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The Libertarian Mind Chapter 1 The Coming Libertarian Age
Libertarianism is the philosophy of freedom. It’s the philosophy that has in different forms inspired people throughout history who fought for freedom, dignity, and individual rights—the early advocates of religious tolerance, the opponents of absolute monarchy, the American revolutionaries, the abolitionists, antiwar and anti-imperialist advocates, opponents of National Socialism and communism.
Libertarians believe in the presumption of liberty. That is, libertarians believe people ought to be free to live as they choose unless advocates of coercion can make a compelling case. It’s the exercise of power, not the exercise of freedom, that requires justification. If we followed the presumption of liberty, our lives would be freer, more prosperous, and more satisfying.
The burden of proof ought to be on those who want to limit our freedom.
We should be free to live our lives as we choose so long as we respect the equal rights of others. The presumption of liberty should be as strong as the presumption of innocence in a criminal trial, for the same reason. Just as you can’t prove your innocence of all possible charges against you, you cannot justify all of the ways in which you should be allowed to act.
But too often we’re told that we have to justify each exercise of our freedom. Want to add a room onto your house? Smoke marijuana? Own a gun? Surf the Internet in privacy? Open a new taxi company? Prove that you need such a freedom.
When New York mayor Michael Bloomberg tried to impose a ban on sodas larger than sixteen ounces, nanny-state activists proclaimed that “no one needs a large soda.” Maybe not, but what if they want one? Don’t people have a right to choose what they eat and drink? Former senator Richard Lugar said that he wanted to ban certain firearms “for which I see no legitimate social purpose.” What other products might not have a “legitimate social purpose”—cigarettes? Electric toothbrushes? Light beer? Politicians’ autobiographies? In a free society politicians and political majorities shouldn’t be arbiters of what can be sold by willing sellers to willing buyers.
Similarly, defenders of massive surveillance of our phone calls and web surfing demand that we make the case for our freedom and privacy. They are wrong. The burden of proof should be on those who would compile sweeping databases of our activities. Liberty should be the presumption. Restrictions on liberty need justification.
We do get exercised about limits on our freedom, but not often enough. Just look at the restrictions government has imposed on us. Government takes as much as half the money we earn. It tells us where to send our children to school and how to save for retirement. It tells us what we may eat, drink, and smoke. It tells us whether we may marry the person we love.
Fortunately, we do still have a lot of freedom, in the United States and in more and more parts of the world.
Sometimes we forget just how much of our life is in fact free. We make thousands of choices every day, engage in thousands of interactions with others, without any coercion. We don’t ask Congress where we should work. We don’t expect the police to get our kids out of bed in the morning. We don’t call the mayor to fix our cars. We don’t go to city hall to buy a new computer. We don’t want the federal bureaucracy to write books, make movies, compose music, or provide us with a place to worship. Freedom has a central place in our lives, and every day people create peace and order without central direction.
It’s not easy to define freedom. The author Leonard Read said, “Freedom is the absence of man-concocted restraints against the release of creative energy.” The Nobel laureate F. A. Hayek referred to “a state in which each can use his knowledge for his purpose” and also to “the possibility of a person’s acting according to his own decisions and plans, in contrast to the position of one who was irrevocably subject to the will of another, who by arbitrary decision could coerce him to act or not to act in specific ways.” Perhaps it’s best to understand freedom as the absence of physical force or the threat of physical force. John Locke offered this definition of freedom under the rule of law:
[T]he end of Law is not to abolish or restrain, but to preserve and enlarge Freedom: For in all the states of created beings capable of Laws, where there is no Law, there is no Freedom: For Liberty is to be free from restraint and violence from others which cannot be, where there is no Law: But Freedom is not, as we are told, A Liberty for every Man to do what he lists: (For who could be free, when every other Man’s Humour might domineer over him?) But a Liberty to dispose, and order, as he lists, his Persons, Actions, Possessions, and his whole Property, within the Allowance of those Laws under which he is; and therein not to be subject to the arbitrary Will of another, but freely follow his own.
That is, a free person is not “subject to the arbitrary will of another” and is free to do as he chooses with his own person and property. But you can have those freedoms only when the law protects your freedom and everyone else’s.
However we define freedom, we can certainly recognize aspects of it. Freedom means respecting the moral autonomy of each person, seeing each person as the owner of his or her own life, and each free to make the important decisions about his life.
Freedom allows each of us to define the meaning of life, to define what’s important to us.
And thus each of us should be free to think, to speak, to write, to paint, to create, to marry, to eat and drink and smoke, to start and run a business, to associate with others as we choose. When we are free, we can construct our lives as we see fit.
The social consequences of freedom are equally desirable. Freedom leads to social harmony. We have less conflict when we have fewer specific commands and prohibitions about how we should live—in terms of class or caste, religion, dress, lifestyle, or schools—as we’ll see throughout this book.
Economic freedom means that people are free to produce and to exchange with others. Freely negotiated and agreed-upon prices carry information throughout the economy about what people want and what can be done more efficiently. For an economic order to function, prices must be free to tell the truth. A free economy gives people incentives to invent, innovate, and produce more goods and services for the whole society. That means more satisfaction of more wants, more economic growth, and a higher standard of living for everyone.
That process has taken us in barely 250 years of economic freedom from the backbreaking labor and short life expectancy that were the natural lot of mankind since time immemorial to the abundance we see around us today in more and more parts of the world (though not yet enough of the world).
Not everyone realizes just how poor the world was for so long. The living standard we enjoy today did not build steadily over the centuries. In fact, average GDP per capita—the standard of living of the average person in the world—was essentially stagnant from the year 0, or maybe even from ten thousand years before that, until around 1700 in northern Europe. And then a wealth explosion happened: Real income per person grew by a factor of ten, twenty, maybe even one hundred in the space of three centuries, first in northwestern Europe and the United States and then in more parts of the world. This chart is based on the work of the economic historian Angus Maddison.
China and Western Europe GDP per capita
1000 CE – 2003 CE
What’s changed to make us so much wealthier? Freedom. A political system of liberty gives us the opportunity to use our talents and to cooperate with others to create and produce, with the help of a few simple institutions that protect our rights. And those simple institutions—property rights, the rule of law, a prohibition on the initiation of force—make possible invention, innovation, and progress in commerce, technology, and styles of living. When libertarians defend limited government, we are defending freedom and the progress it brings.
