage to succeed for a long time without government support eventually are overtaken by technology. Cable TV systems and more traditional public utilities are examples of monopolies that would not have existed without government sanction, and indeed, in areas where government has not designated a particular supplier there is competition in these services. And even the government-sanctioned monopolists are being overtaken by technology, as new, unregulated entrants take away their market share.

      Oligopolies are quite common, and the globalization of business has led to more and larger oligopolies. Like monopolies, if they rely only on their market power for survival and profit, they are often overtaken by technology. Barriers to entry can be broken down. The Detroit of today is a good example of what is the likely end result for most of them, if they fail to adapt.

      Collusion among market participants is well-known. To say that any serious economist disregards it is a serious indictment of that economist. Fraud is against the law, as is collusion under most circumstances (again, unless sanctioned by the government, as in the case of price-fixing of natural gas and airline travel, before deregulation of them). It is the job of government to root out fraud and collusion, and if it should fail to do so then that is a failure – perhaps due to corruption – of government, not of economics or economists.

      What libertarians would like is for government to do its limited legitimate job with respect to the economy, which would make markets be more like the ideal free market, and reduce fraud, collusion, and monopolistic and oligopolistic practices. Even libertarians also acknowledge instances where the free market allocates costs incorrectly, and needs a nudge from government to make them behave more in the public interest – which is what they do by nature, when they approach the ideal. The well-known example is pollution.

      I don’t think even Austrians believe that ideal free markets “rule the day”. They would like that to be true, and they advocate government policies – non-interference policies – to make it more true. I see nothing wrong with that.

      I guess what I’m learning about Austrians is that they see no legitimate role for government at all, even though they see the results that government is supposed to achieve as goodness: an orderly society, free of criminal behavior and international armed conflict. I don’t see how they think those things can be achieved without some form of government constraint on the behaviors they would like to abolish.

      • In all my discussions with libertarians they lean heavily on states and crony capitalism as the origin of all sin. During the progressive era I think most people became convinced that oligopolistic behavior, monopolistic behavior, price-fixing, market-rigging, market-cornering, thieving, etc. are natural behavior in a weakly regulated economy, and so we need firm and vigilant regulation to prevent them from happening. But the modern libertarian believes all of those things are due to states and crony capitalism polluting and wrecking everything. They see pure competition and balanced harmony as a natural and sort of ecologically self-sustaining mode of happy existence, rather than as a condition that naturally evolves, if unregulated, toward conditions of hierarchy, domination and subordination. This tradition of thought on both the left and the right seems to flow from Rousseau and other forms of “noble savage” thinking.

        Sorry for being so pessimistic, but I find the entire line of thought impossibly naive and a historical, and thus dangerous in its naivite. A halfway decent society has to be fought for, held in place with a rule of rule, and defended vigorously and incessantly against the chaotic and aggressive inclinations of a substantial part of human beings.

        • Well, I agree with you on this one, I guess I’m not a “modern” libertarian. But I do also think that crony capitalism (a euphemism for government corruption) has made it all worse. When government fails to enforce the rule of law, and even joins the side of the lawbreakers, what options do we have?

          It would be better if government were simply neutral toward the lawbreakers, instead of aiding them. Take away the power to aid them, and perhaps their will to enforce the law would return, encouraged by the electorate.

        • “During the progressive era I think most people became convinced that oligopolistic behavior, monopolistic behavior, price-fixing, market-rigging, market-cornering, thieving, etc. are natural behavior in a weakly regulated economy, and so we need firm and vigilant regulation to prevent them from happening.”

          During “the progressive era” we also saw the rise of communism and socialism dictate most of the discourse in academia. It’s not surprising that during “the progressive era” historians and professionals with communist/socialist sympathies or leanings would tend to point on markets as the origin of problems, and it’s not suprising that many in academia continue to perpetuate the same questionable claims.

          Part of the Libertarian pushback to such ideologically-driven interpretations of history has been to engage in some review/revision of such claims. Whether you want to argue that they’re just engaging in ideologically-driven revisionist interpretations or actually have a more grounded and logical understanding of history would is a debate worth having (I hazard to guess that neither you nor I are sufficiently qualified to do so…), but simply denying that there exists any historical support for their position by labeling their understanding of history a “belief” is disingenuous.

          • Sunflowerbio

            Dan can certainly speak for himself, but I don’t see his comment as condemning markets per say, but only market distorting activities such as cornering, etc. Progressives saw the results of such distortions (just as we can today) and offered solutions to correct them. That hardly qualifies as Communism, though Socialist would probably approve, with some additional restrictions added.

            • Free marketeers since the day of Adam Smith have been aware of those market-distorting activities, too, and offered solutions. Except for Austrians, they agree that government has a role to play in keeping markets free.

