Cato Institute Publishes Leftist Screed!

by Liberty and Power

[cross-posted at Austro-Athenian Empire]

Mine, that is. There’ll also be a round of responses and counter-responses over the next week or so (the “Cato Unbound” format).

Cato Institute building with Alliance of the Libertarian Left logo superimposed Here’s Cato’s summary of my essay:

In this month’s lead essay, philosopher and libertarian theorist Roderick Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly. He suggests that libertarians should guard themselves against falling into the trap of “vulgar libertarianism,” in which all things good spring from business, and particularly from business as usual. Corporations, he argues, should be no more free of scrutiny than any other institution in a free society, and often businesses have done more than their share to hamper free economic relations in the industrialized world.
One implication of all of this is that the truly free market is farther away than we imagine. Long suggests several ways in which a freed market might look different from what we see around us today. Notably, nearly all of these differences are to the benefit of the consumer and the small or start-up business. These likely outcomes of laissez faire suggest new grounds for left-liberals and libertarians to revise their thinking on economic issues and on politics more generally.

And here’s Cato’s introduction to the whole exchange:

This issue tackles a grave misconception: the idea that corporations and markets are synonymous, and that what’s good for the one is good for the other.
Astute economists have noted that far too often, corporations act to restrict the free operation of the market. Corporations that have become successful in a free or quasi-free market don’t like to face competition any more than any other entity, and their success gives them the resources, unfortunately, to stifle would-be competitors. In these cases, corporations and governments can often find themselves in an unholy alliance against consumers, other firms, and liberty itself. Corporatism, in other words – a system that seems to value corporations as an end in themselves.
And after that – what’s an advocate of the free market to do?
In this month’s lead essay, philosopher and libertarian theorist Roderick Long examines the often tangled relationship between governments, corporations, and those who argue both for and against laissez-faire capitalism. Is a truly libertarian politics possible? Or do libertarians always run the risk – despite their best intentions – of sounding like, or acting like, apologists for an alliance between the state and corporations?
In the rest of the issue, we will hear from three authors with different takes on corporatism and its relationship to free-market advocacy. Political analyst Matthew Yglesias has expressed skepticism about libertarian and free-market advocacy in the past, owing to corporate entanglements. Economist Steven Horwitz has argued that many of our current economic troubles owe precisely to corporate entanglements with the state, and has urged liberals and libertarians to recognize the many potential points of agreement they might find on these issues. And economist Dean Baker has criticized what he refers to as the “conservative nanny state,” or the ways in which the wealthy use their resources to harness government power to their own advantage. Be sure to stop by through the week as our contributors debate these very important issues for the future of a free economy.

Needless to say, I’m excited to have such a prominent forum for the promotion of the cause, and I’m particularly happy to express my gratitude to Jason Kuznicki for offering me this opportunity, as well as to my various left-libertarian comrades on whose ideas I have freely drawn in my essay. Our quest for world domination continues ....

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William J. Stepp - 11/12/2008

Where is his data or argument?
The "fixed" costs of infrastructure building might well be higher in the "short run"; but I would think that the "variable" costs of doing this would fall. But what matters to Wal-Mart is the cost of shipping its products (which is spread over all its revenues), not the cost to a builder of building a highway, which is the builder's problem. The builder hopes to recoup his costs and earn a profit. Wal-Mart's payments for the use of the road in shipping its stuff will be a small portion of his total revenue, as presumably his road will have lots of other paying customers, probably more if the road is better than a government road. That means lower costs.
Kevin apparently thinks that the end of Wal-Mart's transportation subsidies necessarily means that its transportation costs will rise; but this isn't necessarily true. I seriously doubt it would happen, at least once the market efficiencies and ultimately lower costs of private infrastructure building were fully exploited.

Charles Johnson - 11/12/2008

William Stepp: Roads and other infrastructure should be provided by voluntary means, with some combo of user fees/advertising, etc. paying for them--and they would be in a free market, .... Roads would also be better maintained in a free market, so the transportation costs incurred by Wal-Mart would fall in a free market.