WHAT IS LIBERTARIANISM?
Libertarianism is the view that each person has the right to live his life in any way he chooses so long as he respects the equal rights of others. (Throughout this book I use the traditional English “he” and “his” to refer to all individuals, male and female; unless the context indicates otherwise, “he” and “his” should be understood to refer to both men and women.) Libertarians defend each person’s right to life, liberty, and property—rights that people possess naturally, before governments are instituted. In the libertarian view, all human relationships should be voluntary; the only actions that should be forbidden by law are those that involve the initiation of force against those who have not themselves used force—actions such as murder, rape, robbery, kidnapping, and fraud.
Most people habitually believe in and live by that code of ethics. We don’t hit people, break down their doors, take their money by force, or imprison them if they live peacefully in ways that we don’t like. Libertarians believe this code should be applied consistently—and specifically, that it should be applied to actions by governments as well as by individuals. Governments should exist to protect rights, to protect us from others who might use force against us. For most libertarians, that means police to prevent crime and arrest criminals, courts to settle disputes and punish wrongdoers, and national defense against external threats. When governments use force against people who have not violated the rights of others, then governments themselves become rights violators. Thus libertarians condemn such government actions as censorship, the draft, price controls, confiscation of property, and intrusion into our personal and economic lives.
Put so starkly, the libertarian vision may sound otherworldly, like a doctrine for a universe of angels that never was and never will be. Surely, in today’s messy and often unpleasant world, government must do a great deal? But here’s the surprise: The answer is no. In fact, the more messy and modern the world, the better libertarianism works, especially when compared with monarchy, dictatorship, and even postwar Western welfare-statism. The political awakening in America today is first and foremost the realization that libertarianism is not a relic of the past. It is a philosophy—more, a pragmatic plan—for the future. In American politics it is the leading edge—not a backlash, but a vanguard.
Government is serious business. But some deep insights into government have been expressed by comic writers, including P. J. O’Rourke, who summed up his political philosophy this way: “Giving money and power to government is like giving whiskey and car keys to teenage boys.” Thomas Paine’s view of government echoes in Dave Barry’s explanation: “The best way to understand this whole issue is to look at what the government does: it takes money from some people, keeps a bunch of it, and gives the rest to other people.”
In short, we might say: Libertarianism is the idea that adult individuals have the right and the responsibility to make the important decisions about their own lives.
THE LIBERTARIAN SURGE
Libertarianism is an old idea in America and elsewhere, as I’ll discuss more in chapter 2, but there’s been a remarkable surge in libertarian thinking lately. A series of CNN polls found that total support for a combination of libertarian positions had risen 30 percent between 2002 and 2012. Journalists now talk about a libertarian faction in Congress and in the electorate. Libertarian organizations are booming.
And no wonder. In the past few years politicians have given us many reasons to doubt the wisdom and efficacy of big, activist government. Endless wars. Economic collapse. Corporate bailouts. The highest government spending and national debt ever. An unimaginable level of spying on citizens.
There are many kinds of “libertarians,” of course. Some are people who might describe themselves as “fiscally conservative and socially liberal,” or say they want the government “out of my pocketbook and out of my bedroom.” Some believe in the philosophy of the Declaration of Independence and want the government to remain within the limits of the Constitution. Some just have an instinctive belief in freedom or an instinctive aversion to being told what to do. Some are admirers of Dr. Ron Paul and his son, Senator Rand Paul, and their campaigns against war, government spending, the surveillance state, and the Federal Reserve. Some like the writings of Thomas Jefferson or John Stuart Mill. Some have studied economics. Some have noticed that war, prohibition, cronyism, racial and religious discrimination, protectionism, central planning, welfare, taxes, and government spending have deleterious effects. Some are so radical they think all goods and services could be provided without a state. In this book I welcome all those people to the libertarian cause. When I talk about libertarian ideas, I’ll generally be referring to the central arguments that have been developed by thinkers from John Locke and Adam Smith to F. A. Hayek, Ayn Rand, Murray Rothbard, Robert Nozick, and Richard Epstein, which have generally been known as liberalism, classical liberalism, or libertarianism.
The recent libertarian resurgence has taken many forms. Books such as Rand’s Atlas Shrugged and Hayek’s Road to Serfdom became bestsellers, along with copies of the U.S. Constitution. Libertarian student groups emerged and grew rapidly.
When the financial crisis hit in the fall of 2008, the politicians in Washington had one response: start printing money and bailing out big businesses. First Bear Stearns, then Fannie Mae and Freddie Mac, then most of Wall Street through the Bush administration’s TARP plan. But voters had a different response. Polls showed widespread opposition to the bailouts, and voter outrage defeated the first vote in the House of Representatives on TARP. In the end, though, Congress took a second vote, and the lobbyists won. Wall Street got its bailout. And we can date the birth of the Tea Party movement to the week that Congress defied the people and bailed out Wall Street.
A couple of years later another grassroots movement emerged, Occupy Wall Street. It was perceived as left-wing and anticorporate, just as the Tea Party was seen as right-wing and anti-Obama. But there were a lot of libertarian themes at Occupy protests: concerns about war and empire, bailouts and debt, business-government cronyism, police abuse, the vast powers of the Federal Reserve. You could see “End the Fed” banners and “Don’t Tread on Me” flags at both Tea Party and Occupy events.
The two groups had another thing in common: They both got some unwanted attention from the IRS, the FBI, and the Department of Homeland Security.
DISTRUST OF GOVERNMENT IS IN AMERICA’S DNA
In May 2013, a few weeks before revelations about the National Security Agency’s massive surveillance of Americans’ phone calls and emails hit the headlines, President Obama gave the commencement address at Ohio State University. He almost seemed to anticipate the looming outcry over privacy when he denounced “voices” that would encourage distrust of government: “Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems; some of these same voices also doing their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices.” He sounded a lot like President Bush’s attorney general, John Ashcroft, in 2001: “To those who scare peace-loving people with phantoms of lost liberty, my message is this: Your tactics only aid terrorists—for they erode our national unity and diminish our resolve. They give ammunition to America’s enemies.”
