A new argument against libertarianism

David Henderson has a post discussing a Henry Farrell piece on the Silk Road. Farrell shows that when markets like drugs are made illegal lots of nasty side effects can occur.  He concludes that this is an argument against libertarianism:

The libertarian hope that markets could sustain themselves through free association and choice is a chimera with a toxic sting in its tail. Without state enforcement, the secret drug markets of Tor hidden services are coming to resemble an anarchic state of nature in which self-help dominates.

Paul Krugman agrees:

a truly brilliant essay . . . an awesome read.

OK everyone, take a deep breath.  Let’s keep the comment section civil.  Krugman is a distinguished Nobel Prize winner.  This is the world we are condemned to live in.  I think Deirdre McCloskey best expressed my frustration.

I don’t care how one defines capitalism, as long as it’s not defined as evil incarnate.

Unfortunately, everyone from the Pope to Paul Krugman increasingly seem to prefer exactly that definition.



21 Responses to “A new argument against libertarianism”

  1. Gravatar of Kevin Erdmann Kevin Erdmann
    5. March 2015 at 15:11

    I was once chatting with a very smart friend who happens to be a progressive about the problem of student debt and high drop out rates at public universities. Out of the blue, he said that he “blamed capitalism”. Taken aback, I asked, “How can you blame capitalism for the failures coming from the federal government handing out cash for students to attend land grant universities?” He said, “Because they were using the tactics of capitalism.”


    I think the problem we are facing can be seen through Arnold Kling’s 3 axis formulation. The progressive motive is a good one – coming from the oppressed vs. oppressor paradigm. It begins with an attempt to right past (and present) wrongs – to level the playing field.

    But the problem is, this leads to an a priori hierarchy of favored or disfavored groups, which is further vulgarized by the problems of group dynamics, and it has ended up simply as a form of sectarianism. The progressive posture taken toward you and the facts accepted or denied about you largely reflect your place on the hierarchy. Ancient biases against commerce bubble to the surface here.

    Consider fights over civil rights, such as LGBT rights. Strictures are loudly demanded to force firms to hire or to serve LGBT workers or customers. Note what isn’t demanded. There is no similar demand on families, friends, mates, etc. In these areas outright bigotry is a cherished right. Or, consider LGBT citizens who own firms. There are zero demands for customers or employees to treat them fairly. Again, bigotry is a cherished right. Something not even worthy of discussion.

    LGBT rights are the explicit reason for those demands, but if you are an LGBT capitalist, you lose. The stand against capitalists trumps the stand for LGBT.

    This sectarianism has become so ugly that it is usually stated quite explicitly. Look at just about any editorial from the progressive point of view, and wherever they refer to “the rich” or “corporations”, substitute any other group, especially groups whose historic oppression causes us to more easily recognize ugly language used against them, and the bigotry becomes horrifyingly apparent. It has gotten to the point where simply stating that, say, profits are up, is meant to be taken as a problem.

    I only hope that it is darkest before the dawn, and we will begin to see a pendulum swing away from this hatefulness toward a more inclusive cultural attitude.

  2. Gravatar of Brett Brett
    5. March 2015 at 16:44

    Farrell’s piece is more of an argument against anarcho-capitalism than libertarianism. And even then, the big killer for Silk Road was that they couldn’t exclude anyone on the web due to Tor’s anonymity – predators could always slip back in, and the site was extremely vulnerable to DDOS blackmailing.

  3. Gravatar of A A
    5. March 2015 at 16:45

    I read Farrell’s article as a case study for the creation of institutions with punitive authority. The types of people involved may have influenced the types of responses, but implied violence seems more universal than illegal/legal distinctions.

  4. Gravatar of E. Harding E. Harding
    5. March 2015 at 17:22

    “The Argentinian-born pope”
    -There’s your problem right there. Argentina didn’t have no steenking globalization as recently as 1980.

  5. Gravatar of Jim S. Jim S.
    5. March 2015 at 18:37

    I would encourage anyone who identifies as libertarian and has not read Jonathan Haidt’s work on morality to do so. Haidt has done a lot of research on the moral foundations of politics and he has found that the libertarian’s core value is freedom. Give individuals freedom to make their own choices and everything is fine in the libertarian’s universe. Progressives value freedom, but also put a high value on fairness, ¬and empathy. Conservatives also care about freedom, fairness, and empathy, but they add loyalty, respect for authority, and respect for sanctity to their moral foundations. I tend to regard Libertarians as sort of moral simpletons (sorry for the pejorative term), but it seems to be an overly limited philosophy. The libertarian view seems to have particular appeal to smart successful folks who think of themselves as rational actors reasoning their way to the best outcome for themselves. The work of researchers like Jonathan Haidt, Dan Ariely, and Daniel Kahneman clearly shows that we don’t reason our way to moral values, we use reason to justify the values we already have. I believe that Haidt has stated that libertarian individuals have the lowest empathy of any political group he has tested.

