Anti-Libertarian Criticism

Keeping libertarians in check and exposing it as a bankrupt ideology

Tag Archives: The State

Free Market Economics: The Inept Cousin of Real Social Science

You can call this privileging disciplines if you want, but I would gander that if one took the best of the best of modern social science and psychology and put the field of economics to the test, much of what is talked about as free market theory is in contradiction to recognized sociological and ecological fact. And this would only be reinforced by a host of fairly common experiences of modern life. A kind of theory that often more or less brushes off much of social reality as an “externality” just isn’t going to be that descriptively useful or accurate at the end of the day, since it’s trying to make sweeping claims about society based on a highly limited and inaccurate model.

Free market economics is a simple, and some would say elegant, story. This story would generally have one believe that social good tends to be the unintended consequence of the pursuit of individual economic self-interest and accumulated private property (“the invisible hand” in a nutshell), while the intended pursuit of social good tends to lead to ruin (the scapegoating of socialism). This is supposed to be a counter-intuitive general truth about social interaction. There is the linked belief in competition as the driving engine for order and progress (and in the case of typical Randians and conservative libertarians, heroic captains of industry).

The free market idea is frequently used as support for the belief in a social order based on private property and accumulation, I.E. capitalism, that this is voluntary by definition, and then this is reinforced through the culturally ingrained ethos of “winning” and “growing”. There are certain 19th century and turn of the century notions of “progress” that go along with this, and there are overlaps with social darwinist theory, which took the competitive aspect of Darwin’s idea and ran with it even though it doesn’t entirely jibe with Darwin himself. Perhaps there is a grain of truth in the idea that there can be positive side effects of people’s apparently selfish decisions, but free market economic theory often generalizes or universalizes this in an ideological way.

The story just doesn’t square up to human experience. The freedom of enterprise is not my freedom (*insert left-wing interpretation of Max Stirner here*). The pursuit of self-interest within markets does not inherently lead to nothing but win-wins and markets are not a self-correcting machine that is intrinsically and infinitely adaptable to human needs. Structuring society around a competitive ethos has not been without consequences for social ethics and psychology. Economic power is not a harmless thing in a social vacuum. Choices within markets are not necessarily meaningfully voluntary, and social conflict is not an externality to markets. It also turns out that there are many ways in which we’ve been learning that technology is a double-edged sword and that there’s this thing called a progress trap. Realities of class, the environment, and technology, all challenge free market theory.

Historical fact is that the socialist, anarchist and communist movements came into existence in part as a reaction to this kind of liberal theory of capitalism and the early implementation of such ideas. It is important to remember that the orientation of Marxism and much of early anarchism was anti-liberal, and it is no coincidence that so much of free market libertarian ideology is mired in 19th century liberal thought. The march toward what was to become global capitalism created some serious social ruptures and introduced new difficulties into society. A century later, problems have continued to develop in ways that even Marx – who frankly does a decent job of identifying the problem during his own time – could not foresee.

For the most part, the liberals actually won and got what they wanted (relatively free reign for enterprise), only they were unprepared for the reality of growing state intervention and bureaucracy that inevitably came with the development of capitalism. They would never admit it, but there is realistically no way to develop and maintain large-scale global capitalism without the expansion of the state. They’re often left in a position of denouncing the modern state while continuing to believe in the principles and political ideas that necessitate it. The left-libertarian, Carsonian spin on this question is the idea that anti-statism is the road to non-capitalism.

My statement can be misread as supporting the “free market anti-capitalist” view, but it’s more complicated than that, since I’m emphasizing that the play and growth of market forces, of accumulation and competition, were an important causal factor for the growth of state power. In contrast, the “free market left-libertarian” view is all about emphasizing the notion that state power has aided the growth of economic power, which while true at a certain level is not definitive of the problem of capitalism and often leaves them blind to the ways in which markets generate their own problems and that the modern “welfare state” only exists in large part because of the inadequacies of markets. To admit any of this is simply ideological heresy in contemporary American libertarian circles. They are ideologically trapped by ideal-market notions.

The key aspect of this that free market libertarians wouldn’t accept is that the principles of free markets and property necessitate the modern state. In simply removing state intervention without removing the norms of property and markets and directly challenging economic power, one does not end up with non-capitalist society. What one ends up with at best is more like a reset button to the 19th century, to earlier capitalism, in which the modern state can reformulate itself all over again. Except even that isn’t accurate, because the current social climate is such that economic power is so large and ingrained in society that one may as well say that the result wouldn’t likely be far off from the kind of dystopia associated with anarcho-capitalism – a kind of neo-fuedal order in which powerful economic entities take on the functions of the state.

Some libertarians react to this hard reality with shock and denial, reducing it to the common strawman of Hobbesian pessimism run wild. They generally tend to think of it as scare tactics. But it just comes down to realistic expectations of human behavior, plus a critical analysis of society that doesn’t just treat the state as a primary part of a binary. Libertarians would have us believe that they are solving an antagonism between economy and state in a pretty straightforward dialectic in which the economy wins and we all are free, while real-world social dynamics seem to indicate a complexity of antagonisms that aren’t at all easy to resolve. Sorry to be cliche, but it’s just not that simple. Weakening of state power does not inherently lead to non-capitalist society any more than capitalism naturally progresses to communism. Economic power has a capacity to produce political power, as well as generate social conflicts and issues without the necessity of state bureaucracy.

It is quite fascinating that a discipline about economies is so strongly founded in the denial of economic power. This has left many libertarians with little choice but to engage in questionable historical revisionism blaming everything on the state in order to keep their ideology intact. It’s the impetus behind why Austrian economists have to try to elevate their methods over the contrary findings of social science in the modern age and characterize their claims as ahistorical facts of human action. It’s why Murray Rothbard had to explicitly deny the existence of economic power, to keep the libertarian ideology safe from reality. Austrian schoolers aside, whatever school of free market economics one favors, I say a pox on all your houses.