The example with the fly tells us that the state should be restricted to those tasks, and only those tasks, that it can do well. It is up for a debate, even amongst libertarian/classical liberal circles, just what these tasks are but what is clear is that there is a limit. For example, some libertarians believe the state is not necessary at all. The provision of law and order and defense should be left to the private market. Other libertarians/classical liberals believe in, what has become known as, the night-watchman state, where the role of government is limited to the provision of law and order, defense, and possibly providing some public goods. Still, no matter what anyone’s position is, we must admit that the state is not capable of doing everything. There will certainly be many functions the state simply cannot perform well, or at all, and thus we should never ask it to.

Forgetting the past is a very dangerous thing. It can lead to the Cliché of Socialism number 48, “There ought to be a law.” As William C. Mullendore explains the growth of government, in terms of both scale and scope, grows out of this often well-intentioned phrase. A certain situation will attract the attention of sympathetic or disproving citizens, who then turn to legislators to fix the problem. Soon this becomes a rally cry for all our problems.

It is rarely asked whether this is something the government should be doing and instead is simply assumed it should. More often than not the government’s legislation would fail to achieve its intended ends and instead of repeal, new laws (that also are unlikely to work) would be enacted to fix this, costing us more and more freedom.
In his book Democracy in America, Alexis de Tocqueville titled one of the chapters, “What Sort of Despotism Democratic Nations Have to Fear.” The answer is majoritarian despotism, and this is exactly what we have today. Tocqueville warned that an intrusive government in attempting to protect and relieve its citizens “from the trouble of thinking and all the cares of living” would create a sort of “orderly, gentle, peaceful slavery.”

By crying, “there ought to be a law” at every problem, we have given the state parental authority. The result has removed our personal responsibility and also has led to the surrender of many of our freedoms. For freedom and personal responsibility are two sides of the same coin. By turning to the state, instead of finding ways to voluntarily interact and solve our problems, we are reducing ourselves into a condition of perpetual childhood.

This is not the way of a self-governing society; in fact, it is a means of destroying our ability to self-govern. If we truly wish to be a free society, we must learn that the state is not capable of taking care of others or ourselves. The state is not a substitute for personal responsibility. At best the state is a coercive tool that is easily abused. As the founders of our country realized, the larger the state grows the more dangerous it becomes to a prosperous society. The point of our constitution was/is to restrict and constrain the government but it hasn’t worked. Maybe Leviathan cannot be constrained. Perhaps the state can only institutionalize predation. Even if this is the case, if we have any hope for a solution, it must start within ourselves. We must learn to be a society of free and responsible individuals.

Download the Clichés of Socialism number 48 by W.C. Mullendore here.

For the audio file of this lecture click here.

In this article, as in much of Read’s writings, there is a strong positive claim supporting his moral normative argument. Natural rights, which are rights that can be universally applied to everyone, are supported because of the social cooperation they help create. In this instance majority rule, in the sense of “authority over”, is rejected because of the negative affect it has upon personal responsibility. Majority rule lessens the sense of responsibility when combined into a single majority because each individual is just one of many who supported the act. When someone loses this sense of responsibility it creates incentives to act more irresponsible because each individuals does not pay the whole cost. This is caused by a simple concept known as concentrated benefits and dispersed costs. And as economist Bryan Caplan shows, in his book the Myth of the Rational Voter, individuals can indulge in their bias beliefs the more the costs are dispersed. And this has a negative effect for society as a whole. It is important to remember that individuals act not groups. So, majority rule, in this sense, simply encourages irresponsible choices by individuals, which we will all pay for.

This is not to say Read is rejecting democracy. What he is rejecting is a certain kind of democracy. As Vincent Ostrom pointed out, “democratic societies are vulnerable to an unlimited pursuit of strategic opportunism when peoples are spared the cares of thinking and the troubles of living.” This illustrates the importance of constitutional rules to limit the power anyone individual can have. We should strive for the type of democracy that encourages self-governance. What we want is to stress power-with relationships rather than power-over relationships. And this is a point Read understands very well, as he says, “to be sure, reliance on a majority of individual choices as a means of selecting the guardians of our life, livelihood, liberty is at least a theoretical safeguard against the guardians becoming rulers. But if the theoretical safeguard is to be made operative, it is required that these choices be founded on an understanding that no person, or any combination of persons, is qualified to rule and, also, that the choices be an accurate reflection of his understanding.”

As Lysander Spooner said, “a man is none the less a slave because he is allowed to choose a new master once in a term of years.” A true democracy built on freedom does not give power to anyone to rule over others but instead, as Ostrom explains, “implies both responsibility and a willingness to take into account of the interests of others in what can be called patterns of social accountability.” Our society currently seems to support a majority rule represented by the former, so on this election day if asked, I, like Leonard Read, will unequivocally reply, “No! I do not believe in majority rule.” What about you?

