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Libertarian Limitations

Andrew Koppelman’s analysis of libertarianism is rich in detail and full of thought-provoking ideas.

· 16 min read
Libertarian Limitations
Nobel prize winning economist Professor Friedrich Hayek, 84, at a presentation ceremony at which he received the Aims of Industry organisation's first International Free Enterprise Award. Alamy

A review of Burning Down the House: How Libertarian Philosophy Was Corrupted by Delusion and Greed by Andrew Koppelman, 320 pages, Macmillan (Oct 2022)

Andrew Koppelman “was not reading libertarian writers in a generous spirit” when he undertook to investigate libertarian thought, he writes in the Introduction to his eighth book, Burning Down the House: How Libertarian Philosophy was Corrupted by Greed and Delusion. “I was predisposed for a fight. So I was surprised to discover that, while some of them were as callous as I had expected, others were animated by a deep humanitarian impulse, tied to powerful and persuasive arguments about how economies work.”

Friedrich Hayek, whom Koppelman considers to be the founder of the libertarian movement, “clearly reflected that impulse” and “made the case for tolerating substantial inequalities of wealth better than anyone I’d read before.” Koppelman is a Professor of Law and of Political Science at Northwestern University, a civil libertarian, and the author of books on antidiscrimination law, gay rights, same-sex marriage, healthcare reform, and religious liberty. He declares himself to be “a pro-capitalist leftist” and acknowledges that his “embrace of that position here will make many of my friends on the left feel betrayed.” The thing that turns Koppelman’s crank is what he regards as a heartless, narrow, and blinkered understanding of liberty on the part of many libertarians. He opens the book by illustrating this point with an anecdote.

Obion County, Tennessee, relies on the fire department of its neighbor South Fulton. But rather than contracting South Fulton’s services for the entire county, each individual resident is a client of South Fulton’s FD and pays a $75 annual fee. “Fire protection in the county is essentially privatized.” One particular county resident, Gene Cranick, had paid the annual fee for years but in 2010, he forgot. A trash fire got out of control one day and Cranick called 911. The fire department refused to come because he had not paid his fee. Cranick vowed to pay “whatever the cost” but still the South Fulton FD refused to put out the fire. They didn’t show up until much later when the fire threatened the house of a neighbor who had paid his $75 fee. They saved the neighbor’s house but didn’t lift a finger to save Cranick’s. Hence the title of Koppelman’s book.

This disregard for the lives and property of Cranick and his family, argues Koppelman, reflects “two key tenets of libertarianism: that people are appropriately understood to be on their own in the world, responsible for their own fate, and that need does not make a claim on others’ resources.” This view, he avers, is popular throughout the Republican Party and threatens services and protections people take for granted from the American government, including workplace safety, public education, environmental protection, infrastructure such as roads and bridges, disaster relief, Social Security, unemployment insurance, and healthcare assistance such as Medicare.

Today, Koppelman argues, Hayek’s economic arguments are mainstream. “A huge range of policies that were once unquestioned—tariffs, subsidies for failing industries, wage and price controls, rent control, price supports for farm commodities—are now widely agreed to be counterproductive and wasteful.” And Hayek’s arguments that wealth disparities are necessary to alleviating poverty are also widely accepted. Koppelman notes the tremendous strides made in reducing global poverty because of free markets. “Economic growth consistently helps the poor in countries that protect rights and have the rule of law.” Over half the world achieved middle-class status or better by 2018. Koppelman calls it “one of the most spectacular developments in history.”

But Hayek’s view, he continues, “did not entail minimal government. It rather imposed strict conditions on intervention in the economy,” Hayek was not opposed to regulation to deal with economic externalities, such as pollution. Nor was he opposed to funding “public goods that the private sector will not adequately provide, such as roads, education, social services, and basic scientific research.” The philosophies of Murray Rothbard, Robert Nozick, and Ayn Rand, on the other hand, took a different view. They advocated a rights-based regime that virtually discounted any interference by the state in individual lives, even to the point of regarding taxation as theft. And it is this brand of libertarianism that Koppelman primarily assails in his book.

