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The favorite target of free market libertarians is socialism. Socialism, or so the argument goes, cannot work, because a central agency, governing production, doesn’t know who needs how much of what in the absence of price signals. Accurate price signals, in turn, require a free market. This core argument from knowledge, which I find quite persuasive, has a number or corollaries and conditions. First, preferences are subjective and each individual knows better than anyone else what he or she wants. Second, free exchange makes both parties better off, or else there would be no exchange. Third, trade creates value just as much as production does. Fourth, given the focus on the individual, “summing people up” is always deeply suspicious. Fifth, while the reality of scarcity and tradeoffs permeates every aspect of life and we find ourselves woven into impersonal networks of exchange whether we like it or not, a free market economy requires no ideological commitment to the free market. Thus, moral disdain for “the merely economic” is no threat to a free market system. That is not the case in a planned economy, where participation in the joint effort, as defined by the planners, is mandatory. For example, the German poet Wolf Biermann incurred the wrath of the East German government for writing love songs in which the lovers had eyes only for each other. The lovers carved out a sphere of privacy, separated from “the merely economic” of their environment, which was quickly identified as a counterrevolutionary threat. The list goes on, but the argument from knowledge and the first four corollaries are staples of virtually every free market critique of socialism in the spirit of von Hayek and Milton Friedman.

But isn’t the society envisioned by the free market libertarians equally utopian?

Brian Berkey explores that question in his elegant essay Capitalism, Utopianism, and Democracy over at Philosophy from the Left Coast. Here’s the first step of his argument.

Milton Friedman argued that corporations should not attempt to address societal problems because doing so is the job of government. Businesses, he argued, are not qualified to deal with these kinds of problems, and should stick to what they do best, which is making money. And since only a government that is genuinely autonomous can effectively deal with major social problems, it is important that businesses, which are not qualified to handle such problems, stay out of the affairs of government. The implication seems to be that the ideal society, indeed the only sort of society that can hope to adequately deal with pressing social problems, is one in which free market principles prevail and businesses refrain from involving themselves in the affairs of government. But is this sort of society really possible? A society that is driven by free market principles will be one that encourages individuals to do whatever they can to maximize their economic self-interests. And in a capitalist society there will always be some that possess a great deal more wealth than others. And with wealth comes power and influence, or at least the potential to gain power and influence. If we assume that our ideal society will have an ethos that strongly encourages the pursuit of rational (i.e. economic) self-interest, why in the world would we think that the wealthy, including those in charge of large corporations, would refrain from involving themselves in the political process, when doing so would surely be an easy way of ensuring greater profits for their companies (politicians would surely be just as strongly influenced by the ethos as their corporate friends, and therefore susceptible to being bought off). It seems fairly easy to see that the vision of free marketeers who want business out of the affairs of government is thoroughly utopian. If government’s responsibility is to address pressing social problems, rather than to pander to the interests of the corporate class, then it seems that capitalism is fundamentally incompatible with responsible government.

This is a powerful dialectic. The initial freedom that comes with capitalism creates inequalities of wealth. The rich capture the political process and use it to preserve the status quo. As a result, the initial freedom expires and we find ourselves in a world of the rich, by the rich, and for the rich.

Brian’s argument creates particular problems for left-wing libertarians such as myself. I envision a just society as one in which negative individual freedom is the starting point. Patterns of distribution are constantly being reshuffled and disrupted by free markets and technological progress. There is no moral objection to wealth and thus no punitive taxation of it, but - and here’s where the “left-wing” part comes in - there is a moral objection to poverty. Without a certain economic minimum, without a place to live, without access to high-quality education and non-discriminatory credit, for example, participation in a free society is illusory. We thus rely on the government to provide a comprehensive public infrastructure including access to welfare, education, and communication, and the redistributive mechanisms that are underwriting that system. The libertarian in me would want the welfare part of the public infrastructure to be mostly monetary, that is, everyone gets enough cash to participate. And since the freedom that comes with that kind of welfare still permits failure, we should also have a final - now mostly involuntary and paternalistic - safety net that, by providing a bare minimum, shelters those who fail in the free market and are unable to use their welfare entitlements responsibly. Obviously, this left-libertarian ideal relies heavily on a functioning government. It might not work in the event of government capture as described by Brian.

My only response to Brian’s argument is to question the inevitability of government capture to the point that public infrastructure as outlined above becomes unattainable or unsustainable. Government capture is one of the most serious threats to an open society, but there are ways to put checks and balances in place. For example: campaign finance reform, a true majority vote for the office of the President, redrawing of congressional districts to introduce greater political choice, the insistence on keeping the branches of government separated, e.g., by introducing elements of randomness in the selection of public officials and judges, true separation of state and church, media diversity, net neutrality, and universal communication service obligations. None of these measures can in isolation stem the corporate influence on government, but the hope is that in conjunction, they will prevent special interests, including powerful corporate interests, from completely dominating the political process.

Brian makes another point of great interest.

What is perhaps most striking about the articles written by the free marketeers is that, despite containing a great deal of commentary on the role of government, there is no mention of democracy. They clearly emphasize that it is an essential role of government to protect free competition in the marketplace; nowhere do they also claim that it is the role of government to carry out the will of the people. … Their committment to capitalism is prior to their commitment to democracy (this, of course, is not unusual on the American right).

This is clearly an accurate observation. Even though most free market libertarians are committed to the democratic process, that commitment is usually instrumental in nature. Most libertarians value individual freedom higher than democracy. But is that really a shortcoming? The libertarian concern with democracy is rooted in an individualist political philosophy. Any subordination of the individual will under the collective will, as envisioned, for example, by Rousseau, cannot be conceptualized as a realization of freedom from a libertarian standpoint. Freedom, for libertarians, is primarily a negative concept, defined roughly as the absence of arbitrary interference with the realization of an individual’s subjective preferences. As indicated above, libertarians and free marketers are suspicious of any form of “summing people up,” to use David Friedman’s phrase. Of course, a totalitarian way of summing people up under the banner of an official ideology is worse than the democratic summing up of individual votes, but the fear of majoritarian rule, however achieved, persists. That, I submit, is a perfectly reasonable concern, and treating democracy as a means to the end of individual freedom should not discredit a political philosophy on moral grounds.

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