What Matt Zwolinski Gets Wrong About Left-Libertarianism

Over at The Bleeding Heart Libertarian,¹ Matt Zwolinski has a recent post about what we left libertarians get right and get wrong. According to Matt, we left libertarians are correct in going after traditional right libertarians for being vulgar libertarians. Further, he argues that we left libertarians are correct for broadly pursuing socialist normative ends—namely, a more egalitarian and prosperous society for the poorest—via market means.

However, Zwolinski claims that we left libertarians make implausible predictions about how radically different a freed market economy would be. These implausible predictions include that stateless ness would result in more self-employment, more worker-managed firms, or the abolition of landlordism. Zwolinski further claims that left libertarians are just ‘plain old Rothbardians,’ committed to an absurd view of deontic self-ownership with unclear conclusions for compensatory justice and/or absurdities like the prohibition of all pollution.

In this response, I will argue that Zwolinski overstates the empirical and theoretical case against a freed market being radically different than capitalism, particularly focusing on the case of self-employment and workplace democracy. Further, I will argue that Zwolinski overlooks the broad diversity of moral philosophies amongst left libertarians.

The Empirical Case for Self-Employment

First, Zwolinski seems to run together two very different empirical predictions most of us left-libertarians make. We predict both that there will be more individual self-employment and that there will be more worker-managed firms under a stateless market with polycentric law. However, these are distinct predictions that require related but distinct forms of comparative institutional analysis. Self-employment refers to the idea of individuals owning and managing their own business, while worker-managed firms or workplace democracy refers to a form of collective management over firms.

Before we delve into the empirical case, it is worth pointing out that the left libertarian belief in and advocacy of such institutional rearrangements is far thicker than merely an empirical prediction. It is also that, but perhaps more fundamentally, they are normative commitments. In truth, there are many institutional forms that a stateless free market society could conceivably take place depending on the preferences, beliefs of the individuals within that market society, and technological status of such a society: from objectionably hierarchical technofeudalist dystopias, to highly localist economies with socialist tendencies, to the sort of cosmopolitan, broadly liberal and libertarian society. This is not to say any form of market order is equally likely to obtain in the absence of the state, given social scientific facts and human psychological propensities as well as the path dependent nature of sociopolitical evolution. However, the nomological possibilities of what a stateless market order could look like are quite varied and broad. What we insist is not simply that a freed market would magically lead to an egalitarian utopia, but that we are the market, and by the very act of morally advocating for and attempting to actively build less hierarchical economic and social arrangements, we are helping to bring such arrangements about. Unlike critics like Zwolinski, we do not take the existing preferences of the mean or modal market actor under capitalism as a mere given, but view it as something which itself can be shaped and reformed in the marketplace of ideas.

Having said that, we do make empirical predictions that some more traditionally capitalistic modes of production are particularly unlikely to sustain their dominance in the absence of a state interventions that seem very counter-intuitive to the uninitiated and warrant sustained defense. So for the rest of this section, I will proceed focusing on empirical matters as a possibility proof of the left libertarian vision of what a stateless society could look like. Let’s start with the prediction about self-employment. Zwolinski thinks self-employment is relatively rare in capitalism for the following reasons:

The reason most people don’t work in employee-managed firms isn’t that the state makes it hard for them to do so. It’s that they don’t want it, period. A lot of people are happy to have someone else be the boss, and to leave the headaches of management and risk-bearing to somebody else. That’s not cronyism; it’s just the division of labor.

To understand why self-employment is so rare under status quo statist capitalism requires more than just asserting there is a division of labor between managers with a comparative advantage in directing the firm and assuming risk. We must ask: why exactly is management under capitalism such a headache that it requires such a strong comparative advantage in the first place?

To a significant extent, this is because a large part of management under capitalism is just catering to demands the state makes for firms to make their economic transactions, their workers, and their production methods legible² to the state for the sake of taxation and regulatory compliance. Indeed, a huge part of any management team of capitalist firms is accounting and compliance specialists who ensure the firm can report to a litany of regulatory bodies and the tax-collecting authority. In a stateless society, many of these functions would likely be heavily streamlined. Some of these roles would still need to exist for firms to comply with a tort law system of polycentric courts and private third-party regulators who contract with firms for signaling certifications.^[3] However, the competitive pressures of market competition would likely streamline compliance and make managerial overhead overall a lot less of a problem.

