Response to the symposium on Burning Down the House: How Libertarian Philosophy Was Corrupted by Delusion and Greed

Andrew Koppelman

Thanks to Richard Epstein, Christina Mulligan, James Hackney, Matt Zwolinski, Ilya Somin, Jamie Mayerfeld, Jennifer Burns, and Jonathan Adler for their thoughtful responses to my book, Burning Down the House: How Libertarian Philosophy Was Corrupted by Delusion and Greed.  It’s an honor to be able to engage with such an impressive group.

The book is a critical history of libertarian philosophy.  It argues that modern libertarianism began as a corrective to the Depression-era vogue for central economic planning. It showed how individual liberty and free markets could improve life for everyone, especially the poorest.  I trace its evolution from Friedrich Hayek’s moderate pro-market ideas to the romantic fabulism of Murray Rothbard, Robert Nozick, and Ayn Rand, and Charles Koch’s aggressive promotion of climate change denial.  Today it has become a toxic blend of irresponsible anarchism, cruel disdain for the weak, and rationalization for environmental catastrophe. The notion of a minimal state has attracted a new form of parasite: the dishonest businessman who wants to deceive his customers or poison his neighbors without being bothered by the police.

Unsurprisingly, the libertarians who participated in this symposium are unpersuaded.

He doesn’t respond to the book’s critique of his work.  He agrees with my criticism of what he calls “hardline” libertarianism.  He acknowledges the existence of market failures and the need for central planning to deal with public goods and other “high transaction cost settings.” 

He pushes back on the Gene Cranick story, in which a fire department watched a house burn down because the owner had forgotten to pay his annual fee.  Epstein claims that under well-established legal principles such disasters are unlikely.  I agree with him about that: what is most interesting about Cranick’s story is not the episode (though the county’s irrational aversion to a tax-supported fire department is revealing), but the response it elicited from right and left.  Epstein’s response is libertarian-ish to the extent that he fantasizes about compensating uninvited private fire departments through “arbitration or judicial determination.”  That may be an option under “standard rules of restitution,” but it is revealing that the option is never exercised, because America doesn’t do fire protection that way.  The Cranick story shows what can happen if public policy shifts in a more libertarian direction.

Privatized fire protection can create its own perverse effects.  (Jennifer Burns is right that its defenders rely on “a flawed account of incentives.”)  Before public provision was adopted, fire protection was effectively paid for by bounties from insurers.  Rival private fire departments would sometimes fight with one another for the privilege of extinguishing fires.  Competition is not invariably benign.  Houses were marked indicating which insurance company would pay the first company to get water onto the fire.  Houses without insurance marks were sometimes deemed “false alarms” and allowed to burn.  Fred McChesney reports: “the most celebrated incident of violence occurred during a fire at a Cincinnati planing mill in 1850. As the story goes, a dozen companies arrived at the fire and a riot ensued for the right to extinguish it. As the firemen brawled, the fire completely demolished the mill.”

The deeper issue is whether it is wrong to disrespect the distribution of wealth that markets generate.  Insurance against fire is rarely unaffordable.  But the debate about the Cranick fire took place in 2010 amid the Obamacare battle, and the debaters on both sides understood that the real question they were arguing about was whether the huge and growing number of people who couldn’t afford health insurance ought to be left to their fate.  That’s the moral equivalent of standing back and watching a house burn.  The law of restitution was not going to be any help with that issue.  (Epstein’s own solution, as I explain (69), makes unsustainable demands on private charity.)  That particular fight, which I describe in my earlier book The Tough Luck Constitution and the Assault on Health Care Reform, led me to the deeper dive into libertarian philosophy that produced this book.

Christina Mulligan is even more sympathetic to privatization than Epstein, telling a horror story in which public provision leaves open the possibility of viciously harsh punishment of nonparticipants.  Here, too, it is relevant that this doesn’t actually happen.  In her account, as in Epstein’s, the obvious solution of paying for a public good out of public tax revenues (typically enforced by liens on property for nonpayment of taxes) disappears from view.

The larger problem is the way in which libertarians imagine the conditions for liberty.  Mulligan protests that the libertarians she has known “deeply recognized human interdependence and believed private ordering was a superior way of caring for each other than government apparati.”  I also know people like that, including some of the participants here.  I like and admire them, but I don’t always trust their judgment.  Libertarians are typically drawn to the hypothesis that a nongovernmental solution is always better.  It is an hypothesis worth testing, and I say that libertarians have made and continue to make important contributions by insisting upon it (pp. 52-53).   Sometimes it is correct.  Sometimes it is a disastrous mistake.

Ilya Somin, my old friend and sometime collaborator, falls into that trap.  He acknowledges my dissection of the classic libertarian writers, Hayek, Rothbard, Nozick, and Rand, but laments my “neglect of more recent and more sophisticated thinkers.”  Mulligan similarly notes “the vast terrain covered in so little space.”  At 237 pages, the book is necessarily compressed.  I wrote it because there existed no short introduction to libertarianism for the general reader that was not written by enthusiasts.  The “missed opportunity” Somin describes would have been a different book than I was attempting.  Readers who want more luxuriant detail should read Brian Doherty’s wonderfully entertaining Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement, but it was published in 2007, too old to do what Somin asks.  All I can say is that the writers I cover are the trunk of the tree, one that continues to expand, and a historical overview appropriately focuses on the central lines.

