Libertarianism vs Libertarianism

The distinction between libertarianism and liberalism is something that warrants repeating. Libertarianism, as a political theory, is primarily concerned with a critique of the political economy of plunder vis a vis the State.1 Libertarianism, in this sense, is a positive science. It attempts to explain what we see. Liberalism, on the other hand, is a normative theory–rooted in social contract theory–that attempts to justify the degree rational agents should consent to political obligation.

The standard liberal methodology is to propose a rational calculation from some hypothetical initial condition(an agent detached from any bounds of obligation), be it “the State of Nature,” “the initial bargaining position,” “the veil of ignorance,” etc. But there has never been any agreement or consensus regarding the nature and circumstance of this hypothetical condition, nevermind the degree of knowledge and identity one must have in this condition in order to make the “right” (or the “good”) calculation. In this sense, I believe it’s a false strategy to delineate between “classical” and “modern” versions of liberalism. Indeed, I would suggest that the oft heard phrase “the proper role of government” turns out not to be the right question to ask in liberalism. This phrase can be recast as “what are the proper ends of political obligation that rational agents would consent to. But this yields no universally recognized normative solutions, in large part because the rational calculation depends on a disputed nature of the hypothetical state–the state of no agent obligation.

Instead, I would submit that the relevant question in liberalism, the one question that liberalism can answer, concerns the boundary constraints on the degree of political obligation. Put differently, there are recognizable liberal violations that absolve rational agents from political obligation to the State. In this sense, what is meaningful is “constrained government” and not “limited government.” To put it even more bluntly, liberalism, in terms of a theory of political obligation, is really a theory of justifiable revolution(i.e: absolution of political obligation).

But what are these “recognizable liberal violations”? Well, I often use the phrase “the State as the total source of government.” Some people are confused by that phrase. Let me make the meaning clear. Liberalism, by definition, holds politics and the State to be artificial constructs. If you do not ascribe to this principle, then you are not liberal, period. It is an axiom.2. But what is actually meant by the State as an “artificial construct.” Simple, it means the State is a compliance mechanism. But the object(s) of compliance are not supposed to originate from the State itself. The total source of government simply means that the State serves as both as the originator and enforcer of compliance.3. Now it is perhaps fair to say these things are always a matter of degree, but I would suggest we have a particularly relevant example in our modern context: Intellectual Property Rights of Digital Objects. Since any digital object more or less crosses the Rubicon of becoming a “public good” once a network is introduced, it would appear self-evident that the old concepts of “intellectual property and copyright” would necessarily have to adapt to the reality of modern computer science and telecommunications. This adaptation is something we would call a “market” or a “spontaneous order” process. In the historical verbiage, we would say a “product of civil society.” However, a purely political process in this instance would define the object of compliance as something that would never originate from an evolutionary cooperative process” because its enforcement–that is, the enforcement of the traditional definition of “exclusive property” vis a vis digital objects–would necessitate a totalitarian compliance regime. The enforcement of this artificial(i.e., political economic) regime would profoundly violate our liberal boundary conditions. In modern public choice terms, we would cite it as a stark demonstration of rent-seeking becoming the source of the “decision-making rules.”

I often write about the incoherence of libertarianism. What I mean by this is the frequent methodological misuse of it. Normatively, it sheds no light on the liberal problem of the rational foundations of political obligation. I’m sorry to inform you that libertarianism is not the missing piece of the puzzle to convince us of the rightness of the “Lockean State” or the “goodness” of Rawls’ two principles of justice. In no way is it a thing that “normalizes” political obligation. Anyone who tries to methodologically use it in this fashion will almost invariably end up legitimizing political obligation that actually fails the liberal test of legitimacy. In my previous post, I discussed this outcome with regard to the BHL’s “Neo-Rawlsian Program.” I can easily deconstruct a similar outcome in the case of the Cato “Limited Government program.” Consider this eulogy of Ronald Reagan by David Boaz. Boaz declares Reagan the most eloquent spokesman for limited government of our time. Why? Because Reagan supposedly “succeeded in changing the climate of opinion in the United States and around the world.” However, I’m not sure what this has to do with “limited government.” Indeed, after the obligatory Reagan gushing, Boaz finally gets around to conceding that Reagan oversaw a huge expansion in the scope and size of government. A clever wit might suggest Reagan was more of a variant manifestation of the devil’s greatest trick: in this case, convincing the world that a massive increase in scope of State power is evidence of the existence of its limited power. But even worse, as I pointed out in my previous post, The Social Justice of the Police State, it was during the Reagan era that the massive rates of prison incarceration began to slope dramatically upward. What Reagan represented, in actuality, was an instance of a gross liberal violation. In other words, Reagan represented a condition of liberal delegitimization of political obligation(the drug war and the police state). But leave it to the libertarians and their “limited government mythology” to not only legitimize the gross liberal violation but to crown Reagan as some sort of generational prophet.

