Saturday, August 21, 2004

Understanding the Essence of Modern Libertarianism

A lot has been written about libertarianism, but most of it is superficial. Take this definition from Wikipedia, for instance:
Libertarianism is a political philosophy which advocates individual rights and a limited government. Libertarians believe that individuals should be free to do anything they want, so long as they do not infringe upon what they believe to be the equal rights of others. In this respect they agree with many other modern political ideologies. The difference arises from the definition of "rights". For libertarians, there are no "positive rights" (such as to food or shelter or health care), only "negative rights" (such as to not be assaulted, abused, robbed or censored), including the right to personal property. Libertarians further believe that the only legitimate use of force, whether public or private, is to protect these rights.
That's all right, as far as it goes, but it doesn't say why today's libertarians believe what they believe about the primacy of the individual as against the state.

To learn that, we must begin with John Stuart Mill (1806-1873), who advanced the principles of libertarianism beyond their 18th century origins in John Locke (who believed in divinely bestowed inalienable rights) and Adam Smith (who understood that the "invisible hand" of the market translates economic self-interest into general well-being). A look at the Wikipedia entry for Mill tells us that his long essay, On Liberty is
about the nature and limits of the power which can be legitimately exercised by society over the individual. One argument that Mill formed was the harm principle, that is people should be free to engage in what ever behaviors they wish as long as it does not harm others.
That's the sum of Mill's argument. Now let's turn to the meat of it.

First, with regard to freedom of speech, Mill says, in Chapter II of On Liberty:
We have now recognised the necessity to the mental well-being of mankind (on which all their other well-being depends) of freedom of opinion, and freedom of the expression of opinion, on four distinct grounds; which we will now briefly recapitulate. First, if any opinion is compelled to silence, that opinion may, for aught we can certainly know, be true. To deny this is to assume our own infallibility. Secondly, though the silenced opinion be an error, it may, and very commonly does, contain a portion of truth; and since the general or prevailing opinion on any subject is rarely or never the whole truth, it is only by the collision of adverse opinions that the remainder of the truth has any chance of being supplied. Thirdly, even if the received opinion be not only true, but the whole truth; unless it is suffered to be, and actually is, vigorously and earnestly contested, it will, by most of those who receive it, be held in the manner of a prejudice, with little comprehension or feeling of its rational grounds. And not only this, but, fourthly, the meaning of the doctrine itself will be in danger of being lost, or enfeebled, and deprived of its vital effect on the character and conduct: the dogma becoming a mere formal profession, inefficacious for good, but cumbering the ground, and preventing the growth of any real and heartfelt conviction, from reason or personal experience.
In other words, freedom of speech advances the truth, and we are better off for knowing the truth, however much we might resent hearing it in some instances. Similarly, in Chapter III Mill argues that we are better off if we respect individuality rather than impose uniformity of behavior:
As it is useful that while mankind are imperfect there should be different opinions, so is it that there should be different experiments of living; that free scope should be given to varieties of character, short of injury to others; and that the worth of different modes of life should be proved practically, when any one thinks fit to try them. It is desirable, in short, that in things which do not primarily concern others, individuality should assert itself. Where, not the person's own character, but the traditions of customs of other people are the rule of conduct, there is wanting one of the principal ingredients of human happiness, and quite the chief ingredient of individual and social progress.
Having established the importance of freedom of speech and action, how does Mill balance these freedoms in a societal context? At the onset of Chapter IV, Mill says this:
What, then, is the rightful limit to the sovereignty of the individual over himself? Where does the authority of society begin? How much of human life should be assigned to individuality, and how much to society?

Each will receive its proper share, if each has that which more particularly concerns it. To individuality should belong the part of life in which it is chiefly the individual that is interested; to society, the part which chiefly interests society.

Though society is not founded on a contract, and though no good purpose is answered by inventing a contract in order to deduce social obligations from it [touché, Rousseau], every one who receives the protection of society owes a return for the benefit, and the fact of living in society renders it indispensable that each should be bound to observe a certain line of conduct towards the rest. This conduct consists first, in not injuring the interests of one another; or rather certain interests, which, either by express legal provision or by tacit understanding, ought to be considered as rights; and secondly, in each person's bearing his share (to be fixed on some equitable principle) of the labours and sacrifices incurred for defending the society or its members from injury and molestation. These conditions society is justified in enforcing at all costs to those who endeavour to withhold fulfillment. Nor is this all that society may do. The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights. The offender may then be justly punished by opinion, though not by law. As soon as any part of a person's conduct affects prejudicially the interests of others, society has jurisdiction over it, and the question whether the general welfare will or will not be promoted by interfering with it, becomes open to discussion. But there is no room for entertaining any such question when a person's conduct affects the interests of no persons besides himself, or needs not affect them unless they like (all the persons concerned being of full age, and the ordinary amount of understanding). In all such cases there should be perfect freedom, legal and social, to do the action and stand the consequences.
That is, for the sake of preserving individuality, a person who actually harms another person may be punished by the state. But a person who merely says or does something that offends others may be punished only by the force of opinion and reason, to which he may or may not choose to bow. Mill applies his principles in Chapter V:
The maxims are, first, that the individual is not accountable to society for his actions, in so far as these concern the interests of no person but himself. Advice, instruction, persuasion, and avoidance by other people if thought necessary by them for their own good, are the only measures by which society can justifiably express its dislike or disapprobation of his conduct. Secondly, that for such actions as are prejudicial to the interests of others, the individual is accountable, and may be subjected either to social or to legal punishment, if society is of opinion that the one or the other is requisite for its protection....

