Tuesday, 1 May 2018

My talk at Glasgow University

Back in January I was asked by Keir Martland, of Mises UK, to give a talk to a Glasgow University student group. Here are the notes that I used for my speech:

Austrian Economics and Libertarianism

David Farrer. University of Glasgow 31stJanuary 2018.

Quiz: I buy a pair of shoes for £50. How much are they worth?

Both parties (and society) benefit otherwise there would be no trade.

Personal Introduction.

Trigger Warning: I am not an academic!

Born in Dumfriesshire, grew up in Ayrshire. Five Highers from Ayr Academy.

Moved to London because of father’s job. Worked in insurance, then advertising.

The 1960’s – “Swinging London”. Social freedoms beginning to emerge. 1968: student demonstrations, Vietnam, Kent State, Paris, Grosvenor Square. Started reading newspapers and books. The IEA. Ted Heath and the Selsdon Group.

Qualified as a Chartered Secretary while working full time. Headhunted by GGK (Swiss ad agency) and became Company Secretary and then Finance Director.

Later I obtained a First in History and Economics from the OU while working full time. No sympathy for student subsidies!

In 1970s became the eighth member of the Libertarian Alliance and also its treasurer. Read widely including the Austrian School.

Met Hayek, Friedman and Rothbard at the Alternative Bookshop.

Saw my LA Hayek photo on wall of San Francisco bookshop! According to Chris Tame I had the largest collection of libertarian books in the UK.

Eventually moved to Edinburgh. Wrote the Freedom and Whisky blog. Scottish spokesman of Mises UK. Tuesday Club treasurer.


Positive and Negative liberties. Problems with these terms.

Show the Nolan Chart. Positions for Con, Lab, LibDem, Communist and Nazi. Show Libertarian position (not left or right). SNP – new chart or where on main chart?

17th Century. James VI and I. Charles I. Jenny Geddes 1637 and National Covenant. England and taxation. War of the Three Kingdoms. Cromwell. Puritanism and social restrictions. Restoration and Charles II. Puritans to Massachusetts.

(Hillary Clinton is Oliver Cromwell and Donald Trump is Charles II.)

James VII and II. All goes wrong again. King Billy! Still relevant here in Glasgow: Rangers and Celtic!

Bill of Rights 1689. Separation of powers and freedom of speech. Keep and Bear arms.

1775, 1776, 1783 and 1787. No taxation without representation. First and Second amendments. Separation of Church and State. Separation of Economy and State. US originally more or less libertarian in limited state form.

Non-Aggression Principle. It’s wrong to initiate force or fraud.

How to deal with those who breach the NAP?

First libertarian solution proposed is to form a special institution for that purpose and for that purpose only. It’s called the State.

This is defined as a “Limited State”.

Typically, the State has the police to protect us from domestic force and fraud initiators, the military to protect us from foreign force initiators, and a court system to decide whether someone has or has not aggressed, and, if so, what to do about it. Restitution and reimbursement of costs is to be preferred whenever possible.

But, say other libertarians: this “State” is financed by taxation and is itself a force initiator. Some limited statists (Ayn Rand) have suggested possible ways round this.

The second suggestion is anarcho-capitalism, which means the privatisation of all government functions.

A priori and empirical approaches to AnCap.

Mention Murray Rothbard and Man Economy and State. Power and Market.


Adam Smith (from the Boston Review) John Paul Rollert

When he wrote The Wealth of Nations, he devoted an unusually large amount of space to accounting for the superiority of the Scottish system—and the inferiority of the English.

Universities such as Oxford guaranteed “large salaries” to professors, rendering them “altogether independent of the diligence and success in their professions.”

If a professor is paid regardless of whether he discharges his duty as a teacher, he will tend “to neglect it altogether” or, if he is subject to some higher power, to “perform it in as careless and slovenly a manner as that authority will permit.”

In contrast, at Scottish universities the salaries were fairly small, and professors depended on course subscriptions for the majority of their income. At Glasgow, students paid tuition to gain access to the university, but they also paid honoraria to their particular professors. The fees were small, but taken together, they provided a substantial part of a professor’s income, giving him a strong incentive to become a superior teacher.

So, the question tonight is this. Should all professors at Glasgow University publish their lectures on YouTube, like the blessed Jordan Peterson, and on these professorial websites should there be a “Donate Button” and should a substantial part of a professor’s income be earned in that manner?

On to Austrian Economics.

Fifteenth Century. Followers of St Thomas Aquinas at Salamanca University. These were the Late Scholastics. Economic laws were much like other natural laws. Supply and demand, exchange rates, causes of inflation. Advocates of property rights, freedom of contract. They opposed excessive taxation, price controls and other regulations. Moral Theologians. Tell governments what they cannot do.

Richard Cantillon. Thought experiments. To explain economics. (1730). The market as an entrepreneurial process. Austrian theory of money creation. Enters the economy step-by-step. The Cantillon effect. Now, with added QE!

Turgot, Say and Bastiat. No over or underproduction in a free market (Say). Broken Window Fallacy (Bastiat).

Labour value theory held in Britain leading to Marxism.

Carl MengerPrinciple of Economics1871 founder of Austrian School, continuing on from the earlier folk. Jevons and Walras at same time.

Subjective basis of economic value and theory of marginal utility.

Money emerges in the free market as the most marketable commodity. What about Bitcoin?

Science of Human Action.

Historical School. Berlin. Nazis.

Freddy von Wieser. Eugen Bohm-Bawerk (Positive Theory of Capital) – normal rate of profit is the interest rate.

Ludwig von Mises.

Theory of Money and Credit. Marginal Utility applies to money. The regression Theorem.

Human Action.

Economic truths derived from self-evident axioms. Cannot be empirically tested.

Austrian theory of the business cycle.

Impossibility of calculation under socialism because it has no private capital nor a market in capital goods. No way of knowing what to make. The end of civilisation.

That’s why Corbynism can’t work.

See the Soviet Union. 120 million dead.

Mises to Switzerland then USA. Rothbard and others. Man, Economy and State.

Rand and the libertarian movement.

Hayek. Road to Serfdom. IEA. Anthony Fisher. Harris and Seldon.

Ludwig Erhard.

Mises Institute. Lew Rockwell. Jeff Deist (interviewed me after Scottish referendum). Hans-Hermann Hoppe.

The institute is not in the beltway.

Science of Economics

Only individuals choose. Not groups.

The study of the market order is fundamentally about exchange behaviour and the institutions within which exchanges take place.

The “facts” of the social sciences are what people believe and think.

Utility and costs are subjective.

The price system economises on the information that people need to process in making their decisions.

Private property in the means of production is a necessary condition for rational economic calculation.

The competitive market is a process of entrepreneurial discovery.

Money is non-neutral. Prices do not adjust instantaneously throughout the system (Cantillon effect). QE. Inflation is socially harmful. It steals from the productive. Arrest Mark Carney now!

Capital Structure consists of heterogeneous goods that have multispecific tasks.

Social Institutions often the result of human action but not of human design. E.g the market economy and the price system.

Any questions?


Colin Finlay said...

The "Austrian" economics are actually Jewish economics , but I'm sure you knew that to be the case David.

Antony Sammeroff said...

congratulations on degenerate comment of the year