Moderate Libertarianism and Sceptical Toleration of Governmental Ambitions

Henry Moore posts on “Notes On Liberty” (‘This is a humble blog spouting a humble creed’) HERE 

“Ham-Fisted Coercion and Incompetence versus the Invisible Hand of Self-Interest” (22 May):

Part One: “A Tale of Two Hands”.

…“Government coercion and market organization. Two very important concepts for any libertarian to master. Which one better provides for the general welfare? Smith and Read [author of I, Pencil”] would contend the latter. The reasons for this are contained in the analogies. As Read and Galles point out, not much good can come from a clenched fist. Only violence and incompetence. It can punch. It can pound. That’s about it. What better description of government? [Gary M. Galles is the author of an article in The Freeman about Leonard Read’s analogy of government coercion as a clenched fist, “The Clenched Fist and the General Welfare” HERE ] Likewise, as Smith notes, the usefulness of markets is that they do better than government many of the noble things government tries to do, thereby rendering it redundant, if not unnecessary, in those areas. The all-too obvious fist of government regulations and mandates is no match for a more efficient, less obvious hand: self-interest.

The clenched fist of government coercion is quite visible. It holds up the occasional good it achieves, downplays the great expense at which such good comes about, and blames its own inadequacies on “free” markets. The invisible hand, however, is open. It is able to do more, and better, than the clenched fist, without stifling progress in other areas.  …  

Comment

As a broad brush, general statement, I concur though I think such distinctions drawn too tightly can be misleading. Governments play many useful roles, but I would not want to romance the notion; they can do plenty of harm too.

Adam Smith concurred with these reservations on their passing mercantile legislation based on false notions of “jealousy of trade”, on the need to award monopoly powers to special interests (both examples often urged upon ministers by interested “merchants and manufacturers” and entering into unnecessary wars (often, in Smith’s days, spurred by dynastic quarrels and royalist family loyalties, and in ours by ideological or racial distinctions).  Smith also recognized, as I think we must, that government legislated regulations in defined fields, such as in “party walls” in multi-occupied buildings in case of fires, standards of weights and measures in market, the operations of a national post office, in roads, canals, ports, and local civic tasks like street lighting, sanitation, waste disposal, pavements, defined property boundaries, ensuring public education of all children (the ‘little schools’ project on the Scottish model), laws of the sea (a necessary agreement between national governments), the provision of the justice system (an independent judiciary, trial by jury, habeas corpus, codification of the laws and regulations, prisons), regulations of banking practices (Usury), funding the ‘dignity of the sovereign’, as head of state, and basic health provisions (‘loathsome diseases’). 

It is a safe conclusion to assert that over time both government and non-government distinctions would spread and become more competitive as societies became more complex and incomes per capita grew, and that eternal vigilance would be, and remain, required from moderate Smithian Libertarians to scrutinise all legislation and creeping governmental interventions to extend its reach and powers over the citizenry.  The extremes of passive submission to a government’s dictation of its own limits, or fantasies of absolutely no role for government at all (an extreme libertarian stance) while of philosophical interest, they are not compatible with Adam Smith’s thinking.  Lost Legacy exists to remind readers of his more realistic stance on those boundaries.