Exclusive Interviews
Tibor Machan on the Free Market, the Problems of Mixed Economies and the Virtues of Minarchism
By Anthony Wile - December 20, 2009

Introduction: Mr. Machan is currently Professor Emeritus, Department of Philosophy, Auburn University, Alabama, and holds the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University. He is also a research fellow at the Hoover Institution, Stanford University. Machan, who earned BA (Claremont McKenna College), MA (New York University), and Ph.D. (University of California at Santa Barbara) has degrees in philosophy, has written numerous books and papers in the field of philosophy, including on issues surrounding the free-market. His A Primer on Ethics, was published by the University of Oklahoma Press in 1997 and his Generosity; Virtue in Civil Society by the Cato Institute in early 1998. He also wrote Classical Individualism for Routledge in 1998, Objectivity (2006) and Libertarianism Defended (2008) for Ashgate and The Promise of Liberty for Lexington Books (2009). Machan is on the advisory boards for several foundations and think tanks and has also served on the founding Board of the Jacob J. Javits Graduate Fellowship Program of the U. S. Department of Education. Machan was selected as the 2003 President of the American Society for Value Inquiry, and delivered the presidential address on December 29, 2002, in Philadelphia, at the Eastern Division meetings of the American Philosophical Association, titled "Aristotle & Business." He is on the board of the Association for Private Enterprise Education.

Daily Bell: Thanks for sitting down with us.

Machan: My pleasure. I welcome your interest.

Daily Bell: Can you give us some background on your past, especially your childhood, and how you came to America? Your story is an especially inspiring one?

Machan: My story is told in full in my memoir, The Man Without a Hobby, Adventures of a Gregarious Egoist, published by Hamilton Books. Born in Budapest just before WW II broke out, I experienced the war in cellars and in some villages away from the city, sometimes getting too close to the fighting for comfort – as when one of my relatives had a bomb dropped on her apartment a few minutes before we showed up to visit. My parents divorced the year I was born and I lived with my mother while my father was getting ready to leave Hungary because his political sympathies for the Nazis left him in hot water with the new Soviet leaning regime. By 1948 the commies took over the country and from then until 1953 I was being "educated" by communists. It didn't take, needless to say. The incredibly meddlesome puppet government was too obviously tyrannical for anyone with half a brain to miss just what kind of society they were forging there.

Daily Bell: You lived with your father as well?

Machan: In time I was smuggled out and joined my father's family but this was little more than a nominal change of venue since his extreme Nazism, anti-Semitism, and fanatical devotion to the style of child raising one can only associate with ancient Sparta led me to escape his house on my 18th birthday, in Cleveland, where my high school principal refused to return me into his "care." I was by now in America, where we came in September 1956 on a free ride provided by the American taxpayers who Congress forced to pay for our ocean travel because I left Hungary after 1952. Go figure!

Daily Bell: How did you come to believe in free markets?

Machan: That was a gradual process but I believe I started on a serious journey toward my libertarianism when I realized that wanting the US government to fund US Olympiads to compete in the Olympics so as to beat the Soviets was a contradiction. The reason I wanted the Soviets defeated was that they were statists of the highest order and so countering them by means of statist measures would be wrong and undermine my credibility. This was shortly after I came to the USA in 1956, a few years later.

Daily Bell: You read a lot of free-market material in the states, didn't you?

Machan: After that I always integrated my political ideas with the principle of voluntarism. I also enjoyed tremendously the individualism I found in Mark Twain's, Zane Gray's and Earl Stanley Gardner's novels which I read as a kid in Hungarian translation. Later, in the US Air Force where I helped start a theater group, I had a role in an Ayn Rand play and found her focus in that play intriguing so shortly after that when I was urged to read The Fountainhead. I was receptive and found her attention to moral and psychological integrity quite rivetingly germane to my life.

Daily Bell: Philosophical literature?

Machan: Following these halting developments I began to read into classical liberalism, libertarianism, Objectivism, Austrian and neo-classical economics, so much so that in the 30+ books I have written over the last 40 years, I dealt with most of the central themes of this political outlook in several of them as well as with its proper foundations. Some of this is evident in my book, Capitalism and Individualism, Reframing the Case for the Free Society, published by St. Martin's Press.

