Markets & Distributive Justice

As a reminder, markets are an instrument of human agency, not justice. The latter is the raison d’etre of “the law.” If there is no law or if the law is corrupt(i.e, an instrument of plunder), then the only thing markets will assuredly deliver is “social control.”

If the libertarian axiom is correct, that is to say, if the insight “the State is but the organization of plunder” is indeed accurate, then it is probably an easy conclusion to figure out that intellectual endeavors like “market social justice” are a bad idea. Of course, there are many libertarians who deny the axiom. But it is a bit more difficult to deny the result. That you can only whitewash….

Libertarian Moment

Actual libertarians–that is, those who take the political economic critique seriously–easily surmised beforehand that the “libertarian moment” would more or less just produce something like the “libertarian case for stop and frisk.” Bonus: self-described “libertarians” apparently now are even more likely to support US military interventionism than those not aligned with the label.

Smells like a Conservative

I suppose the gig is fully up when someone like Phyllis Schlafly declares social conservatism to be the true heir of libertarianism.
Oh, wait.

What Is Free Trade?

Terms like “free trade” and “free markets” are ubiquitous spout from the lips of libertarians. Occasionally, it is helpful to review what these terms actually mean. “Free” specifically refers to free of any encumbering moral ends other than the ends of the exchanging agents. So it is a matter of liberty. Practically, it means no contravening authority standing between supply and demand. The only justice promised is one of mutual advantage.

Here is what “free” does not mean(in terms of a sufficiency condition): (i) efficiency (ii) self-regulation (3) un-regulation (4) de-regulation (5) perfect competition (5) pareto optimality (6) nihilism (7) justice ….

Yes, “free trade” is not even a sufficiency condition for mutual advantage in the sense that if we show “free trade” we necessarily show “mutual advantage.” Otherwise, there would be little need or demand for that thing called the law.

The point is that “free trade” presumes liberty but implies little beyond that other than an implicit(sometimes explicit) promised mutual advantage. We fashion “free trade” into a social theory(spontaneous order, invisible hand, etc) from experience and attempt to model this experience by economic analysis of rational (marginal)utility calculating agency. While I have no quibble with this per se, it remains important to be cognizant of the distinction between a social theory(predicated on a justice of mutual advantage) and methodology of economic modeling.^1.

For example, the notion of “market failure” is in need of a curious bit of deconstruction. “Free Trade” presumes liberty but implies little beyond that. “Free Market Failure” is really a bit of a non sequitur. What we really have is “model failure.” This justifies all sorts of government regulatory intervention to enforce a model outcome. Of course, when we apply an economic analysis to the regulatory agency itself we end up with a predictive model error of correcting the original “model error.” This, of course, is termed “government failure, the distinction here being that the “regulatory agency” is actually promising everything.

Frankly, I think the above example demonstrates why laissez-faire doesn’t comport very well with the neoclassical economic method. That which treats “free trade” as a matter of liberty is always going to spit out model error by something that treats it instead as a regulatory model of a rational pattern.

The incongruity between liberty and regulatory efficiency can be profound. To see this, consider “comparative advantage.” We all should be familiar with how opportunity costs explain patterns of trade. Even if, say, A is superior in productive skill and efficiency to B for every produced item in a given economy, there are opportunity costs involved in A dividing time and labor to self-produce all items of our given economy. So rather than dividing the time up proportionately to produce everything, A specializes in those things which it does relatively best at(compared to what A does less best at, or earns less from), leaving an opportunity for B to produce the other things for trade exchange.²

No doubt opportunity costs explain trade patterns. But comparative advantage also implicitly suggests something else: namely, refusing to trade imposes external costs on trading partners. In our A-B model, if B refuses to trade with A, B imposes costs on A. Essentially, refusing to trade not only hurts yourself, but it also hurts others.

