“Every couple of years, mainstream media hacks pretend to have just discovered libertarianism as some sort of radical, new and dynamic force in American politics. It’s a rehash that goes back decades, and hacks love it because it’s easy to write, and because it’s such a non-threatening “radical” politics (unlike radical left politics, which threatens the rich).
Pull up libertarianism’s floorboards, look beneath the surface into the big business PR campaign’s early years, and there you’ll start to get a sense of its purpose, its funders, and the PR hucksters who brought the peculiar political strain of American libertarianism into being — beginning with the libertarian movement’s founding father, Milton Friedman. Back in 1950, the House of Representatives held hearings on illegal lobbying activities and exposed both Friedman and the earliest libertarian think-tank outfit as a front for business lobbyists. Those hearings have been largely forgotten, in part because we’re too busy arguing over the finer points of “libertarian populism.”
Milton Friedman. In his early days, before millions were spent on burnishing his reputation, Friedman worked as a business lobby shill, a propagandist who would say whatever he was paid to say. That’s the story we need to revisit to get to the bottom of the modern American libertarian “movement,” to see what it’s really all about. We need to take a trip back to the post-war years, and to the largely forgotten Buchanan Committee hearings on illegal lobbying activities, led by a pro-labor Democrat from Pennsylvania, Frank Buchanan.
What the Buchanan Committee discovered was that in 1946, Milton Friedman and his U Chicago cohort George Stigler arranged an under-the-table deal with a Washington lobbying executive to pump out covert propaganda for the national real estate lobby in exchange for a hefty payout, the terms of which were never meant to be released to the public. They also discovered that a lobbying outfit which is today credited by libertarians as the movement’s first think-tank — the Foundation for Economic Education — was itself a big business PR project backed by the largest corporations and lobbying fronts in the country.
It starts just after the end of World War Two, when America’s industrial and financial giants, fattened up from war profits, established a new lobbying front group called the Foundation for Economic Education (FEE) that focused on promoting a new pro-business ideology—which it called “libertarianism”— to supplement other business lobbying groups which focused on specific policies and legislation.
The FEE is generally regarded as “the first libertarian think-tank” as Reason’s Brian Doherty calls it in his book “Radicals For Capitalism: A Freewheeling History of the Modern Libertarian Movement” (2007). As the Buchanan Committee discovered, the Foundation for Economic Education was the best-funded conservative lobbying outfit ever known up to that time, sponsored by a Who’s Who of US industry in 1946.
A partial list of FEE’s original donors in its first four years— a list discovered by the Buchanan Committee — includes: The Big Three auto makers GM, Chrysler and Ford; top oil majors including Gulf Oil, Standard Oil, and Sun Oil; major steel producers US Steel, National Steel, Republic Steel; major retailers including Montgomery Ward, Marshall Field and Sears; chemicals majors Monsanto and DuPont; and other Fortune 500 corporations including General Electric, Merrill Lynch, Eli Lilly, BF Goodrich, ConEd, and more.
The FEE was set up by a longtime US Chamber of Commerce executive named Leonard Read, together with Donaldson Brown, a director in the National Association of Manufacturers lobby group and board member at DuPont and General Motors.
That is how libertarianism in America started: As an arm of big business lobbying.
Before bringing back Milton Friedman into the picture, this needs to be repeated again: “Libertarianism” was a project of the corporate lobby world, launched as a big business “ideology” in 1946 by The US Chamber of Commerce and the National Association of Manufacturers. The FEE’s board included the future founder of the John Birch Society, Robert Welch; the most powerful figure in the Mormon church at that time, J Reuben Clark, and United Fruit president Herb Cornuelle.
The purpose of the FEE — and libertarianism, as it was originally created — was to supplement big business lobbying with a pseudo-intellectual, pseudo-economics rationale to back up its policy and legislative attacks on labor and government regulations.
This background is important in the Milton Friedman story because Friedman is a founding father of libertarianism, and because the corrupt lobbying deal he was busted playing a part in was arranged through the Foundation for Economic Education.
The arrangement between Friedman and Stigler with the Washington real estate lobbyist was finally revealed during a congressional review of illegal lobbying activities in 1950, called the Buchanan Committee. Yes, there was something called accountability back then.
False, whitewashed history is as much a part of the Milton Friedman mythology as it is the libertarian movement’s own airbrushed history about its origins; the 1950 Buchanan Committee hearings expose both as creations of big business lobby groups whose purpose is to deceive and defraud the public and legislators in order to advance the cause of corporate America.
The story starts like this: In 1946, Herbert Nelson was the chief lobbyist and executive vice president for the National Association of Real Estate Boards, and one of the highest paid lobbyists in the nation. Mr. Nelson’s real estate constituency was unhappy with rent control laws that Truman kept in effect after the war ended. Nelson and his real estate lobby led what House investigators discovered was the most formidable and best-funded opposition to President Truman in the post-war years.
So Herbert Nelson contracted out the PR services of the Foundation for Economic Education to concoct “third party” propaganda designed to shore up the National Real Estate lobby’s legislative drive — and the propagandists who took on the job were Milton Friedman and his U Chicago cohort, George Stigler.
To understand the sort of person Herbert Nelson was, here is a letter he wrote in 1949 that Congressional investigators discovered and recorded:
“I do not believe in democracy. I think it stinks. I don’t think anybody except direct taxpayers should be allowed to vote. I don’t believe women should be allowed to vote at all. Ever since they started, our public affairs have been in a worse mess than ever.”
It’s an old libertarian mantra, libertarianism versus democracy, libertarianism versus women’s suffrage; a position most recently repeated by billionaire libertarian Peter Thiel — who was Ron Paul’s main campaign funder in his 2012 presidential campaign.
So in 1946, this same Herbert Nelson turned to the Foundation for Economic Education to manufacture some propaganda to help the National Association of Real Estate Boards fight rent control laws. Nelson chose to work with the FEE because he knew that the founder of the first libertarian think-tank, Leonard Read, agreed with him on a lot of important issues. Such as their mutual contempt for democracy, and their disdain for the American public.
Leonard Read, the legendary (among libertarians) founder/head of the FEE, argued that the public should not be allowed to know which corporations donated to his libertarian front-group because, he argued, the public could not be trusted to make “sound judgments” with disclosed information.
So in May 1946, Herbert Nelson of the Real Estate lobby, looking for backup in his drive to abolish federal rent control laws on behalf of landlords, contacted libertarian founder Leonard Read of the FEE with an order for a PR pamphlet “with some such title as ‘The Case against Federal Real Estate Control’.”
In libertarianism’s own airbrushed history about itself, the Foundation for Economic Education was a brave, quixotic bastion of libertarian “true believers” doomed to defeat at the all-powerful hands of the liberal Keynsian Leviathan and the collectivist mob.
Here is what the Buchanan committee’s own findings reported—findings lost in history:
“It is difficult to avoid the conclusion that the Foundation for Economic Education exerts, or at least expects to exert, a considerable influence on national legislative policy….It is equally difficult to imagine that the nation’s largest corporations would subsidize the entire venture if they did not anticipate that it would pay solid, long-range legislative dividends.”
Or in the words of Rep. Carl Albert (D-OK): “Every bit of this literature is along propaganda lines.”
There’s no idealism here. The notion that libertarian ideas have captured the political imagination of millions in this country is a root problem: if we’re going to escape the corporate oligarchy that is running this country–their ideas can’t possibility be the alternative solution. This movement has to be recognized for what it is.”(1)
“Libertarianism looks as if someone (let’s call her “Ayn Rand”) sat down to create Un-Communism. Thus:
Communism Libertarianism Property is theft Property is sacred Totalitarianism Any government is bad Capitalists are baby-eating villains Capitalists are noble Nietzchean heroes Workers should rule Worker activism is evil The poor are oppressed The poor are pampered good-for-nothings
Does this sound exaggerated? Let’s listen to Murray Rothbard:
We contend here, however, that the model of government is akin, not to the business firm, but to the criminal organization, and indeed that the State is the organization of robbery systematized and writ large.
Or here’s Lew Rockwell on Rothbard:
He was also the architect of the body of thought known around the world as libertarianism. This radically anti-state political philosophy unites free-market economics, a no-exceptions attachment to private property rights, a profound concern for human liberty, and a love of peace, with the conclusion that society should be completely free to develop absent any interference from the state, which can and should be eliminated.
Thomas DiLorenzo on worker activism: “[L]abor unions [pursue] policies which impede the very institutions of capitalism that are the cause of their own prosperity.”
Ludwig von Mises: “What is today euphemistically called the right to strike is in fact the right of striking workers, by recourse to violence, to prevent people who want to work from working.” (Employer violence is apparently acceptable.)
The Libertarian Party platform explains that workers have no right to protest drug tests, and supports the return of child labor.
On Nietzsche, some libertarians love Nietzsche; others have read him. Nonetheless, the Nietzschean atmosphere of burning rejection of conventional morality, exaltation of the will to power, and scorn for womanish Christian compassion for the masses, is part of the roots of libertarianism. It’s unmistakable in Ayn Rand.
The more important point, however, is that the capitalist is the über-villain for communists, and a glorious hero for libertarians; that property is “theft” for the communists, and a “natural right” for libertarians. These dovetail a little too closely for coincidence. It’s natural enough, when a basic element of society is attacked as an evil, for its defenders to counter-attack by elevating it into a principle.
Who needs facts?
The methodology here is not new: oppose the obvious evils of the world with a fairy tale. The communist of 1910 couldn’t point to a single real-world instance of his utopia; neither can the present-day libertarian. Yet they’re unshakeable in their conviction that it can and must happen.
Academic libertarians love abstract, fact-free arguments– often, justifications for why property is an absolute right.
James Craig Green on Property Rights:
This concept of property originated in some of those primitive tribes when individuals claimed possessions for themselves as against the collective ownership of their groups. Based on individual initiative, labor, and innovation, some were successful at establishing a separate, private ownership role for themselves. […]
Examples of natural property in land and water resources have already been given, but deserve more detail. An illustration of how this would be accomplished is a farm with irrigation ditches to grow crops in dry western states. To appropriate unowned natural resources, a settler used his labor to clear the land and dug ditches to carry water from a river for irrigation. Crops were planted, buildings were constructed, and the property thus created was protected by the owner from aggression or the later claims of others. This process was a legitimate creation of property.
