The Failure of Libertarianism

Why Economic Freedom Alone Cannot Deliver a Better Future

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Libertarians seem to have persuaded themselves that there is no significant trade-off between less government and more national insecurity, more crime, more illiteracy and more infant and maternal mortality, among other things.

June 07, 2013 | Michael Lind

Why are there no libertarian countries? If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early 21st century is organized along libertarian lines?

It’s not as though there were a shortage of countries to experiment with libertarianism. There are 193 sovereign state members of the United Nations—195, if you count the Vatican and Palestine, which have been granted observer status by the world organization. If libertarianism was a good idea, wouldn’t at least one country have tried it? Wouldn’t there be at least one country, out of nearly two hundred, with minimal government, free trade, open borders, decriminalized drugs, no welfare state and no public education system?

When you ask libertarians if they can point to a libertarian country, you are likely to get a baffled look, followed, in a few moments, by something like this reply: While there is no purely libertarian country, there are countries which have pursued policies of which libertarians would approve: Chile, with its experiment in privatized Social Security, for example, and Sweden, a big-government nation which, however, gives a role to vouchers in schooling.

But this isn’t an adequate response. Libertarian theorists have the luxury of mixing and matching policies to create an imaginary utopia. A real country must function simultaneously in different realms—defense and the economy, law enforcement and some kind of system of support for the poor. Being able to point to one truly libertarian country would provide at least some evidence that libertarianism can work in the real world.

Some political philosophies pass this test. For much of the global center-left, the ideal for several generations has been Nordic social democracy—what the late liberal economist Robert Heilbroner described as “a slightly idealized Sweden.” Other political philosophies pass the test, even if their exemplars flunk other tests. Until a few decades ago, supporters of communism in the West could point to the Soviet Union and other Marxist-Leninist dictatorships as examples of “really-existing socialism.” They argued that, while communist regimes fell short in the areas of democracy and civil rights, they proved that socialism can succeed in a large-scale modern industrial society.

While the liberal welfare-state left, with its Scandinavian role models, remains a vital force in world politics, the pro-communist left has been discredited by the failure of the Marxist-Leninist countries it held up as imperfect but genuine models. Libertarians have often proclaimed that the economic failure of Marxism-Leninism discredits not only all forms of socialism but also moderate social-democratic liberalism.

But think about this for a moment. If socialism is discredited by the failure of communist regimes in the real world, why isn’t libertarianism discredited by the absence of any libertarian regimes in the real world? Communism was tried and failed. Libertarianism has never even been tried on the scale of a modern nation-state, even a small one, anywhere in the world.

Lacking any really-existing libertarian countries to which they can point, the free-market right is reduced to ranking countries according to “economic freedom.” Somewhat different lists are provided by the Fraser Institute in Canada and the Heritage Foundation in Washington, D.C.

According to their similar global maps of economic freedom, the economically-free countries of the world are by and large the mature, well-established industrial democracies: the U.S. and Canada, the nations of western Europe and Japan. But none of these countries, including the U.S., is anywhere near a libertarian paradise. Indeed, the government share of GDP in these and similar OECD countries is around forty percent—nearly half the economy.

Even worse, the economic-freedom country rankings are biased toward city-states and small countries. For example, in the latest ranking of economic liberty by the Heritage Foundation, the top five nations are Hong Kong (a city, not a country), Singapore (a city-state), Australia, New Zealand and Switzerland (small-population countries).

With the exception of Switzerland, four out of the top five were small British overseas colonies which played interstitial roles in the larger British empire. Even though they are formally sovereign today, these places remain fragments of larger defense systems and larger markets. They are able to engage in free riding on the provision of public goods, like security and huge consumer populations, by other, bigger states.

Australia and New Zealand depended for protection first on the British empire and now on the United States. Its fabled militias to the contrary, Switzerland might not have maintained its independence for long if Nazi Germany had won World War II.

These countries play specialized roles in much larger regional and global markets, rather as cities or regions do in a large nation-state like the U.S. Hong Kong and Singapore remain essentially entrepots for international trade. Switzerland is an international banking and tax haven. What works for them would not work for a giant nation-state like the U.S. (number 10 on the Heritage list of economic freedom) or even medium-sized countries like Germany (number 19) or Japan (number 24).

And then there is Mauritius.

According to the Heritage Foundation, the U.S. has less economic freedom than Mauritius, another small island country, this one off the southeast coast of Africa. At number 8, Mauritius is two rungs above the U.S., at number 10 in the global index of economic liberty.

The Heritage Foundation is free to define economic freedom however it likes, by its own formula weighting government size, freedom of trade, absence of regulation and so on. What about factors other than economic freedom that shape the quality of life of citizens?

How about education? According to the CIA World Fact book, the U.S. spends more than Mauritius—5.4 percent of GDP in 2009 compared to only 3.7 percent in Mauritius in 2010. For the price of that extra expenditure, which is chiefly public, the U.S. has a literacy rate of 99 percent, compared to only 88.5 percent in economically-freer Mauritius.

Infant mortality? In economically-more-free Mauritius there are about 11 deaths per 1,000 live births—compared to 5.9 in the economically-less-free U.S. Maternal mortality in Mauritius is at 60 deaths per 1,000 live births, compared to 21 in the U.S. Economic liberty comes at a price in human survival, it would seem. Oh, well—at least Mauritius is economically free!

Even to admit such trade-offs—like higher infant mortality, in return for less government—would undermine the claim of libertarians that Americans and other citizens of advanced countries could enjoy the same quality of life, but at less cost, if most government agencies and programs were replaced by markets and for-profit firms. Libertarians seem to have persuaded themselves that there is no significant trade-off between less government and more national insecurity, more crime, more illiteracy and more infant and maternal mortality, among other things.