New York Times columnist David Brooks fretted that the revelations about how our government spies on us reflected a distressing “deep suspicion of authority” and would corrode the “invisible bonds” that hold us together. Yes, it’s entirely possible that making those bonds visible will make people suspicious of those who fastened them around us.
The political class doesn’t like to be distrusted. But distrust of government is in America’s DNA. It turned out that Americans aren’t entirely persuaded by the explanation that the executive branch, a few members of Congress, and a few unknown federal judges have secretly assured one another that a secret program is being pursued properly.
We know who and what government is. It isn’t some Platonic ideal. Government is people, specifically people using force against other people. We need some minimal government to constrain and punish the violent, the thieves and fraudsters, and other dangers to our freedom, our rights, and our security. But that shouldn’t eliminate our skepticism about empowering some people to use force against others. The power that government holds is wielded by real people, not ideal people, and real people are imperfect. Some are corrupt, some are even evil. Some of the worst are actually attracted to state power. But even the well intentioned, the honest, and the wise are still just people exercising power over other people.
That’s why Americans have always feared the concentration of power. As Thomas Jefferson wrote in the Kentucky Resolution of 1798 condemning the Alien and Sedition Acts:
Confidence is everywhere the parent of despotism. Free government is founded in jealousy, and not in confidence; it is jealousy, and not confidence, which prescribes limited constitutions to bind down those whom we are obliged to trust with power. . . . In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.
This time, as we learned more about the NSA’s spying on us, it wasn’t Atlas Shrugged or The Road to Serfdom that shot up on the bestseller lists, it was another libertarian classic: George Orwell’s 1984, known for its warning that “Big Brother Is Watching.”
LAND OF THE FREE
All this libertarian energy should be no surprise. America is, after all, a country fundamentally shaped by libertarian values and attitudes.
Throughout our history most voters and movements have agreed on the fundamentals of classical liberalism or libertarianism: free speech, religious freedom, equality before the law, private property, free markets, limited government, and individual rights. The broad acceptance of those values means that American liberals and conservatives are fighting within a libertarian consensus. We sometimes forget just how libertarian the American political culture is; consider, for instance, the possibility that a newspaper deemed “blasphemous” or offensive to some group would be shut down. Any such suggestion in the United States would be stopped point-blank with the comment “That violates the First Amendment,” and almost everyone—liberal, conservative, or libertarian—would agree. But in other countries it can and does happen. Americans embrace capitalism, religious freedom, and a constitutionally limited government at a far deeper level than citizens of most other countries. And that broad libertarian consensus may have allowed voters who embrace a stronger dose of libertarian values to remain hidden in plain sight.
America’s libertarianism dates back to our founding. As the Pulitzer Prize–winning Harvard University historian Bernard Bailyn writes in his 1973 essay “The Central Themes of the American Revolution,”
The major themes of eighteenth-century [English] radical libertarianism [were] brought to realization here. The first is the belief that power is evil, a necessity perhaps but an evil necessity; that it is infinitely corrupting; and that it must be controlled, limited, restricted in every way compatible with a minimum of civil order. Written constitutions; the separation of powers; bills of rights; limitations on executives, on legislatures, and courts; restrictions on the right to coerce and wage war—all express the profound distrust of power that lies at the ideological heart of the American Revolution and that has remained with us as a permanent legacy ever after.
Political scientists continue to find the same themes. In their book It Didn’t Happen Here: Why Socialism Failed in the United States the sociologists Seymour Martin Lipset and Gary Marks write, “The American ideology, stemming from the [American] Revolution, can be subsumed in five words: antistatism, laissez-faire, individualism, populism, and egalitarianism.” The political scientists Herbert McClosky and John Zaller made a similar point in 1984: The “American ethos” is a combination of capitalism and democracy, which “evolved side by side as part of a common protest against the inequities and petty tyrannies of Old World monarchism, mercantilism, and the remnants of feudalism. Both aimed to free the individual from the dead hand of traditional restraints and to limit the power of the rich and well-born to exploit the less privileged.”
The Columbia University historian Richard Hofstadter wrote, “The fierceness of the political struggles in American history has often been misleading; for the range of vision embraced by the primary contestants in the major parties has always been bounded by the horizons of property and enterprise. However much at odds on specific issues, the major political traditions have shared a belief in the rights of property, the philosophy of economic individualism, the values of competition; they have accepted the economic virtues of capitalist culture.” And Samuel Huntington of Harvard: “Prevailing ideas of the American creed have included liberalism, individualism, equality, constitutionalism, rights against the state. They have been opposed to hierarchy, discipline, government, organization, and specialization.”
McClosky and Zaller sum up a key theme of the American ethos in classic libertarian language: “The principle here is that every person is free to act as he pleases, so long as his exercise of freedom does not violate the equal rights of others.”
Some people recognize but bemoan our libertarian ethos. Professors Cass Sunstein, who has been a close adviser to President Obama, and Stephen Holmes, arguing for a large and powerful government in their book The Cost of Rights, complain that “libertarian fairy tales” are “astonishingly widespread in American culture.”
Much political change in America occurs within those guiding principles. Even our radicals, Lipset and Marks note, have tended to be libertarian and individualist rather than collectivist. America is a “country of classical liberalism, antistatism, libertarianism, and loose class structure,” which helps to explain the failure of class-conscious politics in the United States, like the union-dominated socialist parties of Europe. McClosky and Zaller argue that many of the changes of the 1960s involved “efforts to extend certain values of the traditional ethos to new groups and new contexts”—such as equal rights for women, blacks, and gays; antiwar and free speech protests; and the “do your own thing” ethos of the so-called counterculture, which in fact had more in common with the individualist American culture than was recognized at the time.
FREEDOM IN THE WORLD
None of this means that libertarianism is just an American idea, of course. As Bailyn noted, early America’s libertarianism came from England and Scotland. And as I’ll discuss in chapter 2, deeper roots of libertarianism can be found in China, Greece, Israel, Holland, Spain, and elsewhere.
