Liberalism Against Liberalism (Foundations of the Market Economy)

233 Pages·2006·0.98 MB·English

by  Javier Aranzadi

Liberalism against Liberalism
Defence of the market and economic freedom has been one of the main objectives
of liberal thinkers. Economists of the stature of Milton Friedman and Gary Becker
from the Chicago School of Economics and F. A. Hayek and Ludwig von Mises
from the Austrian School of Economics are united in this standpoint.
Ideas from both of these traditions are often used interchangeably but Liberalism
against Liberalismrefutes the tendency. With special emphasis on the work of von
Mises and Becker, Javier Aranzadi illuminates the theoretical and methodological
differences between the two schools. The book will have wide appeal to all students
and researchers of the methodology of economics, economic philosophy and
scholars interested in the social sciences in general.
Javier Aranzadiis Associate Professor of Economics at Universidad Autónoma
de Madrid, Spain.
Foundations of the market economy
Edited by Mario J. Rizzo, New York University and Lawrence H. White,
University of Missouri at St. Louis
A central theme in this series is the importance of understanding and assessing the
market economy from a perspective broader than the static economics of perfect
competition and Pareto optimality. Such a perspective sees markets as causal
processes generated by the preferences, expectations and beliefs of economic agents.
The creative acts of entrepreneurship that uncover new information about
preferences, prices and technology are central to these processes with respect to
their ability to promote the discovery and use of knowledge in society.
The market economy consists of a set of institutions that facilitate voluntary
cooperation and exchange among individuals. These institutions include the legal
and ethical framework as well as more narrowly ‘economic’ patterns of social
interaction. Thus the law, legal institutions and cultural and ethical norms, as well
as ordinary business practices and monetary phenomena, fall within the analytical
domain of the economist.
Other titles in the series:
The Meaning of Market Process Perfect Competition and the
Essays in the development of modern Transformation of Economics
Austrian economics Frank M. Machovec
Israel M. Kirzner
Entrepreneurship and the
Prices and Knowledge Market Process
A market-process perspective An enquiry into the growth of
Esteban F. Thomas knowledge
David Harper
Keynes’ General Theory
of Interest Economics of Time and
A reconsideration Ignorance
Fiona C. Maclachlan Gerald O’Driscoll and Mario J. Rizzo
Laissez-faire Banking Dynamics of the Mixed
Kevin Dowd Economy
Toward a theory of interventionism
Expectations and the Meaning Sanford Ikeda
of Institutions
Essays in economics by Neoclassical Microeconomic
Ludwig Lachmann Theory
Edited by Don Lavoie The founding of Austrian vision
A. M. Endres
The Cultural Foundations Calculation and Coordination
of Economic Development Essays on socialism and transitional
Urban female entrepreneurship political economy
in Ghana Peter Boettke
Emily Chamlee-Wright
Keynes and Hayek
Risk and Business Cycles The money economy
New and old Austrian perspectives G. R. Steele
Tyler Cowen
The Constitution of Markets
Capital in Disequilibrium Essays in political economy
The role of capital in a changing Viktor J. Vanberg
world
Peter Lewin Foundations of
Entrepreneurship and Economic
The Driving Force of the Market Development
Essays in Austrian economics David A. Harper
Israel Kirzner
Markets, Information and
An Entrepreneurial Theory Communication
of the Firm Austrian perspectives on the Internet
Frédéric Sautet economy
Edited by Jack Birner and Pierre Garrouste
Time and Money
The macroeconomics of capital The Constitution of Liberty
structure in the Open Economy
Roger Garrison Lüder Gerken
Microfoundations and Liberalism against
Macroeconomics Liberalism
An Austrian perspective Theoretical analysis of the works of
Steven Horwitz Ludwig von Mises and Gary Becker
Javier Aranzadi
Money and the Market
Essays on free banking Money and the Market
Kevin Dowd Process
Essays in honor of Leland B. Yeager
Edited by Roger Koppl

Liberalism against
Liberalism
Theoretical analysis of the works of
Ludwig von Mises and Gary Becker
Javier Aranzadi
First published 2006
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016
This edition published in the Taylor & Francis e-Library, 2006.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2006 Javier Aranzadi
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Aranzadi del Cerro, Javier.
Liberalism against liberalism / Javier Aranzadi.
p. cm.
‘Simultaneously published in the USA and Canada.’
Includes bibliographical references and index.
1. Free enterprise. 2. Liberalism. 3. Austrian school of economics.
4. Chicago school of economics. 5. Economics. I. Title.
HB95.A75 2006
330.15′53—dc22 2005022725
ISBN10: 0–415–36543–0
ISBN13: 978–0–415–36543–7
To Amelia

Contents
List of illustrations xiii
Preface and acknowledgements xv
1 Two economic approaches to human behaviour
in liberalism 1
The object of economic study 1
The scope of economics 2
The characterization of economic behaviour 5
PART I
The economic approach of Mises: praxeology 11
2 The definition of economic behaviour in the work
of Mises 13
The structure of the work of Mises 13
Development of the subjective theory of value 14
The Misian theoretical system 17
The Misian methodology 21
3 The structure of the general theory of action of Mises 26
Economic act and economic action 26
The axiom of action 29
The action and the sociocultural framework 33
The praxeological categories: causality and time 38
4 The discovery of means and the creation of possibilities 43
Introduction 43