It’s About Structure, Not Volume

Pascal-Emmanuel Gobry has a good piece up that explores some of the same ground I explored in my self-critique of libertarianism, although he unfortunately does so without the assistance of Monty Python.  Gobry’s central point is one that bears re-emphasizing, though: “one thing that often bothers me about US defenders of free markets is how easily they (and we) [forget] that free markets are created, maintained and curated by, well, the government.”*  Gobry goes on to note “that all markets are dependent on how they are structured, and they are structured first and foremost by the government.” This is, of course, a variation of this point from last week’s post:

In comments, Gobry also hits on something that was a bit of an underlying theme in my Monty Python post, writing: “I am not so much arguing against specific policy positions as I am arguing against a kind of rhetoric.”  This is critical – free market advocates, particularly in recent months, have tended to adopt pretty straightforward anarcho-capitalist rhetoric even though precious few of those advocates are actually anarcho-capitalists.

The reason this is such a problematic line of attack is that anarcho-capitalist rhetoric only makes sense if you’re willing to go the Full Monty in favor of anarcho-capitalism.  If you’re not willing to go that far, then you have to be able to argue against a particular government proposal for intervention or in favor of a particular proposed deregulation on terms specific to that proposal.  Simply assuming that what already exists is in some way more of a free market than what would exist if a particular government action were taken too often ignores the way in which the very system one is defending is already dependent on any number of government interventions.  Additionally, simply assuming that the removal of a particular government intervention will in some way create a freer market too often ignores the possibility that said intervention was part of the structure necessary for a freer market.

To be sure, there will often be times – and I would say far more often than not – when a government intervention creates or will create a set of perverse incentives that will do little to solve a given problem or simply solve a small problem while simultaneously creating additional, bigger problems.  But the opposition to that government intervention needs to be able to explain why it believes the particular government intervention will do more harm than good as well as why existing government interventions do more good than harm and should not be radically restructured.

Free market arguments thus need to be open to the possibility that a given proposed intervention will actually increase competition in a given instance rather than decrease it, or that existing interventions don’t really allow for much competition in the first place.  They also need to be able to explain why a given proposed deregulation will increase competition in a meaningful way rather than simply reinforce existing market dominance such that  it may actually create a less free market.

In his post, Gobry uses the example of French prohibitions on big box stores that result in local cartelization.  While this obviously requires a certain amount of deregulation to fix, it is also something that can’t be truly fixed without a certain amount of additional, positive intervention, to wit: anti-trust laws.  Simply doing the former without doing the latter will leave those cartels untouched and in a position where they will be able to maintain their market dominance for at least some appreciable period of time (maybe decades) before any kind of competition is able to break through.  Yes, the market is made nominally freer by the deregulation, but the benefits of that deregulation will be severely hampered because the cartels have a big leg up to begin with.  For potential competitors, the deregulation without the trust-busting would amount to allowing them to sit at a poker table with a $300 maximum buy-in where everyone at the table has already accumulated $10,000 in chips.

In other words, simply pretending that any new positive government intervention will automatically create a less-free market and that any negative government intervention will automatically create a freer market is false.  And so, as I said above, free market advocates in any given case need to be able to explain why a given proposal will or will not create a freer market beyond simply “more intervention = less free market = bad.”

A central element of Hayek’s argument in Road to Serfdom was his distinction between “planning for” and “planning against” competition.  In this distinction it is the role of the government to set the rules of the game to maximize competition and not to set those rules in a way that will restrict competition such that government is in essence picking the winners.  If the rules are functioning in such a way as to limit competition, then those rules should be changed.  This is not the same thing as saying that some or all of those rules should be scrapped, though – sometimes you need a completely new set of rules, and there may even be times when you just need one small new rule.  Indeed, there will be times when simply removing a rule will be the very type of “planning against” competition that Hayek warned against, protecting one player who has been cheating and allowing that player to destroy the players who have followed the rules.

There will certainly be instances where the number of rules of the game has grown so large as to make the game impossible for all but a few to play such that literally any reduction in that number will increase competition regardless of how those reductions are structured.  But even when that is the case, the argument needs to be precisely that: the rules are too complicated for anyone but a political crony of the government to compete.  The argument cannot be that rules are inherently anti-competitive and anti-liberty.  Such absolutist arguments can only be made if one is themselves an absolutist prepared to defend one’s absolutism.

One final point.  Given the nature of the libertarian movement, I’m fully aware that these posts only reinforce my alienation from both the Judean People’s Front and the People’s Front of Judea, while solidifying my membership in the Judean Popular People’s Front.

*Although to be fair, we’re really taking here about defenders of free market capitalism, rather than free market anti-capitalists.

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9 thoughts on “It’s About Structure, Not Volume

  1. “This is critical – free market advocates, particularly in recent months, have tended to adopt pretty straightforward anarcho-capitalist rhetoric even though precious few of those advocates are actually anarcho-capitalists.”

    First thing that came to mind was this from Hume:

    “Whether your scepticism be as absolute and sincere as you pretend, we shall learn by and by, when the company breaks up: We shall then see, whether you go out at the door or the window…”

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  2. Excellent, Mark. I’ve actually been pondering the dangers of absolutism lately myself. It’s certainly much easier to take an absolutist position because it allows one to stop thinking deeply about complex issues. Often absolutism confuses itself with “purity” or principle, etc. And it’s sneaky because it often stems from very principled, sensible positions, which stop being strong arguments when they transform into panaceas.

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  3. Great stuff. I think one of ways our system gets gamed is by the “logic” that the gov should just stay out and let the free market sort things out. This is a recipe for perverse incentives or powerful groups to get things arranged for their benefit. The gov is always part of the situation even if the best thing for it to do is little or nothing.

    One of twisted incentives in health care is in the private market, where insurance companies know they are incredibly unlikely to care for people for their entire lives. so there is little incentive for preventative medicine.

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  4. You can just as easily say that the constant capitulation and justifications for government intervention means a person isn’t really a libertarian, but a liberal who believes in the efficacy of the state intervening in matters beyond defense of basic rights, which is okay, if that is what they believe — However, there is a line beyond which minarchists say the government is over-reaching — it’s mainly when coercion is used to institute positive rights which benefit some at the expense of others. Coercion to prevent anyone, or group, from violating individual rights, is a fair use of coercion because it applies to every violator equally and protects every individual equally. This is the line, so if a person is not a libertarian, then they will disagree and admit that it is okay to violate the rights of some for the good of others.

    I’m not sure I know very many libertarians who hold that libertarian principles are absolute and that consideration will not be given to other views no matter how valid they are.

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  5. If one is not an absolutist, is there any sense in which she is anything other than just another observer with a view about the right approach to one or more of a variety of economic/market regulation policy questions? In other words, once a person admits it’s a matter of where you and up on particular matters, who’s to say a person doesn’t end up coming down closer to the middle than the libertarian end when all his views are averaged out? Is any non-“anarcho-capitalist”s’ claim to membership in special category “libertarian” meaningful?

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    • Well, but most (or at least many) libertarians aren’t anarcho-capitalists or even minarchists, but are instead classical liberals. I’d also say that the point of this post is in some ways that although a more limited government is properly the goal of libertarianism, the boundaries of what make a government “limited” can be debated. The truly important point, though, is that it makes no sense to rely upon anarcho-capitalist rhetoric unless one is in fact an anarcho-capitalist (and minarchism, as far as I’m concerned, does not qualify as anarcho-capitalism).

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