Daily Bell: How has America changed since you first came here?

Machan: It has and it hasn't. In civil libertarian areas there have been improvements – blacks', women's and gays' rights – some deregulation, some reduction of protectionism, gradual realization that prohibition is useless. But opposite developments have nearly undermined all this, as when the US Constitution's insistence of private property rights has been rejected by the US Supreme Court. Or when prominent legal theorists, such as Richard Posner and, especially, Cass Sunstein, promote legal pragmatism, which is a concept of law without any foundation in justice and individual rights. But then these ideas I found so compelling are based on rigorous reasoning and solid history, while the actual public policies in the country still have more to do with the ancient governmental habit.

Daily Bell: How did you come to help relaunch the famous libertarian magazine Reason?

Machan: The gist of it is that Robert Poole, Manny Klausner and I, along with our personal partners and spouses found the original but quite inept version of Reason promising, so we took it over and developed it. Initially it was to be more like Commentary magazine or The Atlantic but then it became evident that no market for such a publication could be found; thus in time it started to move in the direction of what I call "hip-hop libertarianism," with an effort to appeal to young hedonistic individualists, not to serious, dedicated supporters of the free society, although some of that is still there.

Daily Bell: But you're not close to the magazine's brain trust anymore.

Machan: As you may have noticed, I haven't had anything in the magazine for a couple of decades and despite trying to get a letter or column accepted, have been repeatedly turned away. Still, the magazine serves a purpose and is very pretty at times.

Daily Bell: Let's focus on some modern-day topics. Is globalization a threat or a net positive for Western civilization?

Machan: Depends what kind. If what you globalize is freedom, individual rights, due process of law, the rule of law, free markets, and so forth, clearly it is a net positive and more. If all it means is that some elements of Western culture become widely embraced, with the West aspiring to be an empire, that is hazardous. I should add here that certainly, some proper, efficient, disciplined steps definitely need to be taken in response to terrorists but not by sacrificing the very principles we are supposed to be championing. (I wrote about this back in 1987, way before the issue moved center stage.) But as with most things the government takes up, containing and responding to terrorism have become excuses for greater levels of statism.

Daily Bell: Are you optimistic about America and Western freedom in general?


Machan: Over the long haul, definitely. With possibly major bumps on the way.

Daily Bell: Who are some of the leading free-market philosophers these days besides yourself?

Machan: I know of Douglas Rasmussen, Douglas J. Den Uyl, Eric Mack, Jan Narveson, John Hospers – though not very active now – David Schmidtz, Daniel Shapiro, Eliane Sternberg, Nicholas Capaldi, Aeon Skoble, Randy Dipert, Lester Hunt, James E. Chesher, John Hasnas, Fred Miller, Loren Lomasky, Rod Long, John Reis, Fred Seddon – all come to mind. Some of these individuals are concerned with business ethics, fighting the good flight for shareholder as opposed to stakeholder theory; some are analysts of the welfare state; some are rights theorists, some are defenders of anarcho-libertarianism/anarchism; some are general philosophers and historians of ideas; some are very serious and in depth political theorists and others do good philosophy in other areas.

Daily Bell: Can you give us the top five books that someone interested in freedom and free-markets needs to read? Feel free to include yours?

Machan: Douglas B. Rasmussen, Douglas J. Den Uyl – Norms of Liberty, Randy Barnett – Restoring the Lost Constitution, Roger Trigg – Reality at Risk, George Reisman – Capitalism, David L. Norton – Personal Destinies, Edward Pols – Acts of our Being, Tom G. Palmer – Realizing Freedom, and my own – The Normative Case for the Free Market System. There are many others but if I must select, these are the ones I recommend.

Daily Bell: Thanks. Ludwig von Mises emerged as the leading exponent of Austrian free-market economics in the 20th century. Are you a Misesian when it comes to the gold standard or do you believe in free-banking including fractional reserve private-market – non governmental – banking?

Machan: I think George Selgin has this topic nailed down best. I am a non-governmental money guy but not necessarily a gold guy – I don't know if something else could do the job! The folks in the market will say.

