Libertarianism: Some Clarifications

~by James Hanley

This is not a sermon; there will be no alter call at which I invite you to join the Church of the Holy Rand. This is just a response to some of the confusions about libertarianism that I’ve seen here. I’m not asking you to believe libertarians’ interpretation of the world is correct, or that I am presenting the “one true libertarianism;” I’m just asking you to believe that these are actually the things lots o’ libertarians actually believe.

Do Libertarians Have an Optimistic View of Human Nature?
Some think that libertarians must believe humans are innately good, else how could libertarians think humans could humans live in peace and harmony without government? This is a view of libertarians as anti-Hobbesians, where in a state of nature the life of man is social, rich, nice, gentle and long. Or, as James Madison said, “if men were angels, no government would be necessary.”

This view ignores one of the primary reasons libertarians are skeptical about government—their deep distrust of political power’s effect on people, and even more, of the human tendency to lust after political power and control of others. How optimistic a view is that?

It’s true that libertarians think that individuals can cooperate and live together peacefully, but only to the extent we can choose who we cooperate and live with. Because we (not libertarians, all humans) can’t trust everyone to not cheat us, we selectively develop relationships with those who have proven themselves trustworthy, and we make use of the expected value of future cooperation from us to give them a reason to cooperate with us. E.g., I once shared a lawnmower with a neighbor. We had a short set of simple rules, such as refilling it with gas after each use, to protect each of us against defection by the other. Had I failed to refill with gas, he could have done the same in retaliation. There is a vast game theoretic literature on this, under the name of the iterated prisoner’s dilemma (IPD). The evidence of the literature is conclusive—the IPD will not necessarily create cooperation (it can, in fact, create iterated defection sequences), but it frequently will simply because cooperation tends to produce the best long-term gains. That is, cooperation works because it relies on the individuals’ self-interest, not any inherent goodness.

Is this non-optimism merely more of Hanley’s niche libertarianism? (I’m not, as many have noted, particularly representative of libertarianism.) No. Here’s Murray Rothbard:

[M]ost libertarian writers hold that man is a mixture of good and evil and therefore that it is important for social institutions to encourage the good and discourage the bad.

And here’s Luca Gattoni-Celli:

Libertarians believe human beings cannot be trusted to deny their self-interest and thus view human nature as a fixed reality to be accounted for in the creation of functioning institutions.

Or as Madison said in the continuation of the quote begun above, “If angels were to govern men, neither external nor internal controls on government would be necessary.” But of course those who govern us are not angels.*

Do Libertarians Want to Eliminate Government?
Some do. Bruce Benson writes,

[T]he state might be inevitable… That still does not mean that libertarians should not try to find ways to make it go away, however.

But it’s not a necessary view of libertarians. Minarchism, a common libertarian approach, explicitly says that “the state is necessary and that its only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud.” This is perfectly in line with libertarians’ realism about human nature. While libertarians believe that you and I might develop a great working relationship in which we each find it beneficial to not screw each other over, that doesn’t mean they expect a world in which these types of things don’t happen. And they think government is legitimate for dealing with those things, just not for doing much else.

Robert Nozick is uncharacteristically (for a philosopher) blunt on this point:

No state more extensive than the minimal state can be justified. (Anarchy, State and Utopia, p. 297).

This means the minimal state is justified, according to him, and he is not advocating for eliminating it.

Or as a libertarian FAQ puts it,

Libertarians want to replace as much government as they practically can with private, voluntary alternatives. About 3/4 are “minarchists” who favor stripping government of most of its accumulated power to meddle, leaving only the police and courts for law enforcement and a sharply reduced military for national defense (nowadays some might also leave special powers for environmental enforcement). The other 1/4 (including the authors of this FAQ) are anarcho-capitalists who believe that “limited government” is a contradiction and the free market can even provide better law, order, and security than any government monopoly.

Although I can’t vouch for his numbers, apparently even the anarcho-capitalists recognize that most libertarians don’t want to completely eliminate government.

Back to Madison, “If men were angels, no government would be necessary.” Well, most libertarians I know don’t think men (or women, for that matter) are angels.