Download the clichés of socialism 46 by Leonard E. Read here.

For the video file of this lecture click here.

In the late 1940s, two of the most influential libertarians of the 20^th century, economist Ludwig Von Mises and writer Rose Wilder Lane, had a debate, through correspondences, on the subject of democracy. While FEE’s archives do not house these letters (they can be found at the Grove City College archives) it does contain other letters pertaining to this interesting debate. One example, which can be found here, is a letter dated September 15, 1950 from Rose Wilder Lane to Leonard E. Read expressing her apologies, for being too rough on Professor Mises, and her frustration with Mises’ refusal to grasp, what she called, the American political principle; which in her view was anti-democratic.

Lane detested democracy. She believed that the founders of this country formed the American government in opposition to democracy. In her famous libertarian work, the Discovery of Freedom, she even went as far to say, “ The superstition that all men have a right to vote is a triumph of Old World reasoning… extensions of the franchise are dangerous to individual liberty and human rights.” She believed democracy is simply the rule of the people and that this majority rule would “set up an imaginary Authority armed with force,” which would, “destroy all opportunity to exercise their natural freedom.” As she said in a 1947 letter to Mises,

“as an American I am of course fundamentally opposed to democracy and to anyone advocating or defending democracy, which in theory and practice is the basis of socialism.

It is precisely democracy which is destroying the American political structure, American law, and the American Economy, as Madison said it would, and as Macauley prophesied that it would do in fact in the 20^th century.”

Mises, on the other side, has made the case for the importance of liberal democracy, which can be found in his book Liberalism. He also seemed to disagree with Lane to some degree about America not being democratically founded, as she explains in the letter to Read, “He replied that Toqueville, whom he suggested I read, wrote about democracy in America, so this country is a democracy, but – his tone implied—there, there, never mind, don’t bother about such things; be good, sweet maid, and let who will be clever.” But, Mises also thought Lane misunderstood what he was arguing. He said he never advocated any concrete regime of parliamentary democracy and only wanted to stress the positive fact that all societies ultimately hinge on the ideology of the masses.

Still the Mises/Lane debate was never brought to a conclusion and the question of democracy is still argued today. Today economist even argue over the efficiency of democratic systems (see Bryan Caplan’s book the Myth of the Rational Voter and his debate with Donald Wittman). All and all a conclusion has not been reached leaving us with the question: what role do you think democracy should have in a free society?

Download the September 15, 1950 Letter from Rose Wilder Lane to Leonard Read here.

As we see in Moore’s new movie, Capitalism: A Love Story, Moore is offended by some truly offensive things: banks engaging in wild speculation without concern for the risk, taxpayer bailouts for banks and other businesses, cozy relations between Wall Street and Washington, politicians getting favors from companies that want benefits from government, and big institutions pushing less powerful individuals around. True, he’s offended by some inoffensive things as well, such as the cut in the 90 percent top income-tax rate nearly 30 years ago. But by and large, what he rails against should be railed against.

(Update: Moore gets the tax-rate story wrong, and I let it get by me. The 91 percent top marginal rate fell to 77 in 1964 and 70 in 1965; this was the Kennedy tax cut — I wonder why Moore didn’t say that Democrats John Kennedy and Lyndon Johnson were the rate cutters. Under Republican Ronald Reagan, whom Moore wishes to demonize for cutting taxes for the rich, the rate dropped to 50 and eventually to 28 percent. HT: Gary Chartier.)

Had he called his movie State Capitalism: A Love Story, I might be applauding (with some reservations). But he’s targeting the more ambiguous “capitalism,” which he uses interchangeably with “the free market.” He can be forgiven for this, however. Most people would say that the current U.S. economic system is capitalist. Moore has probably heard that all his life. He’d hear if he watched a Fox financial program. Would Ben Stein or Lawrence Kudlow disagree? Moore has also heard Republican politicians, George W. Bush, for example, praise the existing system, with all its deep government interventions, as capitalist. He did this even as he and Treasury Secretary Henry Paulson, former chief of Wall Street behemoth Goldman Sachs, stampeded Congress into passing the $700 billion TARP bailout last year. Moore takes such people at their word: The free market is capitalism, and capitalism is what we have today.

Can we blame him for thinking this way?

