The Limits Of Libertarianism

(With apologies to James Buchanan, the title of whose excellent book I stole for my own post’s title.)

A relatively short time ago, Jessica had a post on libertarianism that I wanted to respond to, but ended up too busy to give it a good response.  She links to a Wil Wilkinson post in which he notes that coercion is not limited to arbitrary government action and concludes by stating that if “coercive limits to liberty are justified only in defense of private property, or in the enforcement of contracts, then libertarianism is false, and I am not a libertarian.”  Jessica adds to this, stating that such libertarians “seek to remove impediments to their petit bourgeois hedonisms, and they have the vague sense that if the government got its mitts out of business, everything would be fine.”

As a non-libertarian sympathizer trying to argue for libertarianism against(?) two very smart and knowledgeable libertarians, I dare say I’m in a bit of a sticky wicket here.  This is doubly so because I agree with Wilkinson’s point that coercion is, in fact, a necessary aspect of the protective state.  Speaking of Buchanan and The Limits of Liberty, he’s one of the guys who put it best:  following Hobbes, we can imagine an idealized state of nature in which everybody has a full set of liberties.  However, this set of liberties includes the liberty to end another’s life (or do other disgusting things) at any time for any reason, and so we do relatively poorly under this set of circumstances.  As a result, we get together and form pacts—contracts in the small, constitutions in the large—to trade away some of our liberties for security (or other gains).  To enforce these contracts, we need some kind of coercive mechanism, and the general answer for this is the protective state.  It is a mistake to believe that certain fundamental rights—life (in the sense that nobody else may, save for certain circumstances, kill you), liberty (well, the ability to exercise those liberties which you have not traded away), and property to name three—require no coercion to maintain, especially because there are incentives for violating some of these rules.  Buchanan points out in his book that many of the rules we accept actually involve prisoner’s dilemmas we are trying to solve.

One example of such a prisoner’s dilemma is production versus privation.  Suppose you have two individuals, Jethro and Clancy.  These two individuals can perform one of two actions:  farm (which is a productive activity) or fight (which is a non-productive activity).  By farming, they can make themselves better off, but if Jethro fights Clancy and Clancy does not stock up to fight back (by building fortifications and giant robots and whatnot), Jethro can just take all of Clancy’s stuff.  Clancy can do the same thing to Jethro (with the giant robots that he built in his spare time).  So, because neither wants this outcome and both know that the other has an incentive to fight, both will build fortifications and prepare for a giant robot smack-down, thereby limiting the amount of time that they can farm.  Eventually, Jethro and Clancy see the foolishness of what they’re doing and decide to form a constitution in which they pledge that neither will fight and both will farm and trade.  After signing the agreement and having a party (with balloons and paper hats and a guy in a rat suit), what’s Jethro going to do?  The obvious thing:  strike while Clancy’s not looking!  Of course, Clancy will do the same thing.

The reason that both will break the deal is because the constitutional rule is a de jure solution but one which does not address the de facto incentive compatibility problem.  Signing that agreement does nothing to make it less valuable to fight or more valuable to farm, as we still have the prisoner’s dilemma in play*.  So what they need is some kind of enforcement mechanism.  An internalized enforcement mechanism, such as tit-for-tat (in which Jethro will do tomorrow exactly what Clancy does today), can only work if the Folk Theorem holds.  And internal enforcement mechanisms, even if they work for Jethro and Clancy, may not work for a few million individuals, many of whom have never met one another.  Instead, we generally see a move toward external enforcement mechanisms—namely, government** and the protective state.  Government’s job as facilitator of the protective state is to enforce contracts, particularly the top contract:  the constitution.  In this case, Jethro and Clancy would use some of their proceeds to pay Dredd to enforce the constitution they both signed.  That way, Dredd has the authority to make the punishment from violation so severe that both will abide by the rules.  Dredd has altered the game by changing the incentives to fight versus farm.  Because Dredd will kill those who fight outside of self-defense***, the only positive-value result would be farming.  Over time, the descendants of Jethro and Clancy may not even think of the possibility of fighting—at least until it becomes a value-gaining activity again—but their cooperation and rights exist because there is some set of individuals available and willing to use coercion to enforce the rules.

So I completely agree with Wilkinson there.  I would, however, like to ask people who support Wilkinson’s subsequent argument what they think of this judgment against eHarmony.  eHarmony will be required to offer same-sex matches, as a result of a settlement of a civil rights suit.  Is freedom of association a “wrongful[] liberty-limiting social norm”?  If you argue that libertarianism should handle general social relationships, this deal should not be all that problematic.  But to do this requires a compromise to that fundamental freedom, one which libertarians prize:  the ability to contract (or refuse to contract) with whomever you please.