  6. Gravatar of ssumner ssumner
    5. March 2015 at 19:26

    Kevin, Very good comment.

    Brett, Yes, it actually fails on two points. It confuses anarchy with libertarianism, and it confuses the side effects of an illegal drug market with the side effects you’d seen in a legal but unregulated drug market.

    A, No matter how you read it, it has no bearing on libertarianism.

    E. Harding. So he lives most of his life in the least globalized economy, sees it perform incredibly poorly, and concludes that globalization is bad.

    Jim, Yes, I strongly agree that Haidt’s work is very high quality.

    BTW, my values are actually liberal, not libertarian. I end up a libertarian for pragmatic reasons.

  7. Gravatar of gofx gofx
    5. March 2015 at 19:29

    @Jim s.

    I doubt if libertarians would consider me 100% pure, but I do not follow your argument. “Empathy” or the ability to “put oneself in another’s shoes” is not inconsistent at all with the desire to maximize individual liberty and adhere to the non-aggression principle. In fact those two ideas are probably the most empathetic one could be toward the human condition. “Forced” empathy via statists and progressives is not empathy at all, in fact its the opposite with respect to those to whom force is applied.

    The enormous acts of charity throughout the history of the U.S. show what generally free people will do. I know you have experienced the smug attitude of some libertarians, I’ve seen that too (and from progressives big time!), but from my humble point of view, they are basically correct, and their fundamental view is, in fact truly empathetic.

  8. Gravatar of Doug M Doug M
    6. March 2015 at 01:18

    Jim S,

    Interesting what you say about empathy. I not only have low value on empathy. I have put negative value on it. I want my politicians to be absolutely cold. I get downright offended when I hear the president talk about how he wished Americans could be more empathetic. I have plenty of empathy for my fellow man, but have no room for empathy in my politics.

    Dead kids make for bad laws… any law named for a dead child is almost necessarily an over reaction and not fundamentally good policy.

    Why should I fix your roller-coaster… the libertarian response to Hurricane Sandy.

    Libertarian heroes…

    James Madison

    “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”

    Davy Crockett.
    “Mr. Speaker: I have as much respect for the memory of the deceased, and as much sympathy for the suffering of the living, if there be, as any man in this House, but we must not permit our respect for the dead or our sympathy for part of the living to lead us into an act of injustice to the balance of the living. I will not go into an argument to prove that Congress has not the power to appropriate this money as an act of charity. Every member on this floor knows it. We have the right as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money.”

  9. Gravatar of acarraro acarraro
    6. March 2015 at 01:51

    I read the piece in a very different way.

    I thought his main argument was that libertarianism doesn’t evolve naturally. We have main examples in history that prove that societies tend to evolve complex sets of rules that require some form of coercion. I think this is pretty obvious. While it’s true that silk road is not a perfect example, it’s an interesting observation that it had to start evolving a bureaucracy.

    Doesn’t it bother you that libertarianism doesn’t seem to evolve spontaneously? You can argue it’s a superior form of organization, but I think it’s difficult to argue it’s the “normal” form organization for large groups.

    If you believe in some form of natural selection, the fact that no nation has adopted strongly libertarian organization should give you pause I think (unless you think the US has ever been that, even with slavery and prohibitionism). It might be that we haven’t evolved enough, and that we will see them in the future, but I think it’s an interesting observation. Every new society that forms and doesn’t adopt a libertarian system is a (small) piece of evidence that a libertarian society wouldn’t work in my opinion.

    In large part it’s a matter of definition. Some libertarian elements have proved very successful and some are expanding (e.g. drug policies). Socialism and communism have proved as unworkable.

    I think a better criticism is that it’s attacking a strawman: most libertarian are mostly arguing about some marginal change, and in that context failure of the pure abstract idea is irrelevant.

  10. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    6. March 2015 at 03:12

    Marx’s critique capitalism has a very strong component of what we’d call “public choice”. He does not condemn the free market as much as the system in which large corporations and the wealthy use the lever of political power for their own benefit.

