Libertarianism, what is it? The word is chucked around blogs like this in all sorts of contexts, but to the casual visitor it can be a pretty meaningless term.
Leg-iron has a posting up, but it comes across as a whole list of examples rather than a discussion drawing from first principles.
Me, I find it easier to state the principle and then examine the implications.
It doesn’t matter whether you are a moralist, or a consequentialist, and I am both, libertarianism, in its basics and fundamentals, derives from what I will call the Prime Directive (sorry, First Law, First Commandment – call it what you will):
Thou shalt not initiate the use of violence.
Everything else derives from that. Note, this is not pacifism; if someone initiates violence against you and yours, or your friends and allies and theirs, you are free to respond as you see fit. Defence is not precluded.
Otherwise? What about taxation? Regulation? Speech control? Antidiscrimination laws?
How are taxes collected? By threat of violence, that’s how. Don’t pay your taxes? The state commits violence on you and yours. You want to pay high taxes? Feel free to do so. You vote for a party committed to increasing taxes? You are colluding in an act of violence against others.
Yep, that’s right, voting is an act of violence.
Regulation? Ditto. When a socialist tells you they are a pacifist; well, in a pigs ear they are. They just want someone else to commit the violence on their behalf.
Libertarian societies: aren’t libertarians selfish and self centred? You think the average NeuArbeit Government minister is a paragon of virtuous self sacrifice? Communal action – free people freely cooperating for common ends – is fundamental to free societies.
Charity, compassion; what’s the difference between charity and socialism? What’s the difference between a free society and a coercive state?
What’s the difference between sex and rape?
CountingCats,
I a virgin commenter, and (disclaimer) a very young man in a kind of exploratory phase about the libertarian idea, where I still have much to read, discuss, listen, collate and think over.
Pretty sure a patient trawl through the archives would confirm the subjects I will raise have been dealt with before, but no taxes? This is pretty extreme and bitter for the most liberal free market economists.
The axiom of libertarianism ‘thou shalt not initiate violence’ requires the two government agencies to be effective, a police force and a legal system. Does your position require that these two are financed by voluntary donation?
Do libertarians accept the economic theory on Pigovian taxes? (The consumption of some goods may involve an external cost that the agent does not take into account. Consumption is then below or above the level that would prevail if the external cost was internalized by the agent. Pigovian taxes have been suggested as a tool that may solve this). If you contend alcohol has social costs that a drinker ignores, then a tax on it is necessary.
Do you also allow no taxes for public goods provision, a well developed theme in standard economics. Paying for public goods without compulsion is seen by most economists as either unfeasible or, at least, theoretically highly improbable. To circumvent this, I suppose, property rights would have to be established on literally everything, including common resources such as air and water. What is the libertarian position in this case in the context of no taxes?
What is the libertarian position on banking? The only possible theory of the monetary system that I can conceive in accordance with the precept ‘thou shalt not initiate violence’ is free banking, where a banking system is allowed to evolve with zero government interference. Although i have seen it implied that some libertarians sympathize with full reserve banking, which would require regulation.
This is an interesting perspective, which I have taken the liberty of highlighting on my own blog. Thank you.
Tom,
Feel free, knock yourself out.
I like to formulate the “thou shalt not initiate violence” principle in terms of consent these days. It’s the same thing, it just fits better to some situations which are not apparently “violent” such as fraud or indeed theft. A libertarian society is one which recognises and upholds the right of consent, a right which derives naturally from the principle of self ownership. All the clearly recognised crimes- murder, assault, rape, theft, etc are denials of the victim’s consent. It would also allow for consensual violence, such as BDSM or boxing matches or a rugby scrum.
Aspurahov-
The axiom of libertarianism ‘thou shalt not initiate violence’ requires the two government agencies to be effective, a police force and a legal system. Does your position require that these two are financed by voluntary donation?
