Libertarianism' greatest failure:

[SpaceMarine93]

Now that many people had mentioned it, what exactly is the Libertarian ideology's most fundamental flaw?

[Simon_Jester]

...Can you explain exactly what spurs you to toss this out there? It's random, invites a lot of stupid answers, and can't be given a definitive response. It's not as if real world political philosophies come with a convenient list of bullet point reasons for why they're right and wrong that you can use to make up your mind without having to think hard.

[Flagg]

To my mind, the logical extreme of libertarianism is the fact that you essentially trade government rule for corporate rule, except that without government regulation of any kind, corporations can essentially become just as opressive as any government dictatorship.

[open_sketchbook]

Yeah, the problem with libertarianism is the exact same problem as anarchy; it doesn't last long before somebody amasses enough power to turn it into oppressive government again.

[TimothyC]

Failure to account for barriers to market entry.

If the barriers to enter any market were zero, then Libertarianism wouldn't have the issues with corporate dominance, but the barriers are inherently non-zero, therefor a libertarian state can not exist.

[Stark]

That's best exemplified by the 'start your own damn railroad' attitude. It's absurd on the face of it.

Implicit is arguably that people in a market will behave 'properly' (however the speaker sees that idea), when in reality they'll just game the system and be amazingly corrupt as in any other situation.

[Block]

Children working in factories, 16 hour days and no disability benefits when you have an arm chopped off in the gears are pretty good examples of libertarian ideals.

[TimothyC]

Children working in factories, 16 hour days and no disability benefits when you have an arm chopped off in the gears are pretty good examples of libertarian ideals.

No, those are flawed outcomes, not flaws in the ideology.

That's best exemplified by the 'start your own damn railroad' attitude. It's absurd on the face of it.

Implicit is arguably that people in a market will behave 'properly' (however the speaker sees that idea), when in reality they'll just game the system and be amazingly corrupt as in any other situation.

I think the failure to account for barriers to market entry are the flaw in the faith that the market will solve all in a manner that is ethically acceptable. If anyone can start a railroad, then the people that have railroads have to be concerned about those who don't have a railroad yet, and have an interest in keeping those without railroads from getting railroads (less competition means less splitting of demand).

To a lesser degree Libertarian thought tends toward assuming that everyone is a rational omniscient actor, when no one can be that.

[Shroom Man 777]

Basically, that whoever gets to the top will try to keep his position and try to screw those below him over?

That's pretty much what happened to communoidism too, which is ironic.

[Surlethe]

When I think about this question, I come up with a six-pronged answer:

• Barriers to market entry
• Externalities
• Information asymmetry
• Transaction costs
• Principle-agent problem
• Wealth asymmetry

A note on the last one. It means market allocation mechanism weights rich people's utility higher than poor people's. (The poor starving people in Baltimore clearly value their bread less than the wealthy New York heiress values her diamonds!) This is subtle argument; you can't use it by itself because "Nuh-uh, government is worse!" Well, sure, that's an empirical question, but it shoots to hell the notion that even the idealized (no barriers, no externalities, etc.) private marketplace is an unflawed allocation mechanism. It's not.

[BrooklynRedLeg]

Okay,

apparently people still don't understand what in the hell a Corporation is even today. Without a State, what entity is there that could charter a Corporation? There is no one that can grant it limited liability or personhood. So blaming Anarchism (I'm assuming Free Market) and/or most Libertarianism strains for the failings of Corporatism is rather shallow at best considering its a problem with Fascism. That's what Corporatism is often defined as: Soft (or Economic) Fascism.

http://en.wikipedia.org/wiki/Economics_of_fascism

However, "once Mussolini acquired a firmer hold of power... laissez-faire was progressively abandoned in favour of government intervention, free trade was replaced by protection[ism] and economic objectives were increasingly couched in exhortations and military terminology."[19] De Stefani was forced to resign in 1925 because his policy of free trade was opposed by many Italian business leaders, who favored protectionism and subsidies to insulate domestic business from international competition. In 1926, Mussolini gave an impassioned speech demanding monetary policies to halt inflation and stabilize the Italian currency (the lira). He also took the final step of officially banning any kind of strike action. From 1927 to 1929, under the leadership of the new Finance Minister Alberto Beneduce, the Italian economy experienced a period of deflation, driven by the government's monetary policies.