Now I won’t dispute the external costs implication of comparative advantage. However, I will dispute that these costs are a form of injustice, or more specifically, that these costs are something that need to be enforceably corrected(in the legal or regulatory sense). “Free Trade,” after all, must include the freedom not to trade. Otherwise, it is just another form of “freedom to obey.”

However, within the purview of neoclassical economics, “enforcing” Free Trade is entirely consistent with a regulatory model of a rational pattern.

This brings us to a consideration of these “Free Trade Agreements” such as TPP. The public arguments for these trade pacts–supported by many libertarians–essentially reduce to correcting the external costs implied by comparative advantage. The rationale is that despite any “flaws” these pacts are an improvement. An ancillary argument is that if the US doesn’t take the lead in forging these agreements, it opens the door for less savory countries(read: China, Russia) to forge something far less agreeable.

Frankly, these Free Trade Agreements demonstrate why sometimes it is better(perhaps always) to think like a philosopher and not like an economist. In lieu of thinking about the pareto efficiency of trade models, one perhaps may be better served contemplating the philosophical implications of a social theory that implies one bad actor playing a bad strategy forces everyone to play a bad strategy. Au contraire, “justice of mutual advantage.” More like a suicide pact.

Perhaps only after such consideration is it then profitable to dissect the problem from an economic point of view.

From a public choice perspective, these “free trade agreements” are essentially trading decison-making costs for external costs. Recall decision-making costs are “the price we pay for civilization.” These type of costs are imposed by a decision-making rule whose legitimacy–at least within the purview of liberal political theory–is delineated by some condition of unanimity.

A trade-pact is rent-seeking bargain. But the decison-making cost of this bargain results in a disclaimer that the price we pay for civilization–in this case, trade–is the loss of geo-political differentiation. In other words, unitary jurisdiction. Or more descriptive yet, oligarchical collectivism.

When the United States declares the entire planet a battlefield or issues talking points asserting global jurisdictional reach, it is not grandstanding on an explicit or implicit threat of military invasion. Instead, it is relying on a presumption of organs of a unitary political economy serving as an agency of enforcement. Wherever you are on this planet, there stands an authority between supply and demand that is hierarchically intertwined with the regulatory jurisdictional reach of any government. The price of dissent is that you do not trade. Or another way to put it: you can trade but there is nowhere to run.

A rent-seeking bargain that imposes decison-making costs is the negation of Milton Friedman’s famous aphorism regarding capitalism and freedom: showing freedom is sufficient for showing capitalism³. Friedman’s aphorism fails because capitalism as an economic treatment translates to a regulatory model of a rational pattern. And an economic analysis of this regulatory model suggests the potential for an intractable agency problem. If trade entails a decision-making cost attached to the enforcement of the regulatory model, then capitalism trumps “liberal trumps,” with the latter defenseless against an agency problem in our rent-seeking bargain.⁴

This agency problem is why I reject the notion of markets as any instrument of social justice, a la bleeding heart libertarianism. To treat it as such an instrument is to treat it as a regulatory model of a promised rational pattern. Enforcing the promise is what introduces the agency problem. Markets serving in the role of a type distributive justice may indeed by an observed pattern, but justice without an enforcement mechanism/agency is a trifle thing indeed. Distributive justice as an enforceable outcome is not a free market.

I conclusion, I am bit flummoxed at the extent many libertarians endorse “free market” as a regulatory model of a rational pattern. Whether cognizant of it or not, this endorsement more or less substitutes “free trade” with “conscription to the market.”⁵

Interestingly, the most recent cinematic work of the Wachowski brothers(actually now brother/sister since Lana now identifies as a trans-gender), Cloud Atlas(which is a cinematic adaptation of a novel and not an original screenplay) illustrates my point quite dramatically, demonstrating that if a picture is worth a thousand words, a good film is certainly worth a million.

In the futuristic corporate state, Neo Seoul⁶, fabricant AI subordinate themselves to indentured contractual servitude to the efficient functioning of consumer society. In exchange, the fabricants are promised a retirement nirvana(operating under their own agency with no wants) at the conclusion of their contractual obligation. The fabricants are indoctrinated into a religious catechism oriented around the sanctity of the consumer.