It’s a seductive vision—enjoying the same quality of life that today’s heavily-governed rich nations enjoy, with lower taxes and less regulation. The vision is so seductive, in fact, that we are forced to return to the question with which we began: if libertarianism is not only appealing but plausible, why hasn’t any country anywhere in the world ever tried it?


Michael Lind is the author of Land of Promise: An Economic History of the United States and cofounder of the New America Foundation.  

 


Comments

  • Excuse me, Mr. Lind. I believe there IS in fact an example you are neglecting.

    It’s certainly not a particularly powerful nation, but this nation was a failed communist state that successfully transitioned into the stateless libertarian paradise we know today. It’s a little nation called Somalia.

    Q.E.D.

    For some odd reason, libertarian friends don’t like this counterpoint. Perhaps they’re just being polite.

    Regards.

    By Curious Observer on 2013 06 16

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  • The following logic is deeply flawed: that if something is tried and failed (communism), then why isn’t something that has never been tried also similarly a failure (libertarianism).  There were many systems along the line of history that had failed while true liberal democracy didn’t yet exist.  Does that tell us that democracy was similarly a failure?  Of course not.  Furthermore, the comparisons with Mauritius are dubious, though I appreciate where you’re going with it.  Mauritius is still very much a developing economy and it is precisely the economic growth which is allowed to partake through somewhat free market policies that boost statistics in areas of health and education. It’s true you can get there another way, Zimbabwe has Africa’s highest literacy rate, it just so happens that its one of the poorest populations in the world and it hasn’t grown in 30+ years.  Education can help create virtuous circles in more developed economies but it isn’t going to industrialize or liberalize Chad or Mali.  Take those countries and double their education spend and it won’t do much.  Not to mention that literacy among youths in Mauritius is 97%.  All this in quite rapid time for a country with no geographical significance and no real natural resources to speak of.  Policy plays a huge role.  Going further, your point that smaller systems of governance are higher in the economic freedom index strengthens the libertarian view if anything.  Many theorists have said that smaller governance is better governance, and whether your advocating federalism vs. sovereign rule or city-states, the concept is the same.  Larger swaths under the control of more centralized planning should fare poorer.  This is why libertarians do point to Singapore and Hong Kong, or New Hampshire, or Switzerland. There’s things that large countries can do (and are doing, e.g. India), to move in this direction and I think most libertarians like that

    By JB on 2013 08 27

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  • Lind sure didn’t consult the one Libertarian group handling this—I asked. How dishonest.

    Libertarians are spreading democracy, therein federalism, therein legalizing Libertarian eco-communities. Look around you.

    For more on the world Libertarian social and civic movement, and OPERATION DEMOCRACY please see the non-partisan 8 MM worldwide participant Libertarian International Organization at http://www.libertarianinternational.org

    By robert on 2013 11 20

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  • Libertarian states don’t exist mostly because they’re not powerful enough to evolve along side tyrannical states. Force will always trump altruism. It’s like trying to grow a plant in the middle of a sidewalk. A libertarian state certainly isn’t utopia. I have no fucking idea how anyone who claims to understand libertarians would ever suggest that. Libertarians are essentially extremist conservatives shouting at the state, “leave me alone”. And then along come the super helpful dems that shout back, “we will take what we want because it’s best for the state” then the super helpful repubs shout, “we will take what we want because it’s best for you”. Then the dems and repubs ignore the libertarian and fight over how to mismanage what they’ve taken. Anarchy isn’t an option because rationally every libertarian knows that some form of “necessary evil” is required to prevent those who would force their form of governance upon us. That libertarians have no proper evidence to know how much force is required to get a libertarian state to evolve in the first place shouldn’t be a condemnation of their ideas. It should be pointed to when asking them how though. I think it’s safe to say that the current libertarian shift would be non-existent if the federal and state governments were truly kept accountable. Can we even enforce that? In the words of Lysander Spooner: “But whether the Constitution really be one thing, or another, this much is certain – that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist.”

    By Eric on 2013 12 26

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  • You’re really cherry-picking the data from the economic freedom index.  The result that the group finds is that economic freedom correlates positively with economic prosperity.  You ignore that, and rationalize why the top 5 countries shouldn’t count, and then why a small African island country, with limited natural resources, human capital and access to the world, ranks slightly higher than the U.S. and is proof that freedom doesn’t work.

    By Kevin on 2014 01 02

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  • Why hasn’t Libertarianism ever been implemented? I dunno, probably because its foundational principles weren’t layed out until the 1960s, and even then it was mostly just another form of anarchy, and still needed a few more decades to fully flesh out all its theories? No political theory has ever immediately been implemented as soon as it was conceived.

    Karl Marx wrote “The Communist Manifesto” in 1848, yet the first Communist government did not appear until 1917. These things take time. Governments and nations are like huge ocean liners. They can be turned around, but only very slowly.

    By Maphesdus on 2014 03 10

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  • To the author;

    Libertarianism in practice would be against every current vested interest in a Big Government nation. That assertion I just made follows neatly from so-called public-choice theory. We can thank the Chicago Boys for that much, at least.

    You ask why nobody has tried libertarianism; it is against the self-seeking interests of the people who get to decide what social experiments will be tried.

    You must have assumed that people become suddenly virtuous when employed by a monopoly with the legal right to initiate violence and pass laws (opinions with guns behind them).

    By Matthew John Hayden on 2014 07 24

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