What then is the proper methodological use of libertarianism? As I initially stated, it is a positive theory of the political economy of legal plunder. It explains and provides a positive framework to explain what we see(and predict what we will likely see in the future). This is where it is strong; this is where it is rock solid. Unfortunately, whereas say Bastiat thought there was an upper limit to legal plunder, we can employ the modern methods of public choice and game theory to demonstrate the possibility that there may not be such an upper bound. By “upper bound” we mean there is some limit L that if exceeded will trigger a correction. This would indeed be the case if not for the pesky problem of friction. By friction, of course, we mean transaction costs(institutional costs). If we introduce transactions costs into the context we find that a free-entry competitive rent-seeking game between equal players can dramatically over-dissipate rents. By rent dissipation we mean the ratio of outlays or costs to the rent stream: D= C/R4. The over-dissipation of rents in free-entry political competition(between equal agents) can increase without limit, meaning that this type of political competition can waste unlimited resources for finite allocated or created rents. Thus, it can resemble a sort of prisoner’s dilemma. Of course, we also know that iteration can be a means for cooperation to replace strictly dominating strategies that produce highly inefficient equilibriums. In the case of political(or policy) rents, we might use the term “collusion” in lieu of “cooperation.” The implication of the collusion is the emergence of institutional political arrangements that avoid rent dissipation. In a “capitalist economy,” the non-dissipated policy rents are then “capitalized.” Public Policy may then favor tying workers compensations and retirement benefits to the performance of our capitalized policy rents, etc. etc… What can emerge then is a highly interlocking but nonresiliant system that introduces a high degree of asymmetry and risk aversion. These factors only contribute to under dissipation of rents. Our system can “evolve”5 to become highly resistant to “reform” even in face of transparently massive discrepancies in the ratio of outlays to rents in such industries as banking/finance.

So, libertarianism is complimentary to liberalism in a positive methodological sense of informing us of the likelihood of liberal violations and the difficulty of reforming/correcting these violations. What we find then is that we have no normative theory of Utopia, but we most certainly have a positive theory of dystopia. Some may find this a depressing result, but it does serve to release us from political obligation. To those who stress the need of evangelicalism and education, I would suggest that this is the message that should be delivered. But then again, this message is already apparent. Sans the political and professional classes, everyone is quite aware of the fundamental corruption of government. The problem is not education(or changing the climate of public opinion) but rather a collective action one of revolution. However, I would deem this to be an entrepreneurial problem and not one of violent overthrow(which I think is futile). Unfortunately, but hardly unexpectedly, most(but not all), of the libertarian professional class works against this. By and large, the objective of this class is “recognition.” To the extent libertarianism works to promote a “proper ends or role of government,” it merely serves to underwrite totalitarianism.


Liberalism fails to normatively establish the proper ends of the State–that is, the appropriate level of primary goods(in Lockean language, what the property “bundle” should include). Liberalism fares better as a theory of justifiable revolution(termination of political obligation) by defining a boundary condition for political obligation–the State as the total source of government. Libertarianism in no way normalizes political obligation in terms of casting any light on the constitution of proper ends(e.g., Rawlsian “primary goods” or the Lockean “property bundle”). Instead, libertarianism offers a “positive methodological” approach that explains both liberal failure and the difficulty of correcting the failure. Libertarianism, then, absolves us from political obligation. But in the hands of a professional class, it is used(and will continue to be used) to normalize plutocratic and totalitarian outcomes.

1Of course, not everyone would agree with this definition.

2 Communitarianism is an example of a political philosophy that rejects liberalism. Communitarianism more or less holds politics to be the “state of human nature” and denies the possibility of individual identity defined outside of moral obligation. Examples: Charles Taylor, Michael Sandel.

3 The Virginia School of Public Choice would recast “the State as the originator of compliance” in terms of the concept of rent-seeking being the source of decision-making rules.

4Rent Dissipation D is measured by the ratio of outlays/costs to rent garnered. D=C/R. Full dissipation, D–>1. Overdissipation, D > 1. Underdissipation, D < 1. A General treatment of rent-seeking reveals there is no "rational, unbiased rent dissipation model." That is, D=1 is not the "rational outcome." Rent dissipation is largely a function of the institutional context; i.e., a function of the bias of the rules. It is a miscalculation to think(cough,cough***Don Boudreaux***) that capitalism is rational, moderating influence on "bad rules regimes." Of course, no rational model of rent dissipation(by this, i mean that D=1 is the "unbiased, normative outcome") shoots down Caplan's "rational irrationality microeconomic foundations" as well.

5 Evolution of artificial systems(political economy) that demonstrate no resiliency is probably a perversion of the term “evolution.” Interestingly, “social darwinism” is a typical charge against those who point this out.

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