The first paragraph is pure fantasy, and is simply untrue as a portrait of “primitive tribes”, which are generally extremely collectivist by American standards. The second sounds good precisely because it leaves out all the actual facts of American history: the settlers’ land was not “unowned” but stolen from the Indians by state conquest (and much of it stolen from the Mexicans as well); the lands were granted to the settlers by government; the communities were linked to the national economy by railroads founded by government grant; the crops were adapted to local conditions by land grant colleges.
Distaste for facts is actually libertarian doctrine, the foundation of the ‘Austrian school’. Here’s Ludwig von Mises in Epistemological Problems of Economics:
As there is no discernible regularity in the emergence and concatenation of ideas and judgments of value, and therefore also not in the succession and concatenation of human acts, the role that experience plays in the study of human action is radically different from that which it plays in the natural sciences. Experience of human action is history. Historical experience does not provide facts that could render in the construction of a theoretical science services that could be compared to those which laboratory experiments and observation render to physics. Historical events are always the joint effect of the cooperation of various factors and chains of causation. In matters of human action no experiments can be performed. History needs to be interpreted by theoretical insight gained previously from other sources.
The ‘other sources’ turn out to be armchair ruminations on how things must be. It’s true enough that economics is not physics; but that’s not warrant to turn our backs on the methods of science and return to scholastic speculation. Economics should always move in the direction of science, experiment, and falsifiability. If it were really true that it cannot, then no one, including the libertarians, would be entitled to strong belief in any economic program.
An untested political system unfortunately has great rhetorical appeal. Since we can’t see it in action, we can’t point out its obvious faults, while the ideologue can be caustic about everything that has actually been tried, and which has inevitably fallen short of perfection.”(2)
The Founding Fathers
There are those libertarians who are adamant that their ideal isn’t Rothbard or von Mises or Hayek, but the Founding Fathers.
“Nice try. Everybody wants the Founders on their side; but it was a different country back then– 95% agricultural, low density, highly homogeneous, primitive in technology– and modern libertarianism simply doesn’t apply.
You can certainly find places where one Founder or another rants against government; you can find other places where one Founder or another rants against rebellion, anarchy, and the opponents of federalism. Sometimes the same Founder can be quoted on both sides. They were a mixed bunch, and lived long enough lives to encounter different situations.
It cannot have escaped those who have attended with candor to the arguments employed against the extensive powers of the government, that the authors of them have very little considered how far these powers were necessary means of attaining a necessary end. —James Madison
All the Property that is necessary to a man is his natural Right, which none may justly deprive him of, but all Property superfluous to such Purposes is the property of the Public who, by their Laws have created it and who may, by other Laws dispose of it. –Benjamin Franklin
The Constitution is above all a definition of a strengthened government, and the Federalist Papers are an extended argument for it.
The Founders didn’t anticipate the New Deal– there was no need for them to– but they were as quick to resort to the resources of the state as any modern liberal. Ben Franklin, for instance, played the Pennsylvania legislature like a violin– using it to fund a hospital he wanted to establish, for instance. Obviously he had no qualms about using state power to do good social works.
It’s also worth pointing out that the Founders’ words were nobler than their deeds. Most were quite comfortable with slave-owning, for instance. No one worried about women’s consent to be governed. Washington’s own administration made it a crime to criticize the government.
Robert Allen Rutland reminds us:
For almost 150 years, in fact, the Bill of Rights was paid lip service in patriotic orations and ignored in the marketplace. It wasn’t until after World War I that the Supreme Court began the process of giving real meaning to the Bill of Rights.
The process of giving life to our constitutional rights has largely been the work of liberals. On the greatest fight of all, to treat blacks as human beings, libertarians supported the other side.”(2)
Why are libertarian ideas important?
“Liberatarian ideas are important because of their influence on the Republican Party. They form the ideological basis for the Reagan/Gingrich/Bush revolution. The Republicans have taken the libertarian “Government is Bad” horse and ridden far with it:
- Reagan’s “Government is the problem”
- Phil Gramm’s contention that the country’s “economic crisis” and “moral crisis” were due to “the explosion of government”
- Talk radio hosts’ advocacy of armed resistance to “jack-booted government thugs”
- Dole’s 1996 campaign, advancing the notion that taxes were “Your Money” being taken from you
- Gingrich’s Contract with America (welfare cuts, tax cuts, limitations on corporations’ responsibility and on the government’s ability to regulate them)
- Dick Armey’s comment that Medicare (medical aid for the elderly) is “a program I would have no part of in a free world”
- Bush’s tax cuts, intended not only to reward the rich but to “starve the beast”, in Grover Norquist’s words: to create a permanent deficit as a dangerous ploy to reduce social spending
- Jeb Bush’s hope that the Florida state government buildings would one day be empty
- Intellectual support for attacks on the quality of working life in this county and for undoing the New Deal
Maybe this use of their ideas is appalling to ‘Real Libertarians’.
At least some libertarians have understood the connection. Rothbard again, writing in 1994:
The truth is that since we have been stuck with a two-party system, any electoral revolution against big government had to be expressed through a Republican victory. So it is certainly true that Newt Gingrich and his faction, as well as Robert Dole, have ridden to power on the libertarian wave.
Can you smell the compromise here? Hold your nose and vote for the Repubs, boys. But then don’t pretend to be uninvolved when the Republicans start making a mockery of limited government.
What about the social side?
The Libertarian Party has a cute little test that purports to divide American politics into four quadrants. There’s the economic dimension (where libertarians ally with conservatives) and the social (personal) dimension (where libertarians ally with liberals).
The diagram is seriously misleading, because visually it gives equal importance to both dimensions. And when the rubber hits the road, libertarians almost always go with the economic dimension.
The libertarian philosopher always starts with property rights. Libertarianism arose in opposition to the New Deal, not to Prohibition. The libertarian voter is chiefly exercised over taxes, regulation, and social programs; the libertarian wing of the Republican party has, for forty years, gone along with the war on drugs, corporate welfare, establishment of dictatorships abroad, and an alliance with theocrats. Christian libertarians like Ron Paul want God in the public schools and are happy to have the government forbid abortion and gay marriage.
For all practical purposes the social side of libertarianism is irrelevant. A libertarian might actually agree to legalize drugs, let people marry whoever they like, and repeal the Patriot Act. But this has nothing to do with whether robber baron capitalism is a good thing.
We tried it, and it failed
The libertarianism that has any effect in the world, then, has nothing to do with social liberty, and everything to do with removing all restrictions on business. So what’s wrong with that?
Let’s look at some cases that came within spitting distance of the libertarian ideal. Some libertarians won’t like these, because they are not Spotless Instances of the Free Utopia; but as I’ve said, nothing is proved by science fiction. If complete economic freedom and absence of government is a cure-all, partial economic freedom and limited government should be a cure-some.
Pre-New Deal America
At the turn of the 20th century, business could do what it wanted– and it did. The result was robber barons, monopolistic gouging, management thugs attacking union organizers, filth in our food, a punishing business cycle, slavery and racial oppression, starvation among the elderly, gunboat diplomacy in support of business interests.
The New Deal itself was a response to crisis (though by no means an unprecedented one; it wasn’t much worse than the Gilded Age depressions). A quarter of the population was out of work. Five thousand banks failed, destroying the savings of 9 million families. Steel plants were operating at 12% capacity. Banks foreclosed on a quarter of Mississippi’s land. Wall Street was discredited by insider trading and collusion with banks at the expense of investors. Farmers were breaking out into open revolt; miners and jobless city workers were rioting.
Don’t think, by the way, that if governments don’t provide gunboats, no one else will. Corporations will build their own military if necessary: the East Indies Company did; Leopold did in the Congo; management did when fighting with labor.
Or consider the darling of many an ’80s conservative: Pinochet’s Chile, installed by Nixon, praised by Jeanne Kirkpatrick, George Bush, and Paul Johnson. In twenty years, foreign debt quadrupled, natural resources were wasted, universal health care was abandoned (leading to epidemics of typhoid fever and hepatitis), unions were outlawed, military spending rose (for what? who the hell is going to attack Chile?), social security was “privatized” (with predictable results: ever-increasing government bailouts) and the poverty rate doubled, from 20% to 41%. Chile’s growth rate from 1974 to 1982 was 1.5%; the Latin American average was 4.3%.
Pinochet was a dicator, of course, which makes some libertarians feel that they have nothing to learn here. Somehow Chile’s experience (say) privatizing social security can tell us nothing about privatizing social security here, because Pinochet was a dictator. Presumably if you set up a business in Chile, the laws of supply and demand and perhaps those of gravity wouldn’t apply, because Pinochet was a dictator.
When it’s convenient, libertarians even trumpet their association with Chile’s “free market” policies; self-gov.org (originators of that cute quiz) includes a page celebrating Milton Friedman, self-proclaimed libertarian, who helped form and advise the group of University of Chicago professors and graduates who implemented Pinochet’s policies. The Cato Institute even named a prize for “Advancing Liberty” after this benefactor of the Chilean dictatorship.
Destination: Banana Republic
The newest testing ground for laissez-faire is present-day America, from Ronald Reagan on.
Remove the New Deal, and the pre-New Deal evils clamor to return. Reagan removed the right to strike; companies now fire strikers, outsource high-wage jobs and replace them with dead-end near-minimum-wage service jobs. Middle-class wages are stagnating– or plummeting, if you consider that working hours are rising. Companies are rushing to reestablish child labor in the Third World.
Under liberalism, productivity increases benefited all classes– poverty rates declined from over 30% to under 10% in the thirty years after World War II, while the economy more than quadrupled in size.