In reality, the fabricants are not given their promised nirvana. Instead they are duplicitously decommissioned and recycled as a cheap source of protein to newly “manufactured fabricants.” The underground rebellion to the corporate state places its hope in the emergence of “free will fabricants,” in the story dramatized by sonmi-451. When sonmi-451 is given the “liberty to read,” she rejects the present bargain of indentured servitude in exchange for a future payoff of agency. This is before she learns that the promised future is actually a sham. The immediate consequence of her decision, of course, is her own execution⁷.

Just as “unpluggable” perhaps conveys more immediate meaning than any lengthy tome against the standard liturgy of political obligation, to those who insist on intoning the free market as some type of regulatory model, whether it be efficiency, trade deals or social justice, perhaps the best response is simply: sonmi-451⁸

¹ economics is certainly useful as a positive science in describing observed patterns but I find it often suffers from an Is-Ought problem in making unjustifiable prescriptive statements. I believe this view is substantiated by Tullock’s little-referenced work, “Efficient Rent-Seeking: Chronicle of an Intellectual Quagmire,” which establishes the apparent quagmire of prescriptive reasoning in economics. As I would say, Free Trade is little more than a statement about “free agency” or “free will” and not a logical condition for any model outcome.

² Absolute advantage/superiority of A over B in everything is not real-world. It is merely an illustrative device to demonstrate how opportunity costs trump the historical notion of “absolute advantage” in explaining trade patterns.

³ Freedom is understood to mean in the “liberal” sense.

⁴ Richard Stallman’s classic parable, “The Right to Read,” is an excellent example of this point.

⁵ Free Trade is contingent upon a free agency or free will. However, this should be distinguished from the libertarian meaning of “free will” in metaphysics, which is contingent upon path independency(in determinism, similar to mechanics in physics, knowledge of initial conditions of a path is sufficient to know the path at any future state). The question of whether one has a choice in preferring A to B is an interesting one, but not germane to the discussion. Free will in our discussion is perhaps better interpreted as “free preference,” i.e., the liberty to act according to preference.

⁶ The ideological party of this corporate state is “unanimity.”

⁷ The Buddhist-Existentialist theme of the story is that we are a product of each other’s stands that ripple throughout time, so the future consequence of her decision is a better outcome down the line within “the cloud.”

⁸ 451 is obviously a nod to Fahrenheit 451, specifically the auto-ignition point of paper books.

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:

C^M —> Agency, where C^M=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.

Conclusion

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.

Coherence, Not Purity

Alexander’s McCobin essay, Let’s Reject the Purity Test, which is part of this month’s Cato Unbound issue, “Where Next? The Past, Present, and Future of Classical Liberalism,” is a more or less an argument for unbridled incoherence in libertarianism. Of course, what I call incoherence, McCobin calls “purity.” But these two things are not the same. An insistence on a coherent foundation of a rational framework is a necessary condition for the profitable use of said rational framework as an an analytical and methodological tool. Otherwise, the framework is useless and merely serves to obfuscate matters.

Let us be concrete. This whole business, in part, stems from the argument whether “classical liberalism” is consistent with “distributive justice.” Obviously, if we appeal to Rawls or Harsanyi, i.e., “modern or “high” liberalism, claims of distributive justice are not methodologically inconsistent with liberalism. That is, “distributive justice” does not necessarily introduce incoherence into the liberal methodology(NOTE: if we listened to the distributive justice claims of the communitarians and tried to justify such via vis liberalism, then this would introduce a high degree of incoherence). Both Rawls and Harsanyi operate in accordance to the liberal methodology, which is to use an initial state of agent non-obligation(in this case, “a veil of ignorance”) to rationally deduce agent political obligation. The distinction between, say, Locke’s “property bundle” and Rawl’s “primary goods” is a matter of degree, not kind.