Movements for freedom have been visible across the globe in our own time. In 1989 the iron grip of the Soviet Union on the countries of Eastern Europe suddenly ended, and those countries moved from totalitarian communism to varying degrees of freedom. People who had been secretly reading Hayek and Friedman became finance ministers and prime ministers. By 1991 the Soviet Union itself and its internal republics were also free of communist rule. South Africa moved from apartheid to equal citizenship in the early 1990s. Since 1980, as shown in the annual report Economic Freedom of the World, the average level of economic freedom in the world has risen substantially.
Exhibit 1.4: Average Chain-linked EFW Rating for the 101 countries with ratings since 1980
This has been particularly dramatic in the world’s most populous country, China, where beginning in 1979 Deng Xiaoping put the country on the road from communism to greatly expanded markets. That economic liberalization brought with it social changes as well, including the decriminalization of homosexuality. Beginning in 2001 some twenty countries, mostly in Europe, have extended equal marriage rights to same-sex couples. Since 2011 we have seen “middle-class revolutions” demanding democracy, transparency, and an end to cronyism in such countries as Tunisia, Egypt, Turkey, Brazil, and even China.
Most of the people involved in these protests, revolutions, and historical events are not libertarians. But many of them hold libertarian views on human rights, free speech, and markets that are neither socialist nor cronyist. Increasing numbers explicitly embrace libertarianism.
The British magazine the Economist, in a 2013 editorial titled “The strange rebirth of liberal England” (in an allusion to a famous history book), wrote, “Young Britons have turned strikingly liberal, in a classical sense. . . . The young want Leviathan to butt out of their pay cheques as well as their bedrooms.” An accompanying article declared, “Britain’s youth are not just more liberal than their elders. They are also more liberal than any previous generation. . . . As well as prizing social freedom, they believe in low taxes, limited welfare and personal responsibility. In America they would be called libertarians.”
A headline in the Hurriyet Daily News in Istanbul reported, “Protesters are young, libertarian and furious at Turkish PM, says survey.” An online poll of three thousand protesters conducted by two academics had found, among other things, that 81.2 percent of the protesters who completed the survey defined themselves as “libertarian.”
Students For Liberty and the African Liberty Students Organisation drew more than eleven hundred African students to a libertarian conference in 2014 at the oldest university in Nigeria. SFL also has active branches in North America, India, Indonesia, Latin America, and Europe.
THE NEED FOR CHANGE
Some readers may well wonder why people in a generally free and prosperous country like the United States need to adopt a strict new set of policies. Aren’t we doing reasonably well with our current system? We do indeed have a society that has brought unprecedented prosperity to a larger number of people than ever before. But we face problems—from high taxes, unsustainable debt, and slow growth to poor schools to environmental challenges to too many wars—that our current approach is not handling adequately. Libertarianism has solutions to those problems, as I’ll try to demonstrate. For now I’ll offer three reasons that libertarianism is the right approach for America in this new millennium.
First, we are not nearly as prosperous as we could be. Our economy is growing at barely half the annual rate it did in the 1950s and 1960s (even before the slowdown that began in 2008). In a world of global markets and accelerating technological change, we shouldn’t be growing at the same pace we did fifty years ago—we should be growing faster. More reliance on markets and individual enterprise would mean more wealth for all of us, which is especially important for those who have the least today.
Second, our government has become far too powerful, and it increasingly threatens our freedom. Government taxes too much, regulates too much, interferes too much. Politicians on both left and right seek to impose their own moral agenda on 300 million Americans. Laws and policies such as the Patriot Act, surveillance of American citizens, further government control of health care, the growing number of armed police raids on homes and businesses, and the government’s attempts to take private property without judicial process make us fear an out-of-control government and remind us of the need to reestablish strict limits on power.
Third, in a fast-changing world where every individual will have unprecedented access to information, centralized bureaucracies and coercive regulations just won’t be able to keep up with the real economy. The existence of global capital markets means that investors won’t be held hostage by national governments and their confiscatory tax systems. New opportunities for telecommuting will mean that more and more workers will also have the ability to flee high taxes and other intrusive government policies. Prosperous nations in the twenty-first century will be those that attract productive people. We need a limited government to usher in an unlimited future.
The twentieth century was the century of state power, from Hitler and Stalin to the totalitarian states behind the Iron Curtain, from dictatorships across Africa to the bureaucratic welfare states of North America and Western Europe. Many people assume that as time goes on, and the world becomes more complex, governments naturally get bigger and more powerful. In fact, however, the first half of the twentieth century was in many ways a detour from the trajectory begun in the Enlightenment. It represented the counterattack of anti-Enlightenment, antilibertarian principles. Those principles have been and are being repudiated in most of the world.
Today, there are signs that we may be returning to the path of limiting government and increasing liberty. The collapse of communism has left hardly any support for central planning. Developing countries are privatizing state industries and freeing up markets. Practicing capitalism, the Pacific Rim countries have moved from poverty to world economic leadership in a generation.
The United States may seem like an exception to that optimistic view. The terrorist attacks of 2001 led to the Patriot Act, a secret surveillance state, and more than a decade of foreign wars. The economic crisis of 2008 gave us massively increased federal spending, along with a Federal Reserve continuing to expand its powers and pump easy money into the economy. On the Economic Freedom of the World index, the United States fell from third to seventeenth in the world. But more Americans are waking up to those problems.
These changes around the world have two principal roots. One is the growing recognition of the tyranny and inefficiency inherent in state planning. The other is the growth of a political movement rooted in ideas, particularly the ideas of libertarianism.
Why is there a libertarian revival now? The main reason is that the alternatives to libertarianism have all been tried in the past century and have all failed to produce peace, prosperity, and freedom. The success or failure of countries is strongly correlated with the extent to which they embody libertarian principles.
Fascism, as exemplified in Mussolini’s Italy and Hitler’s Germany, was the first to go. Its economic centralization and racial collectivism now seem repellent to every civilized person, so we may forget that before World War II many Western intellectuals admired the “new forms of economic organization in Germany and Italy,” as the magazine the Nation put it in 1934. The world’s horror at National Socialism in Germany helped produce not only the civil rights movement but such harbingers of the libertarian renaissance as The God of the Machine by Isabel Paterson and The Road to Serfdom by F. A. Hayek.