Daily Bell: Is the Internet making a difference in terms of increasing freedom and the diversity of ideas?

Machan: Plus and minus, as with all technology; depends who uses it for what purpose. In the hands of draconian or petty tyrants, it can be a major hazard but then the rebels, too, can make good use of it.

Daily Bell: We think one of the main challenges facing America today is the growth of the so-called pro-military conservative movement. We believe the movement almost purposefully confuses people about Jeffersonian classical liberal thought and is far more challenging to the growing Misesian free-market ideology than the Democrats. Agree? Disagree?

Machan: I fear you are right but I haven't looked into it sufficiently to confidently affirm or deny.

Daily Bell: What do you think of Sarah Palin? On the one hand, it seems to us, she espouses firm free-market beliefs. On the other, she speaks a great deal about patriotism and her support of the military, generally Homeland Security and the various wars on terrors. Isn't this somehow a contradiction?

Machan: I do not think much of or about ex-governor Palin, judging by my meager examination of some of her writings and speeches. Some friends of mine I respect a lot admire her mostly for some of her public policy decisions. But I have no idea about her general political outlook. And if she is, as reported, a creationist, that is very disappointing and tends to undermine her credibility as a serious thinking person.

Daily Bell: Why has socialism, or at least the mixed economy, remained such a popular form of governance, when it obviously doesn't work? Was Mises correct when he wrote that a nation or people cannot be "a little bit socialist."

Machan: No. Obviously, you can actually survive a long time as a mixed economy, although such a system is more likely to go socialist than one closer to the free market. People often live lives wherein they both eat their cake and have it around for a while. People go on violating good sense until a certain point and then draw back and wise up again for some time, only to turn around and mess it all up. I am fond here of the Laffer curve's lesson!

Daily Bell: Where does Rand fit into the free-market pantheon – is she a lonely, modern voice at this point?

Machan: Ayn Rand has laid out the best, most significant and most inspiring moral defense of individualism and the free society. But she comes out of a long line of free-market thinking. There is the tradition of John Locke, the libertarian side of J. S. Mill, Herbert Spencer, the neo-classical economists such as Friedman, Becker, Stigler, et al. – also, James Buchanan's and Gordon Tullock's public choice teachings, as well as some of the Catholic liberals at the Acton Institute and in Europe, at the University of Paul Cezanne in Aix-en-Provence, France. I am sure there are some others I cannot think of now.

Daily Bell: What about yourself?

Machan: I call myself a neo-Objectivist, someone who combines Locke and Aristotle with Rand's help and, of course, my own more developed classical individualism.

Daily Bell: Give us a sense of what your main preoccupations are right now as regards freedom and liberty in America and the world?

Machan: What concerns me most now is how readily top legal scholars embrace an unprincipled, communitarian conception of human community life and have tossed aside all concerns with individual rights, with the sovereignty of citizens, the very ideas that gave birth to the American political journey. Individual rights, as per John Locke and Ayn Rand, is what should be at the center of our legal order but it may disappear since they are either ineptly defended or scoffed at by sophisticates.

Daily Bell: Anything else?

Machan: It disturbs me how much star-gazing there is in academia, with people from old, established institutions always getting the attention by publishing houses and editors of journals, even from those that aim for a wider audience. As a case in point, only when stars appear in the mainstream media do the editors report that philosophy is getting around outside the academy. (This may sound like sour grapes but it isn't.) What is especially odd is that most of these editors are moral and political egalitarians but never bother to practice what they preach! So in the midst of my making an effort to show the superiority of freedom and individualism, I also try to fend off the opponents by showing how confused they are.

Daily Bell: What are your main philosophical concerns given this state of affairs?

Machan: It is very disconcerting that so many free market champions cling to the belief that morality and normative political economy are incapable of being dealt with rationally, that they are what is called non-cognitivists, thus leaving ethics, morality and normative politics to the enemies of liberty. The hope that social science alone can make the case for liberty is foolish, naive, and just plain wrong. Human beings are inescapably immersed in the issue of right versus wrong and trying to dodge this just won't wash.

Daily Bell: Is this why you're a classical liberal rather than a Rothbardian anarchist?

