There is a bit of a feud going on in the Austrian economics family. It started with a really long article by Jesus Huerta de Soto entitled “An Austrian Defense of the Euro”. It was published on the Mises Institute’s website. Yes, you did read that correctly. He actually somewhat defends the euro from an Austrian perspective.
Gary North published a long article (not quite as long though) as a rebuttal. North blasts de Soto in so many areas, I wouldn’t even know where to start. Gary North does have an excellent understanding of economics and morality and he makes a lot of relevant points to refute de Soto.
One of the things North discusses in his piece is 100% reserve banking. He said that he has never seen the point made that Rothbard was an anarchist and yet he advocated for a law against fractional reserve banking. He sees this as a contradiction. I have commented on fractional reserve banking before.
If that wasn’t enough, Walter Block chimed in at Lew Rockwell’s blog. North and Block have been at each other’s throats ever since their live debate on the subject of getting a PhD in economics.
Block makes the point that even though someone is an anarchist, it doesn’t mean he doesn’t believe in laws. He just doesn’t believe in government laws. They would be implemented by the market and private defense agencies. Block is correct to point out that anarchists favor laws against murder, rape, etc. It is just that they don’t believe in having a government to enforce them.
Block goes on to say, “Murray opposed (again, as a libertarian, not Austrian) the free banking (of Selgin and White).” This doesn’t really make any sense. If anything, you would be opposed to free banking as an Austrian, but not as a libertarian. Austrian economics would study the pragmatism of a certain policy. Libertarianism would study the morality of a certain policy.
There is another thing wrong with just that sentence. Why does Block invoke the names of Selgin and White? Why can’t he just deal with free banking in general instead of just the arguments of two individuals? Gary North mentioned nothing about Selgin and White in his piece. Ok, so Rothbard opposed the free banking advocated by Selgin and White. What about the free banking not advocated by Selgin and White? Is Block just trying to confuse the issue here?
Block says that fractional reserve banking is fraud. Does that mean he also wants to outlaw insurance agencies? If everyone got into a car accident tomorrow, there is no way that the insurance companies could pay everyone the contracted amount. Yet, even without government mandates, most individuals would continue to buy car insurance voluntarily. If he were consistent here, then he should favor laws banning insurance.
And finally, and most important, Block says that anarchists are still in favor of laws. They just shouldn’t be government laws. That is fine as far as I’m concerned. But even if laws are enforced by private defense agencies, there are still guns involved. I can understand an agency, or even an individual, using force on a murderer or rapist. But Block wants to invoke violence regarding fractional reserve banking. You can have consenting adults who agree to certain terms of a contract. The bank customer can even be completely aware that the bank is not holding all deposits in reserve. Yet Walter Block would use a gun or hire someone with a gun to break up the contract.
My question for Block is, who would you point the gun at? Would you point the gun at the bank customers, the banker, or both? If they did not cease and desist, would you kill them? If you kill someone over lending, based on an agreed contract, how libertarian is that?