The other great totalitarian system of the twentieth century was communism, as outlined by Karl Marx and implemented in the Soviet Union and its satellites. Communism maintained its appeal to idealists far longer than fascism. At least until the revelations of Stalin’s purges in the 1950s, many American intellectuals viewed communism as a noble if sometimes excessive attempt to eliminate the inequalities and “alienation” of capitalism. As late as 1990, some American economists continued to praise the Soviet Union for its supposed economic growth and efficiency—right up to the system’s collapse, in fact.
When communism suddenly imploded in 1989–91, libertarians were not surprised. Communism, they had argued for years, was not only inimical to human freedom and dignity but devastatingly inefficient, and its inefficiency would only get worse over time, while the capitalist world progressed. The collapse of communism had a profound impact on the ideological landscape of the entire world: It virtually eliminated full-blown socialism as one end point of the ideological debate. It’s obvious now that total statism is a total disaster, leading more and more people to wonder why a society would want to implement some socialism if full socialism is so catastrophic.
But what about the welfare states of the West? The remaining ideological battles may be relatively narrow, but they are still important. Shouldn’t government temper the market? Aren’t the welfare states more humane than libertarian societies would be? Although Western Europe and the United States never tried complete socialism, such concerns did cause government control of people’s economic lives to increase dramatically during the twentieth century. European governments nationalized more industries and created more state monopolies than the United States did; airlines, telephone companies, coal mines, steel manufacturers, automobile producers, and radio and television broadcasters were among the major industries that were generally private in the United States but state-owned in Western Europe. European countries also established earlier and more comprehensive “cradle-to-grave” government benefits programs.
In the United States, few industries were nationalized (Amtrak was a notable exception), but regulation and restriction of economic choices grew throughout the century. And while we have not quite created a European system of “social insurance,” we do have transfer payments ranging from the Women, Infants, and Children (WIC) program to Head Start to college loans to unemployment compensation and welfare to Social Security and Medicare—a pretty good start on cradle-to-grave government. Not to mention programs that redistribute income upward, from trade protection and farm subsidies to tax preferences and bailouts for floundering corporations.
Yet today, all over the developed world, welfare states are on shaky ground. The tax rates necessary to sustain the massive transfer programs are crippling Western economies. Dependence on government has devalued family, work, and thrift. From Greece to France to Australia the promises of the welfare state can no longer be kept.
WHY POLITICS FAILS
Much of this book will be devoted to examining the problems with coercive government, and the libertarian alternative. Here I’ll offer just a brief introduction. The real problem in the United States is the same one being recognized all over the world: too much government. The bigger the government, the bigger the failure; thus state socialism was the most obvious failed policy. As libertarians warned throughout the past century, socialism and other attempts to replace individual decision making with government solutions took away the freedom and dignity of the individual—the goal for which so many battles in Western civilization had been fought. Socialism also faced several insurmountable political and economic problems:
• The totalitarian problem, that such a concentration of power would be an irresistible temptation to abuse
• The incentive problem, the lack of inducement for individuals to work hard or efficiently
• The least understood, the calculation problem, the inability of a socialist system, without prices or markets, to allocate resources according to consumer preferences
For decades libertarian economists such as F. A. Hayek and Ludwig von Mises insisted that socialism simply couldn’t work, couldn’t effectively use all the resources and knowledge of a great society to serve consumers. And for decades social democrats in the West dismissed those claims, arguing that not only was Soviet communism surviving, its economy was growing faster than the economies of the West.
The social democrats were wrong. Although the clumsy Soviet economy could produce large quantities of low-grade steel and concrete—it practiced what the Hungarian-born philosopher Michael Polanyi called “conspicuous production”—and even put men in space, it never managed to produce much that consumers wanted. By the late 1980s the Soviet economy was not two-thirds the size of the U.S. economy, as the CIA estimated; it did not “make full use of its manpower,” as the Harvard University economist John Kenneth Galbraith said; it was not “a powerful engine for economic growth,” as Nobel laureate Paul Samuelson’s textbook told generations of college students. It was, in fact, about 10 percent the size of the U.S. economy, as nearly as such disparate things can be compared, and it made grossly inefficient use of the educated Soviet workforce. A failure in the industrial age, it was a dinosaur in the information age, a fact obvious to everyone—except Western intellectuals—who visited the USSR.
Government intervention into society and markets in the United States suffers from the same problems, albeit in weaker form. Power always corrupts, and the power of government to tell people how to live their lives or to transfer money from those who earn it to others is always a temptation to corruption. Taxes and regulations reduce people’s incentive to produce wealth, and government transfer programs reduce the incentive to work, to save, and to help family and friends in case of sickness, disability, or retirement. And though U.S. bureaucrats don’t make the gross errors that socialist planners did, it is nonetheless clear that government enterprises are less efficient, less innovative, and more wasteful than private firms. Just compare the U.S. Postal Service with Federal Express. Or compare what it’s like to call American Express versus the IRS to correct problems. Or compare a private apartment building with public housing. People who don’t own property don’t take care of it as well as owners; people who don’t have their own money invested in an enterprise and won’t make a profit by its success will never innovate, serve customers, and cut costs as well as profit-seeking entrepreneurs.
In his book The Affluent Society, Galbraith observed “private opulence and public squalor”—that is, a society in which privately owned resources were generally clean, efficient, well maintained, and improving in quality, while public spaces were dirty, overcrowded, and unsafe—and concluded, oddly enough, that we ought to move more resources into the public sector. This book suggests a different conclusion: that since goods and services produced in the competitive marketplace are likely to be produced more efficiently and with more regard for real consumer demand than goods produced by government, we should try to keep as many aspects of life as possible outside the control of government.
BASIC POLITICAL CHOICES
According to Aristotle, the possible political systems were tyranny, aristocracy, oligarchy, and democracy. In the middle of the twentieth century, it seemed to many that the choices were communism, fascism, and democratic capitalism. Today, all those choices have fallen from favor except democratic capitalism, and many intellectuals have embraced Francis Fukuyama’s proclamation of “the end of history,” meaning that the great battles over ideology have ended with the triumph of mixed-economy democracy. Even as his book appeared, however, Islamic fundamentalism was rising in one part of the world, and the economic crisis of 2008 led some pundits to proclaim “the end of capitalism.”
