What Is A Postlibertarian?

Libertarians are interesting people. I first discovered them when I stumbled onto Ron Paul in the presidential preliminaries of summer 2007. As I was growing up and growing disillusioned with the Republican establishment, I was a ripe vessel for the libertarian ideology of less government and vast personal freedom. After all, they argued, that’s what true conservatives used to be like, anyway. I spent hours and hours in a Facebook group forum, watching – and sometimes participating in – grand conflicts of the mind. There was no problem in the world that was not caused by an overreaching government, and no problem that could not be solved by the beauty of the free market. And if anyone dared to accuse libertarian dogma of causing problems in the real world, there was always an explanation that it wasn’t really libertarianism at play – there was a meddling governor or lobbyist or bureaucrat somewhere causing it to only pretend to be a free market and soiling its reputation. I learned about the heroes, from Smith and Hayek to Rand and von Mises; I learned all the lingo and jargon, from the wonders of Austrian economic theory to those dreaded RINOs and neocons.

I also learned that libertarians are often jeered and accused of living in an old-fashioned fantasy. It “sounds good in theory,” but it “just doesn’t work in the real world.” But the logic of libertarian ideas was always so convincing, and the accusers never seemed to explain why it just didn’t work. If they couldn’t disprove the logic, than maybe there was just something imperfect in the execution, some way that it wasn’t true libertarianism, but the actual philosophy was still true. Some would make vague accusations that libertarianism promotes a greed that consolidates wealth and ruins the poor, but that wasn’t very good either. The logic of libertarians said that greed helps things by forcing sellers to meet the desires of buyers, and so forth. So those were only vague attacks on the vice itself, doing nothing to defeat the logic of how that vice improves things instead of destroying them.

And yet…. things didn’t always add up. I saw real evidence of real greed destroying things in the real world. I saw laws and regulations being enacted because horrible things were happening without them. I was still skeptical of the ability of governments to be smart enough, competent enough, or pure enough to make them better, but I was no longer convinced that pure libertarianism held the path to a perfect world, either. I learned more about economics and took a class on game theory, and I am finally at a point where I can identify four logically based reasons why pure libertarianism fails.

That’s why I call myself post-libertarian. I am still grounded in a general aversion to the power of government and an appreciation for the power of the market, but I am not dogmatic about it. I am willing to admit when these ideas fail, but I don’t have to vaguely blame such failures on poor execution or on greed. I am also willing to admit that the world is a complicated place and I don’t understand everything, and I try to understand the point of view of someone who disagrees with me so I can better understand the truth. In fact, all of this is really simply a pursuit of truth.

So what’s wrong with pure libertarians?

1. Libertarians tend to underestimate externalities. An externality is a fancy economic word for an activity that affects someone who had nothing to do with the activity itself. The sort-of classic example is pollution. Big company dumps pollutants into river; little fisherman downstream can’t fish anymore. You might think that a libertarian would use the oversimplified “regulations-are-bad” dogma and say that this is perfectly OK, and this turns a lot of people off to libertarianism. Now a lot of libertarians will actually pay lip service to the existence of obvious negative externalities like pollution (you can also craft an argument on this particular case based on property rights), and they may say it’s perfectly acceptable to regulate activity that negatively affects others, because at its core, libertarian philosophy is “do whatever you want if it doesn’t hurt someone else“.

But these kinds of externalities are everywhere (especially in a world so complex that the debt of a tiny European country has an affect on the price of filling up my tank), and libertarians often don’t think about them in their haste to criticize an over-regulating big government. I think that a lot of times when statists attack libertarians because they see the outcomes of some particular policy as being terribly unfair, it’s an unfairness that actually comes from a negative externality that a libertarian might not have thought about.