In the current libertarian climate, productivity gains only go to the already well-off. Here’s the percentage of US national income received by certain percentiles of the population, as reported by the IRS:
1986 1999 Top 1% 11.30 19.51 Top 5% 24.11 34.04 Top 10% 35.12 44.89 Top 25% 59.04 66.46 Top 50% 83.34 86.75 Bottom 99% 88.70 80.49 Bottom 95% 75.89 65.96 Bottom 90% 64.88 55.11 Bottom 75% 40.96 33.54 Bottom 50% 16.66 13.25
This should put some perspective on libertarian whining about high taxes and how we’re destroying incentives for the oppressed businessman. The wealthiest 1% of the population doubled their share of the pie in just 15 years. In 1973, CEOs earned 45 times the pay of an average employee (about twice the multipler in Japan); today it’s 500 times.
Thirty years ago, managers accepted that they operated as much for their workers, consumers, and neighbors as for themselves. Some economists (notably Michael Jensen and William Meckling) decided that the only stakeholders that mattered were the stock owners– and that management would be more accountable if they were given massive amounts of stock. Not surprisingly, CEOs managed to get the stock without the accountability– they’re obscenely well paid whether the company does well or it tanks– and the obsession with stock price led to mass layoffs, short-term thinking, and the financial dishonesty at WorldCom, Enron, Adelphia, HealthSouth, and elsewhere.”(2)
Conquered by Conservatives
“The nature of our economic system has changed in the last quarter-century, and people haven’t understood it yet. People over 30 or so grew up in an environment where the rich got more, but everyone prospered. When productivity went up, the rich got richer– we’re not goddamn communists, after all– but everybody‘s income increased.
If you were part of the World War II generation, the reality was that you had access to subsidized education and housing, you lived better every year, and you were almost unimaginably better off than your parents.
We were a middle-class nation, perhaps the first nation in history where the majority of the people were comfortable. This infuriated the communists (this wasn’t supposed to happen). The primeval libertarians who cranky about it as well, but the rich had little reason to complain– they were better off than ever before, too.
Conservatives– nurtured by libertarian ideas– have managed to change all that. When productivity rises, the rich now keep the gains; the middle class barely stays where it is; the poor get poorer. We have a ways to go before we become a Third World country, but the model is clear. The goal is an impoverished majority, and a super-rich minority with no effective limitations on its power or earnings. We’ll exchange the prosperity of 1950s America for that of 1980s Brazil.
Despite the intelligence of many of its supporters, libertarianism is an instance of the simplest (and therefore silliest) type of politics: the single-villain ideology. Everything is blamed on the government.
The advantage of single-villain ideologies is obvious: in any given situation you never have to think hard to find out the culprit. The disadvantages, however, are worse: you can’t see your primary target clearly– hatred is a pair of dark glasses– and you can’t see the problems with anything else.
It’s a habit of mind that renders libertarianism unfalsifiable, and thus irrelevant to the world. Everything gets blamed on one institution; and because we have no real-world example where that agency is absent, the claims can’t be tested.
Not being a libertarian doesn’t mean loving the state; it means accepting complexity. The real world is a monstrously complicated place; there’s not just one thing wrong with it, nor just one thing that can be changed to fix it. Things like prosperity and freedom don’t have one cause; they’re a balancing act.
The problem with markets
Markets are very good at some things, like deciding what to produce and distributing it. But unrestricted markets don’t produce general prosperity, and lawless business can and will abuse its power. Examples can be multiplied ad nauseam: read some history– or the newspaper.
- Since natural resources are accounted as free gains and pollution isn’t counted against the bottom line, business on its own will grab resources and pollute till an environment is destroyed.
- The food business, on its own, will put filth in our food and lie about what it’s made of. The few industries which are exceptions to food and drug laws (e.g. providers of alcohol and supplements) fight hard to stay that way. The food industry resists even providing information to consumers.
- Business will lock minorities out of jobs and refuse to serve them, or serve them only in degrading ways.
- Business will create unsafe goods, endanger workers, profiteer in times of crisis, use violence to prevent unionization– and spend millions on politicians who will remove the people’s right to limit these abuses.
- Thanks to the libertarian business climate, companies are happily moving jobs abroad, lowering wages, worsening working conditions.
- The same libertarian climate encourages narcissists to pay themselves handsomely while ruling incompetently, and leads to false accounting, insider trading, and corruption.
- Businesses create monopolies and cartels when they can manage it; and the first thing monopolies do is raise prices.
- Businesses can create bureaucracies as impenetrable and money-wasting as any government.
- State-controlled media are vile; but business-controlled media are hardly better, especially given the consolidation of major media. Democracy needs a diversity of voices, and we’re moving instead toward domination of the airwaves by a few conglomerates.
- The poor are ill-served even for basic services: they pay more for food; they pay through the nose for rotten apartments; they can’t get loans even if they can get bank accounts; if they can get a job it’s ill paid, with no health benefits. Poor areas are also highly polluted (in ways that cause massive health problems).
Libertarian responses to such lists are beyond amazing:
- “Businesses would be stupid to do those things.” Then they’re stupid, because they do them. Private racial discrimination, for instance, lasted a hundred years; and it wasn’t ended by businessmen changing their minds, but by blacks and liberals organizing. The Libertarian Party platform actually hopes to legally re-enable private discrimination.
- “The market will correct those problems.” In a few cases it will– if you wait long enough. But very often it’s simply impossible: e.g., the monopolist has made sure no alternatives exist. (One of the railroad tycoons, for instance, was careful to buy up steamship lines.) And though it was sometimes possible to break a monopoly by starting a well-bankrolled competing business, that was no consolation to (say) an oil producer who saw Rockefeller consolidating all the refineries. He could hardly start up his own refinery, and he’d be bankrupt before anyone succeeded in doing so.)
Slavery is another example: though some hoped that the market would eventually make it unprofitable, it sure was taking its time, and neither the slave nor the abolitionist had any non-governmental leverage over the slave-owners.
(Libertarians usually claim to oppose slavery… but that’s awfully easy to say on this side of Civil War and the civil rights movement. The slave-owners thought they were defending their sacred rights to property and self-government.)
- “We believe in laws too.” And they do, rather touchingly; they just don’t believe in enforcing them. Enforcement of the laws passed by democratic legislatures is called “men with guns” or “initiating force” in libertarian ideology. And without enforcement, laws are just pretty words. You can see this today in Latin America, which often has very progressive laws. The business and landowning elite just ignores them.
- “So what do you want, state-run movie theaters?” The single-villain ideology is so strong that the only response some people can make to a market failure is to invent a statist response and criticize that. Sometimes the best solution to these problems is to use the market– once it gets a good liberal kick in the pants to go find one.
And those are the better responses. Often enough the only response is explain how nothing bad can happen in the libertarian utopia. But libertarian dogma can’t be buttressed by libertarian doctrine– that’s begging the question.”(2)
Taxation is Theft
“Perhaps the most communicable libertarian meme– and one of the most mischievous– is the attempt to paint taxation as theft.
First, it’s dishonest. Most libertarians theoretically accept government for defense and law enforcement. (There are some absolutists who don’t even believe in national defense; Maybe they want to have a libertarian utopia for awhile, then hand it over to foreign invaders.)
Now, national defense and law enforcement cost money: about 22% of the 2002 budget– 33% of the non-social-security budget. You can’t swallow that and maintain that all taxes are bad. At least the cost of those functions is not “your money”; it’s a legitimate charge for necessary services.
Americans enjoy the fruits of public scientific research, a well-educated job force, highways and airports, clean food, honest labelling, Social Security, unemployment insurance, trustworthy banks, national parks. Libertarianism has encouraged the peculiarly American delusion that these things come for free. It makes a philosophy out of biting the hand that feeds you.
Ultimately, a primary objection to libertarianism is moral. Arguing across moral gulfs is usually ineffective; but we should at least be clear about what our moral differences are.
First, the worship of the already successful and the disdain for the powerless is essentially the morality of a thug. Money and property should not be privileged above everything else– love, humanity, justice.
Libertarians need to get a clue that the extremely wealthy don’t need them as their unpaid advocates. Power and wealth don’t need a cheering section; they are– by definition– not an oppressed class which needs our help. Power and wealth can take care of themselves. It’s the poor and the defenseless who need aid and advocates.
The libertarians reminds me of G.K. Chesterton’s description of people who are so eager to attack a hated ideology that they will destroy their own furniture to make sticks to beat it with.
James Craig Green again:
Typical excuses are “the common good”, “public morality”, “traditional family values”, “human rights”, “environmental protection”, “national security”, and “equality”. Each appeals to the confused hysteria of a segment of the population. Each allows property to be denied its rightful owner. Each denies the concept of self-ownership.
Here’s a very different moral point of view: Jimmy Carter describing why he builds houses with Habitat for Humanity:
From my rural boyhood, when I often spent the night with black neighbors who lived in unheated and dilapidated shacks, to my years in the White House when I saw the plight of the homeless and those trapped in poverty housing worldwide, I have known that shelter matters. And I know, as a Christian, that I have a responsibility to serve where I can, that as I treat “the least of these”, I treat my Creator.
Is this “confused hysteria”? No, it’s common human decency. It’s sad when people have to twist themselves into knots to malign the human desire to help one’s neighbor.
Libertarianism is the philosophy of a snotty teen, someone who’s read too much Heinlein, absorbed the sordid notion that an intellectual elite should rule the subhuman masses, and convinced himself that reading a few bad novels qualifies him as a member of the elite.
And perhaps most common, Libertarianism is the worldview of a provincial narcissist.
It’s hard to read libertarians without concluding that they’ve never been out of the country– perhaps never out of the suburbs. They don’t know what Latin American rule by the elite looks like; they don’t know any way of running an industrial economy but that of the US; they don’t know what an actually oppressive government looks like; they’ve never experienced a depression; they’ve never lived in a slum or experienced racial discrimination. At the same time, they have a very American sense of entitlement: a gut feeling that they’ve earned the prosperity they were born into, that they owe the community nothing, that they deserve to have whatever they want, that no one should stand in their way.
In short, they’re spoiled, and they’ve evolved a philosophy that they should be spoiled.
It’s important not to leave out the possibility of honest confusion. Some people may be attracted by parts of the libertarian program without buying into its underlying morality.
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” –Franklin D. Roosevelt“(2)
“No existing democratic governments fully endorse and implement libertarian doctrine, for no national electorate would tolerate so radical a system of political economy.
