Por Adrián Ravier: Publicado el 16/4/14 en http://puntodevistaeconomico.wordpress.com/2014/04/16/an-open-mind-essays-on-liberalism-nuevo-libro-de-alberto-benegas-lynch-h/
Tengo la satisfacción de comentar a nuestros lectores que finalmente pude completar una tarea que deseaba hace tiempo. Se trata de la compilación de varios ensayos en inglés del Dr. Alberto Benegas Lynch (h).
La mayoría de estos artículos han sido presentaciones que el profesor Benegas Lynch (h) ofreciera en las reuniones anuales de la Mont Pelerin Society, más precisamente en Guatemala (1990), Cannes (1994), Viena (1996), Suiza (1997), Santiago de Chile (2000) y Buenos Aires (2011).
El libro puede adquirirlo aquí en ISA Books, equipo de trabajo al que le estoy muy agradecido por el trabajo de edición que realizaron.
In these lines I intend to provide a context about the life and work of Alberto Benegas Lynch, Jr., which I hope will serve as a basis for understanding the essays included here.
I was about 19 years old when I first made contact with the ideas of Alberto Benegas Lynch, Jr. It was around the year 1997. My father and I use to watch some programs about politics and economics on television during dinner, and suddenly the presenter said “Doctor Benegas Lynch is going to explain why we must eliminate the Central Bank.” I look at my father with surprised at such a pose. But he just said, “Listen to him.”
My father knew well both the interviewee and his father, and while he had already approached me to books of Ludwig von Mises and Friedrich Hayek, I had not yet made contact with the Austrian monetary theory that supported those thoughts.
Soon, I got from a bookstore his Fundamentos de Analisis Económico(Foundations for Economic Analisys), a handbook of economics introducing his students in five Faculties of the University of Buenos Aires where he taught: Economics, Law, Engineering, Sociology and the Department of History at the Arts in various fields of study as, the methodology of economics, theories of value and price, the market process, government interference in the market, the currency, capital formation, economic cycles, the labor market, the principles of taxation, foreign trade and the institutional framework. This work was originally his doctoral thesis, but was then enriched with successive editions. The eleventh edition already had 567 pages, but I read the whole thing in less than a week. I remember it was then that I first felt that I understood economy.
The last three years of my bachelor´s degree were different thanks to this author of whom I can say today, I’ve read more than a dozen books, numerous essays and about a hundred articles. His writing is unique, his understanding of the social problems must be heard, and that is why I celebrate and I am delighted to see this book of essays published in English in this edition of ISA Books. Because while the professor Benegas Lynch has an enormous professional recognition, both in Argentina and abroad, very few English speaking people have read some of his work.
The book that the reader has in his hands is a compilation of essays, most of which have been presented at various meetings of the Mont Pelerin Society. In reading the titles, the reader may think that these essays deal with various isolated or disjointed topics, but behind each one there’s a unique line of thought, a single philosophy, the one of liberal who has managed to keep his eyes open but fundamentally an open mind.
The way to understand the liberal philosophy of Professor Benegas Lynch is precisely the one represented in the motto of the Royal Society of London:nullius in verba [Chapter 1]. There is no final word, and there isn´t between mortals a final authority. We liberals must always be open to refutation and corroboration, knowing that all our knowledge is provisional. This does not mean, however, falling into relativism or skepticism, as explain by philosophers and Benegas Lynch himself in the first chapter of this book, it would be falling into a contradiction.
But this has been precisely the attitude that has led Alberto Benegas Lynch, Jr. through a very extensive literature. Unlike other authors familiar with the literature of a single tradition that have remained only in it, the author expanded his vision with hundreds of authors from different traditions and approaches. Each paper published by him, whether pure or applied theory, summarizes an extensive literature on the specific field of research, in which he has worked, reflected, reworked and enriched with a reading of his own.
It is for this reason, too, that his work is not without contradictions. The reader will perceive precisely this evolution in his thinking along these pages. In short, from the classical liberalism of the first two chapters to the later proposed auto-government, one can notice new authors, new readings and a process of evolution that young researchers should take as an example for our work.
The philosophy of Professor Benegas Lynch, however, is not limited to an open mind, but also a critical spirit. A spirit that led him to understand the world by questioning the nature of certain basic institutions that in a modern society cannot be understood outside of the state functions. Such is the case of education [Chapter 3], money and banking [Chapter 4] and foreign aid [Chapter 5], the three areas covered in this book. But this author went even further. With Martin Krause he established several projects that allow us to devise a possible transition to an open society, working towards the “denationalization” of the “public services”, the health system, the labor legislation, the pension system, the environment and even an open skies policy. Later, he even advanced on complex issues such as copyrights, poverty or drugs.
But the logic behind each of these fields is the same. The market can consistently provide both decentralized and competitive public services like education, health, pensions and manage to reduce poverty, much more efficiently than the state.
