The Libertarian History paradox

I have just recently been able to formulate something that I have known at an instinctual level for a long time: that libertarian ideology faces a serious paradox when confronted with historical fact, and that so far libertarians have only managed to find two solutions - both of them quite absurd - to this paradox.

Libertarians start from the premise that free market capitalism is good for the vast majority of the population. But then they encounter a problem when faced with the reality of the fact that the vast majority of the population of every country at almost any given time in history has opposed their brand of extreme free market capitalism.

How do you reconcile your belief that free markets are good for the people with the reality that the people do not want free markets? Clearly, the people must be either stupid or deceived.

Those libertarians who conclude that people are too stupid to know what's good for them take an elitist approach to politics and often end up as bitter reactionary opponents of democracy. Hans-Herman Hoppe, for example - the leader of the Mises Institute - is an extremist libertarian and an advocate of absolute monarchy. This kind of ideological stance can only be described as bizzare; it takes a lot of doublethink to believe at the same time that people are perfect rational actors in the market but somehow too stupid to see their own interests in the voting booth.

The second and more common libertarian solution to the apparent paradox described above is to postulate the existence of some kind of vast statist conspiracy that has somehow managed to brainwash the majority of the population. This stance does not require any orwellian doublethink, but it does require a high dose of paranoia and historical revisionism. It requires you to believe that the 19th century was a golden age when everyone was happy and life was only getting better, until some dark group of evil statists magically persuaded the people that they were unhappy (when in fact everyone was happy and singing kum ba yah). It requires you to believe that all the depictions we have of the extreme misery, poverty and filth that engulfed the life of ordinary people in the 19th century are statist propaganda.

I have not yet met a single libertarian who did not fall into either one of these two categories: elitist doublethinker or conspiracy theorist. Libertarian ideology is too easily refuted by simple historical fact unless you either believe that the people are stupid or that recorded history is a lie.

Definitions, part I: Capitalism

How many political isms can you think of? Socialism might be the first one that comes to mind, since, after all, you are reading a socialist blog. Next you might think of the word capitalism, which is often thought of as a sort of opposite of socialism (though this is inaccurate; see below). And after that, the most likely words to come to mind would be liberalism and conservatism, probably the most common political terms in use today (especially in North America).

What exactly do all these isms mean? First of all, it is extremely important to remember that, by themselves, they are just labels. You might have heard people talk about true socialism, or what a true conservative would do, or some such things. That is all pure nonsense. It makes about as much sense to debate the true meaning of socialism as to debate, for example, whether "orange" is a colour or a kind of fruit. "Orange" - like "socialism" - is a word. And people sometimes use the same word to mean different things. This happens particularly often in politics. Every time you hear someone talk about socialism, or capitalism, or any other ism, you should never let them say another word before they explain to you exactly what they mean by that ism. If my definition of "socialism" is different from your definition of "socialism", then there is a great potential for misunderstanding (and/or manipulation). Before we can talk about socialism, we must agree on exactly what it is that we're talking about. Just because I am a socialist does not mean that I will agree with anything that some people choose to slap the label of "socialism" on. The same holds true for liberals, conservatives, etc.

And, in that spirit, I will dedicate this post to explaining the definitions I use for some terms that will crop up again and again in my future writings. I have already defined socialism and Christian socialism in my previous post; now I should talk about capitalism.

The word socialism can refer to either a political ideology or a socio-economic system that is advocated by that ideology. Capitalism, by contrast, always refers to a socio-economic system. In a nutshell, capitalism is the socio-economic system based on private property over the means of production and an impartial code of law. "Private property over the means of production" refers to the fact that the means of production - the things we use to produce more things (for example factories) - are the private property of individuals or groups of individuals, rather than being shared by the workers who use them or by the entire community around them. In other words, the production of goods and services is controlled by certain individuals rather than society as a whole. This separates capitalism from socialism. But private property over the means of production, by itself, is not enough to define capitalism. After all, the means of production were private long before capitalism developed.

To complete the definition of capitalism, we must look at the difference between capitalism and the socio-economic system that preceded it: feudalism. The fundamental difference lies in the structure of the laws used by the two systems. Feudalism had a complex set of customs and privileges that gave more rights to some people (the aristocracy), less rights to others (the free peasantry and city dwellers), and no rights at all to the majority (the serfs). Essentially, feudalism had different laws for different classes of people. Capitalism, on the other hand, has one set of laws that apply to all people. Thus the second defining feature of capitalism is an impartial code of law.

Capitalism is not the only socio-economic system that features private property over the means of production, and it is not the only system that features an impartial code of law. But it is the only system that features both at the same time. The relationship between socialism, capitalism and feudalism - and their defining features - is best expressed by the simple diagram below:


However, this doesn't mean that socialism, capitalism and feudalism are the only economic systems, or that the code of law and the issue of property over the means of production are the only defining features of such systems. It is possible to draw many other circles on the diagram above, in order to show more economic systems.

Finally, notice that an impartial code of law is something that capitalism and socialism have in common. As such, there is usually no debate over it. Most debate between socialists and capitalists focuses on the fundamental difference between the two socio-economic systems: the issue of property over the means of production.