However, as I have noted in my previous posts, the liberal methodology cannot satisfactorily normalize our degree of “primary goods.” Yes, we know that the ends of the State are these primary goods, but the exact composition of this bundle is a point of contention. One of my insistent points is that libertarianism in no way sheds any normative light on the proper constitution of this bundle–that is, the ends of the State. To try to use it methodologically in this manner to normalize a proper ends of the State is a perversion. This perversion applies to whatever proper ends argued–Lockean or Rawlsian.

We see the fruits of this futile endeavor at Cato Unbound this month. These disputes over a “proper, normative” version of property rights, that devolve into a thousand arguments over “absolutism,” could persist for 50 years without resolution. Hell, the disputes could persist for a hundred years. It is an academic full employment act. It is this type of irresolution that prompts the likes of McCobin to throw up his hands and declare “No Purity Tests.”

But this is the wrong reaction/conclusion. Our normative problem has a relatively straightforward practical resolution. In liberal democracy, the “primary goods,” the ends of the State, are subjected to a democratic process¹. “Limited government” is a meaningless and non-obligatory term within the liberal paradigm. The relevant concept is “constrained government.” Yes, the ends of the State are subjected to a democratic process, but these ends cannot cross an easily identifiable boundary–the Total State. The Total State simply means the State, as an artificial construct, serving as both the originator and enforcer of compliance. This condition is most starkly exemplified by a “Security State.”

To me, “Where Next? The Past, Present, and Future of Classical Liberalism” debate is an attempt to zombify a corpse. There is a highly defensible argument that liberalism is effectively dead. The only relevant discussion now is the proper means of disposal: burial or cremation. Simply, when the Executive declares unilateral power to declare anyone “fair game” outside the bounds of due process–and this power is backed up by the most unaccountable intelligence and military complex in the history of world civilization–then liberalism and its legal underpinning are dissolved. Both “classic” and “high” liberals should be in agreement that this condition thus marks a point of dissolution of political obligation. That this condition seems to be irrelevant to the majority of the “liberal professional political class” is an indication of the rottenness of the system. Indeed, the problem of liberal reform, I would argue, is a primary focus of the libertarian methodology. That is, libertarianism, as a political theory, is not so much concerned with normalizing or legitimizing moral claims of political obligation but rather with a critical scrutiny of said moral claims. And there is good reason for this, a good reason why libertarianism is, in fact, a departure from liberalism and not just a synonym for a “classic” genus of it.

As a demonstration, we can once again consider the Zwolinski and Tomasi essay, “A Bleeding Heart History of Libertarianism.” As mentioned above, this essay has triggered endless rounds of debate over property absolutism adjudicated from priestly interpretations of the philosophy texts. But this is the wrong way to approach it. David Friedman approaches it from a better direction by insisting that Zwolinski and Tomasi refuse to define “Social Justice.” However, I would contend that the problem is not with their inability to define “Social Justice” but rather with their definition of “marginalized agents,” the ones who are supposed to be the primary beneficiaries of the Social Justice Ends. As I discussed in my post, “The Social Justice of a Police State,” it is the marginalized who take the brunt of the Police State. Zwolinski and Tomasi, in response to Friedman, clarified that the “poor” are not really the poor per se. There are obligations attached to a moral claim of social justice. To qualify, you have to be willing to compete within the system. But this restriction, one that imposes an obligation on agents, changes the argument from a normative argument over property rights absolutism to a positive argument over the artificiality of political economy, since compliance to this thing, ex post, has now been made a condition for a social justice claim. And it is here where libertarianism and its positive methodology becomes relevant. If we can demonstrate–which we can using Public Choice–the high degree of artificiality of political economy, we can ask a simple question: why should compliance/obedience to this highly artificial construct be made a condition for social justice?

