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Where the Critique of Right-Libertarianism Goes Wrong

This is excerpted from my comments on Facebook critiquing a recent C4SS article, Where Right-Libertarianism Goes Wrong, by Andrew Kerr.

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Weak article. A few quotes and comments:

Libertarianism is based upon solid intellectual and theoretical foundations of how a free-market society should operate, but when these free-market arguments are applied to defend the corrupt, cronyist, corporate state rigged market capitalism we have at present, the effect is not to support a free market, it is merely to excuse rent-seeking corporations that are beholden to state power.Amazon (for example) has been accused, here in the UK, of (legal) tax avoidance to a chorus of libertarian approval; “Hurrah! Starve the beast!” we jubilantly cry. Yet the costs that Amazon places upon the tax-payer are scarcely mentioned – in addition to taxpayer subsidised warehouses, Amazon deliveries are sent on roads paid for by taxation, its staff attended government schools and the NHS will treat their workers when they are sick.

“scarcely mentioned”? What nonsense. We have for decades explicitly and loudly made it clear that we completely oppose state schools, state medical care, state roads. And, we have routinely observed the ways in which big business is in bed with and uses the state to harm the consumer and its competitors — I have mentioned it several times myself in various areas, like IP and minimum wage, and others have too, of course — see footnote 2 of this post: http://archive.mises.org/14623/state-antitrust-anti-monopoly-law-versus-state-ip-pro-monopoly-law/ (I’ll quote from it below); and http://www.stephankinsella.com/2011/08/eliminate-the-minimum-wage-subsidy-to-big-business/

From this post of mine, “State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law”:

True, large corporations often lobby for and benefit from (relatively speaking) antitrust and other regulations, but still, remove their state-granted monopolies and remove state anti-monopoly restrictions, and let the free market work.[2]

2. See note 10 and accompanying text of my article Reducing the Cost of IP Law (“Once again, as in the case of minimum-wage, social-security, and prounion laws, federal legislation works in favor of big business, … For a recent example, UPS is currently lobbying Congress to enact legislation that would redefine its rival, FedEx, as a trucking company rather than the airline it started out as in an attempt to make it easier for the Teamsters union to unionize FedEx drivers and raise their wage rates—and of course FedEx’s cost structure. See Del Quentin Wilber & Jeffrey H. Birnbaum, Taking the Hill By Air and Ground: Shift in Congress Favors Labor, UPS Over FedEx, Washington Post (September 14, 2007).

See also Murray N. Rothbard, Origins of the Welfare State in AmericaMises.org (1996) (“Big businesses, who were already voluntarily providing costly old-age pensions to their employees, could use the federal government to force their small-business competitors into paying for similar, costly, programs…. [T]he legislation deliberately penalizes the lower cost, ‘unprogressive,’ employer, and cripples him by artificially raising his costs compared to the larger employer.… It is no wonder, then, that the bigger businesses almost all backed the Social Security scheme to the hilt, while it was attacked by such associations of small business as the National Metal Trades Association, the Illinois Manufacturing Association, and the National Association of Manufacturers. By 1939, only 17 percent of American businesses favored repeal of the Social Security Act, while not one big business firm supported repeal.… Big business, indeed, collaborated enthusiastically with social security.”); Llewellyn H. Rockwell, Jr., “The Economics Of Discrimination,” in Speaking of Liberty(2003), at 99 (“One way the ADA [Americans with Disabilities Act] is enforced is through the use of government and private ‘testers.’ These actors, who will want to find all the “discrimination” they can, terrify small businesses. The smaller the business, the more ADA hurts. That’s partly why big business supported it. How nice to have the government clobber your up-and-coming competition.”); Rothbard, For A New Liberty (2002), pp. 316 et seq.; Rothbard, The Betrayal of the American Right, 185-86 (2007) (“This is the general view on the Right; in the remarkable phrase of Ayn Rand, Big Business is ‘America’s most persecuted minority.’ Persecuted minority, indeed! To be sure, there were charges aplenty against Big Business and its intimate connections with Big Government in the old McCormick Chicago Tribune and especially in the writings of Albert Jay Nock; but it took the Williams-Kolko analysis, and particularly the detailed investigation by Kolko, to portray the true anatomy and physiology of the America scene. As Kolko pointed out, all the various measures of federal regulation and welfare statism, beginning in the Progressive period, that Left and Right alike have always believed to be a mass movement against Big Business, are not only backed to the hilt by Big Business at the present time, but were originated by it for the very purpose of shifting from a free market to a cartelized economy. Under the guise of regulations “against monopoly” and “for the public welfare,” Big Business has succeeded in granting itself cartels and privileges through the use of government.”); Albert Jay Nock, quoted in Rothbard, The Betrayal of the American Right, 22 (2007) (“The simple truth is that our businessmen do not want a government that will let business alone. They want a government they can use. Offer them one made on Spencer’s model, and they would see the country blow up before they would accept it.”).

