Sunday, May 26, 2013

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 WelfareHERE ] 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.    
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.


Blogger *K'eim*h3reg' *Peh2u *Meg' said...

Thanks for sharing Gavin. I was aware of your site before this piece and have read a few of your posts. I think I agree that government can do "good". But it can't do so without first doing some sort of bad. Maybe it could be argued that it is worth it, but I think that, because people's values are subjective, that this is a flawed argument. What is worth it for those on the receiving end (on net) or for those who don't mind giving up freedoms to benefit their fellow man (in a most inefficient way) may not be worth it for those who are simply motivated by self-interest and are willing to be responsible for their own well being. If this group is being stiffed are they really being treated equally before the law? I also agree that it is possible that Smith was not using "the Invisible Hand" as a general principle of economic behavior, but the fact that the "principle" even can be applied more broadly than Smith applied it seems like an argument for the notion that Smith ought to have seen it as a general principle. In other words, he was onto something, but for whatever reason pursued the line if inquiry no further.

10:47 pm  
Blogger Gavin Kennedy said...

‪*K'eim*h3reg' *Peh2u *Meg'
Thank you for your thoughtful comment, itself a useful general reminder of the most scholarly manner to express differences of view without sparking overly defensive responses, as per a bar room brawler.
At root I do not think that we are all that far apart if we take our stances on specific examples rather than see them as statements of general policy preferences. I think the distinction is important.
Adam Smith is often presented as an adherent of general stances only (government incompetence versus market perfectionism; “natural liberty” = markets good and legislators of laws all bad; and so on. Smith was more refined than that. In his published writings he often highlights examples where the generalities need to be refined with important exceptions. In the role for governments I have drawn attention to the number of times in WN (70+ in fact) where he is critical of the actions of individuals, particularly the rulers, including “merchants and manufacturers”, acting from self-interest only but they do not benefit society at all. Smith was more pragmatic and less ideological (acting according to a unambiguous principle) than he is credited with. Being “responsible for their own well being” is a fine aspect of character provided we are clear that our self-interests depend on the co-operation of many others and their self-interests.
It is here that extreme libertarians can go astray. Recall Smith’s “butcher, brewer, baker” example, which is often interpreted as a theme for “self-interest” (WN, Book 1, chapter 2). They do not read Smith carefully. He is not calling for unrestrained self-interested behaviour; he specifically highlights the need for a self-interested individual seeking to acquire their dinner to “address” the “self-love” of the sellers and not just their own self-interests. In TMS he makes several references to “every man is a merchant” in their self-interested behaviours. They have to persuade others by appealing to the self-interests of others, which means mediating their own with others self-interests.
In short, Ayn Rand’ and “hero” figures got it wrong and sometimes exponents of extreme libertarianism get it wrong too. Their one-liner politics gain from singular clarity (as politicians must) but they lose a great deal when “one liners” are turned in to detailed policies. Which is why a government can be a messy legislator – the gaps in their laws and regulations require constant elaboration, creating yet more irregularities. However, messy democracy is preferable to indulging in individual tyrannies.

6:08 am  

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