SEAN GABB ON THE LIBERTARIAN CHALLENGE OF FREE ENTERPRISE
re-posted by Bodwyn Wook
‘Big business no longer needs or deserves our support. We can now safely emphasise the radical elements of our ideology.’ (Dr Sean Gabb)
In what may perhaps be a surprise to some who consider Libertarians to be die-hard “capitalists,” Dr Gabb surveys with a critical eye the real threat to liberty of crony capitalism.
The thorny problem is that of all large-order human groupings vs individuals, both members and outsiders — collective entities at least for survival purposes will bully and they will coerce. Outrightly, I mean, or through the sly gambit of pandering in a “free” market to carefully amplified natural proclivities, namely anger, fear, greed and lust — and, the lazinesses! These enhanced anxieties in turn are assuaged by lavings of new, but always ephemeral, “products.”
There is no remedy to that — above all the moral laziness — even in libertarianism, as such. The question here is one of better education and a resulting amplification in the statistically decisive element of better people. Wretchedly enough, this outcome can no more be assured by “governance” than by private moral effort and education.
In any case, I need to point out that it is no good on Earth in saying that large corporate-government entities are ‘not natural’ as Dr Gabb does, below. This is semantically null since whatever is, by definition, must be “natural.” Naturally enough, the question of desirability is a different matter, of course, and I perceive that actually to be what is under discussion here. In any case, the plastic litter blowing in the ditch is strictly on all fours with the fallen tree leaves there, and so we are better off now without staying atop the donkey of metaphor when once it has gotten us to the mosque, so to speak….
We all have much to think about and I, for one, appreciate Dr Gabb’s rehearsals of the issues. Indeed, I am now lifting his text, with full and proper permission and attribution, into these on-line pp of Bodwyn Wook, at least for redundancy purposes, and hopefully for the “bare handful” here to see and read, also:
Hans-Hermann Hoppe and the Political Equivalent of Nuclear Fusion
by Sean Gabb
I have been invited to contribute a chapter to this book of appreciations of Hans-Hermann Hoppe. Now, he is a person of forbidding achievements. He has made important contributions to economics, to political theory, to law, and to epistemology, among much else. He is also a person of much organisational ability, and the conferences he runs at Bodrum for his Property and Freedom Society have rapidly established themselves as one of the high points in the libertarian calendar.
This makes it difficult to know where to start when it comes to writing a single chapter about his achievements. What I have decided to do, however, is to try and show how what he might regard as one of his minor achievements is contributing to a new and potentially significant consensus within the libertarian and conservative movements.
The End of the Cold War: A Victory Denied
In the ideological sense, the Cold War was fought between the defenders of liberty and tradition and their most open and comprehensive enemies. Yet in the settlement that followed the defeat of Communism, the main losers have been libertarians and conservatives.
Those who still regard this defeat as one for the enemies of liberty and tradition have failed to see beneath the surface of things to the underlying reality. Orthodox Marxism-Leninism, together with its numerous heresies, was mostly important not in its own terms, but as an excuse. In every generation, there are people who want to live at the expense of others, or to make them unhappy, or both. Unless they are able to be predators by act of conquest—the Assyrians, for example, or the Mongols—these people always need arguments to persuade their victims that being robbed or murdered will make the world a better place. Most of them need themselves to believe these arguments.
Long before the Berlin Wall came down, Marxism had become an embarrassment. Its historical and economic underpinnings had crumbled. Its predictions had all been falsified. Its promises were all broken. Its body count and the poverty of its survivors could no longer be denied. It no longer served to justify the actions or the existence of the Soviet state. Its disestablishment after 1989 was less a defeat for the enemies of liberty and tradition than a release.
The accelerated rise of politically correct multiculturalism since then, and the rise from almost nothing of environmentalism, should not, therefore, be seen as ideologies of asylum for dispossessed Marxists. Rather, they are ideologies of transformation and control more in keeping with the spirit of the present age. Just as Marxism once did, each provides a shared narrative, a shared terminology, and shared feeling of doing good for those whose objects are anything but good.
