Institutions

From Critiques Of Libertarianism
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Libertarians cannot see the forest for the trees. By focussing on individuals, they ignore the fact that individuals comprise, reside in and utilize institutions. Institutions such as property, law, governance, capitalism, marriage, etc. Libertarians pretend that rights are "natural" when in reality they come from institutions. See also Institutional Economics.

Links

Capitalism (40 links)
Capitalism (and entrepreneurship) are based upon the coercion that creates rights. Capitalism, like fire, is most valuable when it is used only for desired purposes (regulated), not burning indiscriminately. For example, as part of Mixed Economy or Social Democracy. Bartering and other exchanges, even in markets, do not make capitalism: private ownership of the means of production does. Indeed, markets are not distinctive to capitalism; they exist in all economic systems more sophisticated than a hunter-gatherer economy. A major problem of capitalism is that generally the upper classes rob the lower classes.
Government (35 links)
Libertarians demonize government and grossly misrepresent the nature of government, the effects of government and the differences between governments.
Law (18 links)
Libertarians want laws and interpretations of laws that favor their own interests. They have invested in authoring and sponsoring laws. They have their ridiculous own schools of legal and Constitutional interpretation, and they sponsor training for law students and judges.
Property (41 links)
Property, like all rights, is a coercive social institution, not a mystical relationship of individuals with objects. Property redistributes liberty: it protects some specific liberty for owners, and coercively denies that liberty to all others. The pretense that property is not coercive is one of the great libertarian lies.
Bribery, Cooperation, and the Evolution of Prosocial Institutions [More...]
Large-scale anonymous cooperation (as in markets and rights) requires institutions with the power to punish. Permitting corruption such as bribery and nepotism (which many libertarians favor) undermines the institutions. Game-theoretic modeling.
Corporations (26 links)
Corporations are creatures of the state, our first-class citizens, government created systems of privilege used to concentrate wealth. They are a fundamental part of our current capitalist system. Libertarian individualism seems to ignore this basic problem. A few libertarians (and some others) oppose corporations for that reason. Giant corporations exercise private tyranny because they are unaccountable to the public.
Hodgson on the Essence of Old Institutional Economics [More...]
The neoclassical idea of basing economics on the individual utility-maximising agent is mistaken. Individuals and their action can be shaped by social and cultural factors and institutions.
Illiberal Libertarians: Why Libertarianism Is Not a Liberal View [More...] (2 links)
An important academic paper that shows that libertarianism is incompatible with six fundamental liberal institutions. "[...] the primary institutions endorsed by the liberal political tradition are incompatible with libertarianism.[...] what we have in libertarianism is no longer liberalism, but its undoing.
Karl Polanyi Explains It All [More...]
Robert Kuttner explains how Polanyi's The Great Transformation: The Political and Economic Origins of Our Time is more relevant now than ever. "Contrary to libertarian economists from Adam Smith to Hayek, Polanyi argued, there was nothing “natural” about the free market."
Libertarians’ reality problem: How an estrangement from history yields abject failure
"The libertarian tradition fundamentally misunderstands human life. No wonder its adherents get politics so wrong. [...] libertarianism cannot provide a coherent account of our capacity for choice. It presents freedom as its central concern, conceptually and normatively, but is indifferent to the conditions that nurture and sustain it."
Look at the Violence Inherent in the System! [More...]
Libertarian Gene Callahan points out that private property is a social invention, which explains why some nations have "trespass" where others have "right to wander".
Reinventing Government Badly (5 links)
It is patently obvious, even to many libertarians, that some form of government is needed. Libertarians thus reinvent governments according to their own lights as defense associations, private monarchies, and a variety of other bad solutions that privatize power.
The Great Transformation: The Political and Economic Origins of Our Time (book, online) (1 link)
Explains the socially constructed nature of "free markets", as opposed to "spontaneous order". A major work of economic history.
The Institutional Structure of Production
Ronald Coase's Nobel lecture. He discusses the importance of the structure of institutions for understanding real-world economics and the pervasiveness of transaction costs and how they lead to firms, rather than individual contracting.
The Lesson of Grab What You Can [More...]
"But the Grab World baseline allows us to see that all economic institutions are restrictions and infringements on liberty. Property is the most liberty-destroying and all-encompassing of the restrictive economic institutions, but contracts, patents, copyrights, securities, corporations, and so on do the same thing."
The Myth of the “Free Market” and How to Make the Economy Work for Us [More...]
One of the most deceptive ideas continuously sounded by the Right (and its fathomless think tanks and media outlets) is that the “free market” is natural and inevitable, existing outside and beyond government.
The Nation-State Reborn [More...]
Dani Rodrik points out that laissez-faire has not and cannot supplant the nation-state.
There's no such thing as society… only individuals and families. (4 links)
This famous Margaret Thatcher quote is philosophical twaddle. The same principle then applies to government, corporations, religions, etc. It is based on the unscientific and fallacious claim that individuals are the only valid level of analysis, common to the methodological individualism of Austrian Economics.

