Saturday, January 01, 2005

Practical Libertarianism for Americans: Part IV

This is a work in progress. I welcome constructive criticisms and suggestions. Please send an e-mail to: libertycorner-at-sbcglobal-dot-net .



In Part II, I defined libertarianism and the liberty right in this way:
The core of libertarianism is liberty: briefly, the negative right to be left alone -- in one's person, pursuits, and property -- as long as one leaves others alone. I am using "liberty" here to encompass what the Founders intended by "life, liberty, and the pursuit of happiness" in the Declaration of Independence.
In sum, the liberty right is a triune concept, with life as its basis and the pursuit of happiness (personal satisfaction or self-interest) as its end.

I argued in Part III that the liberty right is neither innate in humans nor a right that flows exclusively from the evolution of human behavior:
I would like to be able to say, with fundamentalist libertarians, that liberty is an innate human right -- and the only innate right. But that would be nothing more than an assertion, however cleverly I might clothe it in the language of philosophy.

I would like to be able to say that liberty is a paramount human instinct, honed through eons of human existence and experience. But we are surrounded by too much evidence to the contrary, both in recorded and natural history. The social and intellectual evolution of humankind has led us to a mixed bag of rights….The notion that we ought to enjoy the negative right of liberty is there among our instincts, of course, but it is at war with the positive right of privilege -- the notion that we are "owed something"….Liberty is also at war with our instincts for control, aggression, and instant gratification.
As I said also in Part III:
The virtue of libertarianism…is not that it must be taken on faith but that, in practice, it yields superior consequences. Superior consequences for whom, you may ask. And I will answer: for all but those who don't wish to play by the rules of libertarianism; that is, for all but predators and parasites.
By predators, I mean those who take liberty from others, either directly or through the coercive power of the state. By parasites, I mean those who seek to advance their self-interest through the coercive power of the state rather than through their own efforts. I also classify as parasites those who seek political power for its own sake or on the basis of their service to parasites. (The term "parasites" doesn't include those persons who are truly incapable of taking care of themselves. Such persons, in fact, stand to benefit from liberty, as I will discuss in Part V.)

In other words, a people who band together in liberty -- and who successfully defend their liberty against encroachments from within and without -- not only will be able to pursue happiness, but also will reap greater happiness (call it personal satisfaction or well-being, if you will). For, the pursuit of happiness isn't a zero-sum game; you can advance your happiness by helping me advance mine, and vice versa. But we can do so only if we are at liberty to do so -- untrammeled by predators, parasites, and constraints -- other than those constraints of law and custom that help to secure our liberty. A firm, communal commitment to liberty is therefore a matter of self-interest to all but predators and parasites.

The Evolution of Libertarian Thought: The Unification of Economic and Personal Liberty

Libertarianism, like physics, has evolved from rudimentary beginnings. Physics has evolved because physicists have expanded their store of facts about the physical world and found truer ways of describing the forces that make the universe what it is -- in the large and in the small. Libertarianism has evolved beyond the assertion that humans have "certain unalienable rights" because such thinkers as Adam Smith (1723-90), John Stuart Mill (1806-73), and Friedrich A. Hayek (1899-1992) observed the workings of society -- in all of its aspects -- and told us how liberty serves self-interest.

Smith, writing in The Wealth of Nations (1776), took libertarianism a step beyond its mystical origins in the writings of Locke and that proto-Communist, Rousseau: Here is Smith:
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.
Smith wasn't a libertarian by today's standards, but his understanding of the economic benefits of free markets put us on the road to empirical (consequentialist) libertarianism.

