In a recent talk at the Ludwig von Mises Institute, Tom Woods – a well-known figure in libertarian circles – made the claim that Austrian economics is a value-free science. You cannot, in other words, deduce that any policy is more preferable to another on the basis of Austrian School thinking alone. This I believe to be true. Other approaches to economics are probably more guilty of sneaking values into their theoretical models, for instance by defining such things as rationality in a way that makes some (or perhaps most) people irrational – and the preferences of irrational people is, presumably, not something that we have to care much about when making policy. Austrian economics, on the other hand, is (at least at its “praxeological” root) a theory about all human behavior, be it “rational” or “irrational”. One of the main figures of the approach, Ludwig von Mises, even said explicitly that irrational action is a meaningless concept.
So, if Austrian economics is so value-free, how come most Austrian economists today are libertarians or anarcho-capitalists? Whereas Mises reached his laissez-faire conclusions mainly by pointing out that, given people’s actual preferences (he assumed that material wealth is what most people want), a minimal state is most likely to satisfy them to highest degree, modern Austro-libertarians usually combine their economic approach with an explicitly moral premise, namely that all initiation of force against people is immoral (and the state and its apparatus of taxation is ultimately based on force). This is often referred to as the non-aggression principle.
It is, thus, not the case that it is enough to simply learn Austrian economics to become a libertarian (something that at least some Austrians seem to presume). But the leap between moral principles and economic policies might not be that long if we start with relatively uncontroversial moral principles. In his talk, Tom Woods did, as mentioned above, acknowledge that Austrian economics in itself is value-free. But he also claimed that it if it is combined with the uncontroversial moral claim that human welfare is good, then we get the political conclusion that most Austrians reach, namely a highly limited state or no state at all.
The problem with this is, of course, that the moral principle that human welfare is good is not uncontroversial. Obviously, it is very vague, so before we discuss its validity we have to find out exactly what it means. I suspect that when Woods is espousing this principle, he means that human welfare is defined as the satisfying of human preferences (which are not interpersonally comparable) in the absence of (physical) coercion. Put like this, it is not an uncontroversial principle. Neither moral philosophers and political theorists, nor common people, do subscribe to it in very large numbers. (This is not to say that the principle is necessarily based on bad reasoning, only that it is wrong to state that it is uncontroversial.)
As for myself, I do not have any large (philosophical) quarrels with Austrian economists. The main reason why I disagree with many of their political conclusions is that we have different moral principles. Of course, I don’t know of any Austrian economist who has combined his or her economic insights with hedonistic moral principles. Perhaps it is possible that such a person could convince me that a minimal state (or anarchy) would maximize happiness. Until then, I will adhere to some kind of Welfare state as my default position in politics.