In Defense of “Vulgar Libertarianism”

One difficult aspect of living as a libertarian in a less-than-free society is that we cannot describe to our opponents with absolute certainty how a genuinely free market would look. We are left to rely on thought experiments and the examples of existing businesses models to compare to the State.
If I want to discuss how state intervention raises the costs of healthcare, for example, I may compare it to the cell phone industry, which must do the opposite in order to compete in the marketplace. Should we reach the conclusion that the higher prices are the result of government, assuming we want lower healthcare costs, then we definitely don’t want socialized healthcare, which cannot provide any final or ongoing solution.

Unfortunately, since we don’t live with a free market — and indeed, the state plays a role in every industry, including the ones mentioned above — we don’t have any perfect or pristine examples. As a result, some defenses of freer markets (which are, in fact, not pure laissez faire free markets) are criticized as “vulgar libertarianism” by libertarians on the left, namely Kevin Carson and others at the left market anarchist “think tank,” the Center for a Stateless Society (C4SS).

“Vulgar libertarianism,” as C4SS describes it, “refers to those who treat the existing marketplace as one which closely approximates how a freed market would look.” So, for instance, if I were to praise all the great things that the free market provides using the iPhone as an example, I would be guilty of “vulgar libertarianism” because Apple is part of the existing marketplace and benefits from state interventions such as patent laws and other forms of intellectual property.

There are several ways to approach “vulgar libertarianism,” and left-libertarians (including, but not limited to, Kevin Carson) oscillate between one way that’s helpful and another way that isn’t.

In the first way, a progressive statist points out a phenomenon in the existing economy that he/she thinks is problematic. Then, an (oftentimes somewhat inexperienced) libertarian defends that phenomenon on the premise that if it arose within a free market, it would be efficient and have resulted from a series of mutually beneficial exchanges that improved human well-being. A more discerning and seasoned libertarian would point out in many cases that the phenomenon the leftist is referring to, in fact, resulted from rent-seeking and legal plunder, and is therefore something that libertarians should not ignore or defend, but instead clarify the causes of. Given that this only takes some long-term familiarity with a libertarian outlook, it would not be unique to the libertarian left.

That clarification can offer a valuable service that strengthens arguments which various schools of libertarianism will advance, including libertarian Austrian economists, public choice theorists, as well as left-libertarians. This is the positive way to approach the issue. When the left points out an alleged problem with existing business, it is both rhetorically ineffective and analytically mistaken, for the most part, to simply defend whatever is happening on the assumption that it’s taking place in a free market. Instead, we should look at what is causing the avowed problem and point out whatever role state intervention might play in causing it. This allows for a more accurate analysis and more sympathetic and productive interaction with leftists and populists.

However, left-libertarians engage in erroneous argumentation when they slam other libertarians as vulgar or insincere for praising the existing market. Yet, because state influence is so pervasive, many on the libertarian left oppose big business wholesale.

But what of Walmart’s work in New Orleans after Hurricane Katrina, for instance? Carson and left-libertarians would be wrong (and probably engaging in a bit of derailing) to dismiss that on the basis of the state-granted benefits that Walmart enjoys. A firm can benefit from state intervention and still operate on good knowledge and incentives. This can allow firms like Walmart to resolve problems which many people falsely assume the state is needed to remedy.

Without capitalism (that is, private ownership of the means of production), many technological and industrial innovations would have never come about. Without corporatism, the same companies that provide those innovations might accrue less wealth. Or without the state, they would probably be richer, but we have no way to know for sure. The point is that many on the libertarian left go overboard and apply the above insight in a way which rejects reasonable economic analysis and serves knee-jerk leftism.

What of the family doctor, who funds large lobbies by paying dues to the American Medical Association, which protects his cartel status, promotes licensing regimes, etc? What of the taxi driver who pays his medallion fees, which allows him to operate his taxi, while others who don’t pay the fee cannot?  Next time I’m offered a raise, should I turn it down since that will increase my tax bill, which will in turn aid the state? Should my company turn down a new customer since the resulting increase in income taxation will also help the state? How do I bear moral responsibility for any benefit a mugger might gain when I hand him my wallet at gunpoint? Should I immediately cease any state-legible economic activity and resort to barter for all trade? Or does this criticism only apply to large corporations?

It seems that, while they harp on and on about government sanctioning of large corporations, left libertarians tend to fall silent on the same regarding smaller firms and other economic actors. As Peter Klein has said:

“Roderick [Long] and Kevin [Carson] do a fine job documenting a slew of government policies that favor large, complex, vertically integrated firms: direct subsidies, of course, but also indirect benefits from intellectual property law, bootlegger-and-baptist-style restrictions on market entry, transportation subsidies, various aspects of the tax code, etc. From this they conclude that smaller, more ‘egalitarian’ enterprises, such as worker-owned cooperatives, would tend to flourish under the free market.

The problem is that their argument cuts both ways. Certainly large firms benefit from the state. But so do small firms. Corporations are under stricter antitrust and regulatory scrutiny, are more likely to be the victims of political rent extraction (in Fred McChesney’s sense), and are subject to stricter disclosure requirements (SOX being only the most visible, recent example) than their smaller competitors. Small firms benefit from state-funded incubators, SBIR awards, regional development grants, and a host of other interventions designed to foster ‘entrepreneurship […] Which set of effects outweighs the other? It is impossible to say, ex ante.’”

Every firm — indeed, every individual — benefits in some ways from the state, while being victimized in others. In most cases, it is extremely difficult to determine whether a particular firm is, on net, a beneficiary or a victim of the state.

Many on the libertarian left will answer that objection by querying their own ideology, asking “Is this company offensive to my sensibilities?” If so, the left libertarian will notice how a firm benefits from the state and ignore how the state is, at the same time, a monkey on its back, conclude it’s a net beneficiary, and also forget to blame the state for creating the situation in the first place. Many left libertarians simply want to find some way to arrive at the conclusion that Big Business X is a net beneficiary of the state, so it doesn’t matter how far backward they have to bend to do it.

If we were to take the “vulgar libertarian” argument to its logical conclusion, we would have to condemn all current market activity, all the way from an old grandma paying for groceries with her social security check to a young kid buying his first iPad with fiat currency. We don’t have a truly free market in anything, anywhere. If anything, this left libertarian criticism is a No True Scotsman fallacy (if it benefits by the state in some way then it can’t be an entity that can survive on true free market principles), but it also misses the overall point: Yes, many libertarians, especially anarcho-capitalists, want the state out of everything; and defenses of this position often boil down to the fact that we know that the market absent the state would provide much more of these great innovations. Throwing out every action a group takes because it does something bad elsewhere is silly (see: Black and White Fallacy). The argument is even more fallacious when a firm is actually doing a good thing instead of the perfect thing, because the latter is illegal.

Exchange still can be mutually beneficial, even when the starting-point is heavily state involved. We can praise the benefits of market exchange, as it exists today, even when it’s hampered in various ways by the state. We must recognize all the ways in which the state distorts our society and economy, but at the same time discern between state-hampered business practices and outright rent-seeking and state privilege, but don’t throw the baby out with the bathwater.