Why can’t classical liberals stick to their principles?
This posting is in the series with the theme of libertarians (or classical liberals in the European sense) being unable to stick to their own fine principles whenever it is ideologically inconvenient (as if the fine principles were not their primary motivation!). An earlier blog posting as well as published papers made the point about the whole anti-social-engineering theme of so much libertarian thought (e.g., Hayek and Austrian economics). That theme was much applied to criticize the social planning of socialism in the transition from a capitalist or pre-capitalist society to some form of socialism. But when real-existing socialism collapsed in the late 1980s and early 1990s, liberal neoclassical economists (e.g., the Harvard wunderkinder such as Sachs, Summers, and Shleifer) pushed the strategy of “shock therapy” which involved massive social engineering in the transition from socialism to some form of a private property market economy. Instead of sticking by their fine anti-social-engineering principles, the libertarians, Hayekians, and Austrians suddenly fell silent since it would be ideologically inconvenient to appear as opposing the (shock therapy) transition to capitalism.
A much more subtle matter concerns the libertarian and Austrian “devotion” to private property and contracts as well as to invisible hand mechanisms. Yet the institutions of property and contract are based on certain principles, and there is no principled reason to blindly support a contractual regime or a private property system that violates those principles. For instance,
- a voluntary slavery contract,
- a political constitution to alienate the rights of self-governance, and
- the coverture marriage contract to alienate the separate legal personality of the feme covert,
are all examples of contracts that legally pretend to alienate that which is de facto inalienable (e.g., a person’s responsible agency) and that are all abolished in the advanced democracies. When such contacts were or are allowed, they are examples of legalized frauds parading as “contracts.” Yet libertarianism is unable to develop any serious theory of inalienable rights that gives a per se critique of those voluntary contracts. The intellectual father of modern libertarianism was Harvard’s late philosopher, Robert Nozick, who explicitly argued to allow the voluntary self-sale contract and non-democratic constitutions (traditionally called pactum subjectionis). Many libertarians do not follow Nozick on allowing the self-sale contract but they are only able to raise procedural objections [e.g., how can exit be allowed without having draconian fugitive slave laws that violate libertarian strictures—an objection easily overcome by putting the up front lump sum payment to the voluntary slave into escrow to be slowly released as the slave fulfills the contract over the years]. And libertarians and Austrians seem fully comfortable with non-democratic constitutional government as amply evidenced in one of the recent development fads of the charter cities, “free cities,” and the like addressed in earlier postings here and later here, and considered from another angle in this post.
And there is, of course, a very good reason why the inalienable rights theory that descends from the Reformation (inalienability of conscience) and that was developed in the abolitionist, democratic, and feminists movements is “unavailable” to libertarians and classical liberals (see the Facebook theme page, Abolish Human Rentals, for the classical quotes from that intellectual history). Any per se inalienable rights argument against contracts to alienate responsible human agency for the long term (e.g., the self-sale contract) would apply equally well to the short-term or rental version of the contract, i.e., to the human rental or employment contract that is the basis for the current economic system that liberal social scientists are tasked to “account for” or “explain.” Hence we again see libertarians and classical liberals being all in favor of contracts and private property—in about the same sense that the intellectuals of the Ante-bellum period vigorously defended the “property rights” and “market contracts” of their day. All this is explained in our recent five part posting “Listen Libertarians!,” not to mention my two-decades-old book on property and contract.
All the above is just an introduction to today’s example of libertarians and classical liberals being unable to stand by their fine principles when it is ideologically inconvenient. Today’s example is the recent and ongoing development fad sweeping through libertarian and liberal circles:
- Paul Romer’s charter cities,
- Free Cities Institute’s free cities,
- Patri Friedman’s seasteads,
- Mark Klugmann’s LEAP cities,
- Georgia’s libertarian President Mikheil Saakashvili’s “instant city” Lazika (hilarious video!),
- Honduras’s coup-enabled charter city, and so forth.
My point here is not that libertarianism and classical liberalism see no moral necessity in democracy and see consent to a non-democratic rule-of-law regime as sufficient (indicated by voluntarily moving to the city—”voting” with boots, not ballots).
My point here returns to the social-engineering theme previously explored in the context of the post-socialist transition.
None of the instant-city plans involve the real developmental issues of getting an existing city to evolve into a thriving economic metropolis. They all invoke the classic planners’ fantasy of short-circuiting all those messy human problems of development by building a clean new greenfield city. All the “correct” rules and institutions would be administered by the soft-but-firm authoritarianism of either a developed foreign government or a council of right-thinking governors. Build it and people will come.
One probably has to go back to the early days of the Soviet Union to find such naïve enthusiasm for social planning and social engineering. My point is not that these instant-city fantasies will fail (as they must) but what they indicate about libertarian “principles.” All the fine anti-social-engineering principles are thrown out the window (at the hint of cheap-labor pro-business enclaves); the Soviets just had the wrong blueprints. Substitute Hayek’s Constitution of Liberty for Lenin’s What is to be done?, and everything will be fine.
The case of Paul Romer’s charter cities is particularly interesting (and disturbing) since Romer is more a standard liberal than a right-wing libertarian (which shows that the non-moral-necessity of democratic government is not confined to right-libertarianism). This is doubly perplexing when Romer’s intellectual patrimony is considered. Romer is part of a major theme in modern economics that emphasizes the role of knowledge (see David Warsh’s Knowledge and The Wealth of Nations) a theme often associated with Romer’s Nobel-prize-winning teacher, Robert Lucas. Robert Lucas, in turn, explicitly acknowledges his intellectual debt to Jane Jacobs (one of my heroes) in emphasizing the “spillover effects of human capital” (now often called “Jacobs externalities”). And Jacobs was, of course, the arch-opponent to technocratic city planning. Her bête noir were arch-planners such as Robert Moses and Le Corbusier. How ironic it is, in view of this intellectual lineage, that Paul Romer should emerge as the über-planner, the Robert-Moses-on-steroids, planning not to remake an existing city, but to build thriving economic metropolises from scratch!