Libertarianism is a “tendency” like any other political system. As such one can argue about the degree of it. At the extreme end you get anarchism (no state at all), just as the extreme end of socialism is absolute communism with no private property or private life at all.
Some libertarians argue against state policing and courts. Personally I don’t think this is tenable. If you presume there will be at least state courts and legal system, then that seems to presume some form of taxation. But you could fund it instead via fees on the persons in the system- the guilty pay, kind of thing. Not just restitution to victims, but a fee to the court system which their crime has necessitated the existence of. That is, if there were no crimes, there would be no need for courts, so it’s only fair that the criminals should be required to pay for it. But that’s just one option.
I think in real terms, most libertarians are prepared to pay some tax. What everyone’s sick of is the sheer escalating quantities of tax. If there were nothing but a few tarriffs (e.g. as the US federal government was originally funded) or a small income tax or corporation tax, not many people would really mind very much, even if it’s not “ideologically pure”.
Do libertarians accept the economic theory on Pigovian taxes?
Generally not. There are several problems with Pigovian taxes, not least that the externalities they are supposed to address are generally arbitrary and difficult to quantify objectively. For instance, you can measure the cost of alchohol consumption in terms of injury and illness, but cannot measure the benefit we gain from the pleasure it provides. How many people avoid mental illnesses such as depression because they can go to the pub for some social interaction (most people recognise socialising as a human need) cannot be quanitified. The problem in general terms is that you have a matrix of values of enormous extent, each value in which modifies all the other values, and you’re trying to compare those values to an unknown hypothesised default value which cannot be calculated. There is no way to know what the Pigovian externality is in qualitative terms.
You end up with nothing more than opinion. For instance, some people may say that pornograhy causes violence against women. Others would say it is harmless entertainment that may reduce violence against women. Nobody objectively can say; it’s really a matter of moral opinion.
Do you also allow no taxes for public goods provision, a well developed theme in standard economics.
Depends what you count as a public good. You can argue at one end of the scale that nothing is; at the other end that everything is. Again it comes down to the fact that everything is interconnected in that infinite value matrix.
Is transport a public good? Maybe it is. Or maybe providing public transport in cities artifically subsidises businesses in those cities, causing them to clump together, resulting in transport problems. Look at all those people who cram into The City every morning to do jobs they could actually do anywhere. It’s all a bit arbitrary really.
What is the libertarian position on banking?
It should be left to the market. Many libertarians (including myself) see the current financial system as an entirely messed up game run by the State, via central banks and monetary policy. How much of the money is in banking because it’s providing a useful service and how much is just monopoly money earned by beneficiaries of state intervention we cannot know. What we can know is that without state involvement, the banking system would have to bear its own risks and thus be a bit more cautious.
There’s nothing wrong with banking as a business. Loan brokering (which is what banks basically do) is a useful service for the free market. What they currently do though, pretty much, is skim profits off government-induced inflation.
You are right that forcing full reserve banking would require regulation (the “Rothbardian Fallacy”). In a free market, banks would have to decide their own reserve ratios, and would be liable for the loans they make. It would be more clear that their “bank notes” are not money, but promisory notes and that a customer lending to a bank to gain interest is risking their money. THere would be high risk, high profit accounts and low risk, low profit accounts. One major modifier though is that without inflation, nobody would be forced to speculate with their savings as they currently are; currently you need to speculate just to retain the value of your savings (since inflation erodes their value if you put them in a shoe box under the bed).
Asparuhov,
Libertarianism consists of a broad range of philosophies and positions, and while there is a core of ideas that most tend to agree with, a lot of the details such as you mention will differ depending on who you ask.
Regarding the “no taxes” question, there are two main schools of thought, labelled the anarchist and the minarchist positions. Anarchists try to go for the “no government, no taxes, everything by free association of individuals” approach. Minarchists accept the need for government for certain essential functions, but want the absolute minimum you can get away with. Their position is that if it is possible to do it by private enterprise, the government shouldn’t be doing it. Exactly what functions are considered essential varies - most accept national defence, the courts, and law enforcement (with the minimum of laws necessary) - but some people include a bit more. Everyone is agreed that our current governments are far too big, interfere in far too many things that they shouldn’t, are a crippling economic burden, and an ever encroaching threat to basic freedom.