I will say that contemporary libertarians, including Somin, make the same mistakes as their predecessors whom I do describe, preeminently exaggerated trust in unregulated markets and exaggerated distrust of government.  Somin is particularly troubled by my “neglect of modern libertarian critiques of democratic government, particularly those focused on voter ignorance and bias.”  Some modern libertarians, prominently including Somin himself, have argued that this fact is a reason to reject legislation in favor of “private-sector solutions to public goods problems and externalities.”  I acknowledge the possibility of such solutions (see 69, citing Ostrom, on whom Somin relies), but I say that “whether this is so in any particular case cannot be resolved without attention to the local evidence.”  Neither can the question of whether any particular branch of the administrative state is corrupt or incompetent.  A lot of officials are doing their jobs very capably.  My broad response to the more recent body of scholarship that Somin cites is this:  “Libertarians who are confident that the state can do nothing right have produced first-rate scholarship about abuses of regulatory power. That doesn’t mean they ought to be in charge of government.” (53)

The real gap between me and Somin is what I say next: “More fundamentally, the networks of mutual trust that facilitate such cooperation don’t develop in nations where government is distrusted. Across prosperous democratic nations, and over time, trust in government and interpersonal trust are tightly correlated.”  Somin is committed to a picture in which government cannot be trusted to do anything right: given the effect on policy of voter ignorance and bias, “the quality of those policies is likely to be greatly reduced.”  For reasons I elaborate in the book, that picture is not only destructive to cooperation in markets; it is at some remove from reality.  Despite voter ignorance and bias, Congress did manage to enact protections against death in the workplace and foul air, protections that the market was never going to supply, and which the Supreme Court has lately been gutting in the name of liberty.

Jonathan Adler is a scholar who is drawn to libertarian solutions to market failures, but he is less categorical than Somin in his embrace of such solutions.  For that reason, he and I are not so far apart as he thinks.  He is troubled by my claim that property rights are “conventions” that can be “designed with their likely distributional consequences in mind.” (98) He responds that “property rights cannot be simply ‘designed’ from the ground up to generate particular distributional consequences,” and that “the contours of private property are not infinitely malleable if it is to facilitate a Hayekian market order and safeguard liberty.”  I don’t disagree.  The passage that troubles him is a response to the claim of Murray Rothbard and Robert Nozick that redistributive taxation violates property rights.  I argue that “institutions that guarantee a fair share for the least well-off, such as taxation to support free public schools, are properly part of—not an exception to—the system of property rights.” (98)  Those institutions are human creations, but they need stability if people are going to plan their lives, economic and noneconomic.  Adler also thinks that I should have “far more humility about regulatory interventions” than the book offers.  But I repeatedly acknowledge that regulation can sometimes be corrupt, foolish, and counterproductive.  What I deny – and again, he doesn’t disagree – is that this is always or even usually true.  My “broad generalizations” that trouble him are broad condemnations of libertarian antistatism.

Mulligan claims that libertarianism is politically dead and the book comes too late.  As I’ve noted elsewhere, however, although much of the Republican Party’s agenda is pretty far from libertarian, the last time it held the Presidency and Congress its principal accomplishments were enormous tax cuts for the rich and the evisceration of regulatory agencies.  Its other thwarted aspiration was even more tax cuts, paid for by taking health care away from more than 20 million people. 

Matt Zwolinski acknowledges my criticisms of libertarianism, which happen to be heavily indebted to his own work.  (In some parts of my argument I am gratefully popularizing objections devised by him.)  He worries that I may in the end be too harsh on radical libertarianism, which offers “a lens through which to see the world that helps us get a certain class of important questions right – questions that we might have mis-answered, or not even noticed at all, had we been looking through a different lens.”  I heartily agree.  It generates hypotheses that demand to be investigated.  Libertarianism has an admirable side, which he and John Tomasi describe at length in their admirable forthcoming book.

James Hackney notes affinities between my conception of liberty and that of C.B. Macpherson, who wrote an important critique of negative libertarianism in 1971.  Macpherson stands in a long line of liberal theorists who focus on what the members of society are actually able to do and be, rather than their formal entitlements – as Hackney puts it, “the freedom to be fully human and for every individual to realize their developmental power.”  I cheerfully place myself in that tradition.

Jennifer Burns is right about the importance of Milton Friedman, whom I discuss briefly at 64-66.  He is enormously influential, but in the apostolic line of succession he is a consequentialist libertarian following Hayek.  I don’t think my picture of Hayek is “fairly static.”  I admire The Road to Serfdom, but I note that he “eventually laid aside his caution of centralized schemes and became a daffy armchair constitutional designer.” (61)  But Burning Down the House is primarily a book of critical political philosophy rather than history, and so nuances of influence are necessarily neglected.

Jamie Mayerfeld worries that I “may sometimes exaggerate the distance between Hayek and hardline libertarianism.”  He is right that the distance shortens in Hayek’s later writings.  As I say (and as Chandran Kukathas has shown in his magisterial book Hayek and Modern Liberalism), Hayek is “a bit of a mess as a political philosopher.” (71)  Cleaning up the mess will lead us to a liberal political philosophy that is more sophisticated than any of the libertarians can offer, one that owes a lot (with some qualifications) to John Rawls and Martha Nussbaum.  But that is another story.