Nonetheless, libertarianism deserves careful critical analysis since in theory, if not in practice, it is the ideological “spear-point” of “free market reform” throughout the world.
For all its acquired respectability in contemporary political discourse, libertarianism is a grave threat to the very existence of the American system of justice and representative democracy as we have come to know it. Libertarianism poses this threat not because of the cogency of its doctrines but rather because of the enormous financial and media resources that promote it.
It is important to note at the outset that libertarianism divides neatly into two aspects: personal libertarianism and economic libertarianism. This division puts the libertarians at odds with both the political right and the political left.
There is a hesitatency to use the terms “liberal” and “conservative” since the public media have abused both terms to the point that they are essentially meaningless.
In the American political scene today, self-described “conservatives” are more accurately identified as “regressives,” since they seek to return society and government to the conditions of earlier times. The essentially synonymous words “liberal” and “progressive” can be used interchangeably.
The liberal (or progressive) tends to agree with libertarian insistence that law and government are not justified in interfering with the personal lives of individuals. They agree that in a free society there is no place for laws regarding sexual preference, abortion, drug use, euthanasia, etc. Liberals and libertarians thus endorse John Stuart Mill’s proclamation that “over himself, over his own mind body and mind, the individual is sovereign.” To the contrary, the right, and especially the religious right, has no trouble endorsing government interference regarding these matters of personal conduct.
On the other hand, the liberal left strongly opposes, and the right endorses, the libertarian positions regarding market fundamentalism, deregulation of commercial activity, minimal government, and privatization. Economic libertarianism has for all practical purposes been adopted into the platform of the Republican Party, even though that party is reluctant to embrace the term “libertarianism.”
Because economic libertarianism poses the greater threat to the American system of government and traditions of justice, the primary focus will be on that aspect of libertarianism.
The Essential Doctrines of Libertarianism
While not all individuals who describe themselves as libertarians will fully agree with all of these stipulations, (there are, after all, several varieties of libertarianism), the following formulations will identify the “targets” of this analysis:
- Natural Rights. There are three fundamental human rights: to life, liberty and property. These rights are all “negative rights,” in that they all stipulate “freedom from” interference from other persons or from governments. There are no natural “positive rights:” i.e., rights to receive, e.g., an education, a livelihood, health care, etc.
- The like liberty principle: All persons are entitled to maximum freedom consistent with equal liberty for all.
- Minimal government: The only legitimate function of government is the protections of each individual’s rights to life, liberty and property All other functions of government are illegitimate. Taxation to support these illegitimate functions amounts to a theft of private property.
- Spontaneous Order. The fundamental social institutions arise “spontaneously” out of individual voluntary associations. No planning or regulation “from the top down” is necessary.
- Social atomism. There are no separate entities called “society” or “the public.” These are simply aggregates of individuals.
- Privatism. Private ownership is always preferable to public ownership.
- Market Fundamentalism: The “free market” – the unregulated and undirected summation of all private buyer/seller transactions – is always “wiser” than centralized economic planning.
Now, to an elaboration of these doctrines:
Individualism and Social Atomism: Libertarianism is a radically individualistic doctrine. The optimal libertarian society (if “society” is the correct word) is an aggregate of individuals in voluntary association, secure in their “natural rights” to life, liberty and property. (Thus, the only legitimate function of the “minimal government” is to protect these rights).
Thus “society,” ideally, is a simple summation of individuals, in voluntary association, privately optimizing their satisfactions.
Natural Rights: To the libertarian, the Lockean rights of the individual to life, liberty, and property are fundamental. Because these rights reside in the individual, the only legitimate function of government is to protect these rights from usurpation by other individuals or institutions – especially the government itself which, according to John Hospers, is “the most dangerous institution known to man.”
Accordingly, the scope of government must be scrupulously confined to the protection of life, liberty and property from foreign enemies (through the military), from domestic enemies (through the police and criminal courts), and from the private activities of others (through the civil courts).
Libertarians stress so-called negative rights (or “liberty rights”) which entail duties of forbearance on the part of others. For example, my right to free speech entails your duty not to prevent that speech. However, to the libertarian, there are no “positive” or “welfare rights,” which entail the duty of individuals or of government to positively provide benefits or sustenance to others. The poor have no “rights” to welfare support, and the only children that have a right to our support are our own.
The liberal, while accepting the libertarian triad of negative rights, also proclaims the citizens’ “positive rights” – to an education, to employment with a living wage and safe working conditions, to a clean and safe environment, etc. These rights arise from the fact that the liberal, unlike the libertarian, recognizes social benefits and public interests. Communities flourish when they include an educated work force, when the citizens are assured that their basic needs for livelihood and health-care are met, and when the citizens share the conviction that the society is their society and that they have a role in its governance. And because the communal activity produces more wealth than would be obtained by the sum of individual efforts, members of the community have positive rights to a share of that wealth, and to community assistance in case of misfortune.
Accordingly, the liberal insists that Ayn Rand’s Ubermensch, John Galt, is a fantasy. There is no fully “self-made man,” morally free of all responsibility and obligation to the society that nurtured him and sustains him.
Privatization, Environment, and the Commons Problem: According to the libertarians, all environmental problems derive from common ownership of such natural resources as pasturage, fisheries, and even air, water and wildlife. The solution? Privatization of all such resources. Does this sound extreme? Consider the following from Robert J. Smith: “The problems of environmental degradation, pollution, over-exploitation of natural resources, and depletion of wildlife all derive from their being treated as common property resources. Whenever we find an approach to the extension of private property rights in these areas, we find superior results.”
Public Accommodations and Property Rights. Because property rights are inviolable, the owner of a restaurant or motel or other “public accommodation” is entitled to refuse service to anyone at the owners’ sole discretion, which means that the owner has the right to discriminate on the basis of race, religion, national origin, or whatever. Thus the public accommodations section of the Civil Rights Act of 1964 constitutes an illegitimate violation of personal property rights. The libertarian might agree that discrimination is morally indefensible, and that private citizens are fully entitled to protest and to boycott establishments that elect to discriminate. Nonetheless, the property rights of the owners are inviolable.
Spontaneous Order. “The great insight of libertarian social analysis,” writes David Boaz, “is that order in society arises spontaneously, out of actions of thousands or millions of individuals who coordinate their actions with those of others in order to achieve their purposes.” Because an orderly society arises “spontaneously” out of the free associations and activities of individuals, without the support, investment or coordination of any overarching institutions (e.g., governments), a well-ordered society is a “free gift,” for which nothing is owed (i.e., taxes ) by the component individuals for its maintenance.
Minimal Government. Accordingly, it follows that government has no function other than to protect and secure each individual’s natural and inalienable rights to life, liberty and property. Any additional functions of government, for example public education, public parks, museums, support for the arts, scientific research, welfare payments, foreign aid, are illegitimate, and taxes levied to support these functions constitute theft of private property.
Market Fundamentalism. “The wisdom of the market place” – prices that arise out of the numerous free transactions between autonomous individuals – will always exceed the “wisdom” of regulated markets, controlled and coordinated by superordinate (namely government) agencies.
Milton and Rose Friedman clearly enunciate this central dogma of libertarianism:
A free market [co-ordinates] the activity of millions of people, each seeking his own interest, in such a way as to make everyone better off… Economic order can emerge as the unintended consequence of the actions of many people, each seeking his own interest.”
In the phrase “the activity of millions of people, each seeking his own interest…” we see the concept of social atomism at work. And in the clause, “economic order can emerge as the unintended consequence…” we find a reiteration of the concept of spontaneous order.”(3)
The Myth of Social Atomism
“Perhaps the fundamental dispute between libertarians and liberals resides in the ontological status of “society” and “the public.”
Social atomism might well be the foundational doctrine of libertarianism, upon which all other planks of the libertarian platform – market fundamentalism, privatism, minimal government, spontaneous order – are supported. Refute this doctrine, and quite possibly the entire theoretical structure of libertarianism might collapse. Accordingly, the doctrine of social atomism deserves careful critical scrutiny.
The social atomism of the libertarians was starkly expressed by Margaret Thatcher when she wrote: “There is no such thing as society – there are individuals and there are families.” And Ayn Rand: “There is no such entity as ‘the public’ … the public is merely a number of individuals.” Now admittedly, Baroness Thatcher is not a political philosopher, and Ayn Rand insisted that she was not a libertarian. So let’s look further.
The implications of social atomism are radical in the extreme, for if there is no such thing as “a public,” it follows that there are no “public goods” or “public interest,” apart from summation of private goods and interests. Moreover, if there is no society, it follows that there are no “social problems,” there is no “social injustice,” and there are no “victims of society.” The poor presumably choose their condition; poverty is the result of “laziness” or, as the religious right would put it, a “sin.” There are further implications. Since there is no such thing as a “public,” taxation for the support of such “so-called” public institutions as education, libraries, the arts, parks and recreation, is coercive seizure of private property, or “theft.”
The liberal replies that this denial of the very existence of “society” and “the public” is reductionism, plain and simple – what the Brits call “nothing-buttery.” It is comparable to saying that Hamlet is “nothing but” words, that Beethoven’s music is “nothing but” notes, that the Mona Lisa is “nothing but” pigments on canvas, and that the human brain is “nothing but” cells and electro-chemical events.
Good For Each, Bad For All
Further refutation of social atomism, the keystone of libertarianism, is simple and straightforward. If we can cite cases in which self-serving behavior (“good for each”) can cause collective harm (bad for all), and conversely cases in which imposed constraints upon individuals (“bad for each”) can result in collective benefits (“good for all”).
Then, by thus distinguishing “each” and “all” we will have demonstrated the existence of an “all-entity,” “society,” with unique properties that are distinct from a mere aggregate of individuals.
In more familiar terms, society is “more than the sum of its parts.” Here are three such cases:
Antibiotics: The over-use of antibiotics “selects” resistant “super-bugs,” decreasing the effectiveness of antibiotics for all. But just one more anti-biotic prescription for a trivial, “self-limiting” bronchial infection won’t make a significant difference “in general,” while it will clearly benefit the individual patient. But multiply that individual doctor’s prescription by the millions, and we have a serious problem. “Good for each patient, bad for the general population.” The solution: restrict the use of antibiotics to the seriously ill. Individuals with trivial and non-life-threatening ailments must “tough it out.” “Bad for each, good for all.”
