[jshen]

"the kind who insists that buyers in a market are rational in some individual or even collective sense, that they somehow optimize their own happiness or utility function."

This is my core point as well, thanks for taking the time to lay out a better case than I did. It's rather shocking once you realize that the human brain is not rational in the way we often think it is. I find this fact to completely destroy most libertarian principles.

[mindcrime]

I find this fact to completely destroy most libertarian principles.

How does it do anything of the sort? The most fundamental libertarian principle is simply that one should not use force/aggression/fraud to compel someone to do something against their will[1]. That people should be free from use of oppressive force does not require that they be purely rational.

As for the economic arguments that libertarians often use... understand that consequentalist libertarians like to demonstrate that free market principles usually result in better outcomes for most people, most of the time. I don't know any libertarian or free-market advocate who will contend that there are no pathological edge cases to the free-market / laissez-faire approach. They simply accept that as part of the system and acknowledge the role of private charity to fill gaps.

And to add one more point... while the Austrian School of economics, which is very influential to libertarians, and may sometimes be thought of as almost synonymous with libertarianism, does indeed put a strong emphasis on deductive logic and universal laws, I don't find many (if any) libertarians / austrian economists, who contend that humans are strictly rational, all the time.

[1]: http://en.wikipedia.org/wiki/Non-aggression_principle

[pemulis]

Actually, the granddaddy of libertarian economics, F.A. Hayek, spent his whole career arguing that people are irrational (which is to say, they do not all share the same preferences), and that attempts to shape the economy based on a presumption of the existence of rational utility are doomed. Most non-libertarian economic systems are based on the assumptions that,

1. There is such a thing as rational utility, and 2. Bureaucrats can figure out what it is.

[jshen]

"Most non-libertarian economic systems are based on the assumption ..."

Huh? So you're saying there is only libertarianism or bureaucratly controlled economies? That's wrong on it's face.

Here's my idea of a good economy, markets for most things with good government regulation of health, safety, etc. And, a few public industries like water, power, and healthcare. This system doesn't fit your model at all.

[RickHull]

Note that this criticism does not apply to the Austrian school of thought. In Human Action, Ludwig von Mises establishes that humans reveal their preferences through action. There are no hangups about whether these preferences are "rational" or free of mistakes.