What sets Koppelman’s book apart from most critiques of libertarianism is that he actually knows what he’s talking about. He’s clearly read and researched libertarianism in considerable detail. And while he is sometimes harsh in his criticism, he clearly sees the value in many libertarian positions. His background in law and political science, as well as his writing on civil liberties, allows him to bring some fascinating insights to bear in his analysis. And he sometimes turns libertarian ideas on their head, using libertarian ideas to argue against what he sees as a perversion of libertarian ideas in the works of Rothbard, Nozick, and Rand. “You ought to be a libertarian—of a certain kind, and only up to a point,” he writes. “This book is not only a critical description of libertarianism. It aims to marry what is best about libertarianism with the agenda of the left.”

Interestingly, Koppelman notes that the modern political Left is often more concerned with identity politics than with alleviating poverty. “A right to be different,” he continues, “pushes toward localization of power and away from central planning.” The people on the Left, who continue to malign capitalism, “don’t grasp the anti-socialist logic of their present views.” And because Hayek was not a doctrinaire absolutist in his opposition to a role for the state in the economy, he “thought redistribution to provide basic needs was an appropriate supplement to a free market. Such a supplement was not central planning, because it left the recipients free to make their own decisions.”

The Democratic Party, Koppelman reports, adopted many of Hayek’s positions. Contrary to the popular opinion of many on the Right, the Democrats are not socialists. The term “socialism,” in fact, is grossly misunderstood today. In Western society it no longer means government ownership of the means of production, it means government providing selected public services and social assistance to society—services that it is believed the market cannot adequately provide for. Services that, Koppelman argues, enhance our freedom, not diminish it.

The Failure of Fusionism
Sydney. London. Toronto.

Ronald Reagan, Koppelman suggests, “succeeded in shifting American politics—and American understandings of liberty—in a Hayekian direction.” Bill Clinton’s Democrats adopted these views and implemented some of the things Reagan could not. Quoting Kim Phillips-Fein’s Invisible Hands, Koppelman notes that these measures included “the dismantling of welfare, the deregulation of Wall Street, the expansion of free trade.” This Hayekian approach within the Democratic Party continued under Obama. Although Obama was repeatedly attacked by the Right as a socialist, Obamacare, Koppelman notes, actually followed a plan outlined by Hayek in his 1960 book, The Constitution of Liberty.

Koppelman quotes former George W. Bush speechwriter David Frum, who wryly remarks, “No counterevidence will dissuade them from this belief: not record-high corporate profits, not almost 500,000 job losses in the public sector, not the lowest tax rates since the Truman administration.” In fact, Koppelman argues, the Obama administration was fastidious in looking at the cost-benefit analysis in its approach to regulation. Obama’s first head of the Office of Information and Regulatory Affairs, Cass Sunstein, was “deeply immersed in Hayekian economics during the many years he taught at the University of Chicago,” and “the first three years of regulation under Obama produced net annual benefits of $91.3 billion.”

Koppelman concedes that “the regulatory structure does impose considerable costs on businesses,” but the benefits of the Clean Air Act from 1990–2020, for example, “exceed the costs by a ratio of 30 to 1.” The costs, he adds, “are massively outweighed by the harms that the regulation prevents. If one is to assess this regime from the standpoint of liberty, one must take account of the liberty not to breathe poisonous air. From a libertarian standpoint, toxic pollution should be impermissible for the same reasons that murder and robbery are impermissible.”

But while Democrats since Clinton have adopted a Hayekian approach to markets and regulation, Republicans have moved steadily in a more radical and fundamentalist libertarian direction, distilled from the later views of Murray Rothbard, Robert Nozick, and Ayn Rand. Before considering those views, Koppelman digresses with a chapter on the Lockean theory of natural rights. Hayek was lukewarm at best on rights theory, but it is the centerpiece of the Rothbard/Nozick/Rand approach. And of course, it holds a key place in the American Constitution and the Declaration of Independence.

The fundamentalist view of property rights holds that people work and the fruits of their labor is their property. They have a right to it. Such rights are absolute. And, as per the Declaration of Independence, “to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.” This does not give government carte blanche to do what it wants. Even such things as disaster relief are beyond the scope of government in the fundamentalist view. “You must not spend money that’s not yours.” But, Koppelman notes, if this view is correct, “it straightaway entails that most of what government does is illegitimate.” This, he continues, “is the moral core of much modern libertarianism.”