    Under this definition, I think it’s reasonable to condemn capitalism and defend the free market as an alternative.

  11. Gravatar of MG MG
    6. March 2015 at 03:17

    Following on Kevin Erdmann’s comments, I would argue that the final stage of Triumphant Progressivism (as preached by Krugman) is another version of the Conservative Axis, where Progressives are civilization and the rest of us are the barbarians.

  12. Gravatar of Daniel Daniel
    6. March 2015 at 06:01

    Personally, I think libertarians are ridiculous (and completely lacking in self-awareness) when they talk about how much they love “liberty”.

    When, in fact, what they want is to replace the existing set of constraints with another one. That, hopefully, will benefit them.

  13. Gravatar of Nickik Nickik
    6. March 2015 at 09:03

    > Farrell’s piece is more of an argument against anarcho-capitalism than libertarianism. And even then, the big killer for Silk Road was that they couldn’t exclude anyone on the web due to Tor’s anonymity – predators could always slip back in, and the site was extremely vulnerable to DDOS blackmailing.

    The solution is easy. Identity. All you need is a identiy system, then you can build a reputation system on top of it. The reality is that one silk road goes down, another rises but the sellers can stay the same and keep there reputation.

    This works very simply with public key crypto. The identity is ownership of you GPG Key, when you can sign your messages or offers with your key, everybody can verfiy that you are infact you.

    However currently this is limited to people who understand these things, and further devlopment and mass adoption of crypto identity and maybe even payment system is slowed.

  14. Gravatar of Nickik Nickik
    6. March 2015 at 09:34

    As a programmer who jumps into economics sometimes, here a few information on the technical side.

    The reality is that bitcoin, tor hidden services and things like that are very new. Lots of people are experimenting, there are not very many established practices, there are not very man log term reputations, there is a lot of fear from government actions.

    The crypto behind things like automatic escrow is still beeing devloped.

    Most importently, what we see is that trade goes on. These problems are not so strong that the system breakes down. As long as trade goes on the system can evolve and gain in reputation and security.

    I would suggest to people that this hole darknet/bitcoin combination is like the internet in 1995. There is promise but people have jet to figure out ebay, google and amazon.

    If anything we should be suprised how much transactions are allready happening in this space.

  15. Gravatar of dw dw
    6. March 2015 at 11:51

    from some of the writings i have seen for Libertarianism, it seems like a form of utopia, where all will leave behind any aggressiveness, and that all wrongs can be addressed by what are insurance companies. course it seems like its more of a freedom for some, those with resources, against those who dont. course we have never ever seen that any where it the world since recorded history started. but maybe it happened some place, just wasnt noted in history. is capitalism inherently evil? no. can it be practiced that way? of course it can. is the free market the solution? depends, can you keep it from being gamed or not? so far, it doesnt seem to be any less able to be gamed than any other economic ‘system’.

  16. Gravatar of baconbacon baconbacon
    6. March 2015 at 12:15

    @Jim S-

    Words are difficult things for most people. “Fairness” doesn’t have a rigid definition in politics. One group might define it in a way that makes the statement “everyone has access to healthcare” sound fair while another group might define it in a way that makes the phrase “majority rule” extremely unfair. How many words you would use to define yourself is going to be related to how many words you get to define. Fringe groups will frequently use fewer slogans due to their lack of general influence (far left groups usually drape them in some variation of “social justice”)- this doesn’t make them more or less morally complex, this just means that being part of a majority makes you more comfortable with the language.

    A similar point can be made about empathy- a fringe group finds it hard to be empathetic to the system because they don’t agree with the general population by definition. The more libertarian the world the more empathy you would expect from libertarians.

  17. Gravatar of Scott Sumner Scott Sumner
    6. March 2015 at 12:51

    acarraro, You said;

    “Doesn’t it bother you that libertarianism doesn’t seem to evolve spontaneously?”

    Not at all. The world is a very imperfect place. No optimal structure of any type exists anywhere. Liberalism, conservativism, socialism, Islamic fundamentalism, etc., etc. None of them evolve naturally.

    In any case, the argument you just made applies to actual countries, the Silk Road example adds NOTHING.

    Nickik, This is so obvious to you and me, how could an intelligent person like Farrell not see this?

  18. Gravatar of Morgan Warstler Morgan Warstler
    7. March 2015 at 08:55

    Jim S, good for you!

    Chatted with Haidt about this once, before I wrote this:


    “The point was that via Technology, Conservatives have, through intense life experience, been RETRAINED to go against their genetic code on the moral foundations of Ingroup, Authority, and Purity.