Traffic laws: We all agree that traffic laws can be a nuisance. But if you believe that traffic lights constrain your freedom of movement, try to drive across Manhattan during a power outage! In the blackouts of 1965 and 1977 in the eastern United States and Canada, traffic began to move only after the police and a few citizen volunteers stood at the intersections and directed traffic.
The decision of each driver to accept constraints worked to the advantage of all. So too with the traffic lights and stop signs that we encounter daily. We are all freer to move about only because we have collectively agreed to restrict our individual freedom of movement. “Bad for each, good for all.”
The Tragedy of the Commons. The principle of “good for each, bad for all” was forcefully brought to public attention in 1968 by Garrett Hardin, in his essay “The Tragedy of the Commons” – which was, for a while, the most widely reprinted scientific essay of the time.
Hardin, a biologist, cites as an example, a pasture owned “in common” by the residents of a village. The pasture is at “carrying capacity” – the number of sheep is such that the villagers can, with that number, use the pasture indefinitely without reducing the productivity of the land. However, any additional sheep will degrade the pasture and thus its capacity to support livestock.
It thus becomes immediately apparent, that any individual who adds a sheep to his personal flock will gain in personal wealth, while, at the same time, by degrading the common resource and the value of the other sheep, he slightly decreases the wealth of every other villager. Each villager is similarly situated. Absent common agreement and enforcement thereof, it is “rational” for each individual to increase his personal flock, even though, in Hardin’s words, “ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.”
In other words: “good for each, bad for all.”
The solution? Hardin prescribes “mutual coercion, mutually agreed upon,” which means the rule of law enforced by government. Each individual agrees to a curtailment of liberty (“bad for each”) in behalf of the common good (“good for all”).
It is all too easy to overlook the profound “tragedy” in the “trap” faced by the villagers in Hardin’s example – “tragedy,” in the sense of “the solemnity of the remorseless working of things.” (Here Hardin quotes the philosopher Alfred North Whitehead). For so long as there is no protection of the commons through government regulation and law, the certain fate of the common pasture is destruction. Accordingly, under these circumstances the only “rational” course for each herdsman is to increase his herd and take what he can while he can. If he altruistically volunteers restraint all by himself, he is a fool for his restraint will in no way preserve the commons. Thus restraint (aimed at preservation) is punished and greed (contributing to destruction) is rewarded.
If the “tragedy” applied only to a village of herdsmen surrounded by a “common” pasture, it would be of little interest. The power of the tragedy of the commons is its enormous scope of application: not only to pastures, but also to the seas, the atmosphere, rivers and lakes – any and all resources available to all and owned by none.
Accordingly, an industry that volunteers to scrub its smokestacks or purify its water outflow, assumes costs that will put it at a disadvantage with competitors. The irresponsible industries win out in a “race to the bottom,” and the common atmosphere and watershed degrade, along with the health of unconsenting citizens in the vicinity.
So too with the whaling industry, prior to the adoption of international agreements to impose limits. (“Mutual coercion mutually agreed upon”). The whales were then clearly being hunted to extinction. Yet the only result of individual restraint was to leave the whales for others to catch: “they’re done for anyway – let’s get what we can now before they’re gone.” A similar tragedy has caused a radical reduction in the fishery “catch” in the North Atlantic. Now, at long last, international limits have been imposed.
Catalytic Converters and the Limits of Volunteerism. Next, an application of the tragedy of the commons that might be more salient to those who live in or near urban centers, where automobiles are many and sheep are few.
Libertarians often tell us that voluntary restraint is a morally preferable solution to commons problems than government coercion. Sure enough! The trouble is, it doesn’t work.
Consider the catalytic converter as a solution to the problem of air pollution. (The numbers are “made up” as accuracy is not important. This is a hypothetical “model” based roughly on generally known technology and demographics).
The catalytic converter is a device placed on a vehicle’s exhaust system which eliminates (let us assume) 90% of exhaust pollution. Assume further that purchase and installation of the unit costs $200. In the Los Angeles airshed are ten million vehicles.
Will individuals be willing to pay $200 to clean up the air in their neighborhood? Many folks would probably be willing. Will they clean up the air by volunteering, all by themselves, to install a catalytic converter? Probably not! As an example, if they do install a catalytic converter, it will reduce the pollution by slightly less than one ten-millionth for those that live in the Los Angeles area. In effect, no help whatever. And they will be out $200. To put the matter bluntly: volunteerism is not only futile, it is irrational. The solution is obvious and compelling: require that all vehicles have working catalytic converters. Result: the air pollution in LA has been dramatically reduced, to the relief of the vast majority of Angelinos, and at an individual cost acceptable to that majority.
If a proposition to repeal the catalytic converter requirement were put on the ballot, it would be soundly defeated (assuming the public was correctly informed). The solution is straightforward, rational and popular: “mutual coercion mutually agreed upon.” Imposed and enforced by “big government.”
It costs (“bad for each”), but the “social benefit” is well-worth it (“good for all”).
Examples above focused on “material” or “resource” commons – such as air, water, oceans, pastures (“open range”), etc. But there are also “non-material” commons that are equally, if not more, important to the quality of social life and the justice of a political order. These include the rule of law, the quality and level of education in the community, trust in the government and the prevailing sense among the citizens of that government’s legitimacy, the degree of civility and the “moral tone” extant in the society.
When unscrupulous individuals act to their own advantage and heedless of the consequences to others, they can degrade “the moral commons” – the mutual respect and constraint that is implicit in every well ordered society. For example, when outlaws are unpunished, the rule of law suffers. Worse still, when corrupt politicians and government officials put themselves above the law and betray the citizens by accepting bribes from special interests, they erode the trust that is essential to good government. And when there is reason to believe that the ballot has been compromised and there are no offsetting procedures to assure the accuracy of the ballot, the very legitimacy of the government and of legislation is diminished.
In a just political order, based on the principles of our founding documents, government and the rule of law are the common “property” of the citizens at large, and of no class or faction in particular. This principle is stated explicitly in the Declaration of our Independence: “to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”
The Moral Point of View
“Society” is not, as the libertarians would have us believe, simply autonomous private individuals “doing their own thing,” from which activity somehow, “as if by an invisible hand” (Adam Smith), benefits for all accrue without foresight or planning – a “spontaneous order.”. On the contrary, a society is more than the sum of its individual parts. A society is, as John Rawls puts it, “a cooperative venture for mutual advantage [which] makes possible a better life for all than any would have if each were to live solely by his own efforts.” As these examples illustrate, common goods are achieved through individual constraint and sacrifice. “ Bad for each, good for all.” Conversely, unconstrained self-serving behavior by each individual can harm society as a whole. “Good for Each, Bad for all.”
Self-serving individual behavior, for example by scientists, entrepreneurs and artists, often or even usually results in benefits for all. (“Good for each, good for all”). This is not a universal rule. In innumerable instances, such as the five presented above, it can be clearly shown that social benefit requires individual constraint and sacrifice.
More generally, as every sociologist, psychologist and anthropologist well knows, human existence, including human consciousness, thought, evaluation, history, and culture, including private property and markets, is inconceivable without society. A human infant is not like a sea turtle or a mackerel, wholly independent and autonomous upon “hatching.” All uniquely human life, thought and culture has its origin and sustenance in the uniquely human mode of communication articulate language, which can only be acquired in social life. We define ourselves, and are in turn defined, first by the society and culture in which we find ourselves as we mature, and possibly later on by the societies and cultures that we seek out and adopt, or in the case of geniuses, transform. “The self,” writes the economist Herman Daly, “is in reality not an isolated atom, but is constituted by its relations in community with others – the very identity of the self is social rather than atomistic.”
Furthermore, as many moral philosophers have argued (with significant support from “game theory”), morality can only be understood, and moral problems cogently solved, from the perspective of a hypothetical observer of the human interaction – the so-called “moral point of view.” From this perspective, the group of interacting individuals is the irreducible unit of moral deliberation. Moral problems can no more be analyzed from the point of view of the individual, than strategy and rules of a team sport such as hockey can be analyzed from the point of view of a single player, or a chess game successfully played in disregard of the opposing player. Finally, as the history of warfare repeatedly affirms, the best means of achieving the selfish end of personal survival on the battlefield is to subordinate one’s concern for personal survival to a shared willingness to sacrifice one’s life in behalf of others. Thus morality, at its foundations, is paradoxical: it is often in one’s best interest not to seek above all one’s self interest. This paradox can only be resolved from “the moral point of view” – from the perspective of the ideally informed and disinterested observer of human interaction.
To the libertarian, morality is founded in individual rights. In contradistinction the liberal, while acknowledging individual rights, goes further. By adopting “the moral point of view,” the liberal also recognizes “social goods” such as economic justice, domestic tranquility, and communal loyalty, all of which flourish under a system of laws, regulations, and enumerated welfare rights, which are best enacted, executed and protected by the institution of popular government – “of, by, and for the people.”
These, then, are the contrasting moral perspectives of the libertarian and the liberal:
The Libertarian: From the point of view of the individual (“the egocentric point of view,” “the mind’s I”). “Good for each.” From this perspective, the individual is enjoined to “live for his own sake, neither sacrificing himself to others nor sacrificing others to himself.” (Ayn Rand).
The Liberal: From the perspective of an unbiased benevolent spectator of society (“the moral point of view”). “Good for all.” Furthermore, the liberal acknowledges a loyalty toward the social and political institutions that are the foundations of one’s liberty, security and well-being, and that this acknowledgment entails a moral obligation to support and defend these institutions.
Thus the libertarian (who, recall, denies the very existence of “society”) advocates the maximum liberty for each individual. The liberal, on the other hand, seeks to maximize the amount of liberty extant in the society.