Yes, it’s sloppy thinking, and had he been more curious and read beyond the confines of “Progressive” literature, he could have gotten the straight story. But many knowledgeable advocates of the free market contribute to the confusion by exhibiting what Kevin Carson calls “vulgar libertarianism,” or what Roderick Long describes as “the tendency to treat the case for the free market as though it justified various unlovely features of actually existing corporatist society.” How often have you heard a free-market advocate condemn pro-business intervention in one breath, then defend existing dominant corporations in the next — as though they did not arise in the interventionist environment just condemned? Pro-market is not the same as pro-business. If some market advocates don’t understand that, why should Moore? Vulgar libertarianism is a disconnect that makes the free-market philosophy look like a corporate apologetic. It’s done incalculable damage to the cause of freedom, in part by alienating potential allies. Who knows, maybe even Michael Moore.

Aversion to Profit

This may go a long way in explaining Moore’s aversion to profit — at least other people’s. He associates profit with business, which he associates with (state) capitalism. So for him, profit per se is suspect. But he should see a problem here. Does he think he’s exploiting moviegoers when his production company ends up with a profit? Do the co-ops and worker-owned firms he loves exploit their customers when they sell their products for more than their money costs? When two people barter, are they mutually exploiting each other because each gets more value than he gives up? To consistently oppose profit, one would have to oppose all human action, since every action aims at a surplus of subjective benefit over subjective opportunity cost.

Cornered like this, Moore might say he’s only the against excessive profits that capitalist market power permits. But now we’re back where we started. To the extent that intervention hampers competition by erecting barriers to entry — which is the usual effect, intended or not — protected firms are free to charge higher prices and reap more profits than would have been the case in an open market. Corporate power and privilege derive from political power and can’t exist without it. In contrast to existing capitalism, the truly free market would have no legal barriers to competitive entry, assuring that prices and returns are economically justified and not the fruits of privilege. Strictly speaking, entrepreneurial profit in a true market gets competed away because the very process of capturing them reveals valuable information to others and invites imitation. It takes innovation and efficiency — that is, superior service to consumers — to create new profits. Only the State permits business to make profits by withholding benefits from consumers.

But Moore doesn’t know this. What he “knows” is that the choice is between the current corrupt system — and it is corrupt — and some vaguely defined scheme of control by benevolent politicians, which he calls socialism and democracy.

In his movie Moore expresses affection for socialism, but he’s not clear what he means. He never advocates collectivization of the means of production or the abolition of markets. Instead he suggests that socialism means workers having a say in how the companies they work for are run. But why assume that’s anti-free market? He praises worker-owned companies and notes that hundreds of them exist in the United States today. He might be surprised to learn that these things are entirely compatible with the free market. In fact, it’s a perfectly libertarian intuition to abhor being subject to the arbitrary whim of anyone — yes, even a private employer. If government regulatory and tax obstacles to new competition and self-employment did not exist, workers would have their maximum bargaining power and widest array of alternatives. I imagine we’d see more departures from the traditional firm. People used to get their “social insurance” from mutual aid societies. Maybe in a true free market, we’d see a bigger role for the employment counterpart to these public, yet not governmental, organizations.

What would Moore think about a system in which no one could collude with politicians to legally plunder the rest of us for their own benefit and everyone was free to enter into any cooperative arrangements to produce and offer goods to others in voluntary exchange? Michael, that’s the free market!

FDR’s Second Bill of Rights

Of course, Moore naively looks to government to provide things. His movie laments that FDR died before he could see his Second Bill of Rights enacted. Roosevelt wanted government to guarantee everyone a good education, job, home, health care, and so on. Has Moore ever wondered where government would get the resources for this? He can’t really believe that somewhere there’s a massive pot of collective wealth waiting to be distributed. He must realize that the tax system would provide the money. But how can he not know that if government appears to penalize wealth creation with confiscation, less wealth will be created?

Moore is unaware that he commits the “Nirvana fallacy.” This is the erroneous idea that our choice is between the admittedly imperfect world we’re bound to live in if government leaves us alone and an imagined utopia in which benevolent and all-wise rulers oversee and regulate everything. Of course that is not the choice. Moore’s preferred system, whatever he calls it, would be run by individuals whose insight into the public interest would be no sharper and whose motives no purer than other people’s. However, since they would wield political power — which is the legal authority to compel obedience– they would be far more dangerous than anyone in a free market could ever be. He knows how corrupt politicians are. Why does he think different people would run things in his utopia? Does he really want them in charge of everyone’s job, education, health care, housing, pension, and the rest? It’s hard to understand why he isn’t uncomfortable with the idea of the people being tenants and employees of the State.

Whether he realizes it or not, Moore favors a system in which an elite necessarily would make critical decisions for the rest of us. He’d be incredulous to hear that, but if he ever comes to understand it, libertarians might end up with an unlikely ally.