Granted, I can see a situation in which you can balance both out:  sympathize with the homosexual litigants while wishing that they did not pursue the legal route, instead wishing that they would try to change social norms using non-governmental persuasion.  But then again, considering that this strategy does not inherently distinguish that which Wilkinson calls libertarian versus that which Wilkinson criticizes as pseudo-libertarian (my term), I don’t believe that this would really work for the purpose of differentiation.

Later on, in the comments, Wilkinson writes that “there is no good argument that justifies state coercion in the protection of property, but not state coercion in the pursuit of other aims similarly congenial to the commonweal.”  If, by this, he means that there is a role for a productive state (the provision of public goods) as well as a protective state, okay, that’s fine and I’ve no beef with it.  Jim Buchanan made the same argument and did a good job of it, I dare say.  But when you start trying to “re-engineer” society, Hayek’s warning (quoted by Greg N. in the comments) becomes rather pertinent:

“… when we decide each issue solely on what appears to be its individual merits, we always overestimate the advantages of central direction. Our choice will regularly appear to be one between a certain known and tangible gain and the mere probability of the prevention of some unknown beneficial action by unknown persons. If the choice between freedom and coercion is thus treated as a matter of expediency, freedom is bound to be sacrificed in almost every instance. As in the particular instance we hardly ever know what would be the consequences of allowing people to make their own choice, to make the decision in each instance depending only on the foreseeable particular results must lead to the progressive destruction of freedom. There are probably few restrictions on freedom which could not be justified on the ground that we do not know the particular loss it will cause.”

And as you start moving toward fuzzier “evils” (which I put in scare quotes because some of them are generally accepted as bad things, whereas others are, shall we say, more controversial), you quickly run into agency problems.  Take hate speech, for instance.  Hate speech is bad, so people should be punished for it, no?  After all, if the only major side effects are banning some song lyrics which just happen to involve blowing up the government****, what’s the problem?  Well, abuses of power like in Canada and a disregard for the rules of the game.  All of those public choice problems libertarians and other small-government types (rightly) mention don’t go away when it’s something you like.  Wilkinson mentions the Civil Rights Act (presumably 1964, though there were several before and after) as more-altering legislation that he preferred to have and believes rather beneficial.  However, aside from the agency problems which exist in any government program, these also resulted in affirmative action, and you can make an argument (as Thomas Sowell does in a series of syndicated columns critiquing affirmative action, located here, here, here, and here) that many of the supposed gains of 1960s legislation were either demographically inevitable or began before the supposedly beneficial legislation came into being, and said supposedly beneficial legislation may actually have been a net hindrance to that process.  Whenever you want to re-make society or social policy in your own image, unintended consequences still count, even if you’re a libertarian.

* – I should note that there _is_ a potential solution which could work, known as the Folk Theorem.  If we are in an infinite-horizon game (or a game with an indefinite series of iterations, if you prefer), it is possible that far-sighted agents will see the value of long-term cooperation as greater than a momentary gain from defection and the subsequent shifting into the lower-valued defection track.  For the purposes of this exercise, I’m assuming either that Jethro and Clancy discount future utility rather heavily (since they’re living in a state of nature, they probably won’t be around too long…) or that the gains from a surprise attack outweigh the losses from perpetual warfare over perpetual peace.

** – Bryan Caplan had a series of articles in the Review of Austrian Economics a while back in which he argued that a Rothbardian state of anarchy is possible by using a series of private enforcement agencies.  He did admit that this would probably be a more dangerous and bloody world than the alternative.  Tyler Cowen, however, argued in the same journal that these enforcement agencies would fight and collude to the point where they would eventually become powerful enough to create the laws, thereby forming a government.  I am not much for the cause of anarchism, so I kept the word “government” in there, but I do sympathize just enough that I wanted to make this note.

*** – We may assume here that Dredd knows what evil lurks in the actions of men, if not their hearts, since that’s something only The Shadow knows.  Jethro and Clancy cannot hide their attacks from Dredd’s watchful eye.

**** – Incidentally, it’s a really good song, and I think it was hilarious that they published a “karaoke” version in Germany, where they removed the words.  Of course, since most Germans never heard of the band (they were much more popular in the US than in Germany, ironically enough), this didn’t bother too many people other than the hardcore punkers who were already offended by the government’s existence in the first place.

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