Advocacy of a political system through fiction is a favorite of a certain type of author who has very… directed views on how society should work. It means they can create a world where everything works exactly as they want, and anything to the contrary can be completely ignored. Since I refuse to even attempt to read the multitude of contradictory and undisprovable books that attempt to explain Marxist (and derivative) theory, I’m going to talk about an ideology who’s main attraction is its simplicity. Welcome to the ideology of Econ101, libertarianism.
This is strictly about libertarianism as advocated by groups like the US Libertarian Party and certain non-economist writers. There are some extremely intelligent people who have advocated for a limited government and have dedicated entire careers to collecting data and analyzing the positives and negatives of government intervention. This is not about them.
Examples Darkship Thieves
is a story about a sociopathic heiress who suffers extensively from ‘written by a man’ syndrome, despite being written by a woman. She flees a group of murderers, and spends the next couple hundred pages being saved by deus ex machinas (ranging from hitting a stealth ship in space [a 1 in a couple trillion chance], to having telepathic powers because friendships are genetically transferable, to being sucked into a hazardous waste transport within minutes of hiding in a vat of medical waste, to… it’s impressive. Everything goes perfectly for the main character). What is relevant here is that the story is predicated on a false dichotomy between a repressive aristocratic system and a libertarian system, where the latter uses social pressure to enforce laws while giving people near perfect freedom, with excessive time dedicated to the lack of a nudity taboo. Additionally, it attempts to explore the limitations of an unregulated market dominated by a monopoly. Keyword being attempts. “Freedom!”
is a collection of short stories that is divided into two sections, one about attaining freedom, and one about establishing a free society. It attempts to explain multiple libertarian systems in action, ranging from trust algorithms decided on high to favor driven microeconomies. The stories about attaining freedom aren’t bad, and discuss some more interesting topics, like how little you’d realistically need to break government control, but the latter really suffers writers placing an ideal before realism, with huge amounts of inadvertent harm being handwaved or argued as a good thing.
Jackson’s Whole from the Miles Vorkosigan Saga is a world that grew out of a smuggler’s hideout. The lack of an explicit government was retained, with individuals choosing to work together within a free market system of contracts and Deals, the one thing sacred to the locals. People banded together for mutual protection, producing a number of independent Houses that act to make violence relatively limited, where contract police arrest individuals with a hefty additional fee for resisting arrest.
I’m not going to touch Atlas Shrugged
since objectivism rejects utilitarianism; it accepts broad harm to the general population as worth it to ensure freedom on a broad scale and to ensure that the "best" of humanity are properly rewarded, while the libertarian arguments I’m addressing center around increased broad economic gains to society and improved freedoms compared to other systems.
Libertarianism is a theoretical political system based on minimum governance, where, ideally, rational self interest allows people to live in near perfect freedom. It often attempts to impose something called the Non-Aggression Principle (NAP) to justify how people would act under this system, where no individual would attack another or cause harm because others would respond with violence.
There are substantial arguments about what minimum governance actually implies, ranging from near complete non-existence, generally advocated by 14-year-olds and the US Libertarian Party, to providing a legal system to enforce contracts and a military, to a smaller less intrusive government. The general idea is that the free market is capable of self correcting and rational actors would be able to replace the functions of a government.
A free market means that actors are allowed to buy and sell goods and services at the price levels that they’ve set. It generally requires a judicial system to enforce contracts, to prevent people from cheating each other or outright stealing, strong property rights, so people will be assured that their goods and services can be sold and bought, and a lack of onerous regulations like price controls.
A free market economy is extremely efficient at resource allocation. When there is a food shortage, the price increases, and it becomes financially worth it to bring in food from other locations, helping to alleviate that food shortage. And, since food is common and interchangeable, its basically impossible for independent actors to create a food cartel, which means that the shortage will be alleviated without substantially increasing the price of food. Compare that to many extractionary governments who place a higher priority on maximizing the wealth of those in power, where a food shortage is a way for those in power to make a substantial profit. The Corn Laws governed imports of grain into the UK for about 30 years. Because the government could apply pressure everywhere, it relatively drove prices of basic foodstuffs up, removing most of the financial gain of the Industrial Revolution to the lower classes in British society. Apparent wages increased, but real wages dropped due to food costs, which heavily benefited the aristocracy which owned the farms in the UK.1,2
One profits off of alleviating a shortage, the other profits off of causing and maintaining a shortage.
The idea of libertarianism is to apply this same mindset to everything, intending to create optimal outcomes with market relations and game theory.
The issue is that people are really really bad at acting rationally, and the free market is extremely imperfect.
Rational actors is an economic term that assumes that people act with perfect knowledge, entirely in their self interest. The perfect knowledge aspect is difficult when you’re dealing with individuals in a business agreement. Obviously people wouldn’t ever act disingenuously or immorally if others would be able to look it up and not work with them. Equally obviously, Jack Abramoff3
was a convicted fraudster, and that information was available online, but crypto enthusiasts trusted him with several million dollars, despite the system being billed as being trust-less. Those prior signals were vindicated when he attempted to defraud customers in 2018. Perfectly guessing an individual’s intentions and ostracizing anyone who doesn’t have a clean record is a rather essential aspect of naive libertarianism. This is why more mature versions of libertarianism admit that at least a legal system to enforce contracts is necessary.
