Libertarianism = Despair

 Consider Angus Deaton's How Misreading Adam Smith Helped Spawn Deaths of Despair: A Nobel Prize–winning economist reflects on the dire consequences of libertarian economics.

At an address to the American Philosophical Society earlier this year, the economist Benjamin Friedman updated Stigler’s quip, claiming that Smith is alive, but not so well, and is being held prisoner in Chicago. To be fair, the economics department in Chicago has changed greatly since 1976, so that the “is being held prisoner” should be more accurately put as “was being held prisoner.” And it was in this earlier period where much of the damage was done. In further contrast to 1976, the U.S. economy has not done so well over the last three decades, at least not for the less-educated majority, the currently sixty percent of the adult population without a four-year college degree. I will argue that the distorted transformation of Smith into Chicago economics, especially libertarian Chicago economics, as well as its partial but widespread acceptance by the profession, bear some responsibility for recent failures.

This failure and distress can be traced in a wide range of material and health outcomes that matter in people’s lives. Here I focus on one: mortality. The United States has seen an epidemic of what Case and I have called “deaths of despair”—deaths from suicide, drug overdose, and alcoholic liver disease. These deaths, all of which are to a great extent self-inflicted, are seen in few other rich countries, but in none, except in Scotland, do we see anything like the scale of the tragedy that is being experienced in America. Elevated adult mortality rates are often a measure of societal failure, especially so when those deaths come not from an infectious disease, like COVID-19, or from a failing health system, but from personal affliction. As Emile Durkheim argued long ago, suicide, which is the archetypal self-inflicted destruction, is more likely to happen during times of intolerable social change when people have lost the relationships with others and the social framework that they need to support their flourishing.
***
The reversal of mortality decline in the United States has many proximate causes; one of the most important has been the slowing—and for the less-educated an actual reversal—of the previously long-established decline in mortality from heart disease. But opioids and opioid manufacturers were an important part of the story.

***

Neither America nor American economics was always committed to laissez-faire. In 1886, in his draft of the founding principles of the American Economic Association, Richard Ely wrote that “the doctrine of laissez-faire is unsafe in politics and unsound in morals.” The Association’s subscribers knew something about morals; in his 2021 book Religion and the Rise of Capitalism, Ben Friedman notes that 23 of its original 181 members were Protestant clergymen. The shift began with Chicago economics, and the strange transformation of Smith’s economics into Chicago economics (which, as the story of Stigler’s quip attests, was branded as Smithian economics). Liu’s book is a splendid history of how this happened.

***

And there are worse defunct scribblers than Friedman. Republican ex-speaker Paul Ryan and ex-Federal Reserve chair Alan Greenspan are devotees of Ayn Rand, who despised altruism and celebrated greed, who believed that, as was carefully not claimed by Hayek and other more serious philosophers—the rich deserved their wealth and the poor deserved their misery. Andrew Koppelman, in his 2022 study of libertarianism, Burning Down the House, has argued that Rand’s influence has been much larger than commonly recognized. Her message that markets are not only efficient and productive but also ethically justified is a terrible poison—which does not prevent this message from being widely believed.

***

The beliefs in market efficiency and the idea that well-being can be measured in money have become second nature to much of the economics profession. Yet it does not have to be this way. Economists working in Britain—Amartya Sen, James Mirrlees, and Anthony Atkinson—pursued a broader program, worrying about poverty and inequality and considering health as a key component of well-being. Sen argues that a key misstep was made not by Friedman but by Hayek’s colleague Lionel Robbins, whose definition of economics as the study of allocating scarce resources among competing ends narrowed the subject compared with what philosopher Hilary Putnam calls the “reasoned and humane evaluation of social wellbeing that Adam Smith saw as essential to the task of the economist.” And it was not just Smith, but his successors, too, who were philosophers as well as economists.

For decades, I have had one major gripe with Libertarian/Ayn Rand economics: if there is a capitalist society, then society must have capital spread widely throughout its citizens. What the Libertarians and Ayn Rand types have done is stroke the egos of the rich that they are morally superior to those without capital. This has lined up billionaires in funding politicians who praise the moral qualities of their contributors. I would think that if Rand's thinking is correct, then each citizen should have a sum of capital and let the Almighty Market sort them out. Instead, they think the rich should get richer, suck up all the possible capital regardless of its effect on the wider society.

sch 9/14