Quotations

Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. So inseparably are the means connected with the end, in all cases, that where the former do not exist the latter cannot be obtained. All accumulation, therefore, of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.
Thomas Paine, "Agrarian Justice"
There are substantial parts of ordinary human activity that don't make sense if we think of rationality as egoistic maximization of utility. Collective action, group mobilization, religious sacrifice, telling the truth, and working to the fullest extent of one's capabilities are all examples of activity where narrow egoistic rationality would dictate different choices than those ordinary individuals are observed to make. And yet ordinary individuals are not irrational when they behave this way. Rather, they are reflective and deliberative, and they have reasons for their actions. So the theory of rationality needs to have a way of representing this non-egoistic reasonableness.
Daniel Little, "Amartya Sen's commitments"
Saying ‘governments can’t create wealth’ is a sweeping, largely vacuous statement based on a superficial zero sum view of taxation as being ‘extracted’ from the private sector. In fact, taxation is just one prong of a symbiotic relationship that exists between the private and public sectors. If we take the definition of wealth as the creation of valuable resources, it’s clear that, say, teaching and infrastructure ‘create wealth.’ We’ve already seen just how large a source of wealth the government can be through its funding of research and development. Furthermore, many state-backed institutions are historically a prerequisite for substantial wealth creation to take place at all.
UnlearningEcon, "An FAQ for Libertarians"
It is unfortunate that the kind of computing Bitcoin pioneered has been given the name "cryptocurrency", and has been associated with all sorts of technofinancial scheming. When you hear "cryptocurrency", don't think of Bitcoin or money at all. Think of Paul Krugman's babysitting co-op. Cryptocurrency applications deal with the problem of organizing people and their resources into a collaborative enterprise by issuing tokens to those who participate and do their part, redeemable for future services from the network. So they will always involve some kind of scrip. But, contra Bitcoin, the scrip need not be the raison d'être of the application. Like the babysitting co-op (and a sensible monetary economy), the rules for issue of scrip can be designed to maximize participation in the network, rather than to reward hoarding and speculation.
Steve Waldman, "Econometrics, open science, and cryptocurrency"
Having no conception of a political society, libertarians have no conception of the common good, those basic interests of each individual that according to liberals are to be maintained for the sake of justice by the impartial exercise of public political power.
Samuel Freeman, "Illiberal Libertarians: Why Libertarianism Is Not a Liberal View" pg. 149
I argue that libertarianism's resemblance to liberalism is superficial; in the end, libertarians reject essential liberal institutions. Correctly understood, libertarianism resembles a view that liberalism historically defined itself against, the doctrine of private political power that underlies feudalism. Like feudalism, libertarianism conceives of justified political power as based in a network of private contracts. It rejects the idea, essential to liberalism, that political power is a public power, to be be impartially exercised for the common good.
Samuel Freeman, "Illiberal Libertarians: Why Libertarianism Is Not a Liberal View" pg. 107
The non-consensual constraints on conduct recognized by libertarians are quite extensive. Our duties to respect the lives and the physical integrity of others' persons, and their freedom of action and extensive property claims, our obligations to keep our contracts, avoid fraud, and make reparations for harms we cause, are not based in free choice, consent, or any kind of agreement (actual or hypothetical). These are natural rights and duties, libertarians claim, that people possess independent of social interaction. Despite their emphasis on consent, voluntariness, and contract, libertarians are averse to appeals to consent or social agreement to justify their preferred list of moral rights and duties.
Samuel Freeman, "Illiberal Libertarians: Why Libertarianism Is Not a Liberal View" pg. 125
Libertarians of course deny the institutional conception of property. Fundamental to their arguments are ideas of noncooperative natural property and pre-social ownership. They assume the lucidity of these concepts, and take it as self-evident that property involves unrestricted rights to use and dispose of things.
Samuel Freeman, "Illiberal Libertarians: Why Libertarianism Is Not a Liberal View" pg. 130