Then came Mill, who recognized the value of liberty in non-market behavior. Wikipedia tells us that Mill's vastly influential essay, On Liberty (1859), is
about the nature and limits of the power which can be legitimately exercised by society over the individual. One argument that Mill formed was the harm principle, that is, people should be free to engage in what ever behaviors they wish as long as it [sic] does not harm others.
That's the sum of Mill's argument. Now, the meat of it. First, with regard to freedom of speech, Mill says, in Chapter II of On Liberty:
First, if any opinion is compelled to silence, that opinion may, for aught we can certainly know, be true. To deny this is to assume our own infallibility. Secondly, though the silenced opinion be an error, it may, and very commonly does, contain a portion of truth; and since the general or prevailing opinion on any subject is rarely or never the whole truth, it is only by the collision of adverse opinions that the remainder of the truth has any chance of being supplied. Thirdly, even if the received opinion be not only true, but the whole truth; unless it is suffered to be, and actually is, vigorously and earnestly contested, it will, by most of those who receive it, be held in the manner of a prejudice, with little comprehension or feeling of its rational grounds. And not only this, but, fourthly, the meaning of the doctrine itself will be in danger of being lost, or enfeebled, and deprived of its vital effect on the character and conduct: the dogma becoming a mere formal profession, inefficacious for good, but cumbering the ground, and preventing the growth of any real and heartfelt conviction, from reason or personal experience.
In other words, freedom of speech advances the truth, and we are better off for knowing the truth, however much we might resent hearing it in some instances. Similarly, in Chapter III Mill argues that we are better off if we respect individuality rather than impose uniformity of behavior:
As it is useful that while mankind are imperfect there should be different opinions, so is it that there should be different experiments of living; that free scope should be given to varieties of character, short of injury to others; and that the worth of different modes of life should be proved practically, when any one thinks fit to try them. It is desirable, in short, that in things which do not primarily concern others, individuality should assert itself. Where, not the person's own character, but the traditions of customs of other people are the rule of conduct, there is wanting one of the principal ingredients of human happiness, and quite the chief ingredient of individual and social progress.
Having established the importance of freedom of speech and action, how does Mill balance these freedoms in a societal context? In Chapter IV, Mill says this:
Though society is not founded on a contract [though the government of the United States is founded on a contract: ED], and though no good purpose is answered by inventing a contract in order to deduce social obligations from it [touché, Rousseau: ED],...the fact of living in society renders it indispensable that each should be bound to observe a certain line of conduct towards the rest. This conduct consists first, in not injuring the interests of one another; or rather certain interests, which, either by express legal provision or by tacit understanding, ought to be considered as rights; and secondly, in each person's bearing his share (to be fixed on some equitable principle) of the labours and sacrifices incurred for defending the society or its members from injury and molestation. These conditions society is justified in enforcing at all costs to those who endeavour to withhold fulfillment. Nor is this all that society may do. The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights. The offender may then be justly punished by opinion, though not by law....In all such cases there should be perfect freedom, legal and social, to do the action and stand the consequences.
That is, the state acts legitimately when it punishes those who attack our liberty, and it may tax us for its protective services. But a person who merely says or does something that offends others may be punished only by the force of opinion and reason, to which he may or may not choose to bow.

But Mill comes up short in Chapter V:
Again, trade is a social act. Whoever undertakes to sell any description of goods to the public, does what affects the interest of other persons, and of society in general; and thus his conduct, in principle, comes within the jurisdiction of society: accordingly, it was once held to be the duty of governments, in all cases which were considered of importance, to fix prices, and regulate the processes of manufacture. But is now recognised, though not till after a long struggle, that both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free, under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the so-called doctrine of Free Trade, which rests on grounds different from, though equally solid with, the principle of individual liberty asserted in this Essay. Restrictions on trade, or on production for purposes of trade, are indeed restraints; and all restraint, quâ restraint, is an evil: but the restraints in question affect only that part of conduct which society is competent to restrain, and are wrong solely because they do not really produce the results which it is desired to produce by them. As the principle of individual liberty is not involved in the doctrine of Free Trade, so neither is it in most of the questions which arise respecting the limits of that doctrine....
Thus, despite his acknowledgment that commerce is a social act, and despite having made a good defense of free trade, Mill posits an essential difference between personal and economic liberty.

It was left to Hayek to unify personal and economic liberty. Virginia Postrel, writing in The Boston Globe, explains:
Hayek's most important insight, which he referred to as his "one discovery" in the social sciences, was to define the central economic and social problem as one of organizing dispersed knowledge. Different people have different purposes. They know different things about the world. Much important information is local and transitory, known only to the "man on the spot." Some of that knowledge is objective and quantifiable, but much is tacit and unarticulated. Often we only discover what we truly want as we actually make trade-offs between competing goods."

The economic problem of society," Hayek wrote in his 1945 article ["The Use of Knowledge in Society"], "is thus not merely a problem of how to allocate `given' resources -- if `given' is taken to mean given to a single mind which deliberately solves the problem set by these `data.' It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in totality."

The key to a functioning economy -- or society -- is decentralized competition. In a market economy, prices act as a "system of telecommunications," coordinating information far beyond the scope of a single mind. They permit ever-evolving order to emerge from dispersed knowledge.

"What's the single most important thing to learn from an economics course today?" economist Lawrence Summers said in an interview for "The Commanding Heights," Daniel Yergin and Joseph Stanislaw's 1998 study of the resurgence of economic liberalism. "What I tried to leave my students with is the view that the invisible hand is more powerful than the hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy." Summers, who was then deputy treasury secretary and is now president of Harvard, recently reaffirmed those views in an e-mail.

