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  • Natural or Unnatural Free Markets?

    Posted by Shannon Love on September 22nd, 2004 (All posts by )

    We can think of libertarianism as falling between two poles: the anarcho-libertarian that views all government as a threat and the classical-liberal that views government as necessary but inherently dangerous.

    Both poles worship the free market but each side approaches the origin of the free market from different directions. This difference in concepts of the origin of the free market creates many of the divides in libertarian thought. For example, it predicts whether a libertarian will or will not support a war.

    (Note: Iím simplifying for reasons of clarity and brevity. These are poles on a theoretical spectrum, not either/or binary states.)

    What a free market is free of is violence. Individuals make economic decisions based on the advantage it brings them not out of fear of being hurt or killed by another human. We usually think of the violence as arising from the implicit threat of violence lying behind all government laws but a free market can also be destroyed by individual-to-individual violence on many different scales. Once people begin making economic decisions based on fears of violence from any source, the free market begins to die.

    The anarcho pole views the free market as a natural phenomenon that existed prior to government and could exist independent of any government. Humans donít have to carry out any conscious action to create a free market. The free market exists until a human takes a deliberate action to destroy it through an act of actual or threatened violence.

    The classical liberal views the free market as an unnatural phenomenon. The classical liberal thinks that violence and intimidation are fundamental facets of human existence. The free market only comes into existence when violence is removed from human interactions by conscious intent. The free market exists in an artificial and unstable bubble of non-violence created by a minimal but effective State. Outside the bubble violence is always seeking to rush back in and destroy the free market. The government that forms the bubble is itself violence and can grow out of control and also destroy the free market. The bubble is maintained by counteracting natural violence with government violence. It is always a precarious balancing act.

    These two models of the origins of the free market generate different views on the utility of war.

    Anarcho view warfare as counterproductive. War is an exercise in violence that attacks the natural free market regardless of by whom or why the war gets fought. If governments stopped acting, the natural free market would eventually assert itself.

    Classical liberals view some wars as necessary either to protect the free-market bubble or to expand it. Sometimes, if the government does not act, the free-market bubble will be destroyed by violence.

    In the War on Terror, Anarcho generally oppose it and classical liberals generally support it. Anarcho believe internal security precautions and external warfare are cures worse than the disease. Classical liberals believe that the precautions and warfare are necessary to protect the bubble. Both views are logically consistent with their axiomatic beliefs about the origins of the free market.

     

    13 Responses to “Natural or Unnatural Free Markets?”

    1. Anonymous Says:

      Shannon – your posts continue to be a welcome and provocative addition to chicagoboyz, thanks

    2. Shannon Love Says:

      Thanks, whoever you are.

    3. Ken Says:

      “Both views are logically consistent with their axiomatic beliefs about the origins of the free-market. ”

      But which view is logically consistent with empirical knowledge about human beings?

      Anyone who has spent any time on a school ground knows that there exists a depressing number of people who commit violence for fun, who assault weaker people as a pleasant diversion from the routine of flunking their classes. It’s interesting that some of the people who bore the brunt of this throughout their childhoods go on to subscribe to theories based on the notion that human beings are inherently good and need some sort of “bad influence” to drive them to commit violence.

    4. John F Says:

      Interesting. Like a lightbulb just popped on over my head!
      It really clarifies some divisions on the war that have puzzled me.

      In fact, it might be pushed a bit further:
      why do “classical liberals” and conservatives tend to to fall in one group, anarcho-libertarians and “leftists” in the other?

      Possibly because of each group, despite other differences, share similar underlying views on the innate inclination to virtue of human beings?

    5. Shannon Love Says:

      John F,

      I suggest you might want to read Thomas Sowells, “A Conflict of Visions” in which he talks about how peoples fundamental models of reality undergrids their all their political thinking. It is why the same people line up on the same issues over and over again even though the issues appear to have little in common.

      I think that to understand people’s arguments you must get inside their heads and understand their fundamental models of how the world works. Most people are arguing logically based on their own internal axioms many of which they are not even consciously aware of. Making those axioms explicit is a very powerful tool both for understanding and in argumentation.

    6. MeTooThen Says:

      Shannon,

      “It is why the same people line up on the same issues over and over again even though the issues appear to have little in common.”

      Today one sees this with regard to the Bush 43 Presidency. From the same data set come two completely opposed, and tightly held sets of impressions.

      So whether one talks about the decision to invade Iraq, the significance of Abu Ghraig, the health of the econonmy, the value of the tax cuts, etc. those that fall on the side opposed to the President, do so on each and every issue.

      The intra-rater reliability/consistency is so high as to be nearly uniform.

      Those who support the President, do so with high reliability, but with greater variability than with the AnyOneButBush crowd.

      For example, the Conservative base takes issue with the President on spending, Medicare drug-benefits and the like.

      In this case, the belief system that has become AnyOneButBush is indeed axiomatic, and no matter what new data set is introduced, the interpretation of those data will be the same.

    7. Fûz Says:

      If governments are outlawed, only outlaws will have them.

      I’m firmly in the classical-liberal camp on this point. Does that make me a libertarian hawk?

    8. Jesse Walker Says:

      I don’t think this works as either a description or an explanation of how anarchists and classical liberals think.

      An anarchist may believe that “the free market [is] a natural phenomenon that existed prior to government and could exist independent of any government” and still support the war on terror, for the same reason he calls a government-run fire department when his house is on fire, even though he believes the free market could provide protection if the state would step out of the way. And a classical liberal could believe you need the state to fight external enemies, but still oppose Bush’s foreign policy on the grounds that he’s doing the job in an incompetent or immoral way.

      Also, what do you mean by “war on terror”? Many anarchists support at least part of what’s going on under the “war on terror” label, and many classical liberals (starting with the crowd at Cato) oppose a great deal of it.

    9. Shannon Love Says:

      Jesse Walker,

      It is a broad generalization so I would expect that many people deviate from the model. Like I wrote, this is two ends of a spectrum.

      The war is just one issue where I think this division shows up.

    10. Perry de Havilland Says:

      Excellent article, Shannon! This is quite an issue at our end of the blogosphere :-)

    11. Jesse Walker Says:

      Shannon: Depending on how you define “war on terror,” you could make the case that either a majority of classical liberals oppose it or a substantial minority of anarchists support it. That’s more than just a deviation.

      You might be onto something with your explanation of anarchist behavior (though there’s still more caveats you should add). But as an empirical matter, your generalization about limited-government libertarians doesn’t hold up.

    12. Shannon Love Says:

      Jesse Walker,

      I think you may be right that the “War on Terror” is to vague to highlight the poles of the spectrum.

      The war in Afghanistan might be a better limited case. I would say that those gravitating toward the Anarchist pole were more likely to oppose it even though it was a retaliatory war whereas those leaning towards the Classical Liberal pole would be more likely to support it.

      It might be interesting to create a poll to try to test my idea. We could try to nail down peoples theoretical beliefs about the origins of violence and the free-market and then try to correlate those beliefs with the individuals position on the war or wars going on now.

      I think I’ll do some research.

    13. Joeri Says:

      I’ve personally for a long time held the view that the free market is an unnatural phenomenon because due to scale effects it is more profitable to merge or acquire than to continue business as usual, and so over time any unregulated market will turn into a monopoly or oligopoly. Markets with naturally higher barriers do this faster, like the broadcasting industry (which turned into a few large behemoths incredibly fast when the market was deregulated).

      If my view on this is correct, the only thing that creates and sustains the free market is careful governmental supervision of the market, and violence can only influence that by changing governmental policy, for example through conquering a foreign government and replacing it.