Let us not overstate our case, however. There are other institutionally independent parts of management—such as human resources, risk management, long-term business planning, and so on—which are just necessarily part of the job of a manager of a firm. Zwolinski thinks very few people want to develop a comparative advantage in such things and would prefer to just clock in and clock out in a hierarchical firm. There might be some truth to this, but there is plenty of empirical evidence that he is overstating his case. For example, a Gallup poll last year found that 60% of Americans wanted to be their own boss. 60% of those who wanted to start a business cited lack of startup funds as the biggest hurdle, and only 50% said concerns about financial risk were the hurdle to them starting their own business.⁴ 

Zwolinski might say talk is cheap and revealed preference shows their preferences otherwise when confronting such poll evidence, but even revealed preference shows people moving in the direction of self-employment. Consider the growth and prevalence of the gig economy through services like Uber or Lyft for taxi drivers, DoorDash or Grubhub for delivery drivers, Rula or Better Help for counselors, or LPL or AssetMark for independent investment advisors and financial planners, or Varsity Tutors or Tutor.com for tutors. In every case, these are individuals contracting with a firm that provides a platform that takes care of much of the headache of legal compliance, tax accounting, and marketing as well as offloading some investment risk. This allows individuals to set their own hours and build their own businesses on their terms, effectively rendering it a form of self-employment even if nominally they have some sort of Statutory W2 or 1099 with their platform’s company listed as an employer. Now none of these solutions are perfect⁵ and the state’s distortions like intellectual property and vagaries in tax law do allow for these platforms to exploit their contractors in various ways, but the fact that the gig economy is flourishing is definitely evidence that many would want more autonomy over their work lives.

Further, one whole reason why people need so much money to start their own business isn’t always high fixed costs which requires a large amount of investment capital and risk. Such natural economies of scale do exist in many industries, but to a very significant extent, there are artificial economies of scale which only exist due to statist legal institutions. These artificial economies of scale include all the ways the state requires every economic actor to become legible for the purposes of tax collection and regulatory compliance, as well as state subsidies to incumbent firms which makes it even harder for smaller market-entrants like self-employed entrepreneurs to challenge. Absent such artificial barriers to entry and economies of scale, I would bet more than 60% would want to pursue self-employment.

For an illustrative example of how the state creates institutions that prevents self-employment, take the case of agriculture. There is no reason to think agriculture needs to be dominated by huge multibillion dollar companies as it is. Agriculture is a relatively capital-intensive industry with high fixed costs, requiring millions of dollars of investment in tractors, combines, silos, barns, fertilizer, and land. However, small-scale self-employed farmers once were the norm and still elsewhere in the world.⁶ Yet high levels of subsidies which have gone to politically connected farmers⁷ for generations have created a strong tendency towards centralization.

These artificial economies of scale have been worsened by regulatory barriers from environmental regulations by the EPA, agricultural regulations from the Department of Agriculture, labor regulations from OSHA, and further food regulations from the FDA, all of which create opportunities for regulatory capture by established farmers. The result: even though agriculture has the highest rate of self-employment,⁸ it has been steadily declining for decades⁹ as only previously established market incumbents or the wealthiest are able to overcome both the natural and artificial barriers to entry, resulting in increasing levels of market concentration. There is very strong reason to think that absent those distortions by government the agricultural business would more competitive, with self-employed farmers far more common, as was historically the norm. Similar stories have been told in many other industries.

The Empirical Case for Workplace Democracy

Now let us move to the empirical case for workers’ self-management and workplace democracy. What left libertarian defenders of workplace democracy critique is not the notion of division of labor between managers and workers full stop, but the intensely hierarchical form of capitalist management of the joint-stock company in which workers collectively have little to no say in major business decisions nor profit-sharing. Instead such decisions are made by CEOs, corporate boards, and activist investors and any and all excess profit goes to them.