The absolutism of the fundamentalist view, Koppelman argues, leads Rothbard to conclude that, if push comes to shove, property rights trump all other considerations. Koppelman reminds us that, in The Ethics of Liberty, Rothbard argues that parents may not overtly aggress against their children but nor should they be forced to support them. “The parent should have the legal right not to feed the child, i.e., to allow it to die.” Koppelman cites several passages from Locke that seem to concur with the Rothbardian view. But he goes on to argue that Locke did not propose such an absolutist notion of property rights. “Locke explicitly rejected a conception of property rights so strong that they allowed some people to starve or oppress others.”

Libertarians with a fundamentalist view of property almost exclusively look to Locke’s Second Treatise for their arguments. Koppelman, on the other hand, refers repeatedly to Locke’s First Treatise, in which Locke disputes the justification for absolute monarchy put forward by Robert Filmer. Filmer, Koppelman notes, argued that monarchs derived their power and privilege as direct descendants of Adam who “held a ‘natural and private dominion’ over everything.” He continues: “Locke rejected the notion that anyone should have ‘an Absolute, Arbitrary, Unlimited, and Unlimitable Power, over the Lives, Liberties, and Estates of his Children and Subjects.’” Koppelman perceptively concludes that “what Rothbard aspires to isn’t liberalism but feudalism. ... The ultimate value that undergirds the system is not liberty but property, and liberty can be freely sacrificed for the sake of property.”

This may sound like a preposterous interpretation of Rothbard, but an anarcho-capitalist colleague of Rothbard’s later made the pitch for feudalism and illiberalism explicit. Koppelman doesn't mention the writings of Hans-Hermann Hoppe, but in his 2001 book, Democracy: The God That Failed, Hoppe explicitly argues that monarchy is preferable to democracy. A king who has absolute ownership of his kingdom, he argues, has a natural incentive to increase the value of his kingdom, whereas a democratic government, which is necessarily under the rule of temporary caretakers until the next election, has an incentive to spend like drunken sailors before it is booted out of office (lining its members’ pockets along the way, of course).

Moreover, a king, unlike a democratic ruler, “undertakes little to actively expel those people whose presence within the country constitutes a negative externality (human trash which drives individual property values down). In fact, such negative externalities—unproductive parasites, bums, and criminals—are likely to be his most reliable supporters.” Hoppe pines for the good old days when towns and villages put up signs specifying “no beggars, bums, or homeless, but also no Moslems, Hindus, Jews, Catholics, etc.”

Hoppe calls for the emergence of “a voluntarily acknowledged natural elite—a nobilitas naturalis.” These elites—the equivalent of feudal nobility—would emerge in what he calls covenant communities: groups of likeminded people who would form a community by contract. Basically, the idea of a social contract except the parties to the contract would make their participation explicit, not implicit as is the case with modern Western democracies. And here is where Hoppe makes the point that it is property, not liberty, that is the goal of his propertarian-based communities:

In a covenant concluded among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order.

Hoppe supports the elites expelling such rabble rousers as well as those with alternative lifestyles or values, including hedonists, nature worshippers, and homosexuals “if one is to maintain a libertarian order.” He sounds like a bad parody of everything Koppelman says is wrong with libertarianism, but Hoppe is taken seriously by many libertarians.

In a chapter on Rothbard, Nozick, and Rand, Koppelman compares Hayek’s approach to theirs. Hayek’s libertarianism, he observes, “is fundamentally about consequences.” He is not an ideologue in that sense. “His views were too contingent on facts.” By contrast, “the philosophies of Rothbard, Nozick, and Rand, all ... replace Hayek’s concern for consequences with rigid insistence on the sanctity of property rights.” Rothbard, in particular, “takes the libertarian’s hatred of state oppression to its maximum,” writes Koppelman. “He demands a world with no government at all, in which the market rules everything.”

Koppelman identifies Rothbard’s “core moral principle” as nonaggression, as expressed in For a New Liberty: “No man or group of men may aggress against the person or property of anyone else.” Koppelman says that Rothbard adopts this principle because “each man may only live and prosper as he exercises his natural freedom of choice,” thus “if someone aggresses against him to change his freely-selected course, this violates his nature; it violates the way he must function.” Koppelman agrees that this “axiom entails anarchism.”