Even worse for Zwolinski: his claims that “lazy people” are not worthy of social justice opens himself up to the thorough rebuke by citing Thaddeus Russell’s recent historical exegesis of the relationship between “the American work ethic” and artificial American Political Economic Ends. The lesson from Russell’s groundbreaking positive historical scholarship: (1) work ethic often means compliance with political economic ends (2) do not conflate “laziness” with non-compliance (3) most of the personal freedoms we enjoy today originate from the defiance of non-compliant actors.

Bleeding Heart Libertarians, or at least the contingent represented by the likes of Zwolinksi, can deny the US is a Police State, deny the disqualifying artificiality of political economy(compliance then not being a condition of social justice but rather a condition of enslavement) and deny the historical importance of non-compliance in the face of moral claims of political obligation, but I would suggest that such a litany of denial disqualifies them from occupying a space in a coherent libertarian tradition.

What is this coherent libertarian tradition? Libertarianism inherits and derives from liberalism but it is not liberalism. The inheritance part is the view of the State as an artificial construct. The departure is the rejection of this artificial construct as a compliance mechanism. Indeed, if we historically allude to the original use of the term “libertarian”, it rejected both the State AND the liberal property bundle as artificial.

Frankly, it is really only in the United States, with the “individualist” tradition, that you found any great rooting of sympathy for the liberals ends of compliance: property. And it is the United States, in the 20th century, where we find libertarianism to somehow become associated with “classic liberalism.” A libertarian dispute over whether private property is a thing to be naturally complied with is an argument within a libertarian tradition that can be argued coherently between social and individualist anarchists. However, to say that libertarianism must admit both an acceptance of and a rejection of political obligation renders it utterly incoherent. Libertarianism then would more less admit anything as a valid argument. “Liberty as a political value” results in an endless array of point-counterpoint, “The libertarian argument for abortion” vs “The Libertarian case for pro-life,” The Libertarian case for immigration vs the libertarian case for restricted immigration,” The Libertarian case for individual mandate vs the libertarian case against,” The libertarian case for invasion of Iraq vs the Libertarian case for non-interventionism,” “The Libertarian case of Mitt Romney as the true Libertarian vs The Libertarian case for Mitt Romney as a Neoconservative fascist,” “The Libertarian case for Barack Obama vs the Libertarian case of Barack Obama as a commie bastard,” on an on, ad infinitum. Liberty as a political value will turn libertarian into a dirty word in the same way liberal has become one.

Outside of academia, “liberal” is a ubiquitous accusation that few will actually claim identity with. The irony is that US politics is dominated by communitarian politics. Communitarians despise and reject liberalism and hurl that word, “liberal,” as a political insult against one another. Liberty as a political value, which in our political context, means communitarian recognition, will attach the same fate to “libertarian:” an accusation officially relegated to the academic texts of a professional class.

The “Purity Test” means we have no normative case for Utopia. The “Coherence Test” means we do have a positive case for Dystopia.

¹ Interestingly, form Public Choice Theory, the liberal state, in a sense, behaves “normally” when it is not particularly rational to vote, given the public goods problem of voting. Only in the case of obvious reform would it perhaps be “rational” to vote. The democratic process, then–in light of political rent-seeking–is more of a corrective action, or a constraint mechanism.

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.

Summary:

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.

Smell the Liberty

Overheard at the DailyPaul.com with regards to the likely Obama Administration challenge to the newly passed Arizona Immigration law:

Comment:
Most illegals are taking advantage of the American people in one form or the other, and I say they need to either be deported immediately, or shot on site when crossing our border illegally.

Comment:
how many mexicans or other illegals parents or grandparents fought and bled in our wars?
Our liberty was purchased with a price. Our liberty is for Americans in this country. Let the illegals and other people fight for Liberty in their own countries. OR MIGRATE TO THE US THE LEGAL WAY..

Comment:
Please do not tell us what and who a true libertarian is. What you are decribing is an anarchist. Therefore it you who is at the wrong website.

Anarchists are traitors…and will be dealt with accordingly.

