Tyler Cowen’s “State Capacity Libertarianism”

Tyler Cowen recently posted an argument on his web page, Marginal Revolution, called, “What Libertarianism Has Become and Will Become: State Capacity Libertarianism.”

Terrible name, I thought. But I kept reading.

Cowen, who is professor of economics at George Mason University and director of its Mercatus Center, is probably the most prominent mainstream libertarian intellectual today. (In essence, “mainstream” means that nonlibertarians will listen to him.) His webpage shows a mind ranging from the history of the Marshall Plan to the economics of art to how globalization affects the way the world eats.

He begins his piece as follows:

“Having tracked the libertarian ‘movement’ for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow. One branch split off into Ron Paul-ism and less savory alt-right directions, and another, more establishment branch remains out there in force but not really commanding new adherents.”

The problem, he says, is that plumb-line libertarianism doesn’t address some 21st-century problems, starting with the effects of carbon combustion on the Earth’s climate. Smart libertarians and classical liberals, he says (with a nod to Adam Smith), “have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.”

(Entirely non-sticky: correct.)

The essence of Cowen’s view is that civilization has always needed a functioning state to underpin property rights and markets, and that in the 21st-century it needs one to solve a range of problems from global warming and traffic congestion. “State Capacity Libertarians,” Cowen writes, “are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats.”

That’s right. We need the state. And let’s admit that state power has achieved some vital things that were not going to be done by markets alone. One is the creation of public-health institutions that can protect the public from such scourges as smallpox, polio, AIDS, SARS, and Ebola. Another is to make markets work better by requiring the disclosure of information such as the contents of processed food or the legal properties of stocks and bonds.

“Plumb-line” libertarians — the purists — will, of course, object that Cowen has opened the door to the state, which nonlibertarians will attempt to kick open all the way. And it is so. In the world of opinion journalism Cowen’s opened door was wrenched off its hinges by Washington Post columnist Henry Olsen in a piece entitled, “Libertarianism Is Losing Its Grip on Conservative Thought. Good.”

To Olsen, libertarians are zealots who declare “government always bad, private action always good.” And there are people like that. Olsen argues that this means libertarians “are congenitally unable to present plausible answers to challenges that people want addressed.” As an example, he cites the economic gap in Britain between the prosperous South and depressed North, an ailment to which the U.K.’s prime minister, the “one-nation conservative” Boris Johnson, now promises to minister. Olsen also cites the push by Sen. Mario Rubio (R-FL), for federal intervention to shore up “hollowed-out” manufacturing industries. Olsen applauds these proposals. He favors a politics in which “democratic governments can legitimately define a problem and then use tax, spending and regulatory policy to try to accomplish a specific, publicly defined goal.”

Olsen goes on to argue that too many Republicans in Congress have been cowed by libertarians with their “government bad, private action good” mantra, so that the Republicans offer no solutions to such problems as health insurance coverage, climate change and “the modern economy’s impulse to value formal education and devalue common labor.” Olsen concludes, “Cowen’s essay is thus aptly timed, bringing a ray of sunshine into a long-darkened movement . . . The hard core will try to keep the rest of us in the shadows, but the days will lengthen as more and more conservatives break free from their frozen slumber.”

Shadows and dark forces aside, there is some truth in what Olsen says. Several of the Democratic presidential wannabees are pushing for the entire U.S. health insurance industry to be scrapped and replaced by federal officials. The Republicans oppose this, of course, but mainly by dragging their feet, which is not a strategy that ultimately wins. For years now, the Republicans in Congress have promised to repeal Obamacare, but when they had the votes to do it, they didn’t. They had nothing politically acceptable to replace it with. Now they are maneuvered into the position of effectively defending the program they promised to kill.

So Olsen has a point. If you are too doctrinaire you remove yourself from the discussion and you get nothing. But in defining his position, Olsen opens the door to state action much too wide. He wants government to take up “the challenges that people want addressed.” And that could be anything.

Libertarians seek to limit state action. Cowen is arguing, as am I, not to imagine limits too strict. To defend against an imminent threat to the health and safety of the people, state power may be used against foreign army or an infectious microbe, or to defend against a long-term threat like a warming planet. But the problem Olsen defines as “the modern economy’s impulse to value formal education and devalue common labor” is not such an imminent threat. Nor is the relative decline of manufacturing. These are social trends, not imminent dangers. The percentage of Americans employed in manufacturing has been declining since 1953 — and with the advance of robotics, employment in that sector, if not production, will continue to decline. Get used to it.