Having no conception of public political authority, libertarians have no place for the impartial administration of justice. People's rights are selectively protected only to the extent they can afford protection and depending on which services they pay for.
Samuel Freeman, "Illiberal Libertarians: Why Libertarianism Is Not a Liberal View" pg. 149
In its own way, the "No True Libertarianism" argument is very similar to the "No True Communism" of those on the far left, who argue that the fault of Communism lies not with the idea, but with the practice--despite the fact that no successful large-scale Communism has ever been implemented in the world. Neither ideology can fail its adherents. They can only be failed by imperfect practitioners. Both ideologies run counter to human nature for the same reason: power corrupts, and absolute power corrupts absolutely.
David Atkins, "The "No True Libertarianism" fallacy"
Urban street gangs in under-policed neighborhoods, mafias in under-taxed countries, and groups like Hezbollah in Lebanon invariably step in to fill the void where government fails. When the Japanese government wasn't able to adequately help the population after the earthquake and tsunami, the yakuza helpfully stepped in to do it for them. The devolution of local authority and taxation into the hands of criminal groups willing to provide a safety net in exchange for their cut of the action is the invariable pre-feudal result of the breakdown of the government-backed safety net. It happens every single time. The people will want a safety net where utter chaos doesn't prevent it: they'll either get it from an accountable governmental authority, or from a non-governmental authority of shadowy legality. Both kinds of authority will levy their own form of taxation, be it legal and official, or part of an illegal protection scheme.
David Atkins, "The "No True Libertarianism" fallacy"
But the Grab World baseline allows us to see that all economic institutions are restrictions and infringements on liberty. Property is the most liberty-destroying and all-encompassing of the restrictive economic institutions, but contracts, patents, copyrights, securities, corporations, and so on do the same thing. With Grab World as the actual blank slate starting point baseline, it's clear that all we are debating about is what set of liberty-infringing restrictions are the best ones (unless you actually advocate the Grab World).
Matt Bruenig, "The Lesson of Grab What You Can"
In reality, the “free market” is a bunch of rules about (1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); (2) on what terms (equal access to the internet? the right to organize unions? corporate monopolies? the length of patent protections? ); (3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives? dangerous workplaces?) (4) what’s private and what’s public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); (5) how to pay for what (taxes, user fees, individual pricing?). And so on.
Robert Reich, "The Myth of the “Free Market” and How to Make the Economy Work for Us"
Williamson borrowed from Coase the concept of "transactions costs" the idea that the market price in any transaction may fail to incorporate the full costs to the seller or buyer because of the very conditions of exchange. In particular, whenever there is uncertainty or the need for long-term relationships, the parties to a transaction are unlikely to be able to write contracts complete enough to cover all the contingencies or hidden costs. Furthermore, incomplete contracts encourage one or the other party to behave opportunistically, deliberately withholding information or broadcasting disinformation to get a better deal. In such cases, the transaction is likely to occur under a single roof, inside a "hierarchy" (that is, firm). This solution "internalizes" or reveals to the decision makers those otherwise hidden costs. Williamson showed that there are, even in pure theory, situations in which the inefficiencies of bureaucratic organization are offset by the greater predictability of the outcome. This is showing quite a lot, at least to academic economists. It says that under rather common circumstances it is efficient (maximizing of profits, minimizing of long run average costs) for explicit rules, regulations, commands, organization charts, and social contracts to replace the invisible hand.
Bennett Harrison, "Where Private Investment Fails"
Anarcho-capitalism exists; landownership just happens to be dominated by about 200 corporations called governments.
Karl Widerquist, "Why Do Philosophers Talk so Much and Read so Little About the Stone Age? False factual claims in appropriation-based property theory"
Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density.
Charles Stross, "Why I want Bitcoin to die in a fire"