In many cases, an individual, in pursuing a legitimate object, necessarily and therefore legitimately causes pain or loss to others, or intercepts a good which they had a reasonable hope of obtaining. Such oppositions of interest between individuals often arise from bad social institutions, but are unavoidable while those institutions last; and some would be unavoidable under any institutions. Whoever succeeds in an overcrowded profession, or in a competitive examination; whoever is preferred to another in any contest for an object which both desire, reaps benefit from the loss of others, from their wasted exertion and their disappointment. But it is, by common admission, better for the general interest of mankind, that persons should pursue their objects undeterred by this sort of consequences....

Again, trade is a social act. Whoever undertakes to sell any description of goods to the public, does what affects the interest of other persons, and of society in general; and thus his conduct, in principle, comes within the jurisdiction of society: accordingly, it was once held to be the duty of governments, in all cases which were considered of importance, to fix prices, and regulate the processes of manufacture. But is now recognised, though not till after a long struggle, that both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free, under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the so-called doctrine of Free Trade, which rests on grounds different from, though equally solid with, the principle of individual liberty asserted in this Essay. Restrictions on trade, or on production for purposes of trade, are indeed restraints; and all restraint, quâ restraint, is an evil: but the restraints in question affect only that part of conduct which society is competent to restrain, and are wrong solely because they do not really produce the results which it is desired to produce by them. As the principle of individual liberty is not involved in the doctrine of Free Trade, so neither is it in most of the questions which arise respecting the limits of that doctrine....
Thus, despite his acknowledgment that commerce is a social act, and despite having made a good defense of free trade, Mill believes there is an essential difference between personal and economic freedom.

Now comes Friedrich A. Hayek (1899-1992) to unify personal freedom and economic freedom. Virginia Postrel, writing earlier this year for The Boston Globe, explains:
Hayek's most important insight, which he referred to as his "one discovery" in the social sciences, was to define the central economic and social problem as one of organizing dispersed knowledge. Different people have different purposes. They know different things about the world. Much important information is local and transitory, known only to the "man on the spot." Some of that knowledge is objective and quantifiable, but much is tacit and unarticulated. Often we only discover what we truly want as we actually make trade-offs between competing goods."

The economic problem of society," Hayek wrote in his 1945 article ["The Use of Knowledge in Society"], "is thus not merely a problem of how to allocate `given' resources -- if `given' is taken to mean given to a single mind which deliberately solves the problem set by these `data.' It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in totality."

The key to a functioning economy -- or society -- is decentralized competition. In a market economy, prices act as a "system of telecommunications," coordinating information far beyond the scope of a single mind. They permit ever-evolving order to emerge from dispersed knowledge....

Information technology has strengthened Hayek's legacy. At MIT's Sloan School, Erik Brynjolfsson uses Hayek to remind students that feeding data into centralized computers doesn't necessarily solve a company's information problems. In any complex operation, there is too much relevant information for a single person or small group to absorb and act on.

"As Hayek pointed out, the key thing is to have the decision rights and the information co-located," says Brynjolfsson. "There are at least two ways of achieving that. One is to move information to decision maker. The other is to move decision rights to where the information is."

This analysis, which applies as much to culture as to economics, informs Hayek's best-known work, The Road to Serfdom, which he wrote as a wartime warning to a popular audience. Published in 1944 and dedicated "to the socialists of all parties," the book argued that the logic of socialist central planning implied the erosion of personal freedoms. Britain's well-intended socialists were headed down the same path as the National Socialists whose rise Hayek had witnessed in Austria....

[H]e argued that to fully control the economy meant to control all aspects of life. Economic decisions are not separate from individual values or purposes. They reflect those purposes."We want money for many different things, and those things are not always, or even rarely, just to have money for its own sake," explains Jerry Z. Muller, a historian at Catholic University...."We want money for our spouses or our children or to do something in terms of the transformation of ourselves -- for everything from plastic surgery to reading intellectual history or building a church. These are all noneconomic goals that we express through the common means of money."

Hayek argued that only in a competitive market, in which prices signal the relative values placed on different goods, can people with very different values live together peacefully. And only in such a market can they figure out how best to meet their needs and wants -- or even what those needs and wants are...
There you have it: Mill instructs us that personal freedoms should be preserved because through them we become more knowledgeable and more capable; therefore, the state should intervene in our lives only to protect us from physical harm. Hayek then makes the case that the personal and the economic are inseparable: We engage in economic activity to serve personal values and our personal values are reflected in our economic activity. Moreover, the state cannot make personal and economic decisions more effectively than individuals operating freely within an ever-evolving societal network, and when the state intervenes in our lives it damages that network, to our detriment. That is the essence of modern libertarianism.