Why Libertarians Should Love Government

May 30th, 2011

Three assumptions:

1. We want to maximize aggregate individual liberty. Person A has 5 zlots of liberty, Person B has 12 zlots of liberty, etc. Add them up: sum(people:liberty).

2. Individual liberty is a function of wealth. If you have more money you have more liberty to do what you want day to day, year to year, and in the course of your life.*

3. Unfettered corporate capitalism inevitably concentrates wealth into fewer hands. It’s an inherent, emergent property of the system

Do the arithmetic: unfettered corporate capitalism reduces aggregate liberty.**

So if we want widespread liberty, we want a system that results in widely distributed wealth.That means well-managed capitalism.

Please spare me the ridiculous fallacy-of-the-extremes incentive arguments. Especially given today’s massive disparities, there are more-than-ample incentives at all levels for people to energetically pursue wealth. Adjustments back to 1950s or 1990s levels of wealth distribution will not significantly effect that, and the countervailing macro effects of widespread wealth distribution will overwhelm any negative incentive effects that do arise. Those claiming otherwise are either defending their own status quo wealth (stupidly, because their children will suffer a poorer country as a result), or they’re deluded fools grabbing their ankles and doing the defending for others.

* Libertarians don’t seem to understand that there is such a thing as economic coercion, and that any system — even one with no rules at all — subjects people to such coercion. Even if there’s no physical coercion, i.e. arrest, threatened in the end game (one can always just declare bankruptcy),  economic coercion — the requirement that you choose between bad alternatives — is profoundly destructive of personal liberty. That coercion exists even if there is no identifiable malevolent coercer (de ebil gubmint man) — person or entity.

** Don’t get me wrong (notice the “unfettered” there): I believe that corporate capitalism has created more prosperity — hence liberty — than any other human invention. But that’s only true because of government. Corporations only exist and operate as chartered constructs of government, and it’s only because governments properly manage economies consisting of the corporations they’ve created that those corporations have had the beneficial effects — and success — that they’ve had.

  1. DP
    May 30th, 2011 at 19:55 | #1

    From the point of view of a true libertarian:

    3. Corporate capitalism? The whole reason why there are big corporations in the first place is big government. The larger a corporation is the easier it is for it to deal with regulations, get political favors, minimize the tax burden, etc. Truly unfettered capitalism, devoid of rent-seeking opportunities would most likely result in smaller, more dynamic companies.

    2. No, it is not. Liberty is about being able to pursue your goals without interference. Wealth doesn’t come into the picture.

    1. No, libertarians want everyone to be free, and equally so.

    Your crucial mistake is in conflating liberty with welfare. Unfortunately it has become too common to redefine “liberty” and “rights” to include whatever ideas happen to be fashionable in progressives circles at the time. A right is not a guarantee. Your right to life means that I may not kill you, but not that I must act save your life.

    PS: Corporations are just associations of people. They are not created by government, but by private contract. Obviously the enforcement of such contracts is the job of the government, but so is the enforcement of any other contract.

  2. Olav Martin Kvern
    June 2nd, 2011 at 16:41 | #2

    DP wrote: “Truly unfettered capitalism, devoid of rent-seeking opportunities would most likely result in smaller, more dynamic companies.”

    That’s a beautiful thought, and it’s one I liked a lot when I was 12 (and again in a brief burst of anarcho-syndicalist optimism in my twenties). But it seems a lot more likely that you’d end up with an overlapping network of monopolies–in effect: a totalitarian government. But I guess it would be okay, because all of those corporations squeezing out your life would be “just associations of people.”

    re: “Liberty is about being able to pursue your goals without interference. Wealth doesn’t come into the picture.”

    You’re just proving Steve’s point (“Libertarians don’t seem to understand that there is such a thing as economic coercion…”). Money is by its nature coercive–and it seems to me that coercion is “interference”. I have lots of goals I’ll never be able to begin to pursue because I have to spend a lot of my limited time making money to survive. I have noticed, however, that I’m quite a bit more free when I make more money. Your mileage may vary.

    re: “…libertarians want everyone to be free, and equally so.”

    Yes, of course. That would be a beautiful thing–which is why it’s the central desired outcome of so many “isms,” including Marxism and most forms of socialism. The trick is getting there–and I don’t think that Libertarianism (especially *Right* Libertarianism, which seems to be the most common form around these days) offers a better road map than any of our other pipe dreams.



  3. June 2nd, 2011 at 17:20 | #3


    3. “Corporations … are not created by government”

    !!!! A corporation doesn’t exist absent a charter from government. It’s a corporation’s sine qua non. Now: go back to the 1770s/80s/90s and check out 1. the handful of corporate charters, with their severe restrictions, and 2. read what the founders thought of corporations.

    2. I’d simply say: ask any fifty people what is the main constraint on their everyday, course-of-life freedom to do what they want to do. I would suggest that 49 will say “money.” While there are seriously stupid laws on the books (sex, drugs), 99% (+) of the things that are against the law are things I, at least, don’t want to do, so those laws pose no “interference” to my goals. (You?) Shortage of funds certainly does, and I would venture to suggest that it is likewise with you. Or are regularly frustrated by not being able to do illegal things?

    1. “No, libertarians want everyone to be free, and equally so.”

    Place finger in cheek. Twirl. C’mon, really: what is that supposed to mean?

    Ole’s right: libertarianism, at least beyond a certain point, is profoundly adolescent.


    Update. Which got me wondering: is autism/aspergers (which Robin Hanson has associated with libertarianism) a further extension of human neoteny?

    No surprise: I’m not the first one to think of that:


  4. June 11th, 2011 at 19:56 | #4

    If corporations are just collections of people, then what’s the purpose of limited liability & corporate personhood? Don’t those define a corporation as something other than the sum of its participants?

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