Public Choice(ish) concerns about libertarianism

Recently in my post Occupy Libertarianism, I expressed concern that some libertarians don't only just disagree with their critics - they seem fundamentally unaware of certain concerns that we have. In the comment section of the Coordination Problem post that inspired mine, Troy Camplin wrote something that really illustrated the point. He said: "public choice makes rather explicit that your Keynesian market democracy necessarily leads to cronyism". Now I'm not sure how much economics Troy actually knows (his background is in the humanities, and some of what he's said about Keynesianism has lead me to doubt his understanding of the issues invovled), so this may be nothing more than that. I'm also not sure if anyone who has actually claimed the label "public choice theory" has really made the arguments I'm going to make. But regardless of any of that, it's clear from Troy's comment that there are a lot of people out there who simply don't acknowledge that much of the critique of libertarianism actually takes on a public choice character. Too often people think the argument is "libertarians aren't nice" or "markets could never work". I, for one, have found that libertarians are quite nice on the whole and I firmly believe markets do work. I have other concerns about libertarianism, and a lot of them - even if they're not strictly "public choice" - certainly fall near that rubric.

1. First and foremost, libertarianism is simply not liberty-maximizing

This is primarily an externality argument which I've made many, many times before - and many other people have made as well, so I'll try to be brief. Property rights determine what coercive actions are considered socially appropriate and what coercive actions are considered inappropriate - particularly with respect to possessions. We aren't born with a set of property rights - they emerge as a matter of social construction. When we don't have property rights in matters that concern our daily existence (say, to the air we breath), we're liable to be coerced on a regular basis with no social censure whatsoever. To cast a relatively wide net here, libertarianism is a political philosophy that accepts these coercions as appropriate. Moreover, it defines away their status as coercions, and in so doing it manages to convince itself that it is the political philosophy that rejects coercion and maximizes liberty. To me and people that think like me, that claim is completely absurd. I don't think any political philosophy entirely deals with coercion. Coercion is just part of human life. I think the task is to minimize coercions - particularly the coercions that we think are most important. I don't think there are obvious or unambiguous answers to this question - I think we have to argue over the answers, which is why democracy is so important. But the libertarian tendency to use the imprimatur of property rights to define away the problem of coercion is not a serious attempt at the maximization of liberty, in my opinion.

2. Libertarianism is not robust

The most obvious evidence for this is that we really don't have any libertarian societies around today or at any other time. That's not a proof, but it's strong evidence against the robustness of libertarianism. There are a lot of potential reasons for this. Perhaps libertarian polities can't defend themselves adequately, and get conquered. Perhaps due to an emaciated institutional framework for serving the public good (indeed - the whole iddea is that not serving the public is what serves the public good) libertarian polities are easily co-opted by special interests. Perhaps due to an emaciated institutional framework for serving the public good, gangs emerge from within and displace the libertarian polity. There are lots of reasons to think that libertarianism is not robust. Now, someone like Mark Pennington would not agree with me on this, but I would argue that Pennington provides arugments for the robustness of a constitutionally limited federal republic. There is very good reason to think those polities are very robust (that's why I support them), but those aren't exclusively libertarian polities. Indeed, as the example of the United States shows constitutionally limited federal republics are robust precisely because they are so flexible. We have maintained ours for over two hundred years, but not always or even primarily as a libertarian polity. A lot of libertarians miss this point about the non-robustness of a libertarian polity because they make Pennington's crucial mistake of confusing a constitutionally limited federal republic with a libertarian polity.

3. Institutionally, you reap what you sow

If I were to provide a hypothetical example of a non-anarchical libertarian polity that was captured by a leading capitalist who turned it into a crony capitalist polity, many libertarians would protest that the problem there is crony capitalism and the expanded powers of government enacted by the capitalist-turned-crony capitalist. But this protestation is obviously unacceptable. When we note that regulatory capture is a problem, we don't allow ourselves to protest "but that wasn't the mission of the regulatory agency!". Likewise, libertarians don't have recourse to the claim that capture of the libertarian polity by a capitalist isn't a mark against them. Of course it is. If their institutions aren't robust to these captures, they aren't worth anything. If men have to be angels...

So the questions becomes, what institutional framework best prevents this: (1.) an institutional framework with a regulatory structure overseen by representatives of the people and no presumption that the imprimatur of property rights don't automatically legitimize coercions by capitalists, or (2.) a blank slate regulatory structure with weaker defenses, and which turns a blind eye to coercions that are consistent with the status quo property rights system? It's not an easy question with a clean proof or answer. I obviously lean towards the first one. But both of these systems are obviously liable to some crony capitalist capture. The question is, which minimizes it?

4. In keeping score, we need to be clear about what we mean by "crony capitalism"

Some think any state assistance to the public, such as the bailout, is crony capitalism. I personally think assistance in itself isn't cronyism if it is legitimate. I do get concerned about cronyism when I hear that Paulson tipped off Goldman Sachs employees to what was going on with the GSEs. I don't get concerned about cronyism simply because the federal government extended bailouts. So when a libertarian talks about the extent of crony capitalism they may be talking about something completely different from what others talk about. Likewise, they may fail to count other instances of "crony capitalism", such as the costs that the government allows firms to impose on people when they pollute. This goes back to point number 1, that you don't have to look too far below the surface to see that it's not clear at all that libertarianism is especially pro-liberty. Crony capitalism is when states serve the interests of capitalists. Maintaining a property rights regime that enables capitalists to coerce the public under the fiction that they are not coercing the public because they have property rights (how's that for circular logic) is crony capitalism.

5. Counterfactuals, counterfactuals, counterfactuals

We really need to talk about these things in terms of opportunity costs, and a lot of people don't. It's not just the seen - it's the unseen. I know there is crony capitalism in the modern United States. Pointing that out does not reveal new information to me. My arugment is not that a non-libertarian constitutionally limited federal republic does away with crony capitalism, it is that it seems to me we would be in even worse shape if we didn't have it.

6. Limited government matters to prevent abuses. Democracy matters because these questions are hard.

Few things infuriate me more than libertarians claiming Jefferson's legacy and mocking the role that democracy has to play in deciding these questions. Jefferson stood for many, many things, but first and foremost he was a democrat. It's hard to determine what the least coercive social order is precisely because human life itself is so coercive. The question gets easier to answer if we just kick the can down the road a little further by defining coercion to be "violation of rights". That's an OK answer - "rights" are extremely useful fictions to maintain. I like them, personally, but that just begs the question - well what deterimines a person's rights? We do. Sometimes we're just born into a society where the rights structure is already in place. Sometimes the rights structure changes during our lifetimes. But ultimately, we or some other group of human beings either generates or gives assent (or doesn't give assent) to a rights structure. We don't get it gift wrapped from God or our DNA (although either may influence the rights structures that do emerge). If we determine this rights structure - which is what defines what coercion is socially appropriate and what coercion isn't socially appropriate - then it stands to reason that any polity needs to be democratic. To the degree that it isn't, we're letting an interested party help determine what coercions are and are not socially acceptable.

Conclusion

Please add additional thoughts and reservations in the comment section. This was just off the top of my head, and I may be missing some points. I know the public choice case against my side, and I take that into account. That really doesn't need to be covered or argued over. I'm curious what critiques of libertarianism along these lines I've missed, and I'm curious what you think is weak in this sort of critique.