Inspired by the recent debate between my colleagues Adam Kern and Sarah Siskind concerning libertarianism and public goods, this is the second installment of a multi-part series on various libertarian theories concerning government and the provision of public goods. Or, alternatively, the role of government in a free society.
In the first part of this series, we briefly explored how libertarianism, like virtually every other political ideology today, has a “big tent” phenomenon of its own, in that many self-described libertarians generally agree on certain policy prescriptions (ending the war on drugs and most restrictions on gun ownership) but disagree on others (such as the legitimacy and proper extent of a social safety net).
This disagreement on finer points of policy arises in large part from a difference in the basic principles to which libertarians adhere. One of these approaches is the consequentialist (otherwise known as the utilitarian) approach. This perspective – to simplify it into one sentence – seeks to implement policies that on the net achieve beneficial social objectives while minimizing social harms. In other words, the consequentialist perspective boils down to the classic cost-benefit analysis.
Consequentialists count among their ranks thinkers such as the Austrian economist Ludwig von Mises, Nobel laureates Milton Friedman, and F.A. Hayek, and even Harvard’s very own Prof. Jeffrey Miron.
Consequentialists such as Miron and Friedman, being academic economists, do not differ much in their general framework or methodological approach from the fellow travelers in their profession. They couch their philosophy in language easily recognizable to economists and social scientists: costs, benefits, utility, social welfare, Pareto efficiency, etc.
These sorts of libertarians, however, do not necessarily think that markets constitute the optimal solution to every social problem; their preference for market solutions tends to fluctuate (at least ever-so-slightly) on a case-by-case basis. At the same time, they tend (more than their non-libertarian colleagues) to think either that (1) a particular problem either does not exist or is less severe than other economists think, or that (2) markets tend to be more efficient solutions than governments in tackling social problems.
Milton Friedman, for example, believes in the general libertarian “rule of thumb” – that governments should leave people alone to carry on their own affairs as they wish, with the large caveat that government may legitimately intervene in the presence of externalities: when there exist beneficial goods for which their producers do not receive compensation or harms for which their victims do not receive restitution in an unfettered market. As an example of a positive externality, Friedman posits the case of a public park, which people who live in the surrounding area can enjoy without contributing any compensation to the owner – thus leading to a collective action problem, in which no individual has the marginal incentive to finance this “public good” – and therefore the park, though it woudl benefit many of the neighbors, goes without financing and thus fails to materialize. Pollution, on the other hand, serves as the classic example of a negative externality, since many people other than factory owners or industrialists bear the cost (in the form of sickness or discomfort) of this byproduct of production.
In both cases, then, the consequentialist libertarian would deem some sort of state action appropriate, since a situation with an unfettered free market (a park without public funding, or an airspace which producers may pollute at will) falls short of the optimal possible situation.
One can extrapolate the principles from such cases and apply them to other public policies which some consequentialist libertarians believe merit state intervention, such as national defense, the provision of some form of elementary education (in the form of either school vouchers or a system of charter schools), courts and police to provide arbitration and protection services, and even a negative income tax or some other sort of limited social safety net.
On the other hand, these same principles imply that most current government interventions in the market create, through a process of unintended consequences, subsequent problems greater than those which they intend to solve. Thus, consequentialist libertarians generally argue for repealing the minimum wage, defunding public broadcasting and the subsidization of sports and arts, and even ending measures of occupational licensure, and prohibitions on insider trading.
To return to the example which recently guided the debate between Sarah and Adam on this question, this particular version of libertarianism has no qualms with state financing of public roads (a sure sign of relief to HPR’s resident libertarian cat). The consequentialist position does not (at least explicitly) make much of an appeal to any sort of “ethical” or “moral” aspect to a particular public policy: it only asks whether the benefits of such a project outweigh the costs. Therefore, it considers questions about the “legitimacy” or “consistency” of government irrelevant, as government remains, like markets, an instrument for the attainment of certain social ends. The idea is then that roads and other similar “public goods” derive benefits (e.g. the facilitation of travel and commerce) which seem to exceed their social costs (the taxation required to construct and maintain them, as well as the opportunity cost incurred by those who had land confiscated for this use).
There exist a few explanations for why consequentialists seem to adopt a position of amoralism: Miron rejects what he calls “philosophical” libertarianism and its advocacy of individual rights:
Indeed, what libertarians say when they say thin[g]s like “individuals have [inviolable] rights” is that if a society respects particular individual rights (such as the ownership of one’s property and person), then other good things happen. […] But if the argument for libertarian policies is that some “rights” have better consequences than others, then why not eliminate the middle man and just discuss the consequences entirely?
To give another example, Ludwig von Mises, whose work serves as an inspiration and intellectual bedrock for many contemporary libertarians, dismisses the idea of “rights” or “morality” as an objective basis for justifying or delegitimizing government action: Mises believes that the subjective nature of economic value (a position which he defends thoroughly) also implies the relativity and subjective nature of moral values. Hence, any talk of “good” or “bad” merely expresses and individual’s subjective preferences: from the perspective of an economist, no set of preferences has any sort of intrinsic value higher than another – they are by nature interpersonally incomparable.
For Mises, consequentialist economic analysis can only pass judgment on the means one seeks to attain a certain end, but it lacks the competence to question the ends themselves, instead taking them as givens. The elimination of poverty, for example, has no necessary intrinsic value according to this framework; but since most members of society profess a preference towards achieving this lofty goal, the economist is in a position to criticize certain measures, such a foreign aid and most publicly-funded transfer programs, which libertarians argue achieve ends often contrary to those for which these measures were created.
The common thread which unites consequentialist libertarians with the other brands of libertarianism is that, when approaching questions of public policy or solving social ills, libertarians, for one reason or another, hold a presumption for liberty: though most would argue there exist exceptions, as a general rule, freedom works and government does not.
Photo credits: University of Chicago, Harvard University, and Ludwig von Mises Institute