(To be fair, Wikipedia is not a thoroughly vetted source, but it tracks with statements from other historians about Corporatism and Italian Fascism).

Now, I realize there ARE Corporate Libertarians: the CATO/Beltway/Koch-brand. They tend to have decidedly un-Libertarian beliefs at times, which makes me question their BEING Libertarians. The Kochtopus does love its government coddling and that is rather anti laissez-faire as government should not be in the business of picking winners or losers.

The only real critique I suppose that can be offered, based on history, is that Minarchistic societies (limited government) only stay 'limited' for short periods of time. The Articles of Confederation was the most "Libertarian" government charter (that I am aware of, please correct me if I am wrong) produced on the North American continent and they couldn't stave off the power grab by the Mercantilists (proto-Corporatists) like Hamilton in the form of the US Constitution.

[Thanas]

Moved to appropriate forum.

[Bakustra]

*snip*

Quite apart from the questionable nature of defining Great Britain and the Netherlands circa 1600 as fascist or quasi-fascist states (assuming you mean corporations for business rather than corporations in general, in which case we must define the English kingdom of 1066 at the very least as being fascist/quasi-fascist, and if we remove the need for a formal charter we could potentially push this all the way back to Rome and the Maurya!), how exactly does libertarian ideology deal with preventing the formation of a monopoly or cartel? Or, how does it allow those to be broken up? If your position is that such things can only form in the presence of a state, then I must laugh.

[Lord Zentei]

The standard arguments of libertarians assume the following:

• Cartels are inherently unstable, since each member of the cartel can raise his profits by betraying the cartel. Therefore, any cartel is temporary, in the absence of government. This ignores the problem of economic entry barriers (as opposed to merely political entry barriers), of course. But a powerful state can mediate between the participants in a cartel, and can act as a enforcer of it's anti-competitive agreement, thus increasing their stability and duration.
• Monopolies are not held to be bad if they're natural monopolies rather than ones imposed by force. Natural monopolies arise when the microeconomic structure of the market means that it's more cost effective to have one supplier than several or many suppliers. Moreover, if the monopoly is a natural monopoly, it can't use force to prevent competitors arising should they try to abuse their position (by raising prices exorbitantly for example), or should conditions change making it more efficient to have multiple suppliers. This also ignores the problem of economic entry barriers (as opposed to merely political entry barriers). But the idea is that an economy with a strong government will likely have both of these barriers, while a weak government will only have the economic kind.
• As for the caveats to having a strong government in points #1 and #2, libertarians point to capture theory, implying that ultimately, governments are more likely to serve special interest groups than to act as equalizing agents.
• Naturally, if there's no government, then a sufficiently powerful agent can simply create one. But libertarians usually don't want zero government, just minimal government.

[PeZook]

Okay,

apparently people still don't understand what in the hell a Corporation is even today. Without a State, what entity is there that could charter a Corporation? There is no one that can grant it limited liability or personhood. So blaming Anarchism (I'm assuming Free Market) and/or most Libertarianism strains for the failings of Corporatism is rather shallow at best considering its a problem with Fascism. That's what Corporatism is often defined as: Soft (or Economic) Fascism.

Actually there is a mechanism that works perfectly well for making corporations (who, in a libertarian society, would be defined as "any large company") have limited liability to the public.

Their size.

A sufficiently large company can simply blame responsibility for some failure on a subset of their employees, fire/discipline them and claim the problem is solved. Excluding personal liabilities for lossess etc. can also be established by individual contracts the company enters with its shareholders, employees and customers, there's nothing preventing it, and since this is most useful to the people in power it will most certainly be done.