    The Internet has been an incredible long and powerful lever. In just fifteen years, we have capsized “Conservative” opinions on the lesser morals. Gay marriage. Pot. Sex Work. Surveillance. Conservatives are becoming Libertarians.

    The Church is dying out. Why? Because of the Internet.

    Which leads us to an obvious hope, might there be another technology that could retrain Liberals to be Libertarians on the crucial moral foundation of Fairness? Can they learn to want to punish cheaters?

    Yes indeed. Hello Data Darwinism!

    Thanks to technology we use everyday, in things like Ebay feedback, or apps like Uber, it is becoming incredibly easy to identify lazy people. Hell, you can even track your own laziness down to the second.

    Let me say this loud and clear, on the issue of Fairness, we don’t mind if people are unproductive. We mind if they are lazy. Lazy people taking advantage of people who are not lazy is unfair.”

    I’d urge everyone to read the whole thing for the Hadit.

    But the simple fact is: Technology makes everyone Libertarian. It literally ALTERS our moral foundations, liberals and conservatives alike.

    (This is not my point here, but my belief is that we’ll find that “Libertarian” morality is a Darwinian function combining memetics + improved neural networks overtime).

    My point here is that Technology (Science + Math as like the law of God) isn’t a debate opponent we can “take on” even if we want to. It’s simply an unstoppable “evolutionary” fact.

    You and me have free will in as much as you and me and blow our brains out. But “we” as 9B networked brains cannot stop what Technology makes Humanity into because said brutally: What we have thought of as humanity < What we now know about humanity.

    Anyone holding on to the we idea that "we" can control of humanity simply has an old fashioned view of what humanity is…

  19. Gravatar of Morgan Warstler Morgan Warstler
    7. March 2015 at 09:05

    Continuing so I can make another link. Rod Dreher writing for TAC shows conservatives are JUST AS hungry to hold onto the old view of what humanity is:

    At issue is what it means to be authentically human. Is our humanity something we discover, or is it something we manufacture? If it’s the latter, and if human nature is malleable, as Harari and many others believe it is, then the future belongs to those elites who, in Harari’s chilling phrase, have learned “to produce bodies and minds.”

    As TC says “interesting through-out”:


    I’d urge you to read the Harari piece, but it’s nothing I haven’t been preaching since Snow Crash.

    Just take every dystopian notion of a networked digital economy and instead make it awesome – something each chooses by our “free will” – and Humanity is nothing like what it has always been.

    Anyway, the debate over Libertarian ideology in 2015 is like watching a boys and girls debating who is better, and both agreeing nothing is worse than adults.

  20. Gravatar of Libertarian Conservative Libertarian Conservative
    7. March 2015 at 10:57

    So according to Krugman, supply & demand applying to labor markets is a conservative conspiracy, and libertarianism is disproven by a failure of statism. The fact that he is probably the most influential economist right now is heavily discouraging.

  21. Gravatar of Major.Freedom Major.Freedom
    8. March 2015 at 01:55

    Kevin Erdmann:

    The best way to understand today’s generation of so-called progressive thought is to first understand the neurotic individual who is struggling with their own self-alienation, where they are grappling with a selfish, insatiably greedy aggrandizing characteristic on the one hand, and a free spirited, creative, productive characteristic on the other.

    Then, understand the progressive mindset as one where that inner conflict is then projected outward into society, where each characteristic is then personified and made objective in the form of two separate people, the greedy capitalist who represents pure greed, aggrandizement, selfishness, the “money incarnate”, on the one hand, and the oppressed worker who represents oppressed free creativity and productivity, the “exploited”, on the other.

    Capitalism is thus greedism, which turns into all greedy tactics concerning money are thus “capitalist” tactics.

    In this mindset, even if a state, which is predicated on violating capitalist ethic of homesteading, were to dole out money at interest to prospective students, the state would be engaging in capitalist tactics. The state plays the role of “money bags”. They are using money, they are charging interest, and the poor wretched exploited students become indebted for a substantial portion of their remaining lives.

    The progressive mindset has a core philosophical antagonism towards the use of money. Deep down they believe the ideal, perfect world will be moneyless, greedless, etc.

    What they are doing of course is turning their own neurotic self-imagery into a myth of reality, of evil money desire versus good produvtibity between separate people. They are seeking to become more comfortable in their own skin by vanquishing the objectified personification of their own greed.

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