Do Libertarians Think Free Markets Are Perfect?
Sigh. Like most of you, I suspect, I have a feeling that too many of them do. They certainly give that impression, don’t they? But actually, libertarians just tend to think market failures are less frequent and less serious (and government responses less effective) than liberals tend to think they are—and that is not the same as saying markets are perfect.

Cato research fellow Aaron Ross Powell, in an essay rebutting a critic of markets, says that markets are better than many other ways that goods might be allocated, but explicitly disavows a perfectionist view:

Markets may not be perfect, but they’re better than determining distribution through arbitrary features like the color of one’s skin or the social class of one’s parents

Jeffrey Miron, in Libertarianism, from A to Z, makes an almost identical claim:

Even though markets are not perfect, governments usually make things worse…Laissez-faire is not perfect, but it is still the right choice if non-intervention is less bad than the available interventions.

Libertarian economist David Friedman, in Chapter 18 of his classic price theory textbook, develops the point further:

In Chapter 1, I pointed out that even if every individual in a group behaves rationally, the result may be undesirable–for every individual. This happens when one person’s actions impose costs or benefits on others…The rest of this chapter will be devoted to a discussion of situations of this sort. I will start with a number of specific examples and then go on to explain the two general categories under which many such problems are usually classed in economics: public goods and externalities. I will end by discussing the special problems associated with imperfect information.

And that’s not just his textbook view. In a comment on a blog post by Steven Horwitz. Friedman writes,

Consider, for one example, the issue of market failure. Pretending that there is no such thing, which seems to me to be the most common libertarian response, doesn’t work, because it is easy to show examples of situations in which individual rationality does not lead to group rationality, which is the essential problem. Externalities, public good problems, adverse selection, are standard examples that cannot be handwaved away. All of them imply that, under some circumstances, a laissez-faire system will produce less desirable outcomes than a centrally planned system with sufficiently wise and benevolent planners.**

From a different angle, Sandy Ikeda, writing in the libertarian bastion The Freeman, draws from the work of Elinor Ostrom to note that the best libertarian solution is not always a market solution:

Although not every community Ostrom studied was successful in establishing such conventions, it is instructive how highly complex agreements, enforced by both local norms and effective monitoring, were able to overcome the free-rider problems that standard economic theory–and perhaps vulgar libertarianism–would predict are insurmountable without property rights.

Dealing with air pollution is of course a more difficult problem since it typically entails a much larger population and more diffuse sources and consequences. But it’s important to realize that a “libertarian solution” to air pollution may not necessarily be a “market solution.”

In a nutshell, libertarians do admittedly to tend to overplay their hand on markets (note Friedman’s agreement on that), with many of them being much too quick to dismiss the existence of market failures. Unfortunately, the average libertarian is probably no better educated in economics than the average liberal or conservative. But libertarianism doesn’t require believing that markets are perfect. All that’s “core” belief for libertarians, is having more confidence in markets and less confidence in government than does the average liberal.

Are Libertarians Utopian?
Nozick titled his book Anarchy, State and Utopia, and the final chapter is titled “A Framework for Utopia,” so the issue is settled, right? Well, not exactly. Nozick is a typical philosopher here and his analysis of utopianism is more nuanced than our colloquial use of the term. In fact he distinguishes three different kinds of utopianism. But what really matters is that he isn’t looking for a world where everyone has adopted a pure libertarianism or chosen to live like a highly individualistic libertarian; only a world that allows everyone to choose their preferred type of society, rather than forcing them into a particular type.

Though the framework is libertarian and laissez-faire, individual communities within it need not be, and perhaps no community within it will choose to be so…In this laissez-faire system it could turn out that though they are permitted, there are no actually functioning “capitalist” institutions; or that some communities have them and others don’t… (Anarchy, State and Utopia, p. 321, emphasis in original).