In the case of education, for example, it is a myth to think that today we have some private services in this field [Chapter 3]. I remember a lecture by Professor Benegas Lynch where he explained that virtually worldwide, ministries or departments of education decide about the programs, contents and bibliographies to be used by private and state schools. This does not allow them to operate. When this is so, strictly there is no such thing as private educational institutions; they all belong to the state. In this context, the building of a “private” school may belong to a parent commission or may decide such things as the color of the uniforms to be used by students, or whether or not they carpet the classrooms, but the core product dispensed therein, this is programs, contents and bibliographies, are determined by the state. According to the laware private schools, but in fact they belong to the state.
The same applies to money and banking [Chapter 4]. Once we realize that money and banking services have emerged spontaneously in the market, and that at maturity the system was much more efficient, than the current one, to provide sound money, is incomprehensible that today we have the issue of money monopolized by central banks. Friedrich Hayek himself led the way by proposing the denationalization of money, and stressing the need for competition in this field. But later Lawrence H. White and George Selgin dealt with systematizing theoretically and empirically how the market and the invisible hand could provide sound money. In this regard, we must add that Kevin Dowd has collected an extensive literature summarizing cases where free banking was able to manage in a competitive and decentralized manner the money. In this same field, Professor Benegas Lynch was one of the first authors to recognize that Jean Gustave Courcelle Seneuil was one of the first economists to defend the fractional-reserve free banking.
Other topic that unfortunately did not get to be in this book, but did in other writings of the author, has to do with pensions. Regardless of the intentions of those who sought to implement the distribution system, the reality is a picture of a situation that contrasts with that intention. The pension system of the State does not provide any of the services for which it was created. Is not farsighted, nor serves for others to predict their future, nor is social whatever meaning is given to this word. For retirees the state pension system means a punishment for their years of work and contributions. For workers and contributors mean a countdown to misery. If something cannot be done in Argentina is expect that, with the state pension system, someone has the problem of minimal subsistence in old age solved.
Professor Benegas Lynch opposed to central planning of socialism, because he understood on the basis of the writings of Hayek and James M. Buchanan that the state does not have the knowledge to effectively manage the respective services, but also has no incentive to properly manage resources.
If these two arguments are central to understanding the difficulties of the state to provide services related to education, money and pensions, does too with foreign aid to “countries in need” [Chapter 5]. The support from multilateral lending agencies offer to developing countries may be well intentioned, but instead of helping, compromised even more to the poor. Without this assistance that usually takes the form of foreign debt, governments would be required to attract foreign private investment, adjust their fiscal imbalances, abandon inflationary policies and the ban to get money out of the country, giving up the continued pressure on private businesses, also to restrictive legislation and discriminatory taxes, and should give assurances against expropriation, nationalization and confiscation. This would free business creativity and economic activity would receive a boost to encourage economic development and employment creation, but no longer under the jurisdiction of the state visible hand, but under the invisible hand of the market.
Remembering one of the most modern development experts, what is required to solve the problem of knowledge are more “searchers” and less “planners”. What these countries need is not planned solutions from outside, but people who can build and seek solutions to their own problems from within the system. These searchers through their creativity and using their knowledge of time and place are the only ones who can solve the problem of poverty. International aid from socialist, has so far avoided these “microeconomic” solutions from moving forward.
And even more can be said about the incentives. The literature contains numerous cases in which cash transfers are received by authoritarian governments, not democratic, that can only stay in power by coercing the people by receiving those same transfers. Without the “foreign aid”, the neediest people would find answers quickly.
We can see how certain ideas, at first, applicable to socialism, now extrapolated to new fields of study such as economic development. And this is precisely what the professor Benegas Lynch has done by criticizing not only socialism but also market socialismand particularly the culture of nationalism, which is now supporting the welfare state. The literature explains that the modern state warns certain “market failures” and so it justifies what public goods should be provided and what externalities to avoid, both of which do not escape the ambiguity.