Now, of course, I realize that it can be unfair to cast a few comments as being representative of a given movement as a whole. This type of argumentation method is prone to committing the logical fallacy of the “biased sample.” However, in this case, I’m not sure I would be guilty of committing any fallacy of hasty generalization in assuming these sentiments are accurate reflections of the movement as a whole. Let’s look at their gallery of “liberty candidates.”

David Fitzgerald

We are a Nation of Laws and The Bill of Rights and the Constitution is the Highest law in the land and those Laws Must Be enforced starting at our borders! I say Absolutely no Benefits to anyone here illegally….Period. All immigrants must enter the US legally, follow our laws, assimilate and learn our language. English is our official language and the State shouldn’t have to bear the cost.

We shouldn’t allow sanctuary cities and we all should support our law enforcement officers who only uphold the rule of law. Many who break our laws to be here, also put a huge burden on our economy by eliminating jobs from Arizona citizens. These burden’s also put economic strain on our health care system, schools, prisons and the tax payer who has to absorb the burden.

I’ll work hard protecting our AZ boarders and will not waiver from Oath to uphold the AZ & US Constitutions.

Fitzgerald calls himself a “constitutional conservative,” which is some invented fiction with no basis in any historical reality, and is merely a code word for Big Government enforcement of a cultural normality in line with his own cultural interests. What “constitutional era,” what “old order” are these conservatives seeking to return to? The original adoption of the constitution that excluded about 90% of the population from representation and enforced an order of “slave labor” for some? The passage of the alien and sedition acts or the passage of the Fugitive Slave Act?” The Native American genocide and the trail of tears? The Civil War, which, ended any legality of the right of secession? The “Progressive regulatory State” that would eventually arise in the aftermath of the industrial revolution? The early 20th century “Progressive Baptists and Bootleggers” assaults on the liberty of owning your own body? The New Deal Corporate State of FDR? The permanent War Military State that arose in the aftermath of the WWII?

Murray Rothbard, in “For a New Liberty,” deconstructed the history of American “conservatism:”

Indeed, conservatism began, in the early nineteenth century, as a conscious attempt to undo and destroy the hated work of the new classical liberal spirit — of the American, French, and Industrial revolutions. Led by two reactionary French thinkers, de Ronald and de Maistre, conservatism yearned to replace equal rights and equality before the law by the structured and hierarchical rule of privileged elites; individual liberty and minimal government by absolute rule and Big Government; religious freedom by the theocratic rule of a State church; peace and free trade by militarism, mercantilist restrictions, and war for the advantage of the nation-state; and industry and manufacturing by the old feudal and agrarian order. And they wanted to replace the new world of mass consumption and rising standards of living for all by the Old Order of bare subsistence for the masses and luxury consumption for the ruling elite.

Rothbard, once again, provides us with this deconstructive gem,regarding William F. Buckley, the patron saint of modern conservatism:

For Buckley favors: “the extensive and productive tax laws that are needed to support a vigorous anti-Communist foreign policy,” and by implication supports ECA aid and 50-billion dollar “defense” budgets. He declares that the “thus far invincible aggressiveness of the Soviet Union imminently threatens U.S. security,” and that therefore “we have got to accept Big Government for the duration–for neither an offensive nor a defensive war can be waged…except through the instrumentality of a totalitarian bureaucracy within our shores.” Therefore, he concludes, we must all support “large armies and air forces, atomic energy, central intelligence, war production boards and the attendant centralization of power in Washington–even with Truman at the reins of it all.”

The likes of Fitzgerald self-righteously extol the so-called “Rule of Law,” but the documented reality is that everyone everyday is guilty of committing multiple violations, multiple federal felonies. Fitzgerald is a criminal, just as all of us are criminals. Perfect enforcement of the this “so-called rule of law” would collapse this ‘constitutional government.”

Let’s look at Mike Lee, another Ron Paul endorsed candidate.