Libertarians accept a part of the economic theory regarding how they work, but rarely accept the justification for interference. There are objections to each step in the argument.
First, people disagree on the values of external costs - and in many cases they are so classified because it’s just one person’s opinion that it is a cost, where the people involved in the trade don’t think it is. How can you set a price, if the market itself does not do so? Why should we accept the opinion of the assessor and not that of the consumer? What if the person assessing the cost is wrong? How would such an error be corrected, without market mechanisms?
Second, applying selective taxes (like subsidies, tariffs, etc.) constitutes a trade barrier which has two effects: it distorts the market by applying artificial and arbitrary criteria that hardly ever match the actual cost, and it creates a market for circumventing it. Both of these result in a loss of economic efficiency, and impose an economic cost on society. The first results in ‘rent seeking’ behaviour, where instead of optimising businesses to maximise wealth creation, they’re optimised to gain a tax/subsidy advantage, and indeed to promote the consideration of ‘external costs’ so as to create such advantages. The second of these results in bribery, corruption, smuggling, and black markets as people pay those in power to let them circumvent the imposed barrier. Trade barriers fund organised crime, government corruption, and heavy law enforcement costs - and consequently a loss of liberty as security has to be beefed up. The costs for all of these come out of the overall economic productivity of society. As a rule, trade barriers always cost a society far more than they ever gain.
And thirdly, even supposing that people generally do accept it is a cost worth dealing with, there are frequently better ways to internalise it into the market. Property rights is one possibility. Insurance schemes (and equivalent financial instruments) another. You can use the peer pressure of public opinion, persuasion, reputation, and conscience. And you can simply tell people the cost, and have them take it into account when deciding whether to trade. If people agree with you, and are sufficiently prosperous that they have a choice in the matter, they will often be willing to spend a little more to have it done right.
In the example you cite, that of alcohol, there are no real social costs - they’re all made up by the neo-puritans. In the case of late night violence, it is the violence that is the problem, not the alcohol. The solution would either be to actually enforce the existing edicts against violence; or to separate areas where violence occurs from where everybody else conducts their business, let everybody know where to avoid, and then allow anyone who want to over-indulge to get on with it.
Regarding public goods, which public goods are you referring to? As a rule, libertarians consider most public goods as things we shouldn’t be paying for, anyway. If we want them, we’ll buy them. If nobody buys them, well obviously there’s no real need for them. There are exceptions that might be argued, but without you being more specific I can’t really say. See the above discussion of minarchism as well.
On banking, there is again a diversity of opinion. Both free banking and full reserve banking have their adherents, and there are those that agree with neither. There are two things, though, that libertarians are generally agreed on - that the state shouldn’t be permitted to manipulate the economy via the banks for their own political purposes, and that if people are offered a choice and all the information regarding the risks involved in a particular currency or bank, that they ought to be able to do what they want with their own money. Regulation should only be directed at making the customers aware of the true nature of their investment. Whether they think what they do is sensible, or is a likely cause of the crashes and recessions is another matter. But you can’t coerce people into acting for what you consider to be their own good.
Libertarianism is complicated. For that matter, I’m not sure I’d agree that the above enunciated principle is so foundational, but I’ve argued this out with the people here elsewhere, and am not in the mood for another extended debate. People disagree. Which is why we should impose the absolute minimum restrictions on one another to be able to get along. Because you never know who will turn out to be the most right.
Hope that helps.
[...] Here. h/t The Last Ditch. [...]
[...] has a post below that I honestly can’t disagree with. But I would like to add something to [...]
Pa Annoyed and IanB; I am very grateful for the time taken to respond to my questions.