They are, moreover, better than Marxism, so far as they are less threatening to the powers that be in the West. Diversity and sustainability requirements raise up bureaucracies that allow a cartelisation of costs that privilege established wealth against the competition of new entrants. They otherwise provide jobs and status in organisations that look reassuringly like conventional businesses.
The New World Order
The result has been the emergence since 1989 of a new order in which broadly liberal and democratic institutions are being transformed into the agencies of a police state, and in which traditional ways of life and real diversities are being swept aside in favour of centrally-directed homogeneity.
There is nothing unusual about what is happening. There is nothing that should not have been at least dimly perceived back in 1989. At the end of every real war, the winning alliance tends to break up, as the often radically different interest groups that comprised it find that what brought them together no longer exists to hold them together. New alliances then form between interest groups on the winning and losing sides.
This happened at the end of the Napoleonic wars, when Britain and France found themselves increasingly on the same side against the Central European powers. It happened again at the end of the Second World War, when the Americans and Russians fell out, and both recruited their zones of occupied Germany as allies in the new struggle. It has now happened with the new ideological that emerged at the end of the Cold War.
Whether or not this was to be expected, libertarians and conservatives have reason to feel aggrieved. They were perhaps the two most prominent ideological groups in the battle against Communism. Libertarian economists provided the most devastating weapons of attack. Conservatives did most to articulate the revulsion that ordinary people felt when confronted with the kleptocracy and mass-murder at the heart of Communism. They are now jointly surplus to requirements in a world where ex-Trotskyites and even former Communist Party members have put on suits and become government ministers, and now sit happily at dinner with the heads of global corporations.
There are three possible responses to this state of affairs. Libertarians and conservatives can whine piteously about the unfairness of things. Or they can carry on, as if nothing had changed after 1989, addressing arguments to the same allies and against the same enemies. Or they can recognise that the world has changed, and that promoting the same values requires differences of approach.
New Times, New Ways
Let me now drop the impersonal tone. I will not speak directly for the conservatives. But I will speak for the general libertarian movement. There is no orthodoxy here. Libertarians disagree with each other almost as much as we disagree with our various opponents. Even so, it is possible to see an emerging consensus—first that there is need of a new approach, and second of its nature.
In explaining this, the logical place to start is with our thoughts on the free market.
Limited Liability: The Worm in the Free Market Bud
Everyone knows that libertarians believe in free markets. Something we have not always made sufficiently plain—something that we may not always have been clear about ourselves—is that when we talk about free markets, what we mean is markets of free people. It does not mean that we endorse markets simply because they are efficient, or even because they are creative. In particular, we have no affection for big business.
Though there can be no doubt they have enriched the world, companies like Microsoft and General Motors and ICI are not natural institutions. They are creatures of the State. They came into being and are sustained by incorporation laws. These laws permit individuals and groups of individuals to act not as themselves, but as servants of a fictitious entity. The directors and shareholders are not legally responsible for the debts of the entity. Nor need they feel morally responsible for their actions or inaction on its behalf.
Because of limited liability, business corporations can attract large amounts of investment. Because they are not natural persons, they need not follow the cycle of growth and decline normal to unincorporated businesses. Instead, one generation of directors and shareholders can give way to another. These devices allow business corporations to grow much larger than unincorporated businesses.
It might be argued that incorporation laws are similar to marriage laws—that is, that they gather what would otherwise be a number of complex agreements into a single act. If there were no state, people would still cohabit. Each partner could still make the other next of kin. There would be agreements or customary rules to regulate the management of common property and the rearing of children.
But this is not the case with incorporation. Certainly, the owners of any business could agree with their suppliers and customers that they are servants of a fictitious entity, and that their liability for debt is limited to their investment in the entity. But they could not contract out of liability in tort. This fact alone would put off any investor who was not able to buy a controlling interest. I and countless millions of people like me own shares in companies of which I know nothing. If we knew that we were to be regarded, in the event of a large award of damages, as jointly and severally liable for payment, hardly any of us would risk being shareholders.