[Bakustra]

The idea that cartels inevitably fail by falling apart presumes that people always act to enhance their own power at the expense of others. The entire existence of friendships and marriages that involve sacrificing things for other people speaks as to the insanity of that. It also seems to suggest that libertarians believe that humans are inherently exploitative of others, and so the ideal solution is to remove any possible barriers from letting them do so. Really.

So if a monopoly or ogliopoly formed that instituted debt peonage, the libertarian position is that people would be able to form a competitor and interrupt or stop this process. Why defend a position so utterly inane that it pretends that price-dumping, as an example, is something that can only happen in the presence of a government? Or if that counts as a monopoly via force, how exactly are such monopolies supposed to be stopped from forming or dismantled, then?

[PeZook]

The other obvious answer is that when someone betrays the cartel, the rest of it can take revenge by using their combined power to destroy him/her.

[Lord Zentei]

The idea that cartels inevitably fail by falling apart presumes that people always act to enhance their own power at the expense of others. The entire existence of friendships and marriages that involve sacrificing things for other people speaks as to the insanity of that. It also seems to suggest that libertarians believe that humans are inherently exploitative of others, and so the ideal solution is to remove any possible barriers from letting them do so. Really.

So if a monopoly or ogliopoly formed that instituted debt peonage, the libertarian position is that people would be able to form a competitor and interrupt or stop this process. Why defend a position so utterly inane that it pretends that price-dumping, as an example, is something that can only happen in the presence of a government? Or if that counts as a monopoly via force, how exactly are such monopolies supposed to be stopped from forming or dismantled, then?

The idea isn't that the best solution is to remove barriers to prevent people from exploiting others, but to remove a mechanism that makes it easier to do so, i.e. powerful government that can be hijacked by special interests (and often is). The third point in my bullet list above is the crucial point to their argument.

I don't think that anyone believes that price dumping only happens in the presence of government, but that cushy government-business relationships make it much easier to do so without damaging your own long-term success, and that this happens by impeding the emergence of potential competitors by adding artificial barriers above and beyond what would be the case by only economic factors. Moreover, though friendship between oppressors is something that can limit the instability of cartels, that friendship doesn't go away of there's a powerful (corruptible) government too. *

In other words, they hold that while small-government environment needn't be perfect, it's less bad than a strong government scenario. Not that there aren't starry-eyed idealists too, mind.


* Also, even an idealistic government can cause unintended consequences with their well-intentioned policies.

The other obvious answer is that when someone betrays the cartel, the rest of it can take revenge by using their combined power to destroy him/her.

How, by lowering prices to force him/her out of business? That act destroys the cartel. The cartel works by keeping prices artificially high. It might be a point if the cartel controls numerous additional industries the cartel-breaker depends on for his/her production, but then some other cartel member with a powerful stake in said industries can benefit even more by breaking the cartel.

Or unless you've got a full-blown anarchy and the others hire armed thugs or something.

[Bakustra]

So what are the barriers to prevent people from exploiting others under libertarianism? Social ones? The entire society is modeled on the immorality of telling other people what to do, or, indeed, of acting collectively! The idea that people will rise up to stop these sorts of things from happening? The Republic of Minerva suggests that libertarians, when confronted with such a situation, would fold.

They can headhunt the traitor's staff away. If they are a diverse cartel, they can threaten the traitor's buyers with refusing to sell to them anymore. They can do the same thing to suppliers, or they can buy both of those out and cut the traitor off. They can absorb the losses inherent in this better than the single traitor can, and the same for brief periods of price-dumping to drive the traitor off the market. If we presume that the buyers and sellers too are ogliopolitistic and ogliopsonistic, they would almost certainly act to curtail any treachery in other portions of the chain, to prevent it becoming a widespread phenomenon. And there is nothing that suggests that you need the absence of a government in order to hire assassins or even private fighters (see, for example, the history of the Pinkerton Agency or Ford Security).

