Free Market Fairness: A Bridge to Nowhere

Free Market Fairness: A Bridge to Nowhere

Recently on Twitter, there was a common topic tweet “Libertarianismin4Words.” Well, I can sum it for you in 10 words, separating the Political from the Social:

Political: “The State is its own Agency”
Social: “Live and let Live”

Libertarianism has two century intellectual history behind it that more or less reduces to those 10 words above. But it’s a history that has engaged only a minority. We are reminded of this by the name of Roderick Long’s online library at the Molinari Institute: “A Heritage of Dissent.”

However, in recent times, particularly in the United States, there have been attempts to reposition libertarianism as a legitimizer of a “proper State.” Certainly, the libertarian-conservative fusionism would qualify. Academically, the rise of the Chicago School most assuredly qualifies. Measured in terms of recognition and public policy influence, one would have to categorically proclaim the program a great success. The Chicago School managed to capture the intellectual and public policy control of the American and International Financial System. For twenty years, Ayn Rand’s greatest disciple lorded over the international system of central banking. The Chicago School refashioned the Bretton Woods Global Agency into the Washington Consensus. Beginning with Jimmy Carter, a program of deregulation took shape that ended with the effective repeal of Glass–Steagall in 1999. Simply put, in terms of economic policy, the Chicago School, representing the “revival” of “classical liberal” economic thought, rose to a position of great if not dominating influence.

But as I write these words today, an examination of the actual regime consequences(you know the thing that actually matters) inform me that this revival, in terms of its policy results, has been an unmitigated disaster. What promised to be a rule of Augustus literally at the drop of the hat revealed itself to be the rule of Caligula. How can an ostensibly classical liberal policy regime result in (1) the greatest banking oligarchy in the history of human civilization (2) the application of political economy applied to the greatest spying apparatus ever assembled in human history, (3) an Executive branch more or less functioning as the CEO and Chairman of the Board for National Security State, Inc., unilaterally having declared itself exempt for any application of law to itself, and in broad daylight–as a demonstration point of its effectiveness as this CEO Agency-resurrected the pre-liberal legal notion of “outlaw.” Poof, like that, out in the open–and not buried secretly and denied publicly–is “due process,” the legal foundation(which in part rests on a presumption of liberty) of liberalism, gone. In short, how can a “classical liberal” economic regime underwrite an evisceration of legal/political due process?

Obviously, the regime consequences of this classical liberal economic program(at least the Chicago School version of it) expose the very serious methodological flaws that underlie it. The source of the flawed method really begins with the 6-word political summary of libertarianism above: “the State is its own Agency.” The Chicago School, particularly the 3rd generation iteration of it(“efficient market hypothesis”), more or less dismissed this agency, or at the very least, seriously underestimated it. So we are now living the consequences of a flawed methodology.

The consequences of the Chicago regime suggest a reexamination of Milton Friedman’s thesis famously espoused in “Capitalism and Freedom.” Capitalism is a necessary condition for liberalism but not a sufficient one. Friedman used the example of fascism to falsify the sufficiency condition of capitalism. But we can now empirically include the Chicago regime as a falsifying example, too. We are now confronted with the possibility that capitalism’s necessity condition is challenged by observable regime falsification(for any given regime Ri). This perhaps serves as a clue that capitalism is not the primary logical condition or proposition in relation to freedom. Instead, our primary condition is really agency. Capitalism, like the State, suffers from an agency problem. A deductive argument that liberalism is a sufficient condition for capitalism relies on an implicit premise concerning capitalism and agency that perhaps is not justified. At the very least, an explicit examination of the relationship between agency and capitalism is in order. In this sense, I would suggest the Friedman Statement:

~C –> ~ L , where C=Capitalism, L=Liberalism

is not really the fundamental statement to prove or falsify. Instead, I would suggest something more along the lines of this sufficiency Statement as the more relevant one:

CM —> Agency, where CM=Capitalism serving moral ends.

Now let us also be specific by what is meant by “Agency.” I would define it, in this context, as means(institutionally speaking) that becomes its own ends. This thus puts it in direct competition with human agency(which we can represent as civil society, market society, etc). This is what is meant by the Statement, the “State is its own Agency.”

This brings us to a John Tomasi’s recent book “Free Market Fairness,” a volume largely intended for an academic/professional audience. Tomasi makes no bones in his objective to have “bleeding heart libertarianism” become the new standard of definition of libertarianism, particularly in the academic community. Libertarianism then is redefined as a bridge between “classical” and “high” liberalism, the bridge itself constructed from the foundation of “Free Market Fairness” as a social justice standard. But in reading through parts of the book–and putting aside all the intricate philosophical composition contained therein–Tomasi’s argument more or less reduces to: (1) an “opportunity society” lies at the heart of political legitimization (2) capitalism/markets serve as the superior means for the “opportunity society.”

Now I suppose one could label Tomasi’s effort as a 2012 version of Friedman’s “Capitalism and Freedom”(published on the 50th anniversary of the latter). However, I think Tomasi’s book may have been more persuasive if it had been published, say, in 1994, at the apex of the Chicago reign. Friedman’s 1962 book presaged the coming era of classical liberal economics. Tomasi’s book, however, comes on the heels of its ruin and presages something quit a bit different.