To a libertarian, the market value of different kinds of labor is a background fact that you take into account in your private decisions. If you grow up in a low-wage area with few opportunities, you can move away. You can stay and start a company and thereby provide work. If you can’t make it in manufacturing, you can do something else. Go into the service industry. Become a university professor. Sell hot dogs. Whatever. To a libertarian, these are not government problems.

In today’s America, they are. Politicians and journalists proclaim a manufacturing crisis, an opioid crisis, a homeless crisis, a student-loan crisis, a teen pregnancy crisis, a food-desert crisis, an obesity crisis, on and on. The thing is endless. Government is enlisted to eradicate poverty, inequality, racism, sexism and homophobia. Reacting to the crisis of plastic bits in the Pacific Ocean, the city where I live has banned plastic straws, and to address the obesity crisis (supposedly) it taxes the sugar content of canned and bottled drinks.

No libertarian can accept Olsen’s idea of a government unleashed in this way. You can, however, consider Olsen’s criticism. Some of the time, out of political necessity, it makes sense to accept compromise solutions. Charter schools are better than uniform public schools. A mandate to buy private health insurance is better than “Medicare for All.” A carbon tax is better than green socialism. As George Orwell once wrote, the sure sign of a zealot is an argument that half a loaf is the same as no bread.

Consider some of the replies to Cowen from libertarians.

Jeff Deist of the Mises Institute was against him. “There is no political will or constituency for skillful technocratic state management of society . . . There is no third way between state and market.” Come on, Deist, don’t try to win by asserting theoretical categories. A society can have some state and some market — which is what we do have, here and in almost every jurisdiction on the planet, in various proportions. That’s what we’re talking about, and you know it. “Western states won’t give up their sclerotic regulatory, tax, central banking, and entitlement systems no matter how many flying cars or hyperloops we want.” Yep, they probably won’t, just as Cowen says. “Climate change is not a problem or issue for anyone to solve.” Well, maybe not for anyone to solve, but perhaps for all of humanity to ameliorate — and intelligent amelioration might be good enough. “The environmental movement will quash nuclear (especially after Fukushima).” Maybe, but arguing in favor of nuclear power as part of the solution makes more sense than the environmentalist position, which is to pin all our hopes on solar and wind.

Deist also has his definition. “Libertarianism simply means ‘private.’ It is a non-state approach to organizing human society. It is not narrow or confining; in fact everything Cowen desires in an improved society can be advanced through private mechanisms.” Everything, eh? This reminds me of when I was a teenager and I wrote to Nathaniel Branden asking him how we would build highways without eminent domain. He replied that in a free society this would not be a problem, “nor has it ever been.”

Bryan Caplan offers a piece titled, “Worst Advice to Libertarians Ever?” He quotes Cowen’s lines, “We should embrace a world with growing wealth, growing positive liberty, and yes, growing government. We don’t have to favor the growth in government per se, but we do need to recognize that sometimes it is a package deal.” Okay; Cowen didn’t say he liked growing government, but that he was willing to accept much of it. I don’t think this means, as responder Gabriel M. says, that Cowen “wants the next generation of libertarians to be social democrats.”

Cowen replies to Caplan: “Bryan’s extreme rhetoric is a sign my points have hit home. I regularly debate these topics with him over lunch, I think Bryan is tired of being beat up upon in person. Note that in my essay I mention pandemics, global warming, and intellectual property as problem areas. There are plenty of facts on each topic. Bryan doesn’t mention one of these in response, instead shifting ground to the war on terror and resource pessimism, which he then punctures.”

When you argue against someone, rhetorical fairness requires that you take on their strongest points, not just their weakest ones.

At the Hoover Institution, economist David Henderson argues that “libertarianism, properly conceived, can handle almost all the modern problems that Cowen throws at it, whereas state capacity is fraught with danger.” Henderson argues that hardcore libertarians are right about recreational drugs, which maybe they are (meth, too?), and about the public schools. (Totally privatized schooling in one jump, or vouchers, or charters first?) He allows that on global warming, “if it is indeed a problem,” Cowen makes a good point. Maybe a carbon tax is needed, though how to get China pay its share? And do we really trust the government to get the details right? (What’s the alternative?) Henderson is right that there is some danger in Cowen’s position, but he also makes a crucial concession about global warming.