See also Timothy P. Carney, The Big Ripoff: How Big Business and Big Government Steal Your Money (2006), and also Rothbard, Confessions of a Right-Wing Liberal (“This is the general view on the right; in the remarkable phrase of Ayn Rand, Big Business is “America’s most persecuted minority.” Persecuted minority, indeed! Sure, there were thrusts against Big Business in the old McCormick Chicago Tribune and in the writings of Albert Jay Nock; but it took the Williams-Kolko analysis to portray the true anatomy and physiology of the American scene. … As Kolko pointed out, all the various measures of federal regulation and welfare statism that left and right alike have always believed to be mass movements against Big Business are not only now backed to the hilt by Big Business, but were originated by it for the very purpose of shifting from a free market to a cartelized economy that would benefit it. Imperialistic foreign policy and the permanent garrison state originated in the Big Business drive for foreign investments and for war contracts at home.”)

See also the Wikipedia article on Rothbard: “Rothbard was equally condemning of relationships he perceived between big business and big government. He cited many instances where business elites co-opted government’s monopoly power so as to influence laws and regulatory policy in a manner benefiting them at the expense of their competitive rivals. He wrote in criticism of Ayn Rand’s “misty devotion to the Big Businessman” that she: “is too committed emotionally to worship of the Big Businessman-as-Hero to concede that it is precisely Big Business that is largely responsible for the twentieth-century march into aggressive statism…”[49] According to Rothbard, one example of such cronyism included grants of monopolistic privilege the railroads derived from sponsoring so-called conservation laws.[50]

Patents are state-granted monopolies, which are in “tension” with antitrust law; you can have and use this monopoly, even though it technically seems to violate the antitrust laws, so long as you don’t abuse it. This means that the larger companies who amass the large patent arsenals (and cross-license with each other) sort of have immunity from antitrust law while smaller competitors are not only subject to the anticompetitive effect of the patent monopolies possessed by the big players but also subject to antitrust law still. Absent antitrust law perhaps smaller companies could cartelize somehow to combat the patent monopolies of the big companies–for example perhaps they could form defensive patent pooling arrangements–pools that might under current law violate antitrust (I am not sure, have not looked into it in detail). I.e., the antitrust law (maybe) gives enough of an exemption to big companies to acquire large patent monopoly arsenals and to cross-license with each other forming anticompetitive barriers to entry but does not give enough of an exemption for smaller companies to collude and cartelize and form defensive patent pools. I sense that this is basically one thing that is going on.

Another example would perhaps be Big Sports. If I recall correctly federal antitrust law had to grant a special exemption to certain college or large sports leagues, so that they would not be hampered by antitrust law. I can imagine that the combined effect of antitrust law and the special exemption might give some favoritism to the NFL etc. This may be on point but not sure it’s the only one:http://en.wikipedia.org/wiki/Sports_Broadcasting_Act_of_1961.

Update: See Jeffrey A. Tucker, Does Favoring Free Enterprise Mean Favoring “Business”?:

The first great error here is the mental habit that many have of thinking that big government and big business are somehow at odds. The whole of American history from the beginning to the present suggests precisely the opposite. From Alexander Hamilton to Goldman Sachs, a careful look at the history shows that there has been no major expansion of government that some sector of big business hasn’t backed with pressure and funding.

Who won from the mercantilism of the 19th century? Who came out ahead in the war socialism of Woodrow Wilson? Who was the major power behind the economic regimentation of the New Deal? What sectors of American life made out like bandits during World War II and the Cold War and the regulation of medical care and the American workplace in the 1960s and 1970s? Without exception, the corporate elite were behind every push for expanding the leviathan state.

The 19th-century history here has been carefully documented by Thomas DiLorenzo. Murray Rothbard has revealed the role of business in World War I. The postwar period through the New Deal is documented by Butler Shaffer in his great book In Restraint of Trade. The New Deal racket received a thorough exposé with John T. Flynn. The Cold War and after are shown to be radically probusiness in For a New Liberty, as well as Robert Higgs’s excellent works. And this is just the US case: it’s been true in every country where free competition was overtaken by state interventions.

Update: Antitrust vs. Trademark Law

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And, from my post “Eliminate the Minimum Wage Subsidy to Big Business”:

Often people will decry tax breaks to certain businesses or industries on the grounds that this amounts to a “subsidy.” Of course it is false that letting people keep more of their money is a subsidy, but it is true that unequal tax rates (or breaks) can distort the market and benefit the more lightly-taxed business relative to more heavily-taxed ones. In any case, because of the distorting effect of tax breaks, various progressives and light-socialists label them subsidies and on this ground urge their abolition–i.e., to raise taxes on those taxed more lightly to equalize the tax burden (when the appropriate solution is to lower taxes on those more heavily taxed).