      • ”They would like that to be true, and they advocate government policies – non-interference policies – to make it more true.”

        So what you’re saying is that those government actions you agree with are “policies” but those you disagree with are “interventions”.

        • I was speaking of Austrians, not of myself. But, to answer your question, I think the difference is one of intent. Doing something to enhance the operations of a free market, such as laws against fraud, would be considered a good thing, and doing things to circumvent the operations of a free market, such as laws setting maximum or minimum prices, would be interventions.

          One might argue that fraud occurs “naturally”, and preventing or punishing it is an “intervention”, but fraud exists only because the market is not perfect, in that it relies on imperfect information on the part of the mark.

          • What is the “free market” and how do you know what is good for it?
            What about the good of the people?

            but fraud exists only because the market is not perfect

            Fraud existed long before & is independent of markets, perfect or otherwise.

            • “A free market is a market structure which is not controlled by a designated authority.” – wikipedia

              What is “good for” a free market? I suppose anything that helps keep it free, improves its operation or efficiency? Why do you ask?

              As for the good of the people, that is up to each individual to decide. Or when “designated authorities” act, the good of the people should be defined by the people collectively.

              Yes, fraud existed before and independently of markets, but cannot exist in the ideal perfect free market. Fraud depends on imperfect knowledge: the perp knows something that the mark does not know. The notion of the ideal perfect market assumes that possibility away.

              • “A free market is a market structure which is not controlled by a designated authority.” – wikipedia

                Such a thing does not & never has existed.
                Nor is it the only or even the original definition as held by Classical Economists & others.

                What is “good for” a free market? I suppose anything that helps keep it free, improves its operation or efficiency? Why do you ask?

                I meant why is a “free market” considered a good thing?

                Yes, fraud existed before and independently of markets, but cannot exist in the ideal perfect free market. Fraud depends on imperfect knowledge: the perp knows something that the mark does not know. The notion of the ideal perfect market assumes that possibility away.

                Given that a “perfectly free market” with perfect knowledge” has never & will never exist I’m not sure it really matters whether or not fraud can exist within something that doesn’t & never will exist.

                • OK, so you know what a free market is, why are you asking me?

                  “Such a thing does not & never has existed.”

                  It exists today, in what are called “black markets”, which circumvent the attempts of authorities to control them. If I say “Hey, that’s a nice hat, I’ll give you $5 for it” and you accept, then we have participated in a free market.

                  Free markets are good because they allocate resources to those who value them the most. I want the hat more than I want the $5, and you want the $5 more than you want the hat. In the case of inputs to production, that allocation results in the final product of highest value. Any other allocation results in lower real wealth of the population as a whole. That is the main focus of macroeconomics, and one of many important foci of social policy, some of which conflict with it.

                  As for fraud, the point is that fraud exists in real markets only because real markets are not perfect. If your goal is to reduce fraud, make more information available to more participants. If some information is not to be available to some participants, then it is the role of government to detect and prosecute the fraudsters. There is no real world market of imperfect information in which fraud is impossible.

                  • “It exists today, in what are called “black markets”, ”

                    Let’s ignore the fact that even in black markets goods are denominated in & transactions are made using government money.

                    Most people find black markets dystopian.
                    Black markets are plagued with rampant fraud.
                    Low quality or fraudulent goods are sold as high quality, violence is the only means to resolve disputes, robbery is common & death is a possibility.
                    Most people don’t find that appealing

                    So please keep using the black market = free market thing.

                    How you ever dealt in the black market?

                  • Denominated in government money is irrelevant. It could be denominated in taco chips, it makes no difference.

                    Whether or not people find illegal markets appealing is also irrelevant. If they have fraud, it is because of imperfect information, the same as in controlled markets.

                    I have dealt in black markets, buying cigarettes and alcohol when I was underage. Never experienced fraud, violence, robbery or death. I know people who have bought illegal drugs on black markets for years, and they are also still with us.

  4. Scott Fullwiler

    Just change the name of our current form of corporate/banker-driven “government” to “the market” and you would seem to have Murphy’s system in place already, no? 🙂

    Seems obvious that you always end up with a government whether you want to call it that or not. Not to mention all the excellent criticisms of the details Rohan provides here.

    • Yes, one reason why I explicitly contrasted Murphy’s “market anarchism” against traditional left-anarchism is that there is a difference between condemning unjust authority/demanding that those in power justify themselves and the sort of naive consciousness that believes that one can construct a politics-free economy.