Now, except for anarchists, to say that something could not exist without the state does not make it in itself illegitimate. But it is a reasonable presumption.that whatever cannot exist naturally needs a strong justification in terms of utility. It is not enough to point to the achievements of big business. Libertarians have faced similar arguments for centuries now about the state. In most countries, the state provides education. In my country, the state provides most healthcare. Obviously, this does not mean that education and healthcare would not be provided without the state. It is the same with business corporations. All pharmaceuticals and most computer software have been developed by big business corporations. But there is no reason to suppose they cannot be otherwise provided.
And even if it could be shown that there would be fewer of these things in a world without incorporation, the costs of incorporation must be weighed against the benefits.
Or: “Fuck you!”” (Mr Dick “Stroker” Cheney, US President of the Senate, to a Democrat Senator)
When the number and size of business corporations grows beyond a certain limit, they tend to become part of the ruling class. To create a new business and make it grow large requires entrepreneurship, which is most often a quality of outsiders. To administer what is already established and make it bigger require skills similar to those required by politics and state administration. Between the state and the larger business corporations, therefore, there will be an overlap or a continual exchange of personnel.
This will make it possible for business corporations to externalise some of their costs of growth. They will, as political insiders, press for state involvement in the building of roads and railways and other transport infrastructure that allows them to enjoy greater economies of scale than would otherwise be possible. They will press for the political control of foreign markets. They will be best placed for securing government contracts—often to provide things that they themselves insist are necessary.
Given an ideological climate favourable to active intervention, they will fashion the tax and regulatory system to the disadvantage of smaller competitors.
There are then the cultural costs. Anyone who works for any length of time in a large business corporation tends to become just another “human resource”—all his important life decisions made for him by others, and encouraged into political and cultural passivity. To do well here, he needs to become a receiver and transmitter of orders, to accept authority and avoid arguments with superiors, and to regard success in terms of steady income punctuated by steady advances. He must essentially be a bureaucrat. He will know nothing of how real business is transacted. He will care nothing about laws and taxes that stop others from transacting real business. He will not be inclined to resist paternalism in the political arrangements of his country.
An End to Compromise
As said, this rejection of what may be called “actually existing capitalism” is only an emerging consensus. There are still many libertarians who see nothing wrong with business corporations in themselves. And until quite recently, people like me were on the fringe of the libertarian movement. But, then, until recently, it was not unreasonable for libertarians to look favourably on business corporations.
Until 1989, all politics were shaped by the great ideological tug of war over socialism. We had little choice about joining that tug of war, and none in which direction we would be pulling—and none about with whom we would be pulling. The Communists wanted to destroy business corporations as well as market freedom. Even corrupted markets are better than no markets. And it should never be forgotten that “actually existing capitalism” works. It may constrain both markets and the human spirit. But it has been better than any other system of economic organisation offered in the last hundred years. It has been fantastically productive. It has raised, and is raising, billions from poverty to prosperity. A libertarian world of small and unprivileged business units would be better. But what we has was pretty good, and was to be defended against all its mainstream rivals.
But times are altered. Business corporations have become increasingly global since the end of the Cold War. They have been moving steadily out of their entrepreneurial phase into the bureaucratic. They are increasingly demanding naked privilege. They are demanding intellectual property rights laws that go far beyond what any ordinary person might think reasonable. Through what are called “free trade” agreements, they are promoting regulatory cartelisation at the world level. Nobody of consequence wants to nationalise the corporations. They work happily with governments of every apparent persuasion. Their leading personnel are, more than ever, members of the ruling class.
The more libertarians doubt the legitimacy of the business corporation, more we reconnect or connect with other traditions of resistance to state power. There is nothing anti-libertarian about strong working class organisations. So long as there is no grant of legal privilege, libertarians can have no objection to trade unions, or cooperatives, or other institutions. We might have nothing against the break up of large landed estates—country and town.