In any case, the supposed triumph of democracy still leaves much room for contending ideologies. Even the identification of “democracy” as the Western alternative to fascism and socialism is problematic. Libertarians, as the name implies, believe that the most important political value is liberty, not democracy. Many modern readers may wonder, what’s the difference? Aren’t liberty and democracy the same thing? Certainly one could get that idea from the standard teaching of American history. But consider: India is the world’s largest democracy, yet its commitment to free speech and pluralism is weak and its citizens have been enmeshed in a web of protectionist regulations—happily reduced in recent years—that limited their liberty at every turn. Throughout the twentieth century, Hong Kong was not a democracy—its citizens had no right to vote for their rulers—yet it afforded more scope for individual choice and freedom than any other place in the world. There is a connection between liberty and democracy, but they are not identical. As my friend Ross Levatter says, if we lived in a society where everyone’s spouse was chosen by majority vote of the entire community, we’d live in a democracy but we wouldn’t have much liberty.
Much of the confusion stems from two different senses of the word “liberty,” a distinction notably explored by the nineteenth-century French libertarian Benjamin Constant in an essay titled “The Liberty of the Ancients Compared with That of the Moderns.” Constant noted that to the ancient Greek writers the idea of liberty meant the right to participate in public life, in making decisions for the entire community. Thus Athens was a free polity because all the citizens—that is, all the free, adult, Athenian men—could go to the arena and participate in the decision-making process. Socrates, indeed, was free because he could participate in the collective decision to execute him for his heretical opinions. The modern concept of liberty, however, emphasizes the right of individuals to live as they choose, to speak and worship freely, to own property, to engage in commerce, to be free from arbitrary arrest or detention—in Constant’s words, “to come and go without permission, and without having to account for their motives and undertakings.” A government based on the participation of the governed is a valuable safeguard for individual rights, but liberty itself is the right to make choices and to pursue projects of one’s own choosing.
For libertarians, the basic political issue is the relationship of the individual to the state. What rights do individuals have (if any)? What form of government (if any) will best protect those rights? What powers should government have? What demands may individuals make on one another through the mechanism of government?
As Edward H. Crane of the Cato Institute puts it, there are only two basic ways to organize society: coercively, through government dictates, or voluntarily, through the myriad interactions among individuals and private associations. All the various political “isms”—monarchy, oligarchy, fascism, communism, conservatism, liberalism, libertarianism—boil down to a single question: “Who is going to make the decision about this particular aspect of your life, you or somebody else?”
Do you spend the money you earn, or does Congress?
Do you pick the school your child goes to, or does the school board?
Do you decide what drugs to take when you’re sick, or does the Food and Drug Administration in Washington?
In a free society, you make the choices about your life. In a politically dominated society, someone else makes those choices. And because people naturally resist letting others make important choices for them, the political society is of necessity based on coercion. Throughout this book we’ll explore the implications of this analysis.
KEY CONCEPTS OF LIBERTARIANISM
With that background in mind, let me spell out some of the key concepts of libertarianism, themes that will recur throughout this book.
Individualism. Libertarians see the individual as the basic unit of social analysis. Only individuals make choices and are responsible for their actions. Libertarian thought emphasizes the dignity of each individual, which entails both rights and responsibility. The progressive extension of dignity to more people—to women, to people of different religions, races, and sexual orientations—is one of the great libertarian triumphs of the Western world.
Individual Rights. Because individuals are moral agents, they have a right to be secure in their life, liberty, and property. These rights are not granted by government or by society; they are inherent in the nature of human beings. It is intuitively right that individuals enjoy the security of such rights; the burden of explanation should lie with those who would take rights away.
Spontaneous Order. A great degree of order in society is necessary for individuals to survive and flourish. It’s easy to assume that order must be imposed by a central authority, the way we impose order on a stamp collection or airport landing slots. The insight of libertarian social analysis is that order in society arises spontaneously, out of the actions of thousands or millions of individuals who coordinate their actions with those of others in order to achieve their purposes. Over human history, we have gradually opted for more freedom and yet managed to develop a complex society with intricate organization. Some of the most important institutions in human society—language, law, money, and markets—developed spontaneously, without central direction. Civil society—the complex network of associations and connections among people—is another example of spontaneous order; the associations within civil society are formed for a purpose, but civil society itself is not an organization and does not have a purpose of its own.
The Rule of Law. Libertarianism is not libertinism or hedonism. It is not a claim that “people can do anything they want to, and nobody else can say anything.” Rather, libertarianism proposes a society of liberty under law, in which individuals are free to pursue their own lives so long as they respect the equal rights of others. The rule of law means that individuals are governed by generally applicable and spontaneously developed legal rules, not by arbitrary commands; and that those rules should protect the freedom of individuals to pursue happiness in their own ways, not aim at any particular result or outcome.
Limited Government. To protect rights, individuals form governments. But government is a dangerous institution. Libertarians have a great antipathy to concentrated power, for as Lord Acton said, “Power tends to corrupt and absolute power corrupts absolutely.” Thus they want to divide and limit power, and that means especially to limit government, generally through a written constitution enumerating and limiting the powers that the people delegate to government. Limited government is the basic political implication of libertarianism, and libertarians point to the historical fact that it was the dispersion of power in Europe—more than other parts of the world—that led to individual liberty and sustained economic growth.
Free Markets. To survive and to flourish, individuals need to engage in economic activity. The right to property entails the right to exchange property by mutual agreement. Free markets are the economic system of free individuals, and they are necessary to create wealth. Libertarians believe that people will be both freer and more prosperous if government intervention in people’s economic choices is minimized.
The Virtue of Production. Much of the impetus for libertarianism in the seventeenth century was a reaction against monarchs and aristocrats who lived off the productive labor of other people. Libertarians defended the right of people to keep the fruits of their labor. This effort developed into a respect for the dignity of work and production and especially for the growing middle class, who were looked down upon by aristocrats. Libertarians developed a pre-Marxist class analysis that divided society into two basic classes: those who produced wealth and those who took it by force from others. Thomas Paine, for instance, wrote, “There are two distinct classes of men in the nation, those who pay taxes, and those who receive and live upon the taxes.” Similarly, Jefferson wrote in 1824, “We have more machinery of government than is necessary, too many parasites living on the labor of the industrious.” Modern libertarians defend the right of productive people to keep what they earn, against a new class of politicians and bureaucrats who would seize their earnings to transfer them to political clients and cronies.