2. Libertarians tend to overestimate the perfect flow of information in the market. One of the extremely important assumptions in the functioning of the free market is the flow of information. If someone is extra greedy and charges too much for a product, then someone even greedier will come along and charge less for that product because he can get all the customers. If someone is greedy and sells an inferior product, everyone will find out and stop buying the product. This logic is sound, and it happens all the time in the real world, but only when enough people figure out what’s happening. A libertarian may claim that there’s no need to regulate the food industry because if some producers produce bad food, people will find out and stop buying from them, so producers have an incentive to produce good food. And yet, even in a nation that may have too much food regulation, we frequently hear about bad food reaching the grocery stores. This means that the built-in incentives and the regulation failed. Why? Because the information that the product was inferior did not flow properly to the regulators or the consumers until people started getting sick or worse. (I am not suggesting what should be done to improve food safety, but simply that we must keep the flow of information in mind when we discuss what should be done one way or the other about this and many other issues.)

3. Libertarians tend to underestimate the importance of the rule of law and participation thereof. The rule of law is another important assumption in the philosophy of “do whatever you want if it doesn’t hurt someone else.” In the aforementioned case of two greedy businessmen lowering their prices to attract customers, such a scenario only plays out if both businessmen follow the rule of law, or, if it makes more sense, the “rules of the game.” If one businessmen spreads lies about the other’s product or burns down the other’s store so he doesn’t have to match the prices, then the consumer stops winning. That’s why society creates basic laws about slander, theft, murder, and so on – the rules of the game, the rule of law.

Now here the pure libertarian will object that any businessman who goes about burning down competitors’ buildings will not be in business very long himself, and thus he has an incentive to abide by such behavior whether they exist as rules or not. But now he has committed fallacy #2 – an overestimation of the flow of information. If nobody knows who burned the other building down, than nobody has a reason to dislike the first businessman, and the law enforcement has no reason to enforce the law. Dishonesty is not incompatible with free markets if the dishonesty is found out – and the sooner, the better – but deception that covers up dishonesty prevents the market from working. When greed plays by the rules the market works, but if there is no religious/moral/ethical compulsion to play by the rules, and if it is possible to prevent discovery that the rules are being broken, then greed will break the rules every time. This is the supreme cause of all the fraud and corruption that statists think about when they accuse libertarian greed of being destructive. The statist assumes that the greed will never be discovered quickly enough to prevent the damage, and the libertarian assumes that it always will. (The truth is probably in the middle, so instead of denouncing or praising greed as bad or good, we should think about ways to either encourage the compulsion to play by the rules and not hurt others, or increase the flow of information so that the people-hurting rule-breakers will be more quickly discovered. My belief in Christianity relates to the former, although I realize that may not be the most popular “solution”…)

4. Libertarians tend to completely ignore game theory. My father explained the prisoner’s dilemma to me as a curious novelty years ago, but it was only when relearning about it in a college Game Theory philosophy class that I realized I had solid logical proof of a failure of the core principle of libertarian philosophy. The philosophy of freedom, from Adam Smith down on through Ron Paul, said that if everyone pursued their own interests, everyone would be better off. The buyer gets a product he wants, the seller receives money she wants, and so on. The logic worked. Greed was good. But the prisoner’s dilemma was an undeniable scenario where two players each pursue their own best interest and each end up worse off. Now most everyday economic interactions aren’t prisoner’s dilemmas, of course, but we discussed various real-world scenarios that are prisoner’s dilemmas, and every one feels like a strike against libertarian thought. I had never heard of this in libertarian forums! Never accused and never defended!

I believe prisoner’s dilemmas are relatively rare in the real world, but anywhere such a scenario exists, we must concede that the me-first philosophy will fail and think about ways to change the incentives to encourage the players to cooperate, even if that (gasp) means regulation or some other intervention. Related game theory concepts, from the free rider problem to the game of chicken, also have interesting implications for libertarian thought, sometimes for and sometimes against. The important takeaway here is simply not to assume that a “me-first” philosophy will always lead to optimal outcomes for all involved parties, even if it usually does. I recommend a Game Theory class, or at least a book, for anyone interested in economics and politics.