Big business no longer needs or deserves our support. We can now safely emphasise the radical elements of our ideology. We are no longer in danger of supporting alternative institutions that may turn out to be Communist front organisations.
Outreach to Conservatives: Old Friends in New Times
So much for the first part of our emerging strategy of resistance. But there is now the matter of our relationship with the conservatives. I do not mean by this the neo-conservatives. Generally speaking, the prefix “neo” has a negative meaning. And these people are less interested in tradition than in keeping up a military-industrial complex that may have been necessary to face down Soviet Communism, but which now is simply a standing danger to freedom at home and peace abroad.
No—what I mean is real conservatives in the English-speaking sense. Their defence of tradition is necessarily a defence of limited government, of due process, of civil liberty, and of market freedom. They were natural allies in the past. There is no reason why they should not continue to be in the future.
The problem so far has been that there are certain differences between libertarians and conservatives that have prevented full-hearted cooperation. With the ending of the Communist threat, it did seem for a while as if we might go our separate ways. Even now, it is not commonly accepted that there is a new threat just as deadly and just as much in need of co-ordinated resistance.
The main difference is one of vision. The libertarian utopia is one of maximum choice in a world of rapid technological progress. What we ultimately want is an order not wholly based on this planet, in which people live for at least a very long time. We are not very interested in keeping up old ways of life simply because they are old.
Conservatives, of course, are interested in keeping up these old ways. They hated socialism as an attack on their ideal order. They sometimes regard libertarianism as barely less of an attack. In particular, they do not believe in mass immigration, which they perceive as a threat to their organic nation state. And they are dubious about a freedom of trade that may prevent their country from feeding itself or from producing its own manufactures.
Here we come at last to what I see as the main achievement of Hans-Hermann Hoppe. I am not ualified to assess his economic work. Because my own philosophical outlook is bounded by the Greek sceptics and by Epicurus and the British empiricists, his epistemology does not really answer any of the questions that I have ever asked. Nor will I claim that he agrees with my own dislike of business corporations. But his clarification of what a libertarian order might be is something that I can appreciate. And it is this that I think his greatest contribution to the joint cause of liberty and tradition.
The Problem of Immigration
Let us consider his work on immigration. Until the end of the twentieth century, there was a libertarian consensus over immigration that had emerged during earlier concerns about the entry of Jews and Irish Catholics to England or of the southern and eastern races of Europe to America. Libertarians insisted, and gained agreement over time, that the problems raised by these immigrations were either imaginary or short term; and that policies of benign neglect would turn strangers into citizens.
With the rise of mass immigration from outside the European world, this opinion has had to come under review. If every Jew in Eastern Europe had moved to England before 1906, it would have raised the population by perhaps three million. If every Slovak in Europe had moved to America before 1920, it would have raised the population also by three million. These were peoples whose appearance and values were reasonably similar to those of the native population, and who could be expected in time to become largely indistinguishable from the native population.
It may be different with non-European immigrants. These look different. Their values are often radically different, and even hostile. There are potentially unlimited numbers of them. Their simple presence seems likely to displace cultural patterns that have long been vaguely favourable to freedom, and to place a strong downward pressure on the incomes of the poor. They are, moreover, being used as an excuse to create an order in which freedom of speech and contract and in which democratic accountability are being set aside in the supposed interests of public order.
The mainstream libertarian response has been to deny that there is in itself any problem at all, and that the experience of past immigrations will simply be repeated. Their only policy recommendations are to raise louder objections to the multicultural police state that was already growing before the quickening of non-European immigration. They also point out that much dispute between newcomers and natives takes place within areas controlled or influenced by the state. Let there be no state education, and there need be no argument over whether some schools should allow teachers to wear veils and others should teach the inerrancy of the Bible or the non-existence of God. Let there be no welfare state, and there need be no argument over taxes on natives to maintain the children of strangers or over taxes on strangers to pay the pensions of natives.
