2012-02-13

Empirical Evidence In Favor of Austrian School Economics

Way back in the 1940s, Ludwig von Mises wrote about contraception in Human Action [Scholar's Edition, p665], saying:
The transition to capitalism-i.e., the removal of the obstacles which in former days had fettered the functioning of private initiative and enterprise-has consequently deeply influenced sexual customs. It is not the practice of birth controI that is new, but merely the fact that it is more frequently resorted to. Especially new is the fact that the practice is no longer limited to the upper strata of the population, but is common to the whole population. For it is onc of the most important social effects of capitalism that it deproletarianizes all strata of society. It raises the standard of living of the masses of the manual workers to such a height that they too turn into "bourgeois" and think and act like well-to-do burghers. Eager to preserve their standard of living for themselves and for their children, they embark upon birth control. With the spread and progress of capitalism, birth control becomes a universal practice. The transition to capitalism is thus accompanied by two phenomena: a decline both in fertility rates and in mortality rates. The average duration of life is prolonged.
In the Misesian view, contraception came hand-in-hand with wealth. The first methods of birth control (i.e. drugs, devices and such) appeared at the dawn of the Industrial Revolution and gradually more and more widespread as society's wealth increased into the 20th Century.

One easy test of this line of reasoning is the presence of significant price elasticity in the contraceptive market. With a hat tip to Tyler Cowen, I can point interested readers to precisely such evidence in both the developed and developing world.

In the same chapter of Human Action, Mises emphatically noted that even having access to contraceptives isn't adequate for population control. What is important is a general spirit of capitalism and scientific progress. He called these things elements of Western culture, but 60 years later I no longer feel that's an adequate characterization. The spirit of capitalism and scientific progress is now more evident in the East than it is in the West, or so it seems to me.