Natural Harmony of Interests. Libertarians believe that there is a natural harmony of interests among peaceful, productive people in a just society. One person’s individual plans—which may involve getting a job, starting a business, buying a house, and so on—may conflict with the plans of others, so the market makes many of us change our plans. But we all prosper from the operation of the free market, and there are no inherent conflicts between farmers and merchants, manufacturers and importers. Only when government begins to hand out rewards on the basis of political pressure do we find ourselves involved in group conflict, pushed to organize and contend with other groups for a piece of political power.
Peace. Libertarians have always battled the age-old scourge of war. They understood that war brought death and destruction on a grand scale, disrupted family and economic life, and put more power in the hands of the ruling class—which might explain why the rulers did not always share the popular sentiment for peace. Free men and women, of course, have often had to defend their own societies against foreign threats; but throughout history, war has usually been the common enemy of peaceful, productive people on all sides of the conflict.
Those themes will be explored and developed throughout this book. It may be appropriate to acknowledge at this point the reader’s likely suspicion that libertarianism seems to be just the standard framework of modern thought—individualism, private property, capitalism, equality under the law. Indeed, after centuries of intellectual, political, and sometimes violent struggle, these core libertarian principles have become the basic structure of modern political thought and of modern government, at least in the West and increasingly in other parts of the world. However, three additional points need to be made: First, libertarianism is not just those broad liberal principles. Libertarianism applies these principles fully and consistently, far more so than most modern thinkers and certainly more so than any modern government. Second, while our society remains generally based on equal rights and markets, every day new exceptions to those principles are carved out in Washington and in Albany, Sacramento, and Austin (not to mention Brussels, Beijing, and elsewhere). Each new government directive takes a little bit of our freedom, and we should think carefully before giving up any liberty. Third, liberal society is resilient; it can withstand many burdens and continue to flourish; but it is not infinitely resilient. Those who claim to believe in liberal principles but advocate more and more confiscation of the wealth created by productive people, more and more restrictions on voluntary interaction, more and more exceptions to property rights and the rule of law, more and more transfer of power from society to state, are unwittingly engaged in the ultimately deadly undermining of civilization.
LEFT OR RIGHT?
In modern American political discourse, we want to assign everyone a place along a spectrum labeled left to right, liberal to conservative. So is libertarianism left or right? Well, let’s consider what those terms mean. The American Heritage Dictionary says that liberal means “favor[ing] reform, open to new ideas, and tolerant” while conservatism seeks “to maintain the existing or traditional order.” The Random House Dictionary says that people on the left advocate “liberal reform . . . usually on behalf of greater personal freedom or improved social conditions,” while those on the right “advocate maintenance of the existing social, political, or economic order, sometimes by authoritarian means.” Well, if those are my choices, I’ll take “left.” But then, by those standards, could we call, say, Ronald Reagan and Paul Ryan conservatives? Haven’t they supported significant changes in American government, which they believed would be “reform” and would “improve social conditions”? These definitions don’t seem to tell us much about modern American politics.
Some political science textbooks display political ideologies along a left-right spectrum, such as this:
But is liberalism really a mild form of communism, and conservatism a mild form of fascism? Aren’t fascism and communism both totalitarian, so that they have more in common with each other than with their neighbors on the left-right spectrum?
The columnist Charles Krauthammer, trying to make sense of the words “liberal” and “conservative” around the world, suggested that we agree that the right means less government and the left means more government. His chart would look like this:
But in the real world, people aren’t always consistent about favoring more or less government. On Krauthammer’s chart, where would you place the conservative who wants to cut taxes and censor pornography on the Internet? Or the liberal who wants to increase taxes but repeal drug prohibition?
In fact, if we look at the people in American politics who are called liberals and conservatives, we find a common pattern: Liberals typically want more government intervention in our economic lives—taxes and regulation—and less government intervention in personal lifestyle choices. Conservatives typically want less government intervention in our economic lives and more intervention in our personal lives. Some political scientists have suggested that those are the available options in modern America; anyone who doesn’t fall into one of those categories is labeled “confused.” The political scientists William S. Maddox and Stuart A. Lilie, in their book Beyond Liberal and Conservative, asked a simple question: Since there are two dimensions in such an approach—economic issues and personal freedoms—each with two basic positions, shouldn’t we recognize four possible combinations of positions? They came up with the chart shown below.
Government Intervention in Economic Affairs
For
Against
Expansion of Personal Freedoms
For
Liberal
Libertarian
Against
Populist
Conservative
Libertarians believe that the history of civilization is progress toward liberty. And besides, the libertarian and “populist” (“statist” might be a better word) positions are actually more consistent than the liberal and conservative positions. So why not turn the chart to show that a consistent commitment to freedom is not just one of four choices but is in fact the pinnacle of political thought? With that reasoning, we get a chart that looks like the one below.
Now we can answer the question posed a few pages back. On the contemporary American left-right spectrum, libertarianism is neither left nor right. Libertarians believe in individual freedom and limited government consistently, unlike either contemporary liberals or contemporary conservatives. Some journalists say that libertarians are conservative on economic issues and liberal on social issues, but it would make more sense to say that contemporary liberals are libertarian on (some) social issues but statist on economic issues, whereas contemporary conservatives are libertarian on (some) economic issues but statist on social issues.
A NOTE ON LABELS: WHY “LIBERTARIAN”?
Some people say they don’t like labels. After all, each of us is too complicated to be summed up in a word, whether it’s a word like black or white, or gay or straight, or rich or poor, or an ideological term like socialist, fascist, liberal, conservative, or libertarian. But labels serve purposes; they help us conceptualize, they economize on words, and if our beliefs are coherent and consistent, there probably is a label to describe them. In any case, if you don’t label your own philosophy or movement, someone else will label it for you. (That’s how the system of human creativity and progress in a free market got labeled “capitalism,” a term that refers to the accumulation of money, which happens in any economy. It was capitalism’s sworn enemy, Karl Marx, who gave the system its name.) So I’m willing to use the term “libertarian” to describe my political philosophy and the movement that seeks to advance it.