As for the argument over falling wage rates, this is countered by the observation that greater market freedom would after a while check or even reverse this trend, or by denying the legitimacy of any state concern with the living standards of the poor.
What Professor Hoppe does is to ignore the polarity of the debate as it has been set up. Those who want an anarchist order have so far had to accept the legitimacy of mass-immigration. Those who have been worried about mass-immigration have had to accept the need of a state to control the border. Professor Hoppe walks straight through this debate.
The State — Not Guardian but Traitor at the Gate
He regards the mass immigration of the past half century into western countries as an instance not of libertarian open borders, but of “forced integration”. It is different from free trade in goods and services so far as it is not a free choice of individuals to associate as they please. Instead, it is a product of anti-discrimination laws and state welfare policies.
In a democracy, politicians will have an interest in importing those most likely to vote for big government, or those most likely to lend themselves to an electoral balkanisation that puts an end to the accountability of rulers to ruled. Given enough pressure by the majority, these politicians will make immigration laws that look tough. But these will lead at best to random acts of oppression against the sorts of immigrant who, in any rational order, might be welcomed. The policies of indiscriminate welfare that attract paupers into the country, and of political correctness and multiculturalism that prevent the majority from resisting, will continue unchecked.
But let us imagine a society in which there is no state. Obviously, there would be no welfare provided by the tax payers. Nor would it be possible to frighten the natives into passivity. Nor, though, would there be unchecked immigration.
Professor Hoppe says:
“[L]et us…assume an anarcho-capitalist society…..All land is privately owned, including all streets, rivers, airports, harbors, etc.. With respect to some pieces of land, the property title may be unrestricted; that is, the owner is permitted to do with his property whatever he pleases as long as he does not physically damage the property owned by others. With respect to other territories, the property title may be more or less severely restricted. As is currently the case in some housing developments, the owner may be bound by contractual limitations on what he can do with his property (voluntary zoning), which might include residential vs. commercial use, no buildings more than four stories high, no sale or rent to Jews, Germans, Catholics, homosexuals, Haitians, families with or without children, or smokers, for example.
“Clearly, under this scenario there exists no such thing as freedom of immigration. Rather, there exists the freedom of many independent private property owners to admit or exclude others from their own property in accordance with their own unrestricted or restricted property titles. Admission to some territories might be easy, while to others it might be nearly impossible. In any case, however, admission to the property of the admitting person does not imply a ‘freedom to move around,’ unless other property owners consent to such movements. There will be as much immigration or non-immigration, inclusivity or exclusivity, desegregation or segregation, non-discrimination or discrimination based on racial, ethnic, linguistic, religious, cultural or whatever other grounds as individual owners or associations of individual owners allow.
“Note that none of this, not even the most exclusive form of segregationism, has anything to do with a rejection of free trade and the adoption of protectionism. From the fact that one does not want to associate with or live in the neighborhood of Blacks, Turks, Catholics or Hindus, etc., it does not follow that one does not want to trade with them from a distance. To the contrary, it is precisely the absolute voluntariness of human association and separation—the absence of any form of forced integration—that makes peaceful relationships—free trade—between culturally, racially, ethnically, or religiously distinct people possible.”
Indeed, he does not stop with immigration. He argues that a libertarian world would have room for highly traditional communities in which conservative views of morality would be the norm.
Now, I repeat, this may be a theoretical contribution that Professor Hoppe rates lower than his work on Austrian economic theory. For me and for anyone else who wants a fusion of libertarian and conservative movements, it is a contribution of first class importance.
Resisting the New World Order: The End of the Beginning?
Conservatives might not be wholly pleased by such a world. Their organic ideal has room for a powerful state. But the answer to this at the moment—and for some time to come—is that any state able to intervene in matters of personal morality will necessarily be run by the kind of people who now run the state that we have. This will not be a conservative state. Therefore, libertarianism must, for the foreseeable future, be a strategy for conservatives.