Ronald Coase has taught us how important it is to assign property rights to solve just such problems of externalities, especially pollution occurrences on the environment. Market failures, then, not only does not require of more state to be internalized, but less state and more market. Professor Benegas Lynch argues precisely this argument in response to David Miller about the “Life Boat Situations.” [Chapter 6]
If within the orbit of the state, there is no room for public services or for education, health, pensions, or the environment, what functions concern to the Leviathan? In his Fundamentos de Análisis Económico (Foundations for Economic Analysis), quoted above (p. 480) Professor Benegas Lynch noted that “el gobierno se constituye para salvaguardar los derechos de los gobernados. Esta función es la razón de ser del gobierno.” However, in his book entitled Hacia el Autogobierno: una crítica al poder politico (Towards auto-government: a critique of political power), the author explains that there may come a time in the history of mankind in which individuals can warn they can live better without a state. In that case, we will have achieved auto-government. I imagine such a society as an ideal situation (these are my words) in which we would be free of coercion that today involves the payment of taxes, and a situation in which each person would be responsible for their own welfare and that of his family, and of course of their future. Chapter 7 precisely summarizes the main arguments of that book, of which I want to introduce the final paragraph:
[…] [A]ll these explanations can be extended to include protection and judicial services. As has been explained, the only way to proceed accordingly is through the debate of ideas and persuasion, in the context of an open-evolutionary process. Again, if these ideas are not accepted, nothing can be done other than refining the argument, unless the argument itself contains propositions proven to be false. In any case, abrupt changes in history are not convenient: new ideas should be sifted and implemented in a slow process by which experience is learned through trial and error. Anthony de Jasay explains that non coercive spontaneous orders logically, and thus historically, precede the coercive arrangements of the state apparatus: “There has to be some kind of economic order first, before the state can find the resources to lay the infrastructure for a new one. Perhaps, however, the old one need not be a ‘market’ order? Yet, if it is not, can it be productive enough? It cannot if it happens to be ‘in ruins.’ And if it can, what reason has the state to ‘construct the infrastructure’ for a different one?” (1994a, 35).
The last two chapters of the book focus on the causes of the economic crises that the European Union and the United States are experiencing. In the first case, as correctly anticipated by Friedrich Hayek in The denationalization of money-above-cited, it shows that the Euro is a bad idea.
The Euro -this is added by me-, was created as a way that would allow the European political elite, especially from France, to compete with the political and financial U.S. dominance. All the benefits that were identified in various reports, such as reducing transaction costs, are secondary reasons. The ultimate goal of the creation of the euro was to create the United States of Europe, regulated and controlled centrally from Brussels, with special influence of the policies of Paris and Berlin.
In this sense, monetary policy managed centrally from the European Central Bank is an example of what Friedrich A. Von Hayek would have called the “fatal conceit”. This institution does not have the knowledge or the incentive to properly manage the money, because it does not know what the level of the interest rate should be, or how much money you need to issue, or what would be an appropriate level of the exchange rate with the dollar.
For over 30 years Hayek warned Europe of the dangers of unifying European currency by eliminating the competition of the prevailing national currency. Such competition would ultimately be the only way to stop inflation and the continued devaluation of the local currency, to the extent that people would refuse to demand currency in constant depreciation.
The crisis Europe faces today; particularly the housing bubble has been the product of monetary policy of the European Central Bank.
This is what is briefly suggested by the comments of Professor Benegas Lynch [Chapter 8] on the implications of monetary integration, in this case, for the regional bloc of the European Union. In accordance with Hayek, Benegas Lynch explains that this situation prevents competition. If instead of a single currency, Europe will have competition from several national currencies, Europeans could choose the one currency that has behaved more stably. Today there is no competition, and Europeans are bound to suffer the consequences of inflationary policies that the European Central Bank manages.
Note the reader that the conference in question dates from 1996, during the annual meeting of the Mont Pelerin Society, held in Vienna. If Europe had then notice the author’s suggestions, the housing bubble of the early years of the 2000s could have been avoided, and the dire consequences that today generate high rates of unemployment, stagnation and much social unrest.
To close, the book includes the conference that Professor Benegas Lynch offered in Buenos Aires, in April 2011, in what was the first meeting of the Mont Pelerin Society organized in Argentina. One might say that an Argentinean has no authority to explain a crisis so far to his country, as the one of the United States. However, Professor Benegas Lynch knows both the reality and history of that country, as his own. Perhaps sadly, he published a book entitled United States v. United States, where he faced precisely the country of the Founding Fathers, with the current country of Clinton-Bush-Obama. That book warns that the United States of America is abandoning the principles bequeathed by the Founding Fathers, and that this will necessarily end in tragedy. Of course, the article delineates the essential elements of the 2008-2009 crises, which effects are still with us, but understanding the context of that conference in the context of the author’s work, becomes a fundamental requirement.
Of course this book cannot summarize the profound work of one of the most important authors that my country has produce. But I have the hope that in the future other of his contributions can be translated into English.
 About his father, see Alberto Benegas Lynch in Memoriam, Centro de Estudios sobre la Libertad, Buenos Aires, 1999.
See BENEGAS LYNCH, Jr., A., Fundamentos de Análisis Económico, Foreword of Friedrich A. von Hayek and preface of William E. Simon, Buenos Aires: Abeledo-Perrot,  1994, eleventh edition.
 A selection of his articles was recently publish in BENEGAS LYNCH, Jr., A.En Ebullicion, Rosario, Fundación Libertad, 2009
BENEGAS LYNCH, Jr., A., Liberalismo para liberales, Buenos Aires: Editorial Emecé, 1986, two editions.