Machan: My concerns are normative – prescriptive – and moral, not primarily economic. Rothbard said governments are necessarily coercive and I disagree; he thought government must be a coercive monopoly and I disagree. He also toyed with WW II revisionism and I disagree. But let me point out that I'm certainly not a philosophical pragmatist. I'm a principled minarchist like Rand. Rothbardian anarchism has some influence but not among those engaged in intellectual exchanges with the powers that be, with mainstream statists. That's the significant, promising engagement now, one where liberty can make inroads. I am convinced minarchism can avoid all coercion and Rothbard was wrong claiming otherwise.

Daily Bell: How would that work?

Machan: If all citizens select a group of them to administer the just laws of the land, coercion is absent. (Machan note: For more, see my essay in Machan/Long, eds., Anarchism/Minarchism, Is Government Part of a Free Country? [Ashgate, 2006].)

Daily Bell: Very interesting. What motivates you to be so prolific and impassioned?

Machan: I love liberty and wish for everyone to experience it fully.

Daily Bell: Thank you for your time.

After Thoughts

We thought this was a very interesting interview because it involves the idea of drawing boundaries between the citizen and his or her government. These concepts are evermore important in our opinion because of the advances in free-market economic theory in the 20th century and the phenomenal growth of free-market thinking in general.

If one follows Austrian, free-market thought to its logical conclusion, one must inevitably come to the conclusion that ANYTHING that the state does to impose its will on the private marketplace is a price fix – a distortion that will cause a queue, rationing of some sort or both. While most of these distortions may be invisible, they tend to add up and eventually, if there are enough of them, society suffers and the quality of life declines.

In America, for instance, at least one third of the gross national product is redistributed by government at all levels. Now some of these funds may indeed end up supporting market needs but overall this kind of inefficiency begins to verge on insupportable. Americans – and Europeans, too – are suffering more than they know from these redistributions because they are in fact responsible for the joblessness and the lack of economic vibrancy that is afflicting almost all countries in the West these days.

When so much money is redistributed, the fabric of entrepreneurialism itself is affected. The social and familial linkages outside of the banking industry that are so important to new, small enterprises are affected. There is literally less money – or even no money – available for day-to-day business because it has been wastefully redistributed.

The gift of Austrian economics in part is to provide with a scientific explanation via marginal utility about how this process works. Absent marketplace competition and the invisible hand, there is simply no way that capital will find the appropriate channels. It is impossible. State planning simply cannot determine where money should flow with any certainty – though in fact the state planning process is not really concerned with such things, being basically a political apportionment.

All this having been said, the important question remains: How much inefficiency and lost opportunity does a civil society want to tolerate and how much CAN it tolerate before it collapses? A case can certainly be made, for instance, that the USSR finally collapsed because so much capital had been misappropriated by government entities that the entire marketplace was grossly dysfunctional and unable to operate. Is the West verging on this sort of dysfunction? When is the threshold reached?

Tibor Machan obviously is not a backer of the kind of government scheme that afflicted the USSR and eventually helped caused its downfall. In fact, like Rand herself, he has seen these redistributionist efforts close-up and hates them with a visceral hatred that has fueled much of his career. But unlike some in the free-market community, Machan has given us the gift of considering just where the boundary lines between an active and necessary state and the free-market should naturally fall.

Machan's arguments for minarchism echo Rand's to some degree, and throughout his career he has been a staunch voice for the necessary calibration of state involvement in the private marketplace. His conclusions, which echo other responsible minarchists, suggest that the state's role is mainly in protecting individuals from aggression – and whatever flows out of that. A state would certainly have a role in the necessary self-defense functions and perhaps some other fundamental processes including court and (minimal) taxation functions, but would likely not be involved much – as Western states are today – in areas of monetary policy and business regulation.

We would urge readers of the Daily Bell to seek out the work of such free-market philosophers as Tibor Machan because the rational appraisal of state duties is at the heart of the conversation about freedom. One can hardly be a responsible citizen in our estimation (and many are not) without considering these issues. Machan has spent a career enumerating them and we are grateful for his efforts in this area and for the publications by him and his colleagues that continue to shed light on the important and controversial boundary line between "citizen and state."

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