The liberal further argues that, paradoxically, the egocentric point of view can not accomplish the libertarian goal of maximizing individual liberty. It fails, because individual liberties, and especially the liberties enjoyed by the privileged, powerful and wealthy, constrain the liberties and diminish the welfare of others. In other words, egocentric perspective violates the “like liberty principle” that the libertarian nominally supports: namely, that each individual is entitled to the maximum liberty consistent with the equal liberty of others.
Furthermore, the libertarian’s egocentric perspective fails because political and economic problems are not problems of individuals, they are problems of groups (i.e., of “all”), and therefore the interests of all affected individuals must be taken into account. The liberal proposes that these interests are best “taken into account,” fairly and equally, from the perspective of a hypothetical individual who is unbiased and benevolent – seeking the best result for all while respecting the inalienable rights of each.
In fact, no such neutral observer is actually necessary, for each moral agent, and the agent’s surrogate, the government, is quite capable of adopting the point of view of the hypothetical “unbiased benevolent observer.” Indeed, we did just that as we found solutions to the aforementioned problems, the use of antibiotics, traffic control, and the tragedy of the commons, whereby constraints upon each resulted in benefits to all. There we found that the astute moral agent would, as a “the unbiased benevolent observer,” perceive that all would benefit from constraints upon each.
The perspective of the “unbiased neutral observer” has a name – in fact, numerous names, since it is one of the most familiar concepts in the history of political theory and moral philosophy: “the impartial spectator” (Adam Smith), “the ideal observer” (John Stuart Mill), “the general will” (Rousseau), “the view from nowhere” (Thomas Nagel), “the original position” (John Rawls), and “the moral point of view” (Kurt Baier, Kai Nielsen and many more).
And who or what is most appropriately entitled to adopt the perspective of the “unbiased, benevolent observer,” and to codify and enforce the rules derived therefrom? What else than an agency selected and acting by the consent of the people, an agency that enacts and administers laws to the benefit of all, an agency constituted to “establish Justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty.”
That agency has a name: “democratic government.” And in case you didn’t notice, the above quotation is from the Preamble to the Constitution of the United States.
Public Goods and The Public Interest
The discussion above has definitively proven the existence of “public goods” and “public interest” that are distinct from the mere summation of private interests. Consider again the case of antibiotics which, medical practice has clearly demonstrated, lose their potency the more they are prescribed. The widespread use of antibiotics is clearly to the advantage of each patient, though the resulting loss of potency is to the disadvantage of all patients. Thus it is “in the public interest” to discourage the use of antibiotics by non-critical patients. It is to the advantage of each vehicle owner not to purchase and install a catalytic converter, thought this results in an increase in air pollution. But it is in the interest of all citizens when these devices are required by law. Clean air is thus a “public good” achieved through the imposition of “personal bads.” Clearly “the public interest” and “public goods” are in these cases, as well as the others cited above,” distinguishable from the summation of private interests and goods.
For a political scientist or a sociologist to deny the existence of public interests and goods should be analogous to a chemist denying Boyles Law, and a physicist denying thermodynamics. Each of these principles are the foundations of these various sciences. And yet, the libertarian, by denying the “real existence” of the entities “society” and “the public”, denies the existence of social needs and benefits and of public interests and goods as it proclaims that voluntary associations, privatization and the free market always yield superior results to government “coercion” of private citizens.
The coordinate principles, “good for each, bad for all” and “bad for each, good for all,” resound throughout the history of political thought — from Aristotle, through Thomas Hobbes, Locke, Jean Jacques Rousseau, and Thomas Jefferson, on to the present day. Indeed, the practical applications of these principles are implicit in successful communities, from the present extending far back into pre-history. They are the key to the survival of communities of social insects such as bees and termites, and of social animals such as wolf packs, wherein evolution, not argument, provides their validation.
And yet, amazingly, those who presume to call themselves “conservatives,” reject these principles, in favor of another: “good for each, good for all.” This libertarian principle of the political right, exemplified by “trickle-down economics” and the assurance that “the rising [economic] tide raises all boats,” is immediately appealing. Who would not desire that collective “goods” should result from the achievement of personal well-being? And in fact, the progressive will readily admit that many human endeavors that achieve individual benefits, also benefit society at large. “Good for each, good for all” is true in particular and identifiable cases, such as artistic creation, technological invention, and yes, business entrepreneurship.
The error of the libertarians resides in their embrace of the principle “good for each, good for all” as dogma, applied a priori to society and the economy, virtually without exception. By rejecting, implicitly, the principle of “good for each, bad for all” and vice versa, the libertarian recognizes no personal price that must be paid for the maintenance of a just social order, and pays no heed to the social costs of one’s personal “pursuit of happiness.”
For the libertarian, the only legitimate functions of government are the protection of the three fundamental rights of life, liberty and property. Hence, the only legitimate disbursement of tax revenues is for the military (protection from foreign enemies), the “night watchman” police (protection from domestic enemies), and the courts (adjudication of property disputes). Because there are no “public goods,” compulsory tax payment for public education, research and development of science and technology, medical care, museums, promotion of the arts, public and national parks, etc., is the moral equivalent of theft.
According to this account of human nature and society, with the exception of the just noted protections of life, liberty and property, there is nothing that government can accomplish that private initiative and the free market cannot achieve with better results. As Ronald Reagan famously said in his first inaugural address: “government is not the solution, government is the problem.” No regulation, no governmental functions beyond basic protection of life, liberty and property, no taxes except to support these minimal functions. Any governmental activity beyond this should, in Grover Norquist’s words, be “drowned in the bathtub.”
Let the free market reign without constraint, allow all “capitalist acts between consenting adults” (Robert Nozick). As each individual, in Adam Smith’s words, “intends only his own gain,” then each individual will be “led by an invisible hand to promote … the public interest.”
Good for each, good for all.
In contrast, the progressive views society as more than the sum of its parts; it is what philosophers call an “emergent entity,” with properties and principles of the whole distinct from those of its components just as, analogously, chemical compounds (e.g. water and salt) have properties distinct from their component elements. In this sense society and its economy is like a computer, an engine, an ecosystem, the clarity of a living language. If the system malfunctions, there are innocent victims — the poor, the oppressed, the addicted, the uneducated — and the system is thus in need of adjustment or repair or even overhaul and redesign. These corrections are best diagnosed and treated when the system is examined and analyzed, as a system, and not as an amalgam of distinct individual parts. And diagnosis, adjustment, regulation, repair, overhaul, redesign of the community-entity are legitimate functions of a government established to act in the interests of all and “deriving its just powers from the consent of the governed.”(4)
“Libertarians accept the conviction of neo-classical economists that “the free market,” unconstrained by government oversight and regulation, will always produce better results than markets directed by legislation. The free market, they insist, resulting from the “utility maximizing” transactions of numerous autonomous buyers and sellers, “spontaneously” establishes prices and prompts entrepreneurial decisions that yield the best outcome for the society in general. “Good for each, good for all.”
“The wisdom of the market place” is epitomized by the concept of “the invisible hand,” cherished by libertarians, which has its origin in Adam Smith’s Wealth of Nations:
[The individual] neither intends to promote the public interest, nor knows how much he is promoting it… [H]e intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
An unyielding faith in the infallible beneficence of “the invisible hand,” leads to “market fundamentalism” – the doctrine that whatever government attempts, privatization and the free-market can do better.
[T]he free market allows more people to satisfy more of their desires, and ultimately to enjoy a higher standard of living than any other social system… We need simply to remember to let the market process work in its apparent magic and not let the government clumsily intervene in it so deeply that it grinds to a halt. – David Boaz
A free market [co-ordinates] the activity of millions of people, each seeking his own interest, in such a way as to make everyone better off… Economic order can emerge as the unintended consequence of the actions of many people, each seeking his own interest. – Milton and Rose Friedman
Accordingly, the libertarians argue, governments should never interfere with markets. Furthermore, governments should not own property, which is better managed by private individuals. In short: let the free market decide. The mysterious “invisible hand” of the free market will “[allow] more people to satisfy more of their desires” (Boas), and “make everyone better off” (Friedman).
The dogma of market fundamentalism gains some credibility from the fact that it is at least a half-truth. No doubt, the individual’s striving to maximize self-interested gain accounts for numerous improvements in the quality of life in industrial countries. Presumably, the inventors and developers of computers and the internet were more concerned with their own economic prospects than they were of the “social benefits” thereof. Similarly, many scientific, scholarly, technological and artistic achievements, motivated primarily by self-interest and self-satisfaction, benefit society at large “as if by an invisible hand.”
From the undisputed truth that some, or perhaps even most, market activity yields benefits, the market fundamentalist concludes that the unregulated market never fails to be beneficial to all; the belief, in other words, that there are no malevolent effects of unconstrained market activity, no “back of the invisible hand.” From this belief follows the insistence that the free market is self-correcting, and that there is thus no need for regulation – that, in Ronald Reagan’s enduring words, “government is not the solution to our problems, government is the problem.”
Market fundamentalism is a “dogma” in the same sense that creationism and biblical inerrancy are dogmas; it is accepted “on faith” despite clear and compelling evidence that it is false. Not that this significantly alters the convictions of the libertarian and regressive true-believer.
Be that as it may, for those open to evidence and plain common sense, here are a few compelling reasons to reject the dogma of market fundamentalism – reasons to believe that what is good for an individual buyer or seller or corporate stockholder may not be good for the public in general.
A Fictitious Person in a Mythical Environment
Neo-classical economic theory, from which libertarian market fundamentalism is derived, can be seen at once to be inapplicable to the “real world” of actual economic activity. And, of course, the “real world” is and must always be the only world that we all live in. This mismatch between theory and application follows from the central concepts of neo-classical economics: “economic man” and “the perfect market.” A fictitious person acting in a mythical environment.
Economic Man (Homo Economicus). In neo-classical economic theory, “economic man” is a hypothetical individual who is a complete egoist, motivated solely by the self-interested desire to maximize his “preference satisfaction.” Homo Econ’s motivation is manifested by his willingness to pay for these satisfactions in a “free market.” Neo-classical theory also postulates that “all goods that matter to individuals … must be capable of being bought and sold in markets” and “anything that is valued instrumentally … can be handled by economics, be it acts of friendship or love.”4 “Economic man’s” behavior is described, in neo-classical jargon, as “rational.” By implication, the self-sacrificing behavior of saints and heroes is “irrational.”