IanB, I have enjoyed reading your posts immensely in the few days I have been on the site - can you recommend any initial reading on libertarian theory and specifically on libertarianism and banking?
Both of you are correct; a public good does not have a single definition and consequently it is impossible to agree on examples. A standard example that is given of one type of public good(depending on definitions) is a park (a common resource). Most people like and use parks. At the moment, most parks i know of (in the normal sense of an area of (some) greenery) are non-excludable.
Obviously a park needs constant maintenance. My contention is that it is highly improbable that a voluntary stable mechanism for organizing park maintenance cannot be conceived of. In some cases a park could have a small groups of rich patrons who love parks and are willing to pay for themselves and everybody else.
If this case doesn’t hold, and park maintenance has to be shared between a fairly large portion of a population, organising payment will be a problem. People always have an incentive to free ride i.e. let other people pay for the park. If no steps are taken to make the park excludable in some sense (people can only go if they pay a membership) , it is easy to see how a game theoretic situation will arise where the dominant strategy is to free ride. Everybody will want to be the somebody who doesn’t pay.
Think of a group of students each of who demurs to chip in the money to pay the 10% service charge in a restaurant when they know (since exact division is impractical) somebody will pay more than his fair share and the game essentially becomes one of ‘chicken’. Of course, the service charge carries an extremely heavy legal penalty relative to the 50p expense and so will in most cases be paid.
A park may then not exist, and may be overrun with weeds and plants making it unusable for leisure. But, if everybody paid their true valuation, the park will have more than enough money for maintenance.
You may retort that the voluntary system is efficient since it will happen that the people who value the park the most make the initial donations and carry a proportionately larger share of the burden, while th people who value it less tend to wait and may not pay anything at all. In fact, it could be that most donations fall below the true valuation and are still able to pay for that and other parks.
But this system will tend to be unstable, since people will be annoyed that others get something for nothing, and the process will unravel. Economic experimental games of fairness and equity invented by some Yale professors showed that equity and a perception of justice plays a part in decision making. An example: one player is endowed with $10. He decided the split of the money and offers it to the second player. If the second player accepts the division, they keep the money. Rationally, if the second player was offered 1 cent, he should take it because it makes him better off, but the researchers found that anything significantly different from 50-50 was rejected.
I guess that solution under the government provision would be to work out how much the park costs and raise the money as a revenue requirement under the preffered tax. Any method that tries to elicit separate valuations is unworkable.
That, or make the park lands private. And that would have issues.
Asparuhov:
Many of us hold that there is no need for any state legal system - a free market in legal systems is possible, and preferable. The first to suggest this (as far as we know) was Molinari, one of the French school of liberal economists and it has been further developed by anarchists such as Benjamin Tucker and libertarians like Rothbard.
As for the free rider problem - that is a problem for entrepreneurs to solve on the freed market. There are many possible solutions, each of which depends upon the situation.
What do you think of the way Linux and other open source software is developed? How does it happen, given the economic and psychological principles you set out?
It used to be that private benefactors would open a park to the public, named after themselves, as a way of improving their social standing in the community. Quite a few big companies do it, as a community relations PR exercise. Generosity can still be voluntary, even in a capitalist system.
It depends on the rules of the game. If you set it up so that the aim is to make the most money and fairness is expected, people will be annoyed at the expectation being violated. If you set it up so that the participants expect cheating and ruthlessness, it doesn’t bother people. Nobody wastes time on inflicting petty revenge over ’selfishness’ at a poker game.
However, there are ways to do it on a commercial basis, too. Parks can be used to attract customers to an area. To raise property values, or to attract good neighbours (or good staff, in the case of big companies). If there is a choice of improvements, people can pay to have their own preferences met. There can be mixture of facilities, some of them pay-to-access and others free. Or where a commercial venture requires a lot of local public good will to operate successfully, public amenities are one possible way to buy that.