But if you go by the logic of the raise-taxes-by-closing-loopholes socialistic crowd, what about regulations that help big business by  disproportionately harming smaller companies? For example FDA regulations, patent law, pro-union legislation, environmental regulations, and the minimum wage. The costs of these socialistic regulations are more easily borne by larger companies than by smaller ones. Case in point, Walmart has pushed for a higher minimum wage. But Walmart already pays above minimum wage, so raising it would barely affect them. But it would impose costs on various Walmart competitors. So Walmart gets to advocate for what looks like social justice, while hobbling its competition. Clearly the minimum wage (and other regulations) is a subsidy to big business, following the logic of those who oppose tax loophole “subsidies,” and thus ought to be eradicated.

A few more quotes from the article, and my comments:

“Many libertarians (myself included) have fallen victim to the false dichotomy that whatever is not ‘the state’ is the free-market.”

The rest of us haven’t.

“The corporations we defend are not free-market entities, they are creatures of the state, endowed with privileges; lip-service condemnations of corporate welfare will simply not suffice.”

Total confusion. Corporations do NOT have state privileges by virtue of their form. See my post Corporate Personhood, Limited Liability, and Double Taxation, and my interview podcast Austrian AV Club—Kinsella and the Corporation on Trial.

“Corporations are not leading the defence of the free market against the state; the corporate-state complex is pulling a con-trick on society.”

Yes, um, we know this and don’t have to be left-libertarians to recognize this. The “left-” libertarians offer us no additional insights here; rather, they focus on some already-obvious truths that standard, non-prefix, radical libertarians have always known–and try to take credit for it. Their problem is in thinking left-right makes sense, and that therefore it’s better to be “of the left” than “of the right.” Maybe it is, but the choice is not necessary; we are just libertarians, and neither left nor right. Right-libertarians are confused, but so are left-libertarians. They both make the same mistake: accepting the coherence of the left-right spectrum. I’m a bit sick and tired of left-libertarians trotting out the smug, superior, stupid canard that libertarianism is “really” “of the left” . Nonsense, and rejecting this does not mean we are “of the right”. We are neither.

” Libertarians rightly oppose statist liberalism, but we must not fall into the trap of siding with “pro-business” conservatives either, we must consistently make the case for a genuinely free-market alternative.””

Uh, we radical, non-prefix, standard libertarians know this already, thanks very much.

“A libertarian defence of our rigged market locks in advantages achieved through state force.”

Yeah. That’s why we don’t defend a rigged market. You don’t need to be a “left-libertarian” to avoid this mistake.

“Imagine playing Monopoly where one player initially takes an extra $100 from the other players when they pass “Go.” If the other players protest and the rules are changed, the first player has a massive in-built advantage that will allow him to build houses and hotels and reap the benefits long-after the rules have been equalised. This is not a call for a state policy of redistribution of wealth, just acknowledgement that this is a problem we cannot blithely ignore, a problem for which there are libertarian solutions.”

Yes, we do not “blithely” ignore it, and I am glad he does not call for redistribution, as some of his comrades intimate we should. See Rothbard here:

It might be charged that our theory of justice in property titles is deficient because in the real world most landed (and even other) property has a past history so tangled that it becomes impossible to identify who or what has committed coercion and therefore who the current just owner may be. But the point of the “homestead principle” is that if we don’t know what crimes have been committed in acquiring the property in the past, or if we don’t know the victims or their heirs, then the current owner becomes the legitimate and just owner on homestead grounds. In short, if Jones owns a piece of land at the present time, and we don’t know what crimes were committed to arrive at the current title, then Jones, as the current owner, becomes as fully legitimate a property owner of this land as he does over his own person. Overthrow of existing property title only becomes legitimate if the victims or their heirs can present an authenticated, demonstrable, and specific claim to the property. Failing such conditions, existing landowners possess a fully moral right to their property.

Returning to the article:

“Right-Libertarianism is narrowly focused on the state and the use of direct physical force, to the exclusion of many societal issues and problems people face.”
This may be true of right-libertarianism (whatever it is, exactly; we never get good definitions from these hyphenated libertarians), but it’s not true of us standard libertarians.
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{ 3 comments… add one }

  • Andrew Kerr August 26, 2013, 9:12 am

    My article was not intended to be a criticism of mainstream libertarian theorists or libertarianism – I am a libertarian (as stated in the article). The criticism was not of theorists, but of the way in which ‘libertarianism’ has entered the political lexicon and people tend to inadvertently misapply its arguments and ideas. Many people incorrectly use libertarian ideas to defend the current mixed-market, which inadvertently benefits the rich and powerful. The criticism was aimed at self-styled ‘libertarians’ who could be more accurately described as conservatives who are primarily concerned with state spending on welfare to the exclusion of state interference in the market such as intellectual property. However, reading the article back, I can see how this was unclear in parts.