This also raises the question of how employees are supposed to be able to negotiate with their employers for better pay and benefits. I presume that most libertarians are opposed to unions or to collective bargaining in general. If that's the case, are employees simply supposed to accept whatever pay they get?

[ChaserGrey]

Basically, that whoever gets to the top will try to keep his position and try to screw those below him over?

That's pretty much what happened to communoidism too, which is ironic.

"Under capitalism, man exploits man. Under communism, it's just the opposite." - John Kenneth Galbraith

[Lord Zentei]

So what are the barriers to prevent people from exploiting others under libertarianism? Social ones? The entire society is modeled on the immorality of telling other people what to do, or, indeed, of acting collectively! The idea that people will rise up to stop these sorts of things from happening? The Republic of Minerva suggests that libertarians, when confronted with such a situation, would fold.

Social and economic ones both.

They can headhunt the traitor's staff away. If they are a diverse cartel, they can threaten the traitor's buyers with refusing to sell to them anymore. They can do the same thing to suppliers, or they can buy both of those out and cut the traitor off. They can absorb the losses inherent in this better than the single traitor can, and the same for brief periods of price-dumping to drive the traitor off the market. If we presume that the buyers and sellers too are ogliopolitistic and ogliopsonistic, they would almost certainly act to curtail any treachery in other portions of the chain, to prevent it becoming a widespread phenomenon. And there is nothing that suggests that you need the absence of a government in order to hire assassins or even private fighters (see, for example, the history of the Pinkerton Agency or Ford Security).

That's where minimal government comes in, and independent courts, etc. Not zero government. Libertarians hold that the government is supposed to be effective at providing a court system and defense of basic rights, not as an activist economic agent in its own right. In other words, that progressivism (i.e. that activist government policies can and should be used to ensure improvement in overall social conditions) is net-negative.

This also raises the question of how employees are supposed to be able to negotiate with their employers for better pay and benefits. I presume that most libertarians are opposed to unions or to collective bargaining in general. If that's the case, are employees simply supposed to accept whatever pay they get?

The idea is that workers will be more likely to have freedom of choice if government doesn't coddle and protect their favourites and this will be effective enough at protecting worker's rights, so collective bargaining becomes unnecessary. But it's more that government sanctioned collective bargaining is unnecessary, and in fact nothing more than another kind of state sanctioned monopoly, and thus bad inherently.

[Bakustra]

So how precisely would a government be able to prevent things like the Battle of the Overpass from occurring if it is not an active economic agent? What means would it have to prevent strikebreaking through scabs? How, in other words, can a libertarian society protect the rights of labor without relying on pixie dust?

[Rogue 9]

I presume that most libertarians are opposed to unions or to collective bargaining in general. If that's the case, are employees simply supposed to accept whatever pay they get?

Yes. That's what happens right now in non-union shops in the presence of government; it certainly wouldn't change without it.

[PeZook]

That's where minimal government comes in, and independent courts, etc. Not zero government. Libertarians hold that the government is supposed to be effective at providing a court system and defense of basic rights, not as an activist economic agent in its own right. In other words, that progressivism (i.e. that activist government policies can and should be used to ensure improvement in overall social conditions) is net-negative.

In order to prevent price dumping, strongarming suppliers, smear campaigns, headhunting staff etc the "minimal government" would require prerogatives which make it an active economic agent by definition, and definitely open to the sort of special interest abuse you say libertarians want to prevent by reducing government.

[VarrusTheEthical]

Government is an active economic agent simply by existing, even if it's not making economic policy. Even the most bare-bones minarchist government will likely still have control over a significant percentage of GDP through the simple act of collecting revenues to pay for it's police and court functions. And if external factors require such things as a standing professional military, even a minimal government will likely be the largest employer in any state.