While people respond psychologically to free riders, the more astute businesses tend to work out what the actual profits and losses are, and if it’s a net benefit even with some proportion of outsiders taking ‘unfair’ advantage, they’ll still offer all the deals and discounts. It’s like banks knowing some proportion of their debtors will default - they just factor that into the interest rate and carry on.
Many of us hold that there is no need for any state legal system - a free market in legal systems is possible, and preferable.
I’ve read through all that stuff and none of it seems to me to hold any water.The central problem is that law is inherently- and must be- collectivist and coercive. The law applies to the offender, not the victim. If a man is burgled, the person the law applies to is the burglar. If a woman is raped, the law applies not to her but to the rapist.
The law must thus have the appointed right to haul the burglar into the court and punish him, and must have the power to do so. No free market in an anarchy can apply this. If a person is free to choose a legal code arbitrarily under which they live, they cannot arbitrarily apply it to other persons who choose another legal code (e.g. the burglar may have chosen a legal code in which burglary is legal). Simply, you cannot say to somebody else, “you have broken my law (in which you do not voluntarily choose to participate) and you must now attend my court”. They will simply refuse. What choice of law you made for yourself is none of their concern.
You cannot enforce a law unless all other individuals in a society are compelled to obey it. If everyone in a society is compelled to obey your law, there is no free market in laws. If others are not compelled to obey your law, then it offers you no protection. Polycentric law cannot, by definition, exist without the very force and coercion that anarchists declare themselves to be avoiding.
CountingCats,
I would suggest that you can even go one step back from your “non initiation of force” and that the libertarian “Prime Directive” is of self-ownership. Owning ones-self implies beng able to do with yourself and your justly acquired property what you choose with it. The initiation of force breaches this Prime Directive because it reduces the victims self-ownership in some respect. Still - just getting a bit metaphysical for a moment there!
IanB on your last post on private law.I think you’ve missed a trick about the whole idea. If you think of it as a network of free market providers of insurance, or protection and of arbitration, what you term signing up to a different code is the equivalent of signing up to different insurance providers who have different things in their contracts. These may stand when two members of the same insurance agency come into conflict because the contracts may state, for example, that we will be the first arbiter and will make a judgement based on the terms of the contract you have signed.
However when we sign up to different insurance providers, then between them they will have a procedure involving independent arbiters, who are also in it for profit and who will make their profit as they make their reputations - for fair judgements which satisfy most customers. In the absence of statutory law, these judgements will largely be based on, in the first instance, natural law, and in the second, the body of precedent in similar cases.
So, to apply it say to the current debate about Shari’a in Britain, you would say that those people who sign up to a Shari’a insurance provider will, when they interact with each other settle disputes according to Shari’a, but if they come into conflict with someone not signed up to that they will have to agree a third party arbiter, who is unlikely to uphold your Shari’a contract as applying to other people where it fails tests of natural law (and where it did pass tests of natual law it may not even have gone to arbitration because your insurance company will admit you’ve done something wrong and settle direct with mine).
Just such a system operated amongst the clans of Somalia from around the 7th century to colonization at the beginning of the twentieth. Even though various Caliphs claimed the territory, evrey day law was dealth with by “Xeer” clan courts with sophisticated ways of dealing with plaitiffs or defendents from other clans, and a limited amount of Shari’a used for marriage and inheritance disputes.
As to the force an coercion bit, this is put forward as to why polycentric law would be so much more efficient. If your self-ownership has been infringed upon by someone, then assuming your insurance agents and their invetigative/protection firm has sufficient evidence they could “arrest” that someone which would be retaliatory not initiatory force. If they were proven wrong of course the arrestee could also sue for wrongful imprisonment. So firms are going to be more thorough in investigating and get it right more often first time. They would likely try first not to arrest but to discover who, if anyone, they were insured by and start the process there - indeed it might even be your own insurance provider that does the arresting given the evidence by the plaintiff’s insurance provider.