    On the issue of state privileges for corporations, we can speculate, but cannot know for sure how incorporation would occur in a free market. I do find the Left-Libertarian critique interesting, if ultimately hypothetical. I was not attempting to dispute libertarian theorists on this issue, as it is well-acknowledged that the size and power of corporations is influenced by the policies of the state. Once again I was referring to many people who describe themselves as libertarians who fall into the instinctively ‘pro-business’ trap – it was these people the article was aimed at.

    Thanks for the critique, I will strive to be clearer in future.

    • Vanmind August 27, 2013, 11:31 am

      Good on the both of ya.

  • Andy Cleary September 29, 2013, 11:51 am

    While Andrew’s article may not have been trying to say what Stephan thought he was trying to say, I still think Stephan has something to learn from the LLs and c4ss people. Economically, the libertarian system externalizes the costs of “property rights” from the owners to the rest of society. It is a market distortion, exactly the kind of market distortion that libertarians are usually and correctly concerned with. In this case, the distortion is a result of the initiation of violence: a libertarian (AnCap/propertarian) is willing to initiate violence against someone to press their property rights claims. If a libertarian claims that they own some property according to libertarian property law, and some other person rejects *those rules of property themselves*, the libertarian does not care: they will unilaterally assert their own preferred rules. So if some hippy socialist who rejects “property” does nothing but walk on a libertarian’s land, the libertarian will condone the use of violence to remove them (“trespassers will be shot” and the sort). Since the hippy did nothing but walk across some grass, you certainly can’t say he did anything violent, and hence the libertarian has initiated violence.

    In a society in which people have different preferred rules for “property” – Lockean homesteading, use/occupation, no private property at all, state ownership, etc – there is a cost to having one’s property claims respected. Where the LLs have a point is that libertarians want to externalize this cost. Minarchist libertarians want to put this cost on to the minimal state (it is effectively their only function), but even AnCap libertarians advocate the tranference of this cost from the claimant to the rest of the society through the initiation of violence. “Property” is a relationship, not an absolute. It is a negotiation, an economic trade: “I will honor your property claims if you honor mine.” It follows that these kinds of trades make sense… *when they are relatively equal*. Just as if I will trade you some milk for some corn but not in arbitrary amounts, trading a respect for others’ property claims makes economic sense very frequently (is win/win, IOW), but not in arbitrary amounts. If you claim that the entire continent of North America is yours because you staked it out in accordance with Lockean homesteading, and you want me to honor that in return for your honoring respect for my 1/4 acre lot, it’s not a win/win trade, because the opportunity cost of no longer being able to use an entire continent is a tremendous cost. A statist responds to situations in which they want a win/lose economic transaction to occur by initiating violence against the person on the “lose” side, in the name of some bullshit abstraction or another. If a libertarian responds to a win/lose “property trade” situation by saying “fuck it, I’ve got the guns and I feel justified in shooting you if you don’t honor my property claims”, then they are doing the same thing: using the initiation of violence to force others to participate in a win/lose trade in the name of an abstraction (“property”) and thus bear the costs of their own economic success.

    The problem with the kind of “establish your claim into perpetuity” Lockean homesteading model that Stephan favors is that it gives an enormous economic boon to someone for no ongoing cost. If you are mega-landowner Joe and you have taken whatever one-time homesteading cost you need to satisfy Stephan’s “first claim” criteria, subsequently according to this scheme you “own” that land forever, without ever doing anything else with it or to it, that is, without any cost. But there is a real, tangible ongoing cost *to everyone else*: the opportunity cost of not being able to do anything with that land. Everyone else is paying that cost for the landowner: their costs have been externalized. At its extreme, as the lefties point out, were all land privately owned, then the person who did not own any land *would not even have a place to stand*. Clearly, one person’s land ownership is a cost to everyone else.

    The way to rectify this is to reject *any* initiation of violence, including for the defense of property claims. A society with such a value cannot ever be subject to Statism, since Statism is defined by initiation of violence. Libertarians (or proponents of private property in general) will have to defend their property claims through peaceful means, so necessarily it’s a society a little weaker on property claims than the Kinsellian AnCap society. But where the LLs and c4ss are right, I think, is that in such a society, there will be ongoing costs to property ownership paid by the owner. Essentially, you will have to “pay” society to honor your property claims. Now, if you only own a little land, that payment will just be your reciprocity for others’ claims. If you are a slumlord massive landowner, reciprocity will not in general satisfy most people, and your costs will end up being more explicit. So in this sense, they are right: strong property rights provide a distortion in the market that favors rich landowners, and in a society in which the initiation of violence is never considered legitimate, you will tend to see less concentration of land ownership since the owners actually have to bear the costs of that ownership themselves instead of externalizing them through the distortion of initiation of violence.

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