The first seven paragraphs of this post discussed the problem of capitalism and agency. And to be clear, what is meant by “capitalism and agency” is State Capitalism. Tomasi gives us an offering that poses political legitimacy as the moral ends of markets just time for the inauguration of a particularly un-golden age of State Capitalism. The disconnect between capitalism and political freedom is our current condition. Our age of State Capitalism–intertwined in a million different knots with a political economy of State Security–promises to sever the remaining myth: the relationship between capitalism and opportunity, or the “opportunity society.” To be more precise, we are about to be given an object lesson that there is no logical relationship between Capitalism and Markets. The collapse of this paradigm, of course, is conveniently timed with the maturation of our State Security Apparatus. The reason you have a National Security State, of course, is largely because of a loss of legitimacy. Our era of State Capitalism will be marked by a general decline in popular sentiment regarding legitimacy. But our “bleeding heart libertarians” seek to reposition libertarianism as the legitimizing face of State Capitalism. You know the thing that served to hollow out your political freedom while reneging on its bribe of eternal economic growth. Now that’s quite a historical turn.

The Artificiality of Tomasi’s Model
(i) A straight-forward critique of Tomasi’s model would begin by noting that there isn’t any real reason for unanimity–or a bridge, so to speak–between “classical liberals” and “high liberals” regarding the composition of primary goods(or, in classical liberal language, “property bundle”). The liberal methodology allows for divergences in what the ends of the so-called contract should entail. The “bridge” between the two is in regards to the violations: e.g, the suppression of dissent, the infringement of due process, the forcing of the citizenry to accept one particular moral foundation, the abridgment of free speech, etc.

The Tomasi “Market Research Program” is simply not an important problem in political theory. The actual problem is when you have an Executive Branch unilaterally resurrecting the pre-liberal legal notion of outlaw and not a single pep from our so-called liberal political class. And when you point this out to our “bleeding heart libertarians,” they will point to “markets” as evidence there is no significant abridgment of liberty. The current problem that presents itself is the apparent extinction of the liberal species. In its place we find moral obligation pencil-pushers for the regime.

(ii) John Rawls is overrated as a political philosopher. He managed to divine three rather markedly different versions of normative political obligation. His first version, for which he is primarily known for, was built over the proverbial house of cards. What agents should deduce in the “originalist position” was a major point of dispute within “High Liberalism.” The degree of the thickness of “the veil of ignorance” was another point of major contention within High Liberalism. In short, Rawls couldn’t even win over the “high liberals” which is why he more or less abandoned the “Kantian” foundations of his Theory of Justice in favor of an “overlapping consensus” developed in his second book, “Political Liberalism.” The “overlapping consensus” would form the foundations of the “Public Reason” model. Of course, what Rawls would call Public Reason, I would call “the Culture War.”

In his last book, “Justice of Fairness,” Rawls did another 180. In his first book, the political economy was only a secondary consideration. The economic system, whether,say, Capitalism or Socialism, was an empirical plug-in of sorts. By this I mean the economic system was not part of the normative theory. It was a positive consideration. However, by his third book, the economic system had now become an essential component of his normative theory. His theory of justice now required a type of propertarian democracy. However, I would point out that a propertarian democracy is more or less what we’ve had the past twenty years. In the early to mid 90s the United States enacted welfare reform(the scaling back of welfare capitalism) and pursued the ends of the “ownership society,” particularly in terms of home ownership. We experienced the “classical liberal” version of propertarian democracy. And we now see the agency outcome, the regime consequences(e.g., banking oligarchy), of such a moral end. That’s “strike three” for Rawls.

(iii) The primary criticism of Tomasi remains rooted in his neglect of competing and expropriating agency in political theory. His contention that markets are justified because they serve a moral ends of political legitimization is an anathema to the libertarian tradition. His version of capitalism serving moral ends creates a mile-wide invitation to an agency problem.


In the good ole days, the “classical liberals” made the causal relationship between economic liberty and political liberty a foundational point. These days, with the relationship between Capitalism and political liberty essentially severed, our “bleeding heart libertarians” have stepped in to the void with a subtle shift: it is economic liberty itself, or more accurately the proper set of divinely deduced bundle of economic liberties, that serves the ends of political legitimization. To the extent that this effort succeeds in becoming the new face of “classical liberalism,” it marks the official classic liberal divorce of economic liberty from political liberty. The standard of legitimacy is no longer the liberal legal traditions. It is now simply the degree of “opportunity” afforded by the political economy. The “Market Democracy Research” program is simply an effort to rationalize away the agency problem from political economy.

If you are a political cynic and you take your theory seriously enough, you should expect this type of expropriation. After all, we are now entering the media age of the “western dissident.” The western dissident will mark a species of agents not willing to trade away their political liberties for an economic pot of porridge. We will be in definite need of a morally legitimacy to alienate that type of dissident agency as criminal.

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