David Boaz draws explicitly on Nozick, writing,

Lots of political movements do promise utopia: just implement our program, and we’ll usher in an ideal world. Libertarians offer something less, and more: a framework for utopia, as Robert Nozick put it. My ideal community would probably not be your utopia. The attempt to create heaven on earth is doomed to fail, because we have different ideas of what heaven would be like… What we need is not utopia but a free society in which people can design their own communities. A libertarian society might offer thousands of versions of utopia, which might appeal to different kinds of people… As long as each person respected the rights of others, he would be free to live as he chose. His choice might well involve voluntarily agreeing with others to live in a particular kind of community. Individuals could come together to form communities in which they would agree to abide by certain rules, which might forbid or require particular actions. Since people would individually and voluntarily agree to such rules, they would not be giving up their rights but simply agreeing to the rules of a community that they would be free to leave. …One difference between libertarianism and socialism is that a socialist society can’t tolerate groups of people practicing freedom, but a libertarian society can comfortably allow people to choose voluntary socialism. If a group of people–even a very large group–wanted to purchase land and own it in common, they would be free to do so. The libertarian legal order would require only that no one be coerced into joining or giving up his property. In such a society, government would tolerate, as Leonard Read put it, “anything that’s peaceful.”

Others are more explicitly anti-utopian. James Ostrowski writes,

The charge of utopianism is easier to refute. Libertarians do not say, and have never said, that all of life’s problems will be solved if society operates on libertarian principles. Human nature and the human condition being what they are, there will still be crime and conflict and the occasional war. Given the finitude of existence and the gap between dreams and reality, there will always be tragedy, frustration, loneliness and violence in human affairs. Libertarianism offers no solution to these problems.

And David Friedman, again, expands the explanation:

No doubt some libertarians (and some socialists and some liberals) believe that their preferred institutions would work flawlessly, but utopianism is not an essential feature of libertarianism. For evidence, consider my book The Machinery of Freedom. In it I propose quite a radical version of libertarianism–a society with private property but no government. Having done so, I then describe possible circumstances in which those institutions would produce unlibertarian results–specifically, laws against the use of some drugs. I defend the institutions not on the grounds that they are perfect but on the grounds that they are likely to produce better results than any other institutions I can think of.
…
A second mistake … is that it identifies being a libertarian with holding the political goal of a perfectly libertarian society. No doubt many libertarians hold such a goal and regard it as achievable. But one can also be a libertarian in the sense of wanting a more libertarian society but not expecting ever to get and maintain a perfectly libertarian one.

Rothbard, drawing on Hayek, comes at the question from a different perspective, arguing that libertarianism is not utopian because it accepts human nature for what it is, with all its flaws, rather than attempting to remake it:

[As] the classical liberal F.A. Hayek pointed out: “The main merit of individualism…is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity…”

It is important to note what differentiates libertarians from utopians in the pejorative sense. Libertarianism does not set out to remould human nature.

So is libertarianism utopian? No, it neither seeks to radically remake the world from the top down into a specific order that all must follow, nor does it seek to change human nature in a desired direction.

Are Libertarians As Unfair in Their Interpretations of Liberals as Liberals are in Their Interpretations of Libertarians?
Yes. But “they do it, too” is a childish response.

Conclusion
Again, there is no altar call here at the close. I don’t ask you to accept Mises into your heart as your ideological savior. I’m not passing a collection plate to support our missionaries at Cato. I’m not asking you to place a copy of Anarchy, State, and Utopia in a hallowed place, with the names of all your generations listed inside the cover.*** You don’t like libertarianism, or at least you’re skeptical of it, and that’s totally okay with me. Let’s talk about it. Let’s just not talk about red herrings; they’re not palatable, no how many grains of salt are added to spice them up.

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*I am not implying Madison was a libertarian.

**This does not mean Friedman thinks government policy is necessarily superior, though. He goes on to note that

The right approach, in my view, is to recognize the existence of market failure but to point out that it is not limited to markets in the conventional economic sense. Rationally ignorant voters are an example of market failure due to the public good problem, since figuring out which candidate will be best for the country and voting for him means producing a public good with a very large public. More generally, market failure occurs because individuals making choices do not bear all of the net costs that result. But while that situation is possible on private markets, it is the norm on the political market. Hence market failure is a real argument against laissez-faire but an equally real—I would argue stronger—argument against the alternatives.

***I don’t even like the book. I read it prior to becoming libertarian, while still a liberal, and was mostly unmoved. The same with Rand, and with my Austrian Economics course. I may be the only libertarian in the world who mostly rejects all three of those sources as provenance of his libertarian beliefs.

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