A more democratic workplace need not and should not abolish the existence of functionary managers who make some business decisions any more than a more democratic society requires the abolition of democratic representatives and implementation of direct democracy. Instead, all it requires is that the workers have more ownership decisions over the firm through voting for management representatives instead of outside investors, as well as more share in the profits rather than mere wage labor contracts.

This is a model that has and continues to exist even under state capitalism. It existed for decades (1864-1929) in the barrel-making Cooperage Cooperatives of Minneapolis.¹⁰ It existed in the industrial mold making plant under a firm called Marland Mold in Pittsfield Massachusetts from 1992-2017.¹¹ It continues to exist in both Spain’s Mondragón cooperative¹² and Germany’s admittedly legally mandated co-determination model of workplace management.¹³

Zwolinski might acknowledge such things as an empirical reality and that their growth in a more free market is possible, but claim that they are not more common in status quo markets because such firms are simply not competitive. However, this just misunderstands the history of both the joint stock company and worker managed firms.

First, the entire existence of the modern joint-stock company is not a result of pure market competition but colonial conquest. Indeed, the first large-scale modern joint stock companies in the west were firms like the Dutch East India Company, Muscovy Company, and Company of Merchant Adventurers to New Lands, all of which were granted legal monopolies, chartered by Kings and their closely-associated courts, and were heavily state-subsidized.

I would contend the joint-stock company continues to dominate as a consequence of both that distorted institutional inertia, and growing legal edicts which absolves investors from legal liability and makes economic activity more legible to the state for tax and regulatory compliance. While I do not think that the traditional hierarchical joint-stock style companies would entirely disappear in the absence of the state, the fact that they have needed so much state support to start up and continue to dominate is evidence that their prevalence might be diminished in the institutional context of a greatly diminished state and a freer market.

Second, workplace democracies under existing state capitalism have been competitive for extended periods under capitalism even with the institutional deck stacked against them. The Minneapolis Cooperage Cooperatives, while they became slightly less pure workplace management over time, survived until the Great Depression despite intense competitive pressures and largely closed their doors due to the economic downturn rather than anything inherent to their management model. The aforementioned Marland Mold in Pittsfield Massachusetts closed its doors in 2017 after it merged with a French company after 15 years of relative success.¹⁴ Mondragon and German codetermination companies continue to be successful on an international market dominated by traditionally hierarchical joint-stock capitalist firms.

The Theoretical Case for Both Self-Employment and Workplace Democracy

Further, in the realm of classical liberal economic theory, there is quite a bit of reason to think self-employment and workplace democracy would be more successful in a more free market institutional context. It has long been observed that the Capitalist firm is like a little island of socialist command-style dictatorship.¹⁵ This should be perplexing to a market liberal for Hayekian reasons.

If it is important for individuals to act on their localized tacit knowledge rather than be coerced by a central planner who is far removed from their tacit and localized knowledge, why shouldn’t workplaces give the people actually involved in the day to day production of goods—ie., employees—more power over the firm’s decisions given that they have most of the localized, tacit knowledge about the day-to-day operations of the firm? Indeed, just as there is a knowledge problem for socialist central planners, there is a knowledge problem for corporate central planners, leading to significant inefficiencies.¹⁶

The traditional Coasean story for why this is in mainstream economic theory is some level of central planning at the level of the firm helps reduce transaction costs.¹⁷ Though there is some truth to this, it is heavily overstated. Consider how often firms make extremely short-sighted and unethical decisions in status quo capitalism, much to the protestations of employees. Take, for example, the recent Boeing 737 Max debacle in which engineers were blowing the whistle on how rushed the project was, but management pushed it through anyway resulting in disastrous and costly accidents.¹⁸ Such problems are pervasive in hierarchical firms.

While hierarchical firms do result in fewer transaction costs, this comes at the expense of stifling the localized and tacit knowledge that workers have in guiding the firm. How this tradeoff should be resolved—between minimizing transaction costs and incorporating the worker’s local knowledge—is something that the market should determine. But under status-quo capitalism the thumb has been put on the scale against workplace democracy and created artificial pressure towards firm hierarchy. This undermines Zwolinski’s assumption that hierarchy in firms merely reflects natural specialization rather than distorted institutional incentives.

