On the Edge of Utopianism
The following article, critical of left libertarianism in the BHL Symposium, was written by Steve Horwitz and published with Bleeding Heart LibertariansNovember 12th, 2012.

As Matt said in his post announcing this symposium, many of us who blog here are very sympathetic to the left-libertarian project, even as we have various criticisms. I count myself as one of those highly sympathetic critics. I have been known to refer to myself as a “libertarian of the left.” I recently gave a talk arguing that classical liberalism should reclaim its progressive identity and start to think of itself as “of the left.” And I especially share the left-libertarian criticism of corporatism and militarism, as well as its concern with issues of race, gender, and sexual orientation. I see my recent work on the family as being very much in tune with what the left-libertarians have to say. In what follows, I will expand on some points of agreement with left-libertarians, but also raise a fundamental criticism of some of their arguments (and I should note that I very much consider them to be comrades in arms in the larger libertarian project).

That criticism is that they often commit a rhetorical error that is something of the obverse of what they call “vulgar libertarianism.” Left-libertarians often seem to argue that even just a little bit of statism so distorts markets that the results produced by the mixed economy bear little relationship to what a freed economy would produce. Just as putting one drop of a liquid one owns into an unowned lake does not make the whole thing yours, neither does one drop of statism suddenly mean that the results of a mixed economy are vastly different from the results produced by a freed market. Overstating the transformation that freed markets would bring can lead left-libertarianism to both a dangerous utopianism about freed markets and a reluctance to challenge bad criticisms of really existing markets for fear of engaging in vulgar libertarianism. Neither vulgar libertarianism nor the more utopian moments of left-libertarianism are sufficiently nuanced to do the job. To use a phrase I used in an earlier discussion of left-libertarianism, we must carefully untangle the corporatist knot.

Let me start with some areas of agreement with the left-libertarians. One major point of agreement is that I would like to ditch the word “capitalism,” though I find myself somewhat unable to do so in my own work. Aside from the fact that the word does seem to mean very different things to different people, the word itself suggests that what capitalism-understood-as-free-markets is really about is the centrality of “capital.” If an “ism” is a belief system, then “capitalism” would seem to mean “a belief in the power of capital.” This suggests, especially when contrasted with its claimed opposite “socialism,” that a capitalist system works toward the benefit of capital (and socialism, by contrast, works toward the benefit of “society” as a whole). Using capitalism and socialism to describe what I think is better understood as a contrast between “free markets” and “social planning” as economic coordination processes inevitably biases the case: who could be against benefiting society as a whole rather than just the owners of capital?

Left-libertarians rightly argue, and the historical evidence amply supports, two related claims: 1) capitalists are not the primary beneficiaries of freed markets, society as a whole is and 2) capitalists are all in favor of using the state to advance their own interests in the face of free market results they do not like. Those who genuinely believe in freed markets could avoid a great deal of confusion by not using “capitalism,” a word that, in Alice in Wonderland fashion, seems to mean whatever the speaker wants to mean, and usually something bad. (In this way, it is much like “fascist.”) Instead, I think we are better off talking in terms of the degree to which economic decisions are to be coordinated using the institutions of the market or the institutions of politics. My own view is that this distinction is best captured by the contrast between “markets” and “planning” rather than “capitalism” and “socialism,” but I could be persuaded by other terminology. The key, however, is focusing on the processes and institutions by which decisions are coordinated, rather than terminology that builds in implicit claims about who does or does not benefit from such processes.

Similarly, I would like to see libertarians ditch the term “privatization” for two reasons. First, government “privatization” often means handing over to the private sector things no one should be doing, whether public or private. One need only think of what Halliburton and its successors have done. Second, in the cases where government is doing something that could be done in the market, I would argue that the real goal should be not “privatization” but “de-monopolization.” One of the great strengths of the left-libertarians is their consistent opposition to monopoly, which grows out of their 19th century influences.  Libertarians should first and foremost be anti-monopoly, and turning a public monopoly into a private one is therefore not a gain, and might well be worse! We need to be consistent and vocal opponents of all forms of monopoly privilege and barriers to entry. And I will note that this must include labor. I am sympathetic to the left-libertarians when they remind other libertarians that labor unions can and should have an important role in freed markets, but I, in turn, must remind them that unions must be on equal footing with other voluntary organizations, and that means making sure we reject any form of privilege for capital or labor.