      The beauty of MMT’s “soft currency” view vs gold-buggism or other forms of hard money is that it recognizes that the otherwise-inexorable accounting logic of budgets is in fact politically contestable and socially constructed. This is, as far as i can see, the best true anarchists can hope for absent a total revolution. Murphy’s system goes the other way, however – he creates a system of absolute authority that, despite being socially constructed, is presumed to operate above politics. It reminds me of the Trunchbull saying that the perfect school would be one in which there are no children – it would certainly be efficient, that’s for sure! 😉

      • nicholas a. evans


        Re: “naive consciousness that believes that one can construct a politics-free economy” and “he creates a system of absolute authority that, despite being socially constructed, is presumed to operate above politics”. That is exactly what annoys me the most about certain types of right-libertarians. The notion that they are simply observing economic realities freed from any coercive politics and the notion that economics could ever be fully separated from politics are both insidious and absurd.

  5. Government is an easy target for libertarians because it wickedly supports the usury cartel which drains the private sector of the resources it needs to meet its own needs. The family farm, for example, was in many cases legally stolen by the banking cartel. Workers have been displaced by machines financed with the workers’ own legally stolen purchasing power.

    Cut the cartel loose and the reputation of government will soar instead of being dragged into the mud by the banks.

  6. I find it fascinating that quite a bit of the argument for a voluntary such system seems to be related to moral considerations, backed by some supposed market-mechanisms, given that I’ve just read a piece at Jacobin ( pointing out that moral sentimentalism is a way of staying away from actually addressing issued.

  7. William Wilson

    “It is possible that Murphy and/or others have answers to these critiques, and that his model will turn out to be a feasible alternative to a state-based rule of law.”

    While listening to the Murphy/Mosler discourses during the course of the confrontation, I did not discern that Robert had described a “model” of his understanding Austrian economic theory. It seemed as if he was unaware of significance of the 1971 decision wrt absence of hard currency backing of fiat currency; thus, he apparently considered it perfectly acceptable to continue to babble about non-existent ground rules. Despite Robert’s absence of concern, Warren reminded the audience several times that the US is no longer on a gold standard.

  8. It isn’t “begging the question”. It should read something like “it raises the question.”

    “Begging the question” is like when someone says ” the bible is true because it says it is.” It has to do with circular reasoning.

    • Thanks DAB, but I think I used it correctly – albeit in a context where I simplified the question in a way that probably obscured what I mean, so apologies. The circular reasoning, as I saw it, came when Murphy criticized our current system for being overly coercive because it used taxation to gather the resources necessary to enforce private property rights, without explaining why private property rights weren’t in themselves coercive.


      “taxation is bad because it coercively deprives us of our coercively-obtained property”.

      That feels like circular logic to me.

      • Ah, now that’s interesting! sounds right to me. Now I get it.

        @errorr Sloooooow down sparky!

      • “without explaining why private property rights weren’t in themselves coercive.”
        Hasn’t this been addressed repeatedly since at least the 1940s by pretty much every successive generation of laissez faire proponents? Apparently Marxists believe if they raise it often enough people will think there aren’t a wealth of adequate responses. Glad to see that discussion’s been productive.

        No, someone is not being “coercive” when they refuse to allow the product of their energy and time to be forcibly taken from them by anyone who happens to think they deserve stuff for free. You are not being coerced if I decide not to give you free stuff or slave under you for nothing, even if through my labor I have amassed far more than you. Passivity and inaction can’t possibly be described as coercion in any logical or coherent sense of the term.

        Property rights are merely the social enforcement of the right to your own time and effort, which you are free to utilize or transfer as you see fit. Inevitably Marxist’s object to this point with some cry of exploitation; you are not being “exploited by the proletariat” when you are forced to labor to survive – to improve ones lot in life one must either produce more value than they consume or leech off others who do, there are no exceptions. Even in a situation where there is zero respect or enforcement of any claim to property rights, the situation remains the same… except your life expectancy drops to pre-Neolithic levels.

        Now, it’s true that defense of private property inevitably relies on coercion, but that’s because those who wish to deprive another of their justly-acquired property initiate the conflict with their own use of coercion. Libertarians are against aggression, not the defensive use of force to respond in kind to the use of aggressive force (replace “force” with coercion if you prefer). If they were against the latter they’d be pacifists.

        And Libertarians are not against restitution for violated property rights, either, so bringing up Native Americans isn’t any kind of counterargument. It’s amusing that people attempt to ascribe violent appropriation of Native American land (or war, in general) to “the market” and not, say, colonialism or imperialism on the part of the British Empire at the time. Since they’re strictly against aggression of any kind, they must support annexing foreign countries, right?

        How to swallow pro-government propaganda whole, exhibit A: How the Government Solved All of Our Problems Throughout History.