A core constitutional function of the federal government is to “insure domestic tranquility” by protecting our country. We maintain peace and freedom when our national defense is strong. We must continue to develop sophisticated, cutting-edge tools and weaponry to defend our citizens from threats of terrorism. We must have clear objectives when we place our brave men and women of the Armed Forces in harm’s way. Once engaged, we cannot tie the hands of our military with unnecessary rules of engagement. When our objectives are achieved, we must bring our troops home.

Lee, on immigration and the need promote the use of E-Verify, the federal government’s identification system for workers gaining permission to work for companies under federal contracts. In other words, a national ID card.

Investing in the technology, personnel, and physical infrastructure necessary to secure the southern border

Enforcing existing immigration laws

Improving and promoting the use of E-Verify—a nationwide immigration-status verification system designed to enable employers to ascertain quickly and accurately whether would-be employees are authorized to work in the United States;

Mandating and enforcing the denial of federal and state welfare benefits to illegal immigrants;

Clarify the original intent of the citizenship clause through legislation specifying that children born to illegal-alien parents in the United States are not entitled to automatic citizenship; and

Making clear that illegal aliens will not receive amnesty in any form, and must return to their own countries before applying for a visa; illegal aliens should receive no benefit from having entered the United States illegally, and should not be granted guest-worker visas or the opportunity to “purchase” lawful immigration status.

Or how about Tea party candidate extraordinaire, Sharron Angle, who recently waxed poetic about alcohol prohibition and enthusiastically suggested that every county in America needed a Sheriff Joe Arpaio. I could go on and on documenting the views of these so-called “liberty candidates.” The only one that seems superficially tolerable from a libertarian perspective is Jake Towne; but, of course, he is the only one running as an independent.

Of course, it bears pointing out that using broad designatory terms like “illegals” is a favorite tool of fascism and fascist governments. Such a simple designation immediately abrogates any clear language associated with negative liberty. Habeas corpus and the Geneva conventions? Sorry, doesn’t apply to “illegal” combatants.” Free Speech? Sorry, doesn’t apply to “illegal demonstrations” or “illegal protesters.” In the end, under the so-called rule of law, we are all criminals, we are all “illegals,” if someone or some group wants to designate you thusly. I suppose it hasn’t occurred to these disphits that there are groups out there would designate them as “illegals” and guilty of sedition, and that their own language can be turned against them to support these groups’ claims. In a previous post, commenting on the Democratic Establishment, I noted that if these guys were the least great hope for liberty, it was time to run for the hills. Well, if Tea Party Conservatives are the the remedy to the Dem Establishment, I would suggest boning up on your long-term survivalist skills. Your are not going to be coming down anytime soon…

Paleo Authoritarianism

One of the great embarrassments of the modern libertarian movement is the “paleo phase” that certain members of the “intelligentsia,” in particular Murray Rothbard, pursued in the early 90s. This was unfortunate, because in a very real sense, Rothbard played a key role in reviving a “second libertarian movement” in the United States in the latter part of the 1960s. As I have written before, Rothbard wrote the manifesto and Karl Hess delivered it to the masses with his famous Playboy essay, “The Death of Politics.” This nascent, self-identified “libertarian movement” was really the result of New Left fusionism, resulting in an unshackling of the libertarian intellectual tradition from conservatism and the right that absconded it for much of the 20th century. For a more detailed account of this, refer to this previous post at Freedom Democrats.