The problem I often see in left-libertarian writing is the sense that the world of freed markets would look dramatically different from what we have. For example, would large corporations like Walmart exist in a freed market? Left-libertarians are quick to argue no, pointing to the various ways in which the state explicitly and implicitly subsidizes them (e.g., eminent domain, tax breaks, an interstate highway system, and others). They are correct in pointing to those subsidies, and I certainly agree with them that the state should not be favoring particular firms or types of firms. However, to use that as evidence that the overall size of firms in a freed market would be smaller seems to be quite a leap. There are still substantial economies of scale in play here and even if firms had to bear the full costs of, say, finding a new location or transporting goods, I am skeptical that it would significantly dent those advantages. It often feels that desire to make common cause with leftist criticisms of large corporations, leads left-libertarians to say “oh yes, freed markets are the path to eliminating those guys.” Again, I am not so sure. The gains from operating at that scale, especially with consumer basics, are quite real, as are the benefits to consumers.

Even as I agree with them that we should end the subsidies, I wish left-libertarians would more often acknowledge that firms like Walmart and others have improved the lives of poor Americans in significant ways and lifted hundreds of thousands out of poverty in some of the poorest parts of the world.  Those accomplishments seem very much in tune with the left-libertarian project. To argue with such confidence that firms in a freed market would be unable to take advantage of these economies of scale might be cold comfort to the very folks who left-libertarians are rightly concerned about.

Another example of this problem is in left-libertarian discussions of labor markets. The prediction that a truly freed market, especially one in which corporate privilege was absent, would lead to more labor-managed firms and a less hierarchical workplace suggests that the dominant reason these forms don’t exist is because of the state. Granted, state intervention can alter the incentive structure within firms, but there are also very good reasons why workers might strongly prefer employment arrangements in which they don’t have to take on additional responsibilities or spend time engaging in collective decision making processes. To argue that freed markets would significantly transform the workplace seems to put a desire to appeal to leftists ahead of the economics of the situation.

Eliminating every last grain of statism does not magically transform everything we might not like about really existing markets into a form that will match the goals of the traditional left. One grain of statism doesn’t mean that the really existing world won’t essentially look like it does when markets are freed. My own conviction is that the underlying market processes carry more weight than the distorting effects of the state along more margins than the left-libertarians believe. I might well be wrong, but I worry that the promise of more transformation than a left-libertarian world can deliver repeats the very same utopianism that has plagued the left historically.

Finally, half a cheer for a form of vulgar libertarianism. Often times libertarians find ourselves “playing defense.” When critics of markets argue that firms like Walmart are bad, they are usually not arguing for an end to state privilege, but objecting to the market itself, including a freed market.  Whatever the imperfections of the status quo, we still do live in an economy in which the invisible hand operates, if with something of a palsy. One reason I leap to the defense of the Walmarts of the world is because they have done a great deal of good for the least well-off among us precisely due to the underlying market forces that critics would like to remove. In “playing defense” this way, I might look like a vulgar libertarian, but the larger strategic goal is to defend not the existing imperfect market processes but rather the freed market processes against those who would eliminate both.

Another example of “playing defense” in this way is the literature arguing that the conventional view that the rich are getting richer and the poor poorer is wrong to one degree or another.  Faced with the claim that “capitalism” has generated massive inequalities, libertarians can adopt two kinds of strategies. One is to argue like the left-libertarians that state intervention is responsible for the inequalities and then argue that a freed market would, perhaps, produce less inequality. Another is to show that the data being trotted out are misleading about the real degree of inequality or income mobility and to argue that even with a palsied invisible hand, the underlying market forces are not producing massive inequality, the further impoverishment of the poor, or restricting mobility. One could make a similar argument about the very real increase in consumption possibilities available to poor Americans. Although I think the first strategy has some truth to it, I also think this second is both rhetorically effective and correct.

This isn’t vulgar libertarianism. If much of the claimed growth in inequality is the statistical artifact of the way in which people move through the life-cycle of income earnings and/or changes in the demographic characteristics of households, rather than a genuine increase in inequality or loss of mobility, there seems no necessary reason to reject that as being “vulgar libertarianism” and portray it as a defense of the statist status quo. To the degree that proposals to move us away from freed markets are based on a misreading of these data, defending the market forces at work in a mixed economy is not vulgar libertarianism, but an attempt to save us from even further statism and corporatism.

I happen to think the successes of firms such as Wal-Mart really do reflect market realities that would exist even in a freed market, even as I recognize the large role played by state intervention in such processes.  I also worry that the left-libertarian charge of “vulgar libertarianism” might cause libertarians to stop engaging in the “playing defense” project I describe above. Instead, we should more carefully examine what parts of the status quo are driven by the underlying market forces and which by the state. Charges of vulgar libertarianism against legitimate arguments for the robustness of markets will do more harm than good.

Per the request of BHL, the comments will be turned off here so that they can be redirected to the original article.

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