Of course roads would still exist in a freed market, and would be more efficiently provided than they are under statism. But it doesn't follow from that that the transportation costs incurred by Wal-Mart would fall in a free market. Maybe they would, but Kevin's position (which he was worked out in some detail in various places) is that in the current system, some forms of road use are artificially subsidized by the lack of a market mechanism in appropriating funds for road building and road maintenance. If there were no such thing as eminent domain, this would profoundly affect the costs involved in building new superhighways; and if roads were operated by profit-seeking firms then it is very likely that they would use differential pricing for heavy trucks (which inflict the overwhelming majority of wear and damage to roads, far ought of proportion to their share of the total gas taxes paid) as compared to cars and light trucks (which cause almost none of the wear and damage). If Kevin's right about that (he has some empirical figures to back it up), then a transport system in which road builders and road users had to pay their own way in full would indeed provide roads with much greater efficiency than the current government roads, but the costs involved for people who want to ship huge piles of goods over long distances in a big truck might very well increase substantially with the end of the subsidy.

William J. Stepp - 11/12/2008

Re: Rand's famour comment about "persecuted" businessmen. Surely you must be aware that this is not representative of libertarian thought (I don't count Objectivists as libertarians, at least not those who support U.S. foreign policy, and I repeat that Rand herself repudiated the term libertarian). Rothbard repudiated it, as did several others. I would also point out that some businessmen have been persucuted, such as some who were called up in the Pecora Hearings, the Schecter brothers, and Sewell Avery during WW II. Others would include Ivan Boesky, Martha Stewart, and Sam Waksal for insider trading "violations," Larry Williams (who "owes" $1.5 million in taxes), and the executive-shareholders (as well as non-executive and outside shareholders) of Research in Motion, who were held up by a court-enabled patent troll three years ago.

Cooper Abrams in his, "Are Mormons Christians?" refutes the notion that they are. As an ex-Christian-turned-WASA (the As are for anarchist and agnostic), I don't have a dog in that hunt.
Anyway, the last Christian died on the cross, as they say.

Folsom did counter the extreme robber baron view of history; but as you recognize he didn't deny that some politically-connected capitalists used the state for subsidies and other non-libertarian things.
I skimmed your article. Some of the jargon (lib-soc, etc.?) was over the top.

Re: Kevin Carson, he and I had an exchange in Dec. 2005 on this list, in response to a defense of Wal-Mart by Steve Horwitz. His complaint was that Wal-Mart get subsidized by the building of roads and other infrastructure. He skoffed at the notion that Wal-Mart would be able to innovate in a market characterized by voluntary provision of roads, etc., but provided no theoretical or empirical evidence to back up his skepticism.
Nor did he respond to my point that Wal-Mart paid a lot more in taxes than it paid in dividends to its shareholders. I posed the question of who owns the company--the government or the shareholders, but he had no reply.
Roads and other infrastructure should be provided by voluntary means, with some combo of user fees/advertising, etc. paying for them--and they would be in a free market, just as innovation would still get done without the monopoly formerly known as intellectual property paying off politically-connected rent seekers. Roads would also be better maintained in a free market, so the transportation costs incurred by Wal-Mart would fall in a free market.
The 40-odd people who died when the bridge in Minnesota collapsed might also still be alive.
Wal-Mart presumably pays the going rate to all its suppliers for the transportation costs they incur.
And don't forget that Wal-Mart is far from being the only beneficiary of roads and airports.
The bottom line is that even if some of Wal-Mart's costs are subsidized by others, including infrastructure users and taxpayers, Wal-Mart is a net taxpayer, not a net tax consumer.

A comment about Carson's economics is in order too. Some place he called himself an anti-capitalist free market advocate. Capitalism is to the free market what gravity is to physics. When a plane falls from the sky and crashes, we shouldn't blame gravity. What we should do is search for the cause of the crash, like a malfunctioning engine. So too we shouldn't blame capitalism for the collapse of markets during depressions, etc. Capitalism is simply the process by which capitalists save money and advance it the factors of production in advance of the final sale of a product. This is true even if a capitalist is getting a subsidy or a tax break.
In other words, capitalism has nothing to do with the subsidies, etc. that occur under corporatism or whatever the rght term is.

