Politics Compromises the Libertarian Project

The central point of Roderick Long’s essay seems completely correct to me—powerful actors in society seek to use their power in order to manipulate the state apparatus to get what they want. Corporations are powerful actors in our society, and they want money. Thus, what corporations are after in politics is political action that gets them money and whether or not this coincides with the dictates of a purist laissez faire vision is a matter of mere happenstance.

In what I find a puzzling move, Long thinks that the main upshot of this is to cast doubt on the legitimacy of castigating libertarians as corporate stooges. I would say the real upshot is to cast doubt on the cogency of the libertarian enterprise. Thinkers affiliated with the libertarian movement have had many smart things to say on individual topics, but the overall concept of a state apparatus that simply sits on the sideline watching the free market roll along is impossibly utopian. People are going to try to manipulate the state to advance their own ends.

But of course not all is lost. Much of the world labors under hopelessly corrupt governments, wherein the police and security services are little more than shakedown operations or enforcers for local bigwigs. But elsewhere, justice is administered with a modicum of efficacy. Similarly, there are real alternatives to run-amok corporate dominance of the policy environment. There are better and worse civil services in the world, and even within individual countries some agencies work better than others. There are labor unions and advocacy groups—environmental, human rights, feminist, pro-life, and so forth—that compete with businesses and with each other to influence the direction of policy.

What there aren’t are places where politics just somehow doesn’t happen. The libertarian utopia is no more realistic than the socialist utopia of a perfectly informed and perfectly benevolent central planner.

Meanwhile, putting libertarians themselves third on the list of culprits for inducing confusion between market principles and corporate domination seems both too generous and too kind. The blame, such as it is, ought to land not on vaguely named “libertarians” and certainly not on a set of ideological principles. But at the same time, the predominant cause of people seeing libertarians as shills for business interests is the fact that an awful lot of shilling for business interests does, in fact, take place under the banner of self-described libertarian institutions.

It’s awkward, in these circumstances, to bring up the Cato Institute. And of course Cato engages in many activities that have nothing to do with any corporate interests. And much of this work is exemplary—particularly in the realm of national security where Cato has often been willing to tread on terrain that other mainstream DC policy organizations seem to deem too risky.

That said, it’s striking to me that on what would seem to me to be the simple and straightforward libertarian case that we should make Social Security benefits less generous, Cato has nothing much to say. Instead, it has an elaborate Project on Social Security Choice aimed at restructuring the program into one of mandatory, privately managed savings accounts. It’s not immediately obvious to me what this proposal has to do with libertarianism, but it would seem to offer some prospect of profits for fund managers. Whether monetary contributions from individuals working in the financial services industry, or else a desire to align more closely with the partisan political agenda of the Republican Party (itself largely dominated by the interests of American business rather than free market principles), or some combination of the two motivate the preference is beyond my ability to say.

Similarly, the free-market case for a revenue-neutral carbon pricing scheme seems fairly impeccable to me. But instead of organizing its climate change efforts around seeking to ensure that any future carbon pricing plan be as close to revenue neutral as possible, Cato prefers to steadfastly defend the rights of industry to unload air pollution unimpeded. Or consider the fact that Randal O’Toole is indignant about the prospect of public expenditures on mass transit systems, but appears to have little to say about public funding of highways. This, too, looks more like a case of narrow business interests than sterling free market principles.

That said, the larger problem is that libertarianism, even at its very best, tends to suffer from an impoverished set of ideas about how corporate domination of the public policy space might be prevented. The political left has, by contrast, the tradition of community organizing, a set of public interest advocacy organizations, allies in the trade union movement, efforts to improve the quality and independence of the civil service, and various notions about changing the methods by which campaigns are financed in the United States. This is hardly a perfect toolkit, and it can be enhanced in some ways by drawing on libertarian insights, but it’s something. And libertarians tend to be either indifferent or hostile to it, campaigning against public financing, strong labor unions, and the civil service.

In practice, libertarianism seems to have little to say about how to bring about political change except to work hand-in-hand with business lobbies when the interests of business and free markets are aligned, or else when business interests are masquerading as libertarianism.

I raise this less in the spirit of complaint than to illustrate a genuine problem. Curbing certain sorts of infringements of market activity that serve to only further enrich the already rich is essential. And American progressives aren’t doing all that great a job of doing it. We could use allies, and we could use good ideas. And there are some models out there. The Institute for Justice, for example, takes on some causes I disagree with. But their campaigning against things like an Oklahoma law requiring a license before you call yourself an “interior designer” and other forms of senseless occupational licensing has identified a very real problem. And they’ve developed a litigation strategy that’s borne some fruit and seems to hold some promise. The world could use more such ideas, and hopefully through conversations such as this one some will emerge.

Also from this issue

Lead Essay

  • In this month’s lead essay, philosopher and libertarian theorist Roderick T. Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly. He suggests that libertarians should guard themselves against falling into the trap of “vulgar libertarianism,” in which all things good spring from business, and particularly from business as usual. Corporations, he argues, should be no more free from scrutiny than any other institution in society, and often businesses have done more than their share to hamper free economic relations in the industrialized world.

    One implication of all of this is that the truly free market is farther away than we imagine. Long suggests several ways in which a freed market would be different from what we see around us today. Notably, nearly all of these differences are to the benefit of the consumer and the small or start-up business. These likely outcomes of laissez faire suggest new grounds for left-liberals and libertarians to revise their thinking on economic issues and on politics more generally.

Response Essays

  • In his response to Long, Matthew Yglesias argues that although corporations naturally seek to win special privileges from the state, libertarianism is far from the obvious solution to the problem. Instead, he reiterates the charge that libertarians often act as corporate apologists and suggests that the net effect of any “free market” advocacy will tend strongly toward corporate power. Liberals may have much to learn from libertarians on certain issues and in some policy areas, but the laissez-faire solution to corporate political influence is unworkable.

  • Steven Horwitz offers several examples of so-called “de-regulation” that only served to benefit corporations, while leaving the government, and therefore the taxpayers, to shoulder the risks of the market. He argues that market competition is a form of regulation, albeit a kind worth wanting, as it forces corporations to respond to consumer demand and punishes them when they fail to meet it. He takes issue with Long’s lead essay by arguing that “playing defense,” that is, defending today’s corporations when they act consonantly with a fully freed market, is a valuable part of libertarian advocacy. One must nonetheless take issue with these same corporations when they violate the principles of laissez faire and distinguish carefully between these cases.

  • In his response essay, Dean Baker declines to tally up a “score” of how well libertarians, or other groups, have defended a truly impartial, laissez faire economy. Instead, he suggests intellectual property as an obvious area where libertarians must challenge corporate power to distort the market. Patents that make health care more expensive and copyrights that artificially restrict whole areas of our culture are obviously concessions to corporatism, and the “extraordinary abuses” undertaken to enforce these privileges should be vigorously challenged. Although libertarianism has been skeptical of both patents and copyrights, Baker suggests that this is an area deserving still further attention, and one in which liberals could perhaps become solid allies.

  • The discussion this month has focused to a greater than usual degree on the activities of certain Cato Institute policy scholars. The editors thought it appropriate to solicit responses, and we present them here in their entirety.