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J.E. Cairnes Anticipated Behavioral Economics – L. v. Mises Responded

On pages 19-20 of Ludwig von Mises‘s 1949 essay “Laissez Faire or Dictatorship,” as reprinted in the 2008 Liberty Fund edition of Mises’s 1952 collection, Planning for Freedom, Mises discusses the economist J.E. Cairnes‘s 1870 criticism of a policy of laissez faire (footnote deleted):

Let us for the sake of argument accept the way in which Cairnes presents the problem [with a policy of laissez faire] and in which he argues. Human beings are fallible and therefore sometimes fail to learn what their true interests would require them to do. Furthermore, there are “such things in the world as passion, prejudice, custom, esprit de corps, class interest, to draw people aside from the pursuit of their interests in the largest and highest sense.” It is very unfortunate that reality is such. But, we must ask, is there any means available to prevent mankind from being hurt by people’s bad judgment and malice? Is it not a non sequitur to assume that one could avoid the disastrous consequences of these human weaknesses by substituting the government’s discretion for that of the individual citizens? Are governments endowed with intellectual and moral perfection? Are the rulers not human too, not themselves subject to human frailties and deficiencies?

Good economists have never been as naive about human nature as behavioral economists suppose. And, as Mises points out here, it is naive to suppose that whatever behavioral or psychological quirks and imperfections are at work when individuals make decisions for themselves are not at work when individuals make decisions for others.