In your original article, you also mention that some libertarians have hailed "our free market healthcare system." I haven't seen any libertarians do this.
Maybe it's those deluded Objectivists again, who are not, let me repeat, libertarians.

Roderick T. Long - 11/11/2008

Oops, "they want to b killed" should have been "they want to be called."

Roderick T. Long - 11/11/2008

Can we stop calling Rand a libertarian? She called herself an Objectivist, and termed us libertarians "hippies of the right."

Who cares what she called herself? Suppose someone said "I believe there is no God, but please don't call me an atheist, because I disagree with the reasons for disbelief that other people who call themselves 'atheist' accept." Doesn't matter -- if they believe there is no God they're an atheist regardless of what they want to b killed. Ditto for Rand being a libertarian; she accepted the non-initiation of force principle, and applied it with a fair bit of consistency to politics; hence, she's a libertarian.

Yes, she agreed with libertarians on lots of issues, but so do Mormans agree with Christians on lots of religious issues, yet they are not Christians. (For example, they don't believe in the divinity of Jesus; and they have their Book of Mormon, which Christians don't accept, and their prophets, who Christians don't accept.)

Actually Mormons do accept (a version of) the divinity of Jesus (as much as the Arians did, anyway -- and while the Arians get called heretics, they don't get called infidels); but even if they didn't, they'd clearly still be Christians -- hence I don't accept your definition of "Christian." In particular, the divinity of Christ has never been universally accepted by Christians; it's been a matter of dispute among Christians for the past 2000 years. (Do you really want to deny that the Socinians were Christians?) Moreover, I don't think the New Testament accepts it either, so unless we want to say that the New Testament is un-Christian we'd better not make that doctrine definitionally part of Christianity.

2. Wal-Mart didn't get as big as it is because of government intervention.

If you have a refutation of Carson's arguments I'd be happy to hear it.

Ditch the "plutocracy" tag. It's so 1890s

What's wrong with the 1890s?

Burton Folsom (sp?) showed the whole robber baron thing is mostly historical hot air.

No he didn't. See my discussion of Folsom in the article I link to in footnote 14.

It's just as wrong to indict a corporation for getting a tax break as it is for indicting a slave who is freed and allowed to go when his mates are left behind in shackles.

Not if the slave bribed the master "free me and only me, leave the other shackled." But in any case the point of my piece is not to "indict" corporations in the sense of placing blame; I don't much care about that. The point is that if a corporation does well because it receives a tax break that its competitors don't, and so succeeds via an unjust advantage over its competitors, then its success is *not* due to the free market -- in which case it's a mistake both for leftists to blame its success on the free market and for libertarians to defend its success as a product of the free market.

But maybe that's a reform too far for mutualists.

I'm not a mutualist. But mutualists certainly favour abolishing all taxes.

William J. Stepp - 11/11/2008

1. Can we stop calling Rand a libertarian? She called herself an Objectivist, and termed us libertarians "hippies of the right."
Yes, she agreed with libertarians on lots of issues, but so do Mormans agree with Christians on lots of religious issues, yet they are not Christians. (For example, they don't believe in the divinity of Jesus; and they have their Book of Mormon, which Christians don't accept, and their prophets, who Christians don't accept.)
2. Wal-Mart didn't get as big as it is because of government intervention. Wal-Mart pays lots of $ in taxes, as do Wal-Mart shareholders. There would be big corporations in a free market, sorry to disappoint you. Governments tend to be against "bigness" in corporations. Microsoft is an Exhibitor here, as IBM was in an earlier era.
3. Ditch the "plutocracy" tag. It's so 1890s; and besides, Burton Folsom (sp?) showed the whole robber baron thing is mostly historical hot air.
4. Tax breaks are one of my pet peeves. I'm totally for them, but it would be better if taxes were abolished. It's just as wrong to indict a corporation for getting a tax break as it is for indicting a slave who is freed and allowed to go when his mates are left behind in shackles. The focus should not be on criticizing a corporation for getting a tax break, but instead should be directed toward extending it to other corporations, or better still abolishing the tax in question.
But maybe that's a reform too far for mutualists.

Roderick T. Long - 11/10/2008

Commentary has erupted at Hit & Run.