So how will justice be administered in an anarchist world? By private contractors—“multiple private police forces, with no central authority over them.” Koppelman compares this to a society of warlords, each trying to gain dominance. “What actually emerges from networks of protective associations, all over the world, is some variety of hereditary aristocracy.” In other words, feudalism. The only way around this conundrum is “consolidated control of the military. Only then is it possible to create the impersonal rule of law. The powerful state that Rothbard loathes is the indispensable precondition of the robust capitalism that he idolizes.” The idea of privatizing the state, he suggests, is naive. “A flourishing human life is impossible without it.”

Koppelman discusses a couple of flip-flops in Rothbard’s thinking over the years, on slavery and on the environment. Rothbard initially argued that pollution was a rights violation. You can spew all the pollution you want onto your own property but you can’t let it escape your property onto someone else’s. But this could effectively shut down all business that emitted even a little bit of pollution and effectively ban the internal combustion engine. So, some time later Rothbard did a complete about-face on this question, arguing that victims of air pollution “must assent uncomplainingly” unless they can prove “strict causality from the actions of the defendant to the victimization of the plaintiff.”

Rothbard then condemned the Clean Air Act of 1970. But, Koppelman notes, that law eliminated acid rain. The Environmental Protection Agency’s ban on lead in gasoline resulted in a 75 percent drop in the lead level in children’s blood from 1976–1991. Later research showed a correlation between the use of leaded gasoline and crime. As the use of lead declined, so did violent crime. Under Rothbard’s framework, Koppelman notes sarcastically, “You will have the consolation of knowing that what killed you and your family wasn’t the state.” Rothbard’s “evasive discomfort with the fact of pollution is one of his most enduring and dangerous legacies.”

Koppelman brushes Nozick off in a few paragraphs and moves on to consider the influence of Ayn Rand. Although she spent most of her time after the publication of Atlas Shrugged on a non-fiction elaboration on the philosophy expressed in her novels, Koppelman avers that “her novels have introduced more people to libertarianism than any non-fiction writer, herself included.” Even though she distanced herself from libertarianism, her influence was profound and continues to be so. Her books continue to sell. Koppelman notes that “from 2009 to 2014, Atlas Shrugged sold 2.25 million copies.”

Koppelman seems to have mixed feelings about Rand. He clearly admires some of her writing and philosophy, and he appreciates her support for charity as expressed in her essay “The Ethics of Emergencies.” He loves her description of the launch of the John Galt Line in Atlas Shrugged. “The passage is genuinely inspiring, an eloquent panegyric to capitalist achievement.” Elsewhere, he writes that, “the most attractive aspiration in Rand is the independence of judgment, and faith in oneself, displayed by Roark, the hero of The Fountainhead. The book has surely helped many young people with its message that they should pursue their own deepest aspirations, and not care about impressing others.”

However, there is much about Rand’s work that Koppelman finds disturbing. He notes a disconnect between The Fountainhead and Atlas Shrugged. “The Fountainhead can be read as a Hayekian parable. Capitalism does not reward virtue. Mediocrities like Peter Keating prosper by flattering the powerful. Panderers like the newspaper publisher Gail Wynand become fabulously rich by appealing to consumers’ lowest instincts. ... Geniuses like the visionary architect Henry Cameron are neglected and die in poverty.” While “there is room for brilliance to be rewarded ... free markets cannot, however, be relied on to give people what they deserve.” This, of course, was Hayek’s view, and why he favored some intervention on behalf of those ill-favored by the market or fate.

The Eyes Have It
Sydney. London. Toronto.

But in Atlas Shrugged, Rand “offers a far cruder picture.” She argued that under capitalism, “it is the best product that wins, the best performance, the man of best judgment and highest ability—and the degree of a man’s productiveness is the degree of his reward.” This leads to the view that “markets give people exactly what they deserve and any redistribution is unjust.” In Atlas Shrugged, Rand created a world of producers and parasites. Redistribution, she wrote, “means the right of the incompetent to own their betters and to use them as productive cattle.”

In Rand’s opposition to any relief by the state, she shared Rothbard’s position. But while she did argue in Capitalism: The Unknown Ideal that “without property rights, no other rights are possible,” Koppelman suggests that “at Rand’s core is, not a theory of property rights, but an ideal of reciprocity. That ideal is attractive. It is, I suspect, the source of her rhetorical power.” According to the Oxford dictionary, reciprocity is “the practice of exchanging things with others for mutual benefit.” This, writes Koppelman, “is distinct from deserving.”