Information technology has strengthened Hayek's legacy. At MIT's Sloan School, Erik Brynjolfsson uses Hayek to remind students that feeding data into centralized computers doesn't necessarily solve a company's information problems. In any complex operation, there is too much relevant information for a single person or small group to absorb and act on.

"As Hayek pointed out, the key thing is to have the decision rights and the information co-located," says Brynjolfsson. "There are at least two ways of achieving that. One is to move information to decision maker. The other is to move decision rights to where the information is."

This analysis, which applies as much to culture as to economics, informs Hayek's best-known work, The Road to Serfdom, which he wrote as a wartime warning to a popular audience. Published in 1944 and dedicated "to the socialists of all parties," the book argued that the logic of socialist central planning implied the erosion of personal freedoms. Britain's well-intended socialists were headed down the same path as the National Socialists whose rise Hayek had witnessed in Austria....

[H]e argued that to fully control the economy meant to control all aspects of life. Economic decisions are not separate from individual values or purposes. They reflect those purposes."We want money for many different things, and those things are not always, or even rarely, just to have money for its own sake," explains Jerry Z. Muller, a historian at Catholic University...."We want money for our spouses or our children or to do something in terms of the transformation of ourselves -- for everything from plastic surgery to reading intellectual history or building a church. These are all noneconomic goals that we express through the common means of money."

Hayek argued that only in a competitive market, in which prices signal the relative values placed on different goods, can people with very different values live together peacefully. And only in such a market can they figure out how best to meet their needs and wants -- or even what those needs and wants are.
Postrel's précis captures the thrust of Hayek's argument, but not its richness. (For much more by and about Hayek see the addendum to this post.) Moreover, Postrel focuses on Hayek's warnings about the dangers of totalitarianism and central planning, which seemed imminent in the socialist-leaning Britain of 1944 and 1945. But, as Hayek argued so well, economic and personal (or social) liberty are always indivisible; an encroachment on one is necessarily an encroachment on the other. The modern welfare-regulatory state is far from totalitarian, but it smacks of totalitarianism in many of its actions -- and it is certainly very far from libertarian.

Consequentialist Libertarianism, in Summary

Smith observed that when we are at liberty to advance our own economic interests we must necessarily advance the economic interests of others.

Mill instructed us that personal freedoms should be preserved because through them we become more knowledgeable and more capable. Therefore, the state should intervene in our lives only to protect us from actual harm, as opposed to mere offense.

Hayek made the case that economic and personal liberty are inseparable: We engage in economic activity to serve our personal values, and our personal values are reflected in our economic activity. When the state restricts economic liberty, it necessarily restricts personal liberty, and vice versa. The state, simply cannot make personal and economic decisions more effectively than individuals operating freely within an ever-evolving socio-economic network.

To return to a metaphor from Part I, think of yourself as a business. You are good at producing certain things -- as a family member, friend, co-worker, employee, or employer -- and you know how to go about producing those things. What you don't know, you can learn through education, experience, and the voluntary counsel of family, friends, co-workers, and employers. But you are unique -- no one but you knows your economic and social preferences. If you are left to your own devices you will make the best decisions about how to run the "business" of getting on with your life. When everyone is similarly empowered, a not-so-miraculous thing happens: As each person gets on with the "business" of his or her own of life, each person tends to make choices that others find congenial. As you reward others with what you produce for them, economically and socially, they reward you in return. If they reward you insufficiently, you can give your "business" to those who will reward you more handsomely. But when government meddles in your affairs -- except to protect you from actual harm -- it damages the network of voluntary associations upon which you depend in order to run your "business" most beneficially to yourself and others. The state can protect your ability to run the "business" of your life, but once you let it tell you how to run your life, you compromise your ability to make choices that are right for you.

Thus liberty serves self-interest. And it is self-interest that should motivate us to embrace liberty -- not a belief in a mystical essence that is somehow innate in humans.

The Prerequisites of Liberty

If only it were as easy to enjoy liberty as it is to explain how it serves self-interest. But the attainment of liberty -- or an approximation of it -- requires several things of a band, tribe, or nation:
  • an agreement among a controlling faction that liberty is the paramount right;
  • the willingness and ability of that faction to defend liberty against predators and parasites;
  • forbearance from meddling in the economic and social affairs of individuals, except to deter and punish actual harms; and
  • replacement of the controlling faction and/or curtailment of its power when it uses that power to subvert liberty.
It is easy to agree to the fundamentalist view that humans ought to enjoy liberty "just because." (After all, there are precious few persons who don't want liberty for themselves, "just because.") But it is equally easy to abandon the fundamentalist view because of its shallowness. A welfare-state demagogue, by contrast, has at his disposal many spurious arguments that appeal to self-interest.