Now, for whatever reasons, Rothbard would become disillusioned with the left and would shift back to the right. I would speculate that in terms of the communitarian politics that would evolve out of 60s radicalism, Rothbard came to view right-wing communitarianism as the more fertile ground to launch the ‘cadre movements” that he deemed necessary to bring about a “libertarian revolution.” With the failure of the 1988 campaign of Ron Paul, running as a the presidential nominee of the Libertarian Party, to garner much traction in politically advancing the libertarian movement, a certain subset of libertarians, including Rothbard, started to blame libertarianism’s association with cosmopolitan culture and a “live and let live” moral credo. Never mind that these are foundational elements of libertarianism, Rothbard was getting up in years and he needed his “cadre movement.” So these libertarians rechristened themselves as “paleos,'” began a campaign of re-glorifying the “old Right,” and attached their horses to the cult of personality of Pat Buchanan, who had used his 1992 GOP convention speech as a platform to announce a call to arms in all out culture war. These libertarians, under some delusion that aligning with Christian Right would allow them to dictate terms after Pat the Conqueror had vanquished the left in the cultural wars, ended up swallowing a bitter pill. Cultural conservatism got it’s ass kicked in the 90s cultural wars, so much to the point that the likes of Paul Weyrich were hoisting the white flag of defeat by the end of the decade. Pat Buchanan would prove to be an economic statist who was immune to the economic charms of the libertarians. And to top it all off, the libertarians would ultimately get out-flanked by the neo-conservatives in terms of re-shaping right-wing Christian culture.

Let us recall, in the 90s, the neoconservatives incessantly complained about the lack of a unifying “national culture,” which they blamed on consumer capitalism. Their solution to this problem was “the long war” in the theaters of the Middle East, Northern Africa, and Southern Asia. We should further recall that in the aftermath of the 1st Gulf War, the Christian Right was very much skeptical of Bush the Elder’s “New World Order,” deeming it as a satanic plot towards world government. This was the “unifying culture” that these libertarians thought they could ride to victory. Of course, after 9-11, this Christian Right Wing culture converted overnight to the neo-conservative position of permanent war. In the annals of recent history, I think the libertarian paleo shift has to count as one of the grossest, egregious miscalculations.

So, given all this, I am flabbergasted by the likes of Hans Hermann Hoppe who waxes poetic about libertarian-christian conservative fusionism. Frankly, I have no idea how this guy is taken seriously in the libertarian movement. When he writes:

This Establishment Libertarianism was not only theoretically in error, with its commitment to the impossible goal of limited government (and centralized government at that): it was also sociologically flawed, with its anti-bourgeois—indeed, adolescent—so-called “cosmopolitan” cultural message: of multiculturalism and egalitarianism, of “respect no authority”, of “live-and-let-live”, of hedonism and libertinism.

The anti-establishment Austro-libertarians sought to learn more from the conservative side about the cultural requirements of a free and prosperous commonwealth. And by and large they did and learned their lesson. At least, I think that I did.

First, he commits a glaring logical fallacy that because, say, the likes of Cato promote both “limited government” and “cosmopolitan” culture, that advocacy of cosmopolitan culture implies the State. This is the logical fallacy of “Denying the antecedent.” As well, it is a logical fallacy to think making the case against Cato in terms of limited government makes the case against rich cultural diversity. This is a historical fallacy as well, because libertarianism historically is anarchism and has promoted a rich cultural diversity, particularly with respect to tearing down coercive cultural institutional enforcer of norms in terms of being a rationale for impinging one’s liberty.

Hoppe’s criticism of “limited government libertarianism” does not validate any critique of libertarian culture, and thus justify his position on the need for uniform culture. The fact is, there is no such thing as “uniform culture,” other than a official culture that is enforced and propagandized by organs of the State. Indeed, I would argue it is the State that relies on some sort of a uniform culture to retain it’s legitimacy(e.g., nationalism, patriotism, militarism). Those who espouse the need for uniform culture to make their social theory work are authoritarians at heart. We saw this authoritarian strain emerge from the Paleos with the Ron Paul newsletters, where the most egregious things were not the politically incorrect criticisms of the like of Martin Luther King, but the putrid support of thuggish tactics of a thug police, even going as far as suggesting the need to outlaw video cameras so as to allow the thugs to operate in secret.

In a scientific examination of the relationship between markets and culture, we find that markets universalize values across cultures. You cannot have closed cultures and open markets. In my opinion, to think otherwise, is an egregious denial…