Clearly, “economic man” exists nowhere outside of Ayn Rand’s novels and, perchance, on Wall Street. And this is fortunate, for we wouldn’t want him for a neighbor.
A public policy for “economic man,” systematically detached from criteria of truth, civic value, distributive justice, friendship and loyalty, is a policy that any civilized person should reject, and reject on non-economic grounds.
The Perfect Market
Consider next the conditions that define “the perfect market:”
All participants are “perfectly rational,” utility maximizing egoists – i.e., are “economic men.”
There are many participants in the market.
Competition is “perfect” – there is no collusion, cartels or monopolies.
All participants have access to all relevant knowledge.
There are no transaction costs.
All transactions are mutually beneficial.
There are no externalities – i.e., no consequences to non-participating and non-consenting “third parties”. (See the following section).
Clearly, there are no “perfect markets” anywhere on earth, apart from the imaginations of economists and libertarians.
Consider the following:
(a) “Economic man” is a myth, or at the very least extremely rare. As noted above, most individuals engage in economic transactions for several reasons, some of them non-economic.
(b) Participation in markets is restricted to those with the ability to pay. Public policy decisions, on the other hand, should involve the rights and welfare of many who are excluded from market activity; namely, the very young, the very poor, animals, and future generations.
(c) Unregulated markets are self-eliminating, because capitalists detest competition and strive constantly to eliminate it. The remedy? The enforcement of anti-trust laws and regulation, which means, of course, “interference” by governments in the marketplace.
(d) The multi-billion dollar advertising and public relations industries are devoted to the task of persuading rather than informing. And persuasion involves the withholding of relevant information (e.g. health risks) and the dispensing of distorted and false information. Caveat Emptor!
(e) All transactions in the real world exact costs. Among them are the costs of enforcing the laws required for markets to take place at all (e.g. fair disclosure, patents and copyrights, contracts, civil and criminal courts, etc.), and this of course means government, which is so despised by “free marketeers.”
(e) Transactions are frequently not mutually beneficial, due to fraud (i.e., violation of the “relevant knowledge condition”), the remedy of which is civil suits, which requires the “transaction costs” of the enforcement of law and the appeal to courts.
(f) External costs of market transactions are more the rule than the exception. Innocent, non-consenting parties are routinely impacted by economic activity. Among these external costs are environmental pollution, urban decay, public health costs, etc. Third-party “stakeholders” have no say in economic transactions. Their only recourse for protection and compensation is the sole agency legitimately established to represent all citizens: the government.
“Economic man” and “perfect markets” are abstract constructs which, due to their clarity and simplicity, allow theoretical economists to devise complex mathematical models. However, they have no counterparts in the real world, which compromises the application of these concepts in public policy.
Market Failure and the Problem of Externalities
One cannot enroll in an Introduction to Economics class, without encountering the concept of “market failure” – the acknowledgment that a totally unconstrained and unregulated free market can, at times, have socially undesirable consequences (as I will exemplify below). It is one of the most obvious and incontrovertible facts of applied economics. Almost all of us are aware of market failures, whether or not we have ever studied economics.
Some students of Econ. 101 choose to major in Economics, and a few of these earn doctorates in the field. Those scholars who go on to work for The Heritage Foundation, The American Enterprise Institute, The Cato Institute, and other such “conservative” and libertarian think-tanks somehow manage to forget about “market failures.” The free unregulated market, they tell us, always brings about the socially optimum result.
Practical experience tells us otherwise:
The unconstrained chemical industry promoted pesticides and caused extensive damage to the ecosystem, until the public and then the government, aroused by Rachel Carson’s book, “Silent Spring,” put a stop to it.
Similarly, the chemical industry strenuously resisted demands that it cease the manufacture and distribution of chloro-fluorocarbons (CFCs), when atmospheric scientists discovered that the CFCs were eroding the stratospheric ozone, which protects the earth’s inhabitants from ultra-violet radiation. Once again, the federal government, joined by the governments of other industrialized nations, enforced a ban on CFCs.
Reduced labor costs yield increased profits and increased dividends to the stockholders of the corporation. Thus, if workers abroad accept wages that are a fraction of the wages demanded in the United States, then the “responsible” policy of the corporation executives is to re-locate jobs abroad: “outsourcing.” The consequences to the displaced workers, and eventually to the national economy, is devastating. But strictly speaking, that is not the concern of the corporation. Not, that is, unless the government intervenes with tariffs, tax incentives, regulations, and laws.
Finally, the tobacco industry, whose corporate responsibility to its stockholders is to maximize profits, successfully marketed its products to the point where half of the US population were smokers. As a result, almost a half million Americans die prematurely each year – nearly twice the total US casualties in World War II. Today, only a fifth of adult Americans are smokers. No thanks to the industry. Once again, government intervention, vigorously and persistently opposed by the tobacco industry, has curtailed marketing and has publicized the health hazards of smoking, saving the health and lives of millions.
We are all quite familiar with these “market failures,” and many more. It is obvious that, in numerous undeniable cases the unregulated free market fails to “make everyone better off,” as Milton Friedman would have us believe. So why, if market failures are so compellingly obvious, should we even bother to mention them? The answer is that our present government is dominated by individuals who behave as if they don’t recognize these malevolent consequences of free markets. So one after another, regulations and laws designed to correct market failures are being dismantled, as government regulatory agencies are staffed with lobbyists and officers from the corporations that these agencies are charged to regulate.
But why do markets fail to produce optimal results for society at large? Railroad tycoon, William Vanderbilt (1856-1938), said it all: “the public be damned, I work for my stockholders.” Moreover individual entrepreneurs and workers also want and strive for what is best for themselves. Indeed, as any neo-classical economist will insist, personal want-satisfactions (e.g., profits) are what drive an economy.
Implicit in market fundamentalism and libertarianism is the belief that what is best for each individual and each corporation is best for all individuals – in other words, for “society at large.” As President Eisenhower’s Secretary of Defense, Charles Wilson, allegedly put it: “What is good for General Motors, is good for the country.”
Because market fundamentalism is a dogma, it is untouched by hard evidence and practical experience. “Market — good; Government — bad. Period! Now don’t confuse us with the facts.”
Those who are not captivated by the dogma of market fundamentalism (i.e., most of us), know better. We trust the scientists who tell us that pesticides damage the ecosystem, that CFCs erode the ozone in the stratosphere. And we know that smoking causes lung cancer and premature death – the cigarette packs tell us so, not because the tobacco companies warn us out of a sense of social responsibility, but because the government requires them to print the warnings.
The Third Parties Problem
It is an article of faith among libertarians, a faith undiminished by the historical record or practical experience, that the unregulated free market of self-serving buyers and sellers will, “as if by an invisible hand,” yield the optimum social benefits. Accordingly, as Milton Friedman notoriously proclaimed in the title of his 1970 New York Times article, “the social responsibility of business is to increase its profits.” End of story.
This reassuring dogma conveniently neglects the “third parties” to economic transactions: the “stakeholders” – individuals affected by the transactions without their informed consent. These include individuals residing downwind and downstream from polluting industries, taxpayers who must pay for the medical costs of smoking, citizens at risk of injury or death from toxic chemical releases, homeowners near airports, and most recently, the tax-paying public, present and future, that has been presented the bill for rescuing Wall Street. Add to these, the customers who are not informed of the consequences of their purchases: teenagers induced to take up smoking, consumers of insufficiently tested drugs, etc. If the stockholders of a corporation are dissatisfied with the profit-making of the corporation, they can fire the managers. But who, other than the government, speaks for the stakeholders? The costs of these third-party “externalities” do not figure into the profit-maximizing plans of corporations, unless those costs are imposed by force of law and regulation, which is to say, by government.
There is another remedy, say the libertarians: the threat of law suits by individuals harmed by corporate irresponsibility. Unfortunately, the regressive Congresses and administrations have pulled the teeth from this watchdog by enacting so-called “tort reform” – limitations on awards to plaintiffs. So today, damage claims by customers and stakeholders are simply regarded by large corporations, as “the cost of doing business.”
Once the high-pressure political rhetoric and the high-fallutin’ scholarly jargon is set aside and undeniable economic and social facts are brought to the fore, the conclusion is inescapable: totally unregulated, laissez-faire capitalism cannot work, and attempts to make it work lead to oligarchy: opulent wealth for the very few, poverty for all others, and the disintegration of social order and the just rule of law. In addition to all that, oligarchy leads, paradoxically, to the destruction of the free market for, as history testifies and we are discovering anew in the daily news, oligarchy detests competition and leads to monopolies. Hence “mergers and acquisitions.”
Equally obvious is the remedy for all this: government regulation and the rule of law – law based, not on neo-classical economic theory, but on historical experience and fundamental moral principles.
How then have the regressives succeeded in foisting a belief in the dogma of market fundamentalism upon a sizeable portion of the United States population, including the media and perhaps a majority of the U.S. Congress? They have accomplished this through the expenditure of vast sums of private money in support of “think tanks,” in the purchase of media, and in political campaign contributions.
But what cogent arguments have been presented in support of the dogma? Very few, I submit. The widespread acceptance has been accomplished through simple repetition, devoid of argument and rich in the rhetoric of “freedom.” About the only supporting argument forms of note are anecdotal evidence and false generalization. Supporters of market fundamentalism cite examples of the benefits of free markets, and from that conclude that all “free markets” are always benign. However, as noted above, the fact that free market activity is often beneficial is not in dispute. Yes, we are all better off due to innovation, entrepreneurship and competition in the production of goods and the performance of services. This is the aforementioned “half-truth” of market dogmatism. But this half truth does not yield a whole truth. It does not follow from the admitted advantages of free market activity that there are never any harmful consequences thereof. Simple reflection, as noted above, yields abundant examples of what economists call “market failures” and “negative externalities.”
“The Reagan Revolution” of 1981 ushered in the grand experiment in applied market fundamentalism. Before more and greater harms befall us all, it is past time for the people and the government of the United States to recognize and to proclaim that the experiment has failed.