And this is what I call postlibertarianism. I was actually surprised to see that there do not seem to be such things as postlibertarians on the Internet (except for one definition I found that was really just regular libertarianism presented more softly than usual), so I am defining it here and making myself known. A postlibertarian accepts the basic premises of libertarianism, but also tries to understand how and why it sometimes doesn’t seem to work, and tries to use that wisdom not to denounce it, but to make it work better. (e.g. When are problems caused by a lack of information, and how can we make that information flow better?)

My economic and political philosophies have changed more in the last four years than in all of my first eighteen, and they may change even more in the next four. I don’t have all the answers, and I’m willing to admit it. This is meant to be a launching pad, not a stone screed. But I believe in the power of markets to create positive outcomes and I believe that there are also frequently overlooked limitations, as I have outlined here. I don’t know how pure libertarians will react to such thoughts, and I don’t know if regular conservatives or liberals will like it very much, either. (If you feel I’ve mischaracterized you, please let me know.) That’s the problem with trying to be so reasonable and conciliatory. But such is the pursuit of truth. Whether you join me, question me, or accuse me, you are helping the pursuit. Thanks for reading.

9 thoughts on “What Is A Postlibertarian?”

  1. You know… even as a middle-to-lower class citizen, no matter what ideology the ruling government is based around, or how much control it has, I will still be able to get by financially. With some I may be more or less wealthy, but my life wouldn’t be much different. So when I vote, I vote for the party with the best social policies. I disregard economics. People should have the right to marry whoever they want, restrict their bodies from producing children, etc. Simple liberties. They are more important than whether I can afford a $20k or $40k vehicle. If you vote based on economic reasons, you are greedy either way.

  2. Interesting post. I am a present libertarian & I’ve been vaguely libertarian since I was about 15 (20 years now), so I’ll give you my thoughts. First of all, I don’t think that a perfect world is achievable, so criticizing libertarian philosophy because it doesn’t achieve this is like criticizing life because it isn’t fair.

    1) Externalities: This is not an argument against libertarianism. It’s a good argument that I agree with against ignorant people.
    2) Information: This is another good argument that I agree with against ignorant people. The same problem exists for regulators. I suspect that one of the problems with our current system in the USA is that producers voluntarily give up responsibility for the safety of their products because they think the government will take care of it.
    3) Rule of Law: This is definitely true about many libertarians. However, there is a huge amount of diversity with regard to the respect that libertarians have for law. The libertarians you describe in this point are on the anarchist side of things, and I really don’t think that anarchists are the majority of libertarians. The only thing I think libertarians have in common with regard to regulation is that we think there should be less of it.
    4) Game theory is important, but it doesn’t explain the whole picture. I recommend this video for some information that is a great adjunct to game theory: http://reason.com/blog/2011/07/20/reasontv-nobel-prize-winning-e

    One of the reasons I like libertarian philosophy is that all of the criticisms that you weigh against libertarianism also apply to regulators. I don’t know of any reason that a regulator would be any less ignorant or selfish on average than the average market participant. The difference between the two is that market participants making a mistake affect very few others. Regulators making a mistake affect MANY others. Over the long term, and for policies that constrict freedom for many, I will trust the wisdom of crowds over that of “experts” any day.

    1. Thank you for your insightful thoughts. I agree that it is good to keep in mind that a perfect world is impossible – reminds me of the old yarn about capitalism (or democracy) being the worst possible system except for all the others that have been tried. You are right that there are many different kinds of libertarians but that we all do pretty much want less regulation. Mistakes by regulators can cause greater damage, as you say, and even worse their mistakes can’t be corrected as quickly, if they are ever corrected (the ethanol boondoggle comes to mind).

      Yet I think I disagree with you that the mistakes of market participants affect very few others. For instance, the mistakes that led to the BP oil spill last summer affected a large number of people. Now I don’t think that’s an argument for more regulation – there already was plenty of regulation that clearly failed – but I think we have to be willing to admit that greed and/or sheer incompetence can and do cause large amounts of harm that are not always quickly self-correcting, and in such situations I think we should at least investigate whether or not there are ways to encourage the flow of information to decrease the risk of such harmful events without creating a worse problem (such as merely moving the corruption and incompetence to the regulator). Such a way may not exist – but I think that is a more honest approach than simply claiming (as some libertarians do) that self-regulating incentives will always eventually lead to positive outcomes for everyone.