“She has in fact captured an important ethical ideal,” Koppelman continues. “the value of interpersonal respect between ‘men who do not desire the unearned, who do not make sacrifices nor accept them, who deal with one another as traders, giving value for value.’” Unfortunately, in Atlas Shrugged, Rand has her hero John Galt declare “that any redistribution of income benefits only ‘the weakling, the fool, the rotter, the liar, the failure, the coward, the fraud.’” Koppelman is appalled by her “gleeful enumeration” of the ways in which the victims of the Taggart Tunnel disaster “deserved to die.” He compares her “literary style, combining didacticism and homicidal fury” to that of the Marquis de Sade.

Koppelman concludes with chapters on paternalism, discrimination, and how the lack of appropriate regulation has led to the aggrandizement of modern day moochers and looters. His strongest case for paternalism is essentially Hayekian. He assails what he calls Tough Luck Libertarianism, the view that the poor and marginalized are just reaping their so-called just deserts. We’ll cancel Social Security and leave you on your own. “Tough luck, you’ll have the life crushed out of you, but that’s okay, because you will deserve to be punished.”

“Paternalism sometimes facilitates people’s ability to live the lives they want,” he continues. It enhances rather than reduces their freedom. “That modest conclusion undergirds familiar interventions to guarantee workplace safety, consumer protection, drug effectiveness, and sound banking.” Freedom “isn’t the absence of regulation. It is the ability to construct one’s life as one likes. That means the capacity to focus on what matters to us, in reasonable security that we will not be blindsided by all the matters we inevitably neglect.”

Koppelman understands the libertarian opposition to antidiscrimination laws—one not only has the freedom to associate with who one wants but also the freedom to avoid associating with those one does not like, for whatever reason—but he avers that there are exceptions. “The case for antidiscrimination law resembles the case for regulation. It is justified only if market failure can be shown.” He sees antidiscrimination law as “a larger project of cultural transformation, aiming to eradicate or marginalize prejudiced attitudes such as racism.” And libertarians, he suggests, should get on board with that: “Libertarianism,” he suggests, “is fundamentally incompatible with the notion that some classes of persons are beings of an inferior order who have no rights.”

In Atlas Shrugged, Rand argued that regulation benefits a class of looters and moochers who use the state to entrench themselves and restrict new competition. But Koppelman argues that we now have a situation where the failure to regulate has enabled a class of looters and moochers. And some cases of privatization as well. Libertarians, of course, have long been opponents of the military-industrial complex, a case in point. Another egregious example is the privatization of prisons. The United States has long been among the most punitive countries when it comes to crime and punishment. With 4.2 percent of the world’s population, it houses 20 percent of the world’s prisoners.

Koppelman argues that the oligopoly that controls US prisons has a vested interest in keeping and expanding its clientele, namely prisoners. More prisoners mean more profits. So it is not surprising that “they lobbied for ‘three strikes,’ ‘mandatory minimum,’ ‘truth-in-sentencing,’ and ‘immigration enforcement’ laws, all of which produced longer sentences for larger numbers of prisoners.” Libertarians, he adds, “ought to be especially wary of calling into existence interests that can prosper only by making the state more repressive.”

Unsurprisingly, both Rand and Rothbard thought Hayek a fool. Rothbard, reviewing an advance copy of Hayek’s The Constitution of Liberty, called it “an extremely bad, and I would even say evil, book.” Rand wrote, in marginal notes in her copy of The Road to Serfdom, “The fool is so saturated with all the bromides of collectivism that it is terrifying!” The two different approaches to libertarianism differ on ethical fundamentals. Whether the twain shall ever meet is problematic.

I was a doctrinaire libertarian/Objectivist from 1969 to 2000, and I came to my libertarianism through Ayn Rand. The first libertarian book I ever read was Capitalism: The Unknown Ideal. I was hooked and read everything Rand ever published during her lifetime and much of what was published posthumously. My drift away from orthodox libertarianism accelerated after I retired in 2014, started blogging, and returned to university. I became an admirer of Isaiah Berlin's value-pluralism—the view that genuine values can conflict, which is anathema to libertarians. Although I have read very little of Hayek, Koppelman's book makes me want to explore his thought in more detail. Koppelman presents a good case for taking the Hayekian approach with a work that is rich in detail and full of thought-provoking ideas. It is well worth the read, whether you ultimately agree with him or not.

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