Monday 23 October 2006

Libertarianism (1)

A fascinating debate is going on among my younger colleagues.

Devil's Kitchen started it off by mentioning my observation about libertarianism in the Scottish blogosphere (Scroll down).

Then Doctor Vee responded:

One of the most interesting things about libertarians is how quickly their devotion to free markets and capitalism disappear so quickly as soon as it involves those dirty foreigners getting a piece of the action.
Given that DK is such a “libertarian”, I am sure he will be familiar with the section of libertarian poster boy Adam Smith’s The Wealth of Nations dealing with protectionism (Book IV, Ch II). Smith might be talking about goods, but I cannot see any reason why what he says does not apply to labour as well. If anyone has any reasons I would love to hear them.
Next, Longrider joined in:
Libertarianism in its pure form is anarchy. If you are to have individual freedom, sooner or later you are going to need commonly accepted rules to govern the limits of that freedom. Put simply, all freedoms are limited to a greater or lesser degree. I do not profess to have the freedom to do as I please if it hurts others or impinges on their freedoms. The moment we accept this principle, we have stepped away from the brink of anarchy that is the absolute of libertarianism.

None of the libertarian bloggers I frequent appear to be offering anarchy as an alternative to what we have. This means that they recognise the need for some form of collective behaviour where individuals are unable to achieve their aims alone. We need government for foreign policy, policing, defence, local services, for example. Therefore, we accept (grudgingly) the need for general taxation to fund these activities. Depending on just how extreme is the individual will decide just how large that list is. So all of those libertarian bloggers are prepared to compromise. It doesn’t damage their libertarian credentials, though; it merely makes them pragmatists.

There's a rejoinder from DK, then a reply from the Doc and another response from DK. All of this has connections with this post of mine (Scroll down) and, in particular, my debate with Bernie Hughes.

It's wonderful to see that the word "libertarian" is now used so often. That certainly wasn't the case when I first got involved in the movement and so I thought that a bit of libertarian history might come in useful.

What most libertarians believe in is similar to what used to be known simply as liberalism before that word got stolen by its opponents. Towards the end of the nineteenth century the members of the liberal Austrian School were advocating a very purist form of laissez faire economics. One of the most prominent of these gentlemen was Ludwig von Mises. Knowing that the Nazis were fervently opposed to free markets (and their supporters), Mises fled Vienna following the Anschluss. After a period in Switzerland he moved to the US. Of course, America at that time was in the grip of Keynesianism, partly as a result of a complete misunderstanding of the cause of the Great Depression. Consequently, Mises, one the greatest minds of the century, had to operate on the fringes of America's leftist-dominated Academia.

Meanwhile the Russian-born American author Ayn Rand had produced novels that were turning millions in the direction of liberty. Ms Rand's favourite economist was Mises. Rand's inner circle included Alan Greenspan, later Chairman of the Fed, and another member was economist Murray Rothbard who had studied under Mises.

Doctor Vee wrote:

Since DK has revealed that in his opinion government intervention can be a force for good, he has become a utilitarian like the rest of us.
That's interesting. There's no question that some libertarians are utilitarians, but a very large number - possibly the majority - are not. Most libertarians that I'm aware of base their philosophy on natural rights, and in particular the non-aggression principle. That's to say, they favour liberty on principle and not specifically for its undoubtedly benevolent outcomes. Both Rand and Rothbard were natural rights libertarians although they fell out over what mechanism was required to protect those rights. According to Rand, the state was needed to protect citizens against aggression. In other words: the military to protect against external aggressors, the police to protect against internal aggressors, and the courts to judge those accused of aggression. AND NOTHING ELSE. No "public" schools, hospitals, roads or welfare.

Rothbard, on the other hand, claimed that the state itself should and could be replaced by what's known as anarcho-capitalism or market anarchism.

I note that Jarndyce (commenting on Doctor Vee's) says:

You’ve pinpointed the glaring hypocrisy of most people who call themselves libertarians. They’re usually nothing of the sort: more like “what I have, no matter how I got it, is mine”-ians.

Also worth noting: all those wonderful predictions of neoclassical economics… the optimality of free trade, the inefficiency of taxation, the macroeconomic burdens of regulation, all of them… only work in the presence of perfect or near-perfect labour mobility. So next time someone chucks “free markets are best” at you, you know what to ask them back…

But most libertarians, both the anarcho-capitalists and the limited statists, are followers of the Austrian School, they are not neo-classicists and specifically do not assume a world of perfect markets. Indeed, entrepreneurship is only possible when markets aren't "perfect".

There is a vast literature on anarcho-capitalist as well as limited state libertarianism. Almost every human activity has been and is being explored. Indeed, Mises' greatest book was titled Human Action. It is not possible to have a proper understanding of libertarianism without undertaking a considerable amount of study. In part 2 I shall explore the vexed question of libertarianism and immigration.

(UPDATE: more from Doctorvee and also from DK!)

1 comment:

David Farrer said...

Comments made on previous template:

David Farrer

but factors (Labour, Capital) still have to be free to move where they expect the greatest returns

But remember that Austrians take a subjective view of value. It isn't necessarily measurable in money terms. For example, I may well have been happy to pay a higher price for my flat if there had been a covenant in place that guaranteed that my neighbour would always be someone like the quiet Indian doctor and his wife who do live there and not a noisy Scottish ned.
24 October 2006, 21:29:18 GMT+01:00 – Like – Reply

David Farrer

PS Impressed by your knowledge of Jeckyl Island!
24 October 2006, 21:14:50 GMT+01:00 – Like – Reply

David Farrer

Not in his later years but he did write a very soundly libertarian piece on gold and money in Rand's "Capitalism, the Unknown Ideal", which was one of the first libertarian books that I read. Why did he go so wrong? I have no idea!
24 October 2006, 12:44:27 GMT+01:00 – Like – Reply

james higham
..Rand's inner circle included Alan Greenspan, later Chairman of the Fed.. Are you seriously suggesting he was libertarian? He regulated the hell out of the US and continued the tradition of Jeckyl Island.
24 October 2006, 12:03:08 GMT+01:00 – Like – Reply

_they are not neo-classicists and specifically do not assume a world of perfect markets_

Indeed, but factors (Labour, Capital) still have to be free to move where they expect the greatest returns, whether you're Austrian or orthodox. Without that, there's no entrepreneurship, or at least sub-optimal entrepreneurship. And according to Hayek, there's no way a government could decide who gets in optimally.
23 October 2006, 22:08:54 GMT+01:00 – Like – Reply

this type of post is the reason i read your blog.
23 October 2006, 16:01:59 GMT+01:00 – Like – Reply

Blognor Regis
Wonderful post David.
23 October 2006, 14:33:55 GMT+01:00