BENEGAS LYNCH, Jr., A., Entre albas y crepúsculos: peregrinaje en busca de conocimiento, Mendoza: Fundación Alberdi, 2001; 631 pages.
BENEGAS LYNCH, Jr., A., Hacia el autogobierno: una crítica al poder político, Prologue of James M. Buchanan, Buenos Aires: Editorial Emecé, 1993; 516 pages.
BENEGAS LYNCH, Jr., A., El juicio crítico como progreso, Buenos Aires: Editorial Sudamericana, 1996; 773 pages. AlsoseeBENEGAS LYNCH, Jr., A.,Contra la corriente, Buenos Aires: Editorial El Ateneo, 1992; 423 pages.
 I write “state” in small letters intentionally, because that´s what professor Benegas Lynch suggested we should do in one of his articles.
BENEGAS LYNCH, Jr., A., «La educación en una sociedad libre», Estudios Públicos, N° XV, 1984, Chile.
BENEGAS LYNCH, Jr., A. and KRAUSE, M, Proyectos para una sociedad abierta, in two volumes, Buenos Aires: Abeledo-Perrot, 1993; 770 pages.
BENEGAS LYNCH, Jr., A., «Apuntes sobre el concepto de copyright», Academia Nacional de Ciencias, Buenos Aires, 1998.
BENEGAS LYNCH, Jr., A. y KRAUSE, M, En defensa de los más necesitados, Buenos Aires: Editorial Atlántida, 1998; 382 pages.
BENEGAS LYNCH, Jr., A.La tragedia de la drogadicción. Una propuesta, Prologue of Carlos Alberto Montaner, Buenos Aires: Ediciones Lumiere, 2006; 281 pages.
 HAYEK, F.A., Denationalisation of Money: The Argument Refined, 2.ª extended edition, Institute of Economic Affairs, Londres 1978
 WHITE, L.H., Free Banking in Britain: Theory, Experience and Debate, 1800-1845, Cambridge University Press, London and New York 1984. Also seeCompetition and Currency: Essays on Free Banking and Money, New York University Press, New York 1989.
 SELGIN, G., The Theory of Free Banking: Money Supply under Competitive Note Issue, Lanham, MD.: Rowman & Littlefield, 1988.
 WHITE, L. H. and SELGIN, G., “How Would the Invisible Hand Handle Money?”, Journal of Economic Literature 32 (December 1994): 1718-49.
 DOWD, K., The Experience of Free Banking, London and New York, Routledge, 1992.
BENEGAS LYNCH, Jr., A. Jean Gustave Courcelle Seneuil. Un adelantado en Chile: dos debates para el mundo de hoy, Santiago de Chile: Universidad del Desarrollo, 2011.
 Report No. 1 of the projects for an open Society, quoted previously.
 WILLIAMSON, C., “Exploring the failure of foreign aid: The role of incentives and information”, The Review of Austrian Economics. Vol, 23 (1), March 2010, pp. 17-33.
 EASTERLY, W., “Planners versus Searchers in Foreign Aid”, Asian Development Review, Asian Development Bank, vol. 23(2), 2006, pages 1-35.
BENEGAS LYNCH, Jr., A., Socialismo de mercado: ensayo sobre un paradigma posmoderno, Rosario: Ameghino, 1997; 176 pages.
BENEGAS LYNCH, Jr., A., «Nacionalismo: cultura de la incultura», Santiago de Chile, Estudios Públicos, N° 67, Invierno de 1997, (originallypresented in Spain, October of 1994, Benidorm).
BENEGAS LYNCH, Jr., A., «Bienes públicos, externalidades y los free-riders: el argumento reconsiderado», Estudios Públicos, Chile, N° 71, Winter of 1998.
 This paragraph can be translated as: “the government is created to safeguard the rights of the governed. This function is the reason for the government.”
BENEGAS LYNCH, Jr., A., Hacia el autogobierno: una crítica al poder político, Prologue of James M. Buchanan, Buenos Aires: Editorial Emecé, 1993; 516 pages.
BENEGAS LYNCH, Jr., A. Estados Unidos contra Estados Unidos, México, Fondo de Cultura Económica, 2008. Another book on the same topic is BENEGAS LYNCH, Jr., A.y JACKISCH, C.Límites al poder. Los papeles antifederalistas, Buenos Aires: Ediciones Lumiere, 2004; 252 pages.
 I have worked on this topic in “The Subprime Crisis”, The Quarterly Journal of Austrian Economics, Vol. 15, Num. 1, Spring 2012, pp. 45-74. (with Peter Lewin)
Adrián Ravier es Doctor en Economía Aplicada por la Universidad Rey Juan Carlos de Madrid, Master en Economía y Administración de Empresas por ESEADE y profesor de Macroeconomía en la Universidad Francisco Marroquín.