        • Hi Djinni,

          1. There are different justifications for property rights made by different laissez-faire proponents, the persuasiveness of which varies considerably. My point was that it was difficult to see what Murphy’s justification was, not that he didn’t have one per se.

          2. Regarding whether or not property rights are coercive – did you read the Hale article? I’d highly suggest it, as it ends up at a different position than your claim that “defense of private property inevitably relies on coercion, but that’s because those who wish to deprive another of their justly-acquired property initiate the conflict with their own use of coercion.”

          3. Even assuming you are right at a principled level, how does that get enforced in real life? You say “Property rights are merely the social enforcement of the right to your own time and effort, which you are free to utilize or transfer as you see fit,” but give no explanation about what titles should be considered, what shouldn’t, etc.

          4. At any rate, i’m not sure who you’re referring to with your last comment, but nothing I wrote was intended to be pro-government per se.

        • “Property rights are merely the social enforcement of the right to your own time and effort, which you are free to utilize or transfer as you see fit.”

          This is not true of all systems of property rights and thus cannot be true.
          Is incorrect to assume all systems of property rights include the right to the product of one’s labour, the right to engage in exchange, the right to property or the right to engage in production.
          What can be exchanged and for what it can be exchanged, who can exchange & what they can exchange, who can produced & what can they produced, what can be owned, how it is owned & whom can own it, vary greatly.

          All systems of property rights are creatures of law & government.

          If you can find a market without any form of government I’d like to know.

  9. I don’t automatically assume that the use of “beg the question” is wrong. It is all about how to parse the sentence. “Murphy’s critique of the coercive nature of our modern monetary system, while morally seductive, begged the question” is true in the traditional sense of being an example of “petitio principii”. Of course the whole thing is just is just a way of self gratified people to show superiority by correcting others. I could say in the original sense you “doth protest too much”

    • nicholas a. evans

      I’ll admit to intentionally using “begs the question” in the sense of “raises the question” just to troll pedants and prescriptive grammarians. It was always a bad English translation of a bad Latin translation of the original Greek phrase. So please just say “assuming the initial point” or “circular reasoning” and give up on the losing battle of trying to protect this goofy jargon’s silly original meaning.

      • Well there has been a very interesting result of this little exchange.

        You see I have never had the opportunity to disagree with people here because I am a proponent of MMT. Now I may understand a bit of what some have claimed with regards to not staying in line.

        Apparently, what I thought was a rather benign comment was in fact a “way of self gratified people to show superiority” and that I “doth protest too much”. Odd since it was only a handful a words… Or how I must be a trolling pedant or perspective grammarian.

        I’ll have to go find the person who brought my use of the phrase to my attention. It appears now my response must have been the complete opposite to what it should have been.

        • nicholas a. evans

          No no. In this case I would be the one trolling. You were merely attempting to be pedantic. Sorry to derail further. Feel free to ignore my handful of words.

  10. nicholas a. evans

    I think there must be two categories of Austrians: those who have never played chess (or Go or Monopoly or Risk or any other game with a strategic component) and those who consider themselves quite good at chess (or some other game) and are deceptively using Austrian theories as one of their strategies for advancement. Hanlon’s Razor comes in handy here: Never attribute to malice that which is adequately explained by stupidity. Some polemicists seem to assume that all right-libertarians are selfish and malicious. I assume that most of them are pawns, the slaves of some defunct economist. And even the more vocal “leaders” (like Murphy) I’d guess are still convinced of their view’s moral rightness… they’re the knights, bishops, and rooks. 😉

  11. Well, let’s at least diminish the Austrians by removing the Bible believers from them:

    Every person is to be in subjection to the governing authorities. For there is no authority except from God, and those which exist are established by God. Therefore whoever resists authority has opposed the ordinance of God; and they who have opposed will receive condemnation upon themselves. For rulers are not a cause of fear for good behavior, but for evil. Do you want to have no fear of authority? Do what is good and you will have praise from the same; for it is a minister of God to you for good. But if you do what is evil, be afraid; for it does not bear the sword for nothing; for it is a minister of God, an avenger who brings wrath on the one who practices evil. Therefore it is necessary to be in subjection, not only because of wrath, but also for conscience’ sake. For because of this you also pay taxes, for rulers are servants of God, devoting themselves to this very thing. Render to all what is due them: tax to whom tax is due; custom to whom custom; fear to whom fear; honor to whom honor.

    Owe nothing to anyone except to love one another; Romans 13:1-8

    Verses 1-7 handle the rebellious attitude toward the government but I included verse 8 since the implication is that Christians should oppose the government-backed credit cartel since it DRIVES people into debt and the bankers are hardly lovely when they are not repaid plus usury.