It is best, therefore, if the commitment to liberty arises from an understanding of consequentialist libertarianism. But the consequentialist view is subtle and non-intuitive. It is the philosophical equivalent of special relativity: Just as one cannot move rapidly in space without slowing time, one cannot enjoin the government to intervene in private affairs without diminishing the welfare of all but predators and parasites.

The defense of liberty against predators is the easier defense to arrange, but only relatively so, as we know from the long-running debates about how to deal with foreign enemies and domestic criminals. It is rather more difficult to defend liberty from parasites: those who seek privilege, for themselves or on behalf of others. The difficulty of that defense arises in part from the subtlety of consequentialism, in part from meddlesome and collective human instincts that conflict with liberty, and in part from the inevitability that those who are entrusted with power will sooner or later abuse it.

Forbearance from meddling in the socio-economic order implies laissez-faire, except to prevent or remedy an actual harm (discussed below). As Hayek pointed out, liberty requires a degree of stability in society; otherwise, how can you decide, with any degree of confidence, what sort of life and livelihood to pursue? Of course, there can be such a thing as too much stability (as Hayek also argued), as well as too much instability. Thus it is equally damaging to liberty to use the law to bar interracial marriage, to foster affirmative action as it is practiced in the United States, to prohibit smoking on private property, or to regulate economic activity on the basis of environmental hysteria rather than sound science.

To paraphrase what I wrote here, you may want government to meddle in certain private matters because that meddling seems to advance liberty. But it should bother you that government can just as easily restrict liberty, all in the name of meeting a pressing social or economic need. Government has taken liberty down a slippery slope, and every instance of meddling -- always for a "good" cause -- creates a precedent for another step down the slope. It all reminds me of this exchange from Act I, Scene 6, of Robert Bolt's play about Sir Thomas More, A Man for All Seasons:
Roper: So now you'd give the Devil benefit of law.

More: Yes. What would you do? Cut a great road through the law to get after the Devil?

Roper: I'd cut down every law in England to do that.

More: Oh? And when the last law was down--and the Devil turned round on you--where would you hide? Yes, I'd give the Devil benefit of law, for my own safety's sake.
Not only are economic and social liberty indivisible, but also is liberty itself indivisible. To reap the full benefit of liberty we must be willing to accept "bad" outcomes as well as "good" ones. That is, we must adhere to the principle of liberty and ignore the occasionally unhappy outcome that flows from it. For, as I will discuss further in Parts V and VI, liberty can improve the lot of all but predators and parasites.

By what criteria, then, should we decide where to draw the line between governmental action and private action? I propose these principles:
1. Government may not act or condone action (e.g., civil litigation) except when it seeks to deter, prevent, or remedy an actionable harm to liberty.

2. An actionable harm to liberty is one that arises or would arise directly from the commission of a specific act or acts by any person or entity, domestic or foreign. An expression of thought is not an act, for this purpose.

3. An expression of thought cannot be an actionable harm unless it
a. intentionally obstructs or would obstruct governmental efforts to deter, prevent, or remedy an actionable harm (e.g., divulging classified defense information, committing perjury),

b. intentionally causes or would cause an actionable harm (e.g., plotting to commit an act of terrorism, forming a lynch mob), or

c. purposely -- through a lie or the withholding of pertinent facts -- causes a person to act against self-interest in an economic transaction (e.g., misrepresenting a product, inflating a corporation's statement of earnings).
4. An expression of thought cannot be an actionable harm until it has led or will lead directly to the commission of an act. A mere statement of fact, belief, opinion, or attitude cannot be an actionable harm, regardless of the subject of the statement, unless it amounts to slander or libel (both of which are offenses against liberty). Othewise, those persons who do not care for the facts, beliefs, opinions, or attitudes expressed by other persons would be able to stifle speech they find offensive merely by claiming to be harmed by it.

5. An act of omission (e.g., the refusal of social or economic relations because of some form of bias), other than a breach of contract or duty, cannot be an actionable harm. It is incompatible with liberty for government to judge voluntary actions that are not otherwise actionable harms.
In other words, to enjoy the benefits of liberty we must enjoy broad latitude of action (or inaction), speech, and thought.

When the controlling faction persistently abridges the principles of liberty it must be replaced and/or its power must be curtailed. I am cynical about the ability of any controlling faction to resist the thrall of power. The more feasible alternative is to garner enough support to curtail the power of government, a bit at a time. The deregulation movement is one example. The nascent movement toward federalism is another example. The effort to privatize Social Security is yet another example. I'll discuss such remedies in Parts VII and VIII.