We left libertarians could be wrong about that prediction. Further, I fully expect there will be some industries with such high natural barriers to entry due to natural economies of scale and networking effects such as transportation infrastructure, electric utilities, or telecommunications that the firms would have to be so large that something closer to a capitalist firm would probably dominate to reduce transaction costs. However, such industries are likely a small minority. Regardless, just handwaving about comparative advantages in management and transaction costs, as many right libertarian and capitalist economists do, is by itself insufficient to discuss this complicated empirical question. Similar things could be said about why we left libertarians think wealth inequality and landlordism are largely a symptom of the crony capitalist state rather than the market process itself.

The Diversity of Moral Views Within Left Libertarianism

So much for the empirical point, now let us address the moral foundations of left libertarianism. According to Zwolinski, “In terms of its underlying philosophical principles, left-libertarianism is basically just plain old Rothbardianism.” While some left libertarians, like Jason Lee Byas,¹⁹ Cory Massimino,²⁰ and Roderick Long are far more sympathetic to Rothbard than either Matt or I are, this is simply a straw man of their views.

Even the most Rothbardian among us at C4SS do not merely believe in deontic self-ownership as the basis of all morality like Rothbard did. Long is a eudemonistic Aristotelian virtue ethicist who, unlike Rothbard, believes that the unity of virtue means our conception of property rights need to be held in something of a reflective equilibrium with our commitment to equality.²¹ Byas also is a eudemonistic virtue ethicist and defends a form of relational egalitarianism that would have made Rothbard in his later years squirm²² and has forthcoming work in which he critiques the notion of self-ownership for implying an alienability of natural rights.²³

Further, most left libertarians are not even Rothbardians in a broad sense. Some of us, like the late Fred Foldvary, are more Georgist.²⁴ Gary Chartier, one of only two left libertarians Matt mentions by name, bases his moral philosophy on New Natural Law theory rather than Rothbardian deontology.²⁵ Many of us, like Kevin Carson²⁶ and Shawn Wilbur,²⁷ are far closer to Proudhonian mutualism than Rothbard. William Gillis is straight-up a consequentialist who is extremely opposed to any Rothbardian theory of negative natural rights.²⁸ I myself defend a form of Rossian pluralist deontology rather than strict Rothbardian or Nozickean self-ownership. I think we must attain a reflective equilibrium to resolve tensions between deontic rights considerations that come from prima facie duties of autonomy and non-malfeasance and more consequentialist considerations that come from prima facie duties of benevolence, and that balancing act avoids a lot of the absurdities Zwolinski sees in Rothbard. This is to say nothing of some social anarchist who are far more sympathetic to Marxist critiques of markets based in alienation and see more room for syndicalist cooperatives are who are even more radically opposed to Rothbard than most of us left market anarchists.

There are simply more left libertarianisms on heaven and earth than are dreamt of in Zwolinski’s philosophy. Just as most if not all libertarian and classical liberals in academic philosophy are not simply unreformed Nozickians, few if any left libertarian anarchists are unreformed Rothbardians. This pluralism renders the notion of a unified ‘Rothbardianism’ among left-libertarians not just simplistic, but empirically inaccurate.

Conclusion: The Relationship Between Bleeding Heart Libertarians and Left Libertarians

Much of what Zwolinski says about how he is a fellow traveler of us left libertarians who has strong sympathies with us could be stated mutually. Zwolinksi’s work, as well as the work of other bleeding heart libertarians like Thomasi, Brennan, and the late Steve Horwitz have been very influential over me over the years. I do not write this criticism of him in the spirit of derision. I, too, would take a more moderate bleeding heart libertarianism/neoclassical liberalism over a reactionary Hoppean or late Rothbardian paleo libertarianism any day.

However, I think if bleeding heart libertarians were to more carefully engage with us left libertarian anarchists, they would see that the philosophical differences between us are far less stark than it would seem. Further, our empirical predictions, as radical as they might sound, have far more theoretical and empirical support than you might expect.

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