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The homogeneic view

Economic Theories that treat humans as similar parts (cogs if you like) of a great machine, invariably end up justifying ends by this view, whichever those ends may be. The goal of society always trumps the goal of the individual because the ultimate goal of society is to perfect itself. Hence, any and all obstacles from this lofty goal must be removed and this is ethical and moral. And who makes these decisions? Society’s representatives, also known as governments. In other words, the end justifies the means.

For example, increasing taxes is good because the collected money will be distributed among the poor people although some middle class people will suffer. This is justifiable from their point of view because as society is homogeneous, if some people from the middle class suffer that’s OK because they are equal to everybody else and therefore replaceable. It is OK to do so because those in the middle class which will suffer are currently “better off” or “not paying their dues” and are therefore different from the rest of society and thus detrimental to it. This is an anomaly that needs correcting and therefore it is ethical and moral.

Or this one. It is OK to go to war and sacrifice some people because as we are all the same, they are replaceable. Those sacrificed will have done so for the rest of society which will benefit equally, therefore it is ethical and moral.

Communism and Dictatorships represent the most extreme mechanistic view of society while Democracies the least extreme (considering only main Politico-Economic Theories).

The heterogeneic view

In contrast, Austrian Economics and Libertarianism consider people members of the same species but distinct individuals. As such, they not only behave distinctly but they are capable of modifying their behavior at will. No individual is identical to any other individual, although there are similarities. Therefore, individuals are not interchangeable since every individual has distinct goals. Moral and ethical questions must then be answered one individual at the time, one issue at the time. Furthermore, these questions cannot be answered by other individuals (e.g. society) but the affected individuals themselves.

For example, to answer the question whether or not it is ethical or moral to raise taxes for re-distribution to poor people, leaving some middle classers suffering, cannot be answered by poor people. It must be answered by the people whose taxes will be raised, particularly those middle classers facing suffering. As such, answers will be as diverse as the people providing them. Since each answer is personal, every person may then act as he or she perceives that his or her ethics and morals demand. Some will chose to donate the proposed tax increase, some may choose not to donate and some may donate more or less than proposed. It is up to every person to answer morally and ethically to the challenge.

Similarly, it is up to every person that may face death in a war to decide whether or not his or her sacrifice will benefit other people. It is up to each person to determine what is ethical or moral.


In the previous section we have laid out how both theories view economics and who makes moral or ethical choices within them. The question we need to ask now is if those moral or ethical choices are valid.

In a homogenic economic system these choices would be performed for us by other people (i.e. governments) with our consent (i.e. exercising our free will).

In heterogenic economic systems they would be performed by us gauging options and then selecting one (through the exercise of free will).

If any of those conditions is false then these moral and ethical choices are invalid.

Free will

In order to answer the above question, we need to determine first if this thing called “fee will” actually exist. This is a very important question that has baffled philosophers for several thousand years, and they have yet to reach a final conclusion. Hence, it is very unlikely that we will be able to answer it here. However, we strongly suspect that free will indeed exists. As a matter of fact, Libertarianism is based on the assumption that free will exist. On what do we base our assumption? On the following points:

  • The universe is not deterministic. Determinism is the idea that everything follows laws; therefore once we know those laws and the initial condition, the future can be forecasted with absolute precision. Physics tells us that there are random events and un-knowable values in the most basic particles that form the universe. Therefore, the universe is not deterministic and hence there is a possibility that something other than randomness may affect it. In our case we call that possibility “free will”.
  • We believe we can objectively recognize good from evil. We all do. However, if we would not have free will, this would not be possible since we would be influenced by something else and therefore we would not be able to recognize objectively good from evil. Therefore the existence of free will is part of our most basic assumptions.
  • We implicitly recognize free will when we reflect on the choices we made. When we do so, we express ourselves in the following manner: “I should have done this or that”. Through the use of “I” we recognize that it was our decision and not somebody’s else, which means that the decision was made freely by us or through our free will.

We naturally act as if free will actually exists. Therefore, our assumption that this thing called “free will” exists seems to be a sensible one.

Valid or invalid

Now that we can assume with certain confidence that free will actually exists, we can go back to the previous question and review how both Economic Theories fare.


In homogenic Economic Theories, society’s representatives (i.e. governments) make the decisions. Therefore to the degree to which those decisions are made for us and imposed to us, we have no free will.

The standard counter-argument to this position is that we do exercise our free will through the government. However, this assumes that there is a valid Social Contract between us and our government. This could not be further from the truth as we have showed in our lesson Social Contracts Are A Scam.

Therefore as the decisions are made by other people and imposed to us, these moral or ethical choices are invalid.


In Austrian Economics or Libertarianism, ethical or moral choices are always performed by people, one person at the time by exercising their free will. They are not imposed to them and therefore they are valid.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Austro-Libertarian morals and ethics - Part 3


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