We have learned what we need to know about the attempt to institutionalize this dogma, and it is time now to return to proven modes of governance: the rule of law, the protection of the environment and common resources, just distribution of the fruits of our combined and coordinated labor, and the subordination of economic activity in the service of the public good. It is time, in short, to bring back the rules, the umpires and the sanctions. Time to scrap the ethic of “you are on your own,” and to restore the ethic of community: “we’re all in this together.”
The liberal economist, James Galbraith, concurs:
“A new spirit of pragmatism surely requires that we discard the metaphor of market determinism – whole and entire. No more, let us bow and scrape before that altar. Markets have their place – they are a reasonably open and orderly way to assure the distribution of services and goods. They are not a general formula for the expression of social will and the working out of social problems.”(5)
The Privatization Panacea
“In colonial Philadelphia, firefighters were employed by private insurance companies which, of course, had financial incentives to minimize damage to their clients’ properties. Plaques with the insurance company’s insignia were placed on buildings, so that the fire fighters would know whether or not it was “their business” to put out the fires on the premises. (These plaques are often found today in antique shops). If the “wrong” plaque was on the building, well, that was just tough luck. Of course, with their attention confined to a single building, fire fighters were ill-disposed to prevent a spreading of the fire to adjacent “non-client” structures.
Occasionally, when the building’s insurance affiliation was in some doubt, competing fire companies would fight each other for the privilege of putting out the fire, resulting in more water aimed at fire fighters than at burning buildings.
Eventually, the absurdity and outright danger of this system led one prominent Philadelphia citizen to come up with the idea of a publicly funded and administered fire department.
His name was Benjamin Franklin: America’s first anti-free-enterprise commie pinko nut-case.
Franklin’s subversive left-wing ideas were extended to include libraries, post offices, and public schools, and, if we are to believe some of today’s self-described “conservatives,” it’s been downhill ever since.
Libertarians contend that virtually all economic and social institutions are better managed when privatized and unregulated. According to this theory, the greed (i.e., “profit motive”) of investing private individuals is, in virtually all cases, mystically transformed into the optimum public good. The exceptions are the police, the military, the courts and the legislatures which, they concede, are properly confined to “the public sector.”
However, today even these exceptions are succumbing to “creeping privatization,” as the hyphen in “military-industrial complex” dissolves, as members of Congress are clearly more beholden to their corporate sponsors (“contributors”) than to their constituents, and as “conservative” judges routinely rule that corporate “property rights” trump personal injury suits and civil liberties.
But is it just possible that old Ben Franklin had a point? Are we not all better off now that the fire department doesn’t look first for the insurance medallion on our homes before they turn on the hoses? Isn’t the function of the military to defend the country – all of us, rich and poor, male and female, white and “other” – from foreign enemies, rather than enrich the industries that supply the armed forces? And shouldn’t the members of Congress represent the public at large, and not the private corporations and individuals that finance their campaigns?
Libertarians and their right-wing political allies are not convinced as, today in some wealthy neighborhoods, even fire and police protection are being “re-privatized.”
The absurdity of uncompromising privatism and market fundamentalism is on full display when applied to environmental policy.
According to the libertarians, all environmental problems derive from common ownership of such natural resources as pasturage, fisheries, and even air, water and wildlife. The solution? Privatization of all such resources. Does this sound extreme? Consider the following from Robert J. Smith (my emphases):
“The problems of environmental degradation, pollution, overexploitation of natural resources, and depletion of wildlife all derive from their being treated as common property resources. Whenever we find an approach to the extension of private property rights in these areas, we find superior results.”
The environmental devastation in the former communist countries, the libertarians argue, proves the rule: that which is the property of everyone (i.e., the state) is the responsibility of no one. In contrast, they argue, resources will be best protected when the costs of environmental degradation fall upon the property owner. Accordingly, when the environment and its resources are privately owned, there is no need to urge the owners to practice “good ecological citizenship” for abstract altruistic reasons or through the threat of government sanctions. Instead, the libertarian believes, self interest and economic incentives will suffice to motivate the property owner to maximize the long-term value of his property.
Pollution and Property Rights: But if privatization motivates the owner to protect the environmental quality of his own property, what is to keep him from polluting and degrading the property of others – especially in the absence of government regulation, which the libertarians detest? The answer, in a word, is the courts — in libertarian theory, one of the few acceptable institutions of government.
Recall that the right to property is one of the three inviolate “natural rights” of the libertarian. It follows that pollution is an invasion of one’s property and even of one’s person, and thus punishable as an illegal violation of personal property rights. Accordingly, would-be polluters are restrained by the threat of suit by the injured property owner.
That, in brief, is how the libertarians propose to deal with nature and environmental quality. Let’s see now how it stands up to close scrutiny.
The Problem of the Irreducible Commons. Recall that in his classical 1968 essay, “The Tragedy of the Commons,” Garrett Hardin describes an overstocked pasture used by several herdsmen, but owned by no one in particular (i.e., “in common”). The addition of one sheep to the commons enriches its owner at the expense of all the other herdsmen. So long as there is no collective regulation on the use of the commons, no initiative by an individual will save the commons as each herdsman “rationally” chooses to “get what he can, while he can.” The result is inexorable: “ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.”
The strength of Hardin’s essay resides in its enormous scope of application. “The tragedy of the commons” explains the depletion of the Atlantic Grand Banks fisheries east of Canada and the United States. It also explains the pollution of common waterways and airsheds, the loss of biodiversity, uncontrolled population growth, and global warming. In all these cases and many more, a common resource is exploited and diminished as benefit to each individual exacts costs on unconsenting others. Good for each, bad for all.
The tragedy of the commons strikes at the very heart of libertarianism. It is the polar opposite of the cheerful optimism of “the invisible hand,” whereby the self-serving “utility maximization” of each leads to advantages to all. In contrast, the tragedy of the commons is “the back of the invisible hand” — the falling tide that grounds all boats — whereby advantages sought by each systematically and inexorably work to the disadvantage of all. And as we argued in the preceding essays, the tragedy is unquestionably widespread and endemic to modern society. Gone is the Thatcherite social atomism. And gone with it is the impermeable boundary, essential to libertarian theory, between “my business” and “your business.”
Hardin endorses the liberal remedy: “mutual coercion, mutually agreed upon” – which means, primarily, regulation and control by a legitimate democratic government. However, as we have seen, government interference is anathema to the libertarians. Instead, they propose privatization and legal compensation for damages.
The libertarian’s error resides in their proposal that privatization, which is clearly the correct solution for some commons problems, is to be prescribed for all commons problems. Like Maslow’s carpenter who believes that all problems can be solved with a hammer, libertarians insist that all commons problems can be fixed with the “hammer” of privatization. Accordingly, they propose the abolition of all national parks and the privatization of all public lands and utilities, including roads and airports — everything, that is, except the military, the police and the courts.
Critics of libertarianism find no end of amusement pointing out the inadequacies of such a privatization scheme. How, for example, are we to “privatize” the whaling industry? Are we to “brand” the whales, to validate the ownership of each? And what if “my whale” feeds on “your” krill, which you purchased (from whom?) to feed “your” whales? What courts must we set up to assess damages? What agency will be set up to collect the facts germane to the case, and how is it to be financed? Furthermore, the privatization of oceanic resources suggests that “territories” of ocean will have to be established, which means the end of the centuries-old convention of non-sovereignty of the seas.
If we privatize wildlife, then will the owner of the wild insects that pollinate my orchard be entitled to charge me for this service? If someone’s flock of migrating birds soils my clothing or pollutes my swimming pool, how am I to locate the responsible owner? The mind boggles.
There is worse to come: can we conceivably “privatize” the atmosphere, and with it the hydrological cycle? If so, then who is liable for El Nino or Hurricane Katrina? If I own a “piece” of the atmosphere, is this a defined space, or is it the migrating clouds and molecules within. How is the “owner” to make his claim?
Total privatization of nature is a fantasy — a reductio ad absurdum, charitably supplied to the critics by the libertarians themselves. The atmosphere, the seas, wildlife, and innumerable ecological services both known and undiscovered, are now and will forever be the “common property” of mankind, not to mention the other species of the earth. And since “privatization” of land and resources can never be the total and final solution to the commons problem, there remains the libertarians’ alternative proposal: legal compensation for invasion of property. If that is found to fail, then governmental regulation, endorsed by the progressives and detested by the libertarians, may be the only remaining solution to “the tragedy of the commons.”
Progressivism vs. “The Ownership Society”
“The ownership society” – the privatization regime proposed by the libertarian — is inherently unstable, unequal, and eventually oppressive. Wealth and power act to enhance wealth and power, ever loosening the constraint of checks and balances, as they proceed to absorb government and make it an instrument in behalf of wealth and power. The statistics tell it all: today, the average CEO of a Fortune 500 company earns in half a day, what his median worker earns in a year (a ratio of 500 to 1). Twenty years ago, the ratio was 40 to 1. Today, one percent of the US households own almost 40% of the nation’s wealth – twice that of the 1970s. With the coming abolition of taxes on estates, dividends and capital gains, that inequality can only accelerate, as Leona Helmsley’s maxim — “taxes are for the little people” – achieves full realization.
Furthermore, the privatizers’ celebration of “competitive enterprise” is essentially hypocritical. As noted, capitalists hate competition, as they relentlessly strive to build monopolies and crush their competitors. All that stands in their way are anti-trust laws and the courts – which is to say, government.
But let us stop well short of the deep end. Privatization and free enterprise, constrained by popular government, are fine ideals, the applications of which have undoubtedly yielded great benefits to mankind. Moreover, government regulation can often be excessive and a damned nuisance to the private entrepreneur. Private enterprise should surely count for something. But not for everything. Adam Smith was right: “the invisible hand” of the market place can, without plan or intention, “promote … the public interest.” But we put ourselves in great peril if we fail to acknowledge “the back of the invisible hand” – the tragedy of the commons – whereby the unregulated pursuit of self interest by the wealthy and powerful becomes parasitic upon, and eventually destroys, the well-ordered society of just laws, common consent, and an abundance of skilled and educated workers who produce and secure that wealth.”(6)