On the Soapbox

As the people who read this blog already know, my core philosophical/political principles are libertarian, and as such, I am a free market economist. But at the same time, I am also very centrist, and I view platform of the Libertarian Party as a platform of cold anarchy. Worse yet, I am a free market economist who is intrigued by Karl Marx--not the radical Karl Marx of the Communist Manifesto, but the economist Karl Marx of Das Kapital. I have long turned this around in my mind trying to find a way to reconcile and to unify these beliefs, and here is my (hopefully concise) attempt at doing so.

Libertarianism was born out of government abuses. It is believed that governmental powers pose the greatest threat to freedom, and as such, libertarians prefer a hands-off approach to virtually anything. Libertarians (generally) do not support anarchy, however, as they believe that the government is needed to provide justice (i.e., a way to deal with thieves, etc.) and to provide certain (limited) public goods. Marxists believe that the preservation of freedom involved eliminating concentrations of capital so that economics does not become a means of enslavement. The difficulty here is that this violates the property rights that libertarians hold dear, and although there are no specific provisions on precisely how reallocated capital should be managed, this, realistically, necessitates the transfer of authority to some form of governing body (though ideally, this would not be the case).

I want to start by trying to define what our goal is. Both conflicting views advocate freedom, but how should we define this freedom? I propose that we define it in terms of power. Random House Webster's dictionary defines it as the possession of control or command over others, which I think is a suitable definition for this purpose. Thus, in the absence of government, people can exert power on others through physical coercion (e.g., seizing of property, killing, etc.), and when government is formed, people surrender the right of physical coercion to the government, thus instituting and protecting freedoms such as property and life. Libertarians believe that government should not do much more beyond confiscating the powers of physical coercion, fearing (rightfully so, as history attests) that governments with too much power will tend to exert them in ways that suppress individual freedom. What is lacking from this perspective, however, is economics. In a world of abundant resources (capital), this may not have been a serious oversight, but it is nevertheless an oversight, and in our world, it is a serious one. But to what extent is economics power? If Mr. Smith decided to do work for Mr. Jones so that Mr. Smith would have the money to buy korfball equipment for his hobby sport, should this be viewed as Mr. Jones exerting economic power over Mr. Smith or should this be viewed as a voluntary economic exchange initiated by Mr. Smith in which he trades some amount of his time for equipment for his pet sport? What if the situation was a little different? Let's say that Mr. Smith is struggling to pay the rent on his run-down low-cost apartment and barely has any money for meager amounts of food, and he is working for Mr. Jones to pay for just these basic necessities of life. Would Mr. Jones' ability to have Mr. Smith do work on his behalf constitute power in this case? Would it make a difference if Mr. Jones was the only employer or if Mr. Smith could choose between different employers? A distinction needs to be made between economic activities where the parties act voluntarily and where there is a coercive element (a non-economic example of such a distinction would be Mr. Doe deciding whether to go to a police station so that he can interview the police chief versus Mr. Doe deciding whether to go to a police station because he's surrounded by policemen with guns drawn--while he technically has the option to resist, the consequences of that option are such that the option does not realistically exist). The study of free market economics addresses this to some extent with the notion of market power: monopolies, monopsonies, etc. and the notion of inelastic demand: demand for food and shelter, etc., but how does this fit into politics?

Classical libertarianism is somewhat myopic in this regard, as it focuses on the protection of people from the coercive powers of government and pays little attention to the possibility of coercive powers from other sources, mostly because a perfect free market economy would necessarily be free of these problems. However, just as many people could claim that a perfect Marxist society is an impossibility, so is the notion of a perfect free-market economy. Just as the frictionless surfaces of physics textbooks do not exist in the real world, many of the assumptions of free market economics are limited only to textbooks: perfect symmetrical information, lack of externalities, no natural monopolies, perfectly rational people, perfectly mobile capital and labor, etc. It is true that much of the power held by the rich are really the product of misapplied governmental powers (fine examples include the federal grants that established the crooked railroad monopolies of long ago and the corruption of government through lobbyists) and that a general reduction of governmental powers would reduce the amount of power that could be "bought" and abused, but there are many cases where power could be had without the help of a corruptible government, through deception (it has been proved mathematically that asymmetric imperfect information will produce undesirable economic results in a free market model), natural monopolies, natural monopsonies, the disregard of externalities, etc. Alan Greenspan's 1961 paper titled Antitrust is a perfect example of the commonplace libertarian view that economic problems like trusts are caused by government and that, had government not meddled in the first place, there would be nothing to fix. This perspective, as I have just argued, is flawed because while it may be true for certain cases (such as the railroad example brought up by Mr. Greenspan that so conveniently fit his argument), it is by no means all-encompassing. It should also be noted that even if the economy was perfect enough that it is able to correct itself, the process of correction can oftentimes be slow. It took about a decade for U.S. Steel to lose its grip on the market, Alcoa did not lose its monopoly until after a number of decades and a government jump-start of its competitors.

While classical libertarianism is naive in respect to the economy, Marx was blind in respect to government and the power and efficiency of free markets. Although Marx does not advocate a government per se, reality implies the necessity of granting government a lot of power if reallocation of capital of the scale he imagines is to take place, hence my motivation for a perspective that takes both concerns into account.

I would like to see a version of libertarianism that takes into account the realities of the economy and thus tries to address the kinds of issues that Marx tried to address without taking a radical approach to the allocation of capital. Locke believed that, as a whole, people were good and that if it were not for the small minority of aggressors, government would not be necessary. If these concessions can be made for the imperfections of human nature, why can they not be made for the imperfections of economics? While excessive government intervention in economics is undesirable (e.g., agricultural supports), government intervention is necessary to establish the foundations necessary for a true free-market economy, which in turn will ensure freedom. Laws are needed to regulate information disclosure, to force the pricing of externalities (e.g., pollution and gasoline taxes), to regulate natural monopolies (e.g., utilities), to regulate mergers and other anti-competitive activities, etc.

I suppose the difference between what I am advocating and socialism is that, as a libertarian, I believe in a different standard to which these laws must be held. Their purpose is not to help specific groups of people, but instead, they should be carefully targeted at the natural defects of the economy in the hopes that all groups of people will benefit once a true market economy exists, and as such, these laws need to be limited so that they grant the government only as much power as necessary. In the end, I believe strongly in the power and efficiency of a market economy. One needs to look no further than the high unemployment and discontent in Europe to see that, ultimately, free markets are the best that we have, and that with some ironing out of the natural kinks (a process that many hard-line libertarians oppose), it could do wonders for the world.

Anyway, this is just a short (though not as short as I was aiming for) preliminary sketch of my take on libertarianism. One of these days, I should flesh this out to something more carefully researched and written, but for now, I'm just curious to see what people think of it.