Nick Gillespie, editor of Reason, argues that Cowen’s “spirit is on target” but that his “specifics are fundamentally mistaken.” He goes on to concede, however, that Cowen is mostly right about the movement not commanding new adherents. And concerning the necessity of compromise, Gillespie writes that a better, non plumb-line definition of libertarianism is “an outlook that privileges things such as autonomy, open-mindedness, pluralism, tolerance, innovation, and voluntary cooperation over forced participation in as many parts of life as possible.” I like that definition a lot, and I think Cowen would like it. It seems to me that Gillespie accepts much of what Cowen says.

Dan Hugger of the Acton Institute argues that Cowen’s “state capacity libertarianism” “is actually a case for a politically pragmatic libertarianism tailor-made to a hostile audience.” Okay.

Several commenters describe Cowen’s position as left-liberal or social democrat — in other words, “liberaltarian.” These are sort-of libertarians who want to ally with Left in the hope of converting them. Read some of the comments from leftists on Olsen’s piece in the Washington Post.

• “Libertarians are cruel,” writes Jetmechanic1. “Probably more so than republicans. They are overwhelmingly people who have money and status and don’t answer to anyone.”
• “Libertarianism will never go away because Conservatives will always need a rationalization for ripping people off,” writes Blochead1.
• “These people will eat you if they make a dime from it,” writes CountryMouse2.
• “I’ve yet to hear of even ONE Libertarian of any stripe refusing to accept their Social Security checks,” writes CubbyMichael. (Isabel Paterson was one.)
• From Domiba: “Tell a so-called libertarian to pave his own road.”
• Then there is Kumit, who asserts that conservatism and libertarianism both are “just dog-whistle fascism.” (The “dog whistle” trope is a way of dismissing your opponents’ arguments without having to consider them.)

We are not allies of the Left. They don’t want anything to do with us. Cowen’s version of a compromised libertarianism is not “liberaltarianism” in any case.

Cowen’s positions are not plumb-line, but they are broadly libertarian. To me, the central statement of libertarianism is that your life belongs to you. This doesn’t mean that you don’t love your family or your country or the green Earth, or that you accept no obligations to them. It means that you decide which ones to accept, and that others respect your decision. You accept the world as you find it and make your own way. You can ask others for help, and if you treat them kindly you have a good chance of getting it, but you can’t demand it of them. “Society” does not owe you food, shelter, housing, medical care and a free bus pass.

Our opponents accuse us of saying, “You are on your own,” as if we were cutting people off from humanity. And I think: No way. You are free to make all kinds of affiliations, and most people do. But you decide — what you believe, whom you love, whom you live with, where you live, what work you do and how you spend your money.

In many of these things, we are essentially a libertarian society right now. Our politics is not libertarian, but even in our economic life, we are broadly more libertarian than not.

The case for liberty is also about the quality of the society. A society of private decisions is fluid. Freewheeling. Organic. Its direction is set by the sum of people’s choices, of which only a small part is how they vote. More important is what they do. It is the same in industry. The future of the medical industry, for example, requires that innovators constantly develop new drugs, new devices, new treatments and new ideas. A single payer will tend to roll a moldy carpet over all that. Regarding research and development spending, Terence Kealey wrote in The Economic Laws of Scientific Research (1996), “Nationalization always lowers budgets, whatever the enterprise.” (p. 247). Especially when there is no competition — and that is what “single payer” means — government services tend to be not too good.

The political world of 2020 doesn’t want to hear this. The candidates vie with one another to offer free stuff and secular salvation. One is an avowed socialist, and none is a libertarian. Still we have a good case, and we can make it stronger if we are not so dogmatic about it. Life is complicated, and an entire political philosophy built on the nonaggression principle will not work and will not sell. But we can still promote a world of strong (if not absolute) self-ownership, self-reliance and individual rights. We can say what H.L. Mencken said of the freedom of the press, when asked how much of it he was for. His answer was, simply, “As much as people can stand.”