If of course the defendant has chosen not to insure themselves then a. they will likely find themselves unable to function in many areas of social interaction, but b. also find themselves likely unable to fight a wrongful improsonment action against someone who accuses them of a previous crime (unless some ambulance chaser type firms buy up the rights to the complaint from him and procede on his behalf).
Pa Annoyed, you make some very good points, especially about land prices. I hope I did not make it sound as if the justice/ equity thing was an overriding principle.
Pay-to-access facilities? In this, is there not the potential for a large commercial venture on prime land that makes the common resource area smaller?
I think you are right, parks will find benefactors. I was just unsure whether such a system would be stable, since it seems that park funding would be an item most large benefactors would cut back on in case of liquidity trouble. To make sure this doesn’t result in absence of provision, there would have to be a either a specified back up donor or a community reserve fund. (I am fully aware that stability is a disingenuous word used to justify the majority of government intervention)
I think open source differs from a common resource in an important respect. You put in the time, and get an improved piece of software, which nobody can make you enjoy less. You can donate to a park, and have everybody crowd in in response. A common resource is a rival good, while software is necessarily non-rival.
Further, software design or improvement has three further desirable characteristics for a time donor. It has the structure of a intellectual puzzle, which can yield utility on its own account. And if you were to concede that fairness is a consideration, then software improvement has the advantage of being ‘blind’ in that you do not know how many people who could help are not helping. Lastly, park maintenance is a fixed sum, as maintenance beyond a certain point yields almost no marginal utility, while time spent on valid improvements in software is never wasted, as software is at the embryonic stages of its development and powers.
Jock — If different insurance providers have different standards or laws, and there is no centralized law agency, then does it follow that you could ‘break’ the law and face a penalty without knowing ex ante that you have done anything wrong?
Pa Annoyed,
Where do you stand on privatising parks? Friedman said there was commercial value in a leisure space, and so if Central Park in NY were privatised, it would be just cleaner and safer. It seems to me a parkland can’t be maintained as a large urban grassland unless extensive, arbitrary conditions are set as to it use.
Asparuhov,
A question you might like to consider is whether a park is the best use of urban land, anyway? You seem to be taking it for granted that there ought to be parks. Yes, they’re nice, but so are lots of things. Like jobs, and facilities being closer to where you live. Are parks what most people really want? Isn’t the rural countryside an acceptable substitute? How would you know, if it isn’t tested by the market? And if it turns out people want something else more, isn’t it wrong and a waste of their money to keep on dogmatically giving them parks?
But if there is commercial value in parks, then it makes no sense to shut them down when money is tight. Doing so would actually lose you money. It would be like a shopping mall that was financially struggling closing its free car park.
I’m not sure if that answers your query. If you’re asking whether the market can offer something exactly identical to state interference in all the same circumstances, then I’d say no; and what’s more, that this is most often a good thing. If you’re asking whether the market can ever offer free, publicly accessible facilities that everyone benefits from, then the answer is clearly yes.
If enough people want something, there’s generally a way.
You are right Pa Annoyed, it may or may not be the ‘best’ use of urban land. My point was that if you privatise, then the odds are against a park, even it is valued more by society than an apartment block.
Property development firms are well organised. To get a co-op to buy the land to maintain as a park, you would need donations equal to the true valuation of roughly half the city. Then consensus on exactly how the park should be set up and what kind of things it should have in it. This kind of co-ordination is extremely difficult, nigh impossible. The incentive to free ride in this case is large, like not casting a vote because it doesn’t matter. While a property development firm has four guys on the deal team, and a much smaller number of target clients.
In the previous example, voluntary donations were for park maintenance. Now you are bidding against the big guys.
To be plausible, you would need to have a small number of owners charging people to use the park, but then the whole point of a park is lost.
Nice piece of text I must say. Is it oke for me to make a translation in Dutch with a obvious link to this article?