We are talking here about a debate that is taking place between a few hundred people, and that is ignored by almost everyone else. There is no chance, either in England or in America, of a libertarian or even of a really conservative electoral victory.
But, if regrettable, this is not necessarily important. What is important is that two groups of intellectuals should arrive at the truth and agree between themselves on that truth and how it should be promoted. If what they decide is the truth, it will eventually have its effect.
I have said that those who enjoy living at the expense of others hardly ever argue honestly about what they want. They hardly ever admit to themselves what they want. Instead, they operate from behind the most presently convenient ideology of legitimisation. Attack these ideologies hard enough, and they will crumble. That may provoke the oppressed to stand up and demand their rights. More likely, it will confuse and weaken those who benefit from such ideologies so that they eventually give in to less violent demands.
Libertarians and conservatives may have lost the Cold War. But the battle continues. And, thanks in part to the work of Hans-Hermann Hoppe, what just a few years ago might have seemed a futile last stand may be the prelude to a dazzling counter-attack.
 None of the above should be regarded as original. There is a large, though mostly American, literature on this point. See, for example, Murray Rothbard: “Every element in the New Deal program: central planning, creation of a network of compulsory cartels for industry and agriculture, inflation and credit expansion, artificial raising of wage rates and promotion of unions within the overall monopoly structure, government regulation and ownership, all this had been anticipated and adumbrated during the previous two decades. And this program, with its privileging of various big business interests at the top of the collectivist heap, was in no sense reminiscent of socialism or leftism; there was nothing smacking of the egalitarian or the proletarian here. No, the kinship of this burgeoning collectivism was not at all with socialism-communism but with fascism, or socialism-of-the-right, a kinship which many big businessmen of the twenties expressed openly in their yearning for abandonment of a quasi-laissez-faire system for a collectivism which they could control…. Both left and right have been persistently misled by the notion that intervention by the government is ipso facto leftish and antibusiness.” (Murray N. Rothbard, “Left and Right: The Prospects for Liberty,” Left & Right 1, no. 1, Spring 1965.)
For further discussions, see: Gabriel S. Kolko, Railroads and Regulation, 1877-1916, Princeton University Press, Princeton, 1965 and The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916, Free Press, New York, 1965; Murray N. Rothbard, “War Collectivism in World War I” in Ronald Radosh and Murray N. Rothbard, eds., A New History of Leviathan, Dutton, New York, 1972; Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government, Oxford University Press, Oxford and New York, 1987; Paul Weaver, The Suicidal Corporation: How Big Business Fails America, Simon & Schuster, New York, 1988; Butler Shaffer, In Restraint of Trade: The Business Campaign Against Competition, 1918-1938, Bucknell University Press, Lewisburg, 1997; John T. Flynn, As We Go Marching, Free Life, New York, 1973; Roy Childs, Big Business and the Rise of American Statism, unnamed publisher, 1971; Joseph Stromberg, “Political Economy of Liberal Corporatism” and “The Role of State Monopoly Capitalism in the American Empire”, both from the Center for Libertarian Studies, New York, 1978; Kevin A. Carson, The Iron Fist Behind the Invisible Hand : Corporate Capitalism as a System of State-Guaranteed Privilege, Red Lion Press, Montreal, 2001; Kevin A. Carson, Austrian and Marxist Theories of Monopoly-Capital: A Mutualist Synthesis, Economic Notes 102, The Libertarian Alliance, London, 2004.
I particularly commend the works of Kevin Carson. See also Appendix Two for a more extended discussion of these matters.
 Hans-Hermann Hoppe, On Free Immigration and Forced Integration, 1999—available at: http://www.lewrockwell.com/orig/hermann-hoppe1.html
[Sean Gabb all rights reserved August, 2009]
[Bodwyn Wook all introductory & supplementary text-rights reserved 11 August 2009]