Why would anyone choose such an awkward term as libertarian to describe a political philosophy? It’s a clunky neologism with too many syllables. It probably wouldn’t be anyone’s first choice. But there’s a historical reason for the word.
Elements of libertarianism can be traced as far back as the ancient Chinese philosopher Lao-tzu and the higher-law concept of the Greeks and the Israelites. In seventeenth-century England, libertarian ideas began to take modern form in the writings of the Levellers and John Locke. In the middle of that century, opponents of royal power began to be called Whigs, or sometimes simply opposition or country (as opposed to court) writers.
In the 1820s the representatives of the middle class in the Spanish Cortes, or parliament, came to be called the Liberales. They contended with the Serviles (the servile ones), who represented the nobles and the absolute monarchy. The term Serviles, for those who advocate state power over individuals, unfortunately didn’t stick. But the word liberal, for the defenders of liberty and the rule of law, spread rapidly. The Whig Party in England came to be called the Liberal Party. Today we know the philosophy of John Locke, Adam Smith, Thomas Jefferson, and John Stuart Mill as liberalism.
But around 1900 the term liberal underwent a change. People who supported big government and wanted to limit and control the free market started calling themselves liberals. The economist Joseph Schumpeter noted, “As a supreme, if unintended, compliment, the enemies of private enterprise have thought it wise to appropriate its label.” Thus we now refer to the philosophy of individual rights, free markets, and limited government—the philosophy of Locke, Smith, and Jefferson—as classical liberalism.
But classical liberalism is not much of a name for a modern political philosophy. “Classical” sounds old, outdated, and carved in stone. Some advocates of limited government began using the name of their old adversaries, “conservative.” But conservatism properly understood signifies, if not a defense of absolute monarchy and the old order, at least an unwillingness to change and a desire to preserve the status quo. It would be odd to refer to free-market capitalism—the most progressive, dynamic, and ever-changing system the world has ever known—as conservative.
The right term for the advocates of civil society and free markets is arguably socialist. Thomas Paine distinguished between society and government, and the libertarian writer Albert Jay Nock summed up all the things that people do voluntarily—for love or charity or profit—as “social power,” which is always being threatened by the encroachment of state power. So we might say that those who advocate social power are socialists, while those who support state power are statists. But alas, the word socialist, like the word liberal, has been claimed by those who advocate neither civil society nor liberty.
In much of the world, the advocates of liberty are still called liberals. In South Africa the liberals, such as Helen Suzman, rejected the system of racism and economic privilege known as apartheid in favor of human rights, nonracial policies, and free markets. In China and Russia liberals are those who want to replace totalitarianism in all its aspects with the liberal system of free markets, free speech, and constitutional government. Even in Western Europe, liberal still indicates at least a fuzzy version of classical liberalism. German liberals, for instance, usually to be found in the Free Democratic Party, oppose the socialism of the Social Democrats, the corporatism of the Christian Democrats, and the paternalism of both. Outside the United States, even American journalists understand the traditional meaning of liberal. A Washington Post story datelined Moscow reported that “liberal economists have criticized the government for failing to move quickly enough with structural reforms and for allowing money-losing state factories to continue churning out goods that nobody needs.” Liberal economists such as Milton Friedman make similar criticisms in the United States, but then the Post calls them conservative economists.
Here at home, though, by the 1940s the word liberal had clearly been lost to the advocates of big government. Some classical liberals resisted for a time, doggedly insisting that they were the true liberals and that the so-called liberals in Washington were in fact re-creating the old order of state power that liberals had fought to overthrow. But others resigned themselves to finding a new term. In the 1950s Leonard Read, founder of the Foundation for Economic Education, began calling himself a libertarian. That word had long been used for the advocates of free will (as opposed to determinism); and, like liberal, it was derived from the Latin liber (free). The name was gradually embraced by a growing band of libertarians in the 1960s and 1970s. A Libertarian Party was formed in 1972. The term was still rejected by some of the greatest twentieth-century libertarians, including Ayn Rand, who called herself a “radical for capitalism,” and F. A. Hayek, who continued to call himself a liberal or an Old Whig.
In this book I accept the contemporary usage. I call the ideas I advocate, and the movement that seeks to advance them, libertarianism. Libertarianism may be regarded as a political philosophy that applies the ideas of classical liberalism consistently, following liberal arguments to conclusions that would limit the role of government more strictly and protect individual freedom more fully than other classical liberals would. Most of the time, I use liberal in its traditional sense; I call today’s misnamed liberals welfare-state liberals or social democrats. And I should note that libertarian ideas and the libertarian movement are far broader than any political party, such as the Libertarian Party. References to libertarianism should not be taken to indicate the Libertarian Party unless that is made explicit.
THE LIBERTARIAN ALTERNATIVE
The old ideologies have been tried and found wanting. All around us—from the postcommunist world to the military dictatorships of Africa to the insolvent welfare states of Europe and the Americas—we see the failed legacy of coercion and statism. At the same time we see moves toward libertarian solutions: constitutional government in Eastern Europe and South Africa, privatization in Britain and Latin America, democracy and the rule of law in South Korea and Taiwan, the spread of women’s rights and gay rights, and economic liberalization in China, India, and even some countries in Africa. Challenges to freedom remain, of course, including the continuing lack of Enlightenment values in much of the world, the unsustainable welfare states in the rich countries and the interests that fight reform, the recurring desire for centralized and top-down political institutions such as the Eurozone, Islamist theocracy, and the spread of “populist,” antilibertarian responses to social change and economic crisis. Libertarianism offers an alternative to coercive government that should appeal to peaceful, productive people everywhere.
No, a libertarian world won’t be a perfect one. There will still be inequality, poverty, crime, corruption, man’s inhumanity to man. But unlike the theocratic visionaries, the pie-in-the-sky socialist utopians, or the starry-eyed Mr. Fixits of the New Deal and Great Society, libertarians don’t promise you a rose garden. Karl Popper once said that attempts to create heaven on earth invariably produce hell. Libertarianism holds out the goal not of a perfect society but of a better and freer one. It promises a world in which more of the decisions will be made in the right way by the right person: you. The result will be not an end to crime and poverty and inequality but less—often much less—of most of those things most of the time. 