  3. You: says libertarians do not understand game theory. My dad told me about the prisoners dilemma! I took a game theory class!

    You: present obvious misunderstanding of the prisoners dilemma.


    I’m going to go ahead and assume you aren’t aware of Austrian economics influence on the very development of game theory. Early game theory is a literal minefield of influences of modern libertarian thought and economics. You couldn’t possibly get this more wrong.

    Oskar Morgenstern wrote An Economic Theory of Games, which was the seminal work in that field. He was a student of LUDWIG VON MISES, attended many of his seminars, wrote in works with him, frequently refereed to praxiology. When he wrote about economics it was clear that his influences came from THE AUSTRIAN SCHOOL OF ECONOMICS, which is a modern libertarian hotbed. Morgenstern succeeded Friedrich Hayek, (another hugely influencial person for libertarians that advocated non-interventionism into markets ) as the director of the Institute for Business Cycle Research in Vienna. During his time in that post Morgenstern authoredThe Limits of Economics in which he clearly took a Misesian view toward economic policy. He argued that governments are not capable of coordinating markets; he continued with the contention that statistics can not be used to completely comprehend the status of an economy “because the whole economic process cannot be statistically portrayed”

    Hoselitz was a student of who? Mises. Who was Nash’s prime influence and basis of work? Hoselitz! Nash as in, THE NASH EQUILIBRIUM.

    Practically all of the major inflences of the emergence of game theory, are either people who studied Mises, were Influenced by Menger, Praxiology, or the Austrian School of Economics.

    BUT you didn’t see it in a FORUM??!!!


    The rest of the stuff you wrote is all on a similar cringe worthy level of criticism. How about learning the topic first before doing this?

  4. Hi Joshua,

    Firstly, good on you for writing the post. It takes a lot of effort. I’d just like to point out a libertarian/ancap response to some of your critiques. Since it doesn’t seem that you got much from your forums!

    Critique 1: Externalities

    Externalities are dealt with through property rights. Consider a polluter of air. If it could be proven that the pollution objectively causes harm then no matter how great, the polluter would have to cease and desist until the situation is rectified e.g. affected parties are compensated. Here is a really good video about how the common law which is derived anarchically (not from rulers but from reason and practice).

    Critique 2: Perfect information

    In all my research and reading of economics the concept of perfect information was not mentioned. What von Mises does mention is that without property rights and exchange there is a no information or what he termed the “Socialist Calculation Problem”. If you just take my money, without my consent, then you have no idea how I value it. Aggregate this upwards of a few million people and you have a lot of money with very little way of knowing where to allocate it. Libertarians and Austrians don’t posit perfect information, that will never be possible, what they do posit is how value is actually realised and that it can only be realised through voluntary exchange.

    Critique 3: The rule of law

    The rule of law is fundamentally the most important aspect of society, you are correct. As a deontological anarco-capitalist I’m fundamentally about universalization of the rule of law, and I believe that governments violates an individuals property rights. Obviously a businessman burning down his competitors shop is a violation of an individual’s property rights. It’s an act of aggression and destruction of property.

    Critique 4: Game theory

    I only have basic game theory knowledge, but one of the greatest reasons I become a libertarian and a anarcho-capitalist was due to the fact to the realisation that the presence of a state, of an entity with the ability to coerce will always get corrupted. Consider the CEO of Monsanto. If Monsanto don’t lobby politicians then another company will, bending the rules to their advantage over Monsanto. Effectively the game is that of the most successful lobbier getting the rules to benefit him. See all the corruption of the rules in the pharmaceutical industry and, well, all over the place.

    Thanks for the post. It [prompted explanation which is always good to properly get your head around concepts! Hope you enjoy.

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