In the study of economics, econ101 is basically why the free market is amazing. Every other class is talking about how it fails and what is necessary to minimize unintentional harm. From the tragedy of the commons, where community owned resources are often overused and everyone is negatively impacted, to monopoly power, where one group is able to set prices as they see fit due to lack of alternatives, government intervention is absolutely necessary to prevent undue harm. Darkship Thieves
unintentionally demonstrates both perfectly. The libertarian society is based on a system of social pressure. If the general opinion of society is that you’ve fucked up, then you must pay to make amends, regardless of the truth. A legal system is designed to gather all the facts and avoid mob justice, because mob justice is random and disproportionate. Plenty of people have been killed for violating a social norm they didn’t know about, and it’s not like any society is so perfect that their norms are mutually consistent and equally applied. In the book, one of the main characters is accused of committing a murder. He refused to take a truth drug to clear his name, so the victim's brother attempted to assassinate him half a dozen times, which the general society viewed as expected and fine. The truth drug is an attempt by the author to avoid the issues with naive libertarian justice, but it completely fails as applied, where only the exact question asked is answered, the questioner can be a friend of the questionee, and they can coordinate ahead of time, which opens the door for so much lawyering.
“Did you do x on this date at this time?” “No.” “Case dismissed!”
Perfectly rational actors could function in such a system, mainly by having perfect access to data and knowing when someone lied or acted dishonestly in the past. Humans are really bad at doing the same, and turning determination of guilt into what is effectively a popularity contest is called high school. It doesn’t really work for society level justice for any period of time. Power concentrates and cliques form.
With regards to the economy side, Darkship Thieves
’s main cause of scarcity is that it takes place in a hollowed out planetoid. This means that the main input from outside are power pods scavenged by the titular Darkship Thieves, various freelancers paid by a monopoly controller of the power system. Which is explicitly set up for profit. It has no regulatory capabilities; their only response to a sudden lack of power pods was to raise prices. There’s a term for how demand for a good responds to price changes, elasticity. Luxury goods like steak are relatively elastic. If the price for streak increases, people will just buy cheaper types of meat. Necessities like oil are relatively inelastic, people need a certain amount regardless of price. On a space station, power is more important than anything. You need it to run the air recyclers, water recyclers, lighting, everything. Raising prices in that situation is just exerting monopoly power. Rather than reducing consumption, it would just severely negatively impact the poor, while minimally affecting actual consumption. Which is the power monopoly’s right, but the implicit assertion that there is no better system, rationing, lottery, or eliminating unnecessary parts of the grid, is an interesting argument.
Coupled with genetic alteration, that is extremely expensive and available to a limited population, the assertion that this system is fair or beneficial is… interesting. All power is concentrated in the hands of a selective few, genetically enforced socioeconomic castes exist, and society is set up so that if you question the norms of said society attempted murder is totally acceptable. If it didn’t spend multiple paragraphs justifying the economic system in comparison to a dystopic aristocracy, I’d view the book as a cautionary tale.
“Freedom!” on the other hand, has one particular story entitled “The Ungoverned” by Vernor Vinge, which attempts to address the issue of people banding together to impose their will on another group in a libertarian society. This concerns the NAP, where the idea is that any violation of the NAP will be met with lethal response, thereby making violations unthinkable. All rational actors would band together to defend themselves from an aggressor. Aside from the issue of determining who is actually the aggressor, since reality is messy, this is a very interesting assertion on how willing people are to go to war for someone else’s benefit. Most of Germany doesn’t want to go to war with Russia if Poland was invaded, despite both nations being in NATO.4
The US is mixed on that topic. People, generally, don’t like to send the military for something that doesn’t benefit themselves or when the outcome is unknown. And coordinating hundreds or thousands of independent actors would be absurdly difficult. There’s a reason why representative democracy attempts to reduce the number of voices making decisions, if everyone needs to speak, and there’s no leadership to direct efforts, positive action is extremely slow and difficult.5
In the story, a private police department has their territory invaded by an autocratic neighbor from the south. As a nation-state, the invaders have a bigger military, more effective weapons, better training, and resources beyond what is strictly economically viable. What’s the solution to such an enemy? Give everyone nukes. Or, more accurately, be around random paranoid farmers that keep nukes buried underneath their farms. Admittedly, establishing MAD over a population of rational actors would eliminate all ability to fight, since anything would suddenly be a binary decision of ignore or cause the destruction of humanity as everyone detonates their nukes in self defense, but… Well, humans are bad at designing perfect systems. There’s a non-zero chance of failure in every mechanical system, and I doubt that a nuclear bomb that is affordable by anyone who wanted it would be built to the highest standards, and people are probably going to get drunk or suicidal or do something dumb with the detonator. Reducing all people to the same power level, by giving everyone nuclear weapons or other WMDs would allow for the NAP to function. But I don’t think humans can function under an all or nothing approach to security and defense. This is why more developed systems of libertarianism establish that a state is needed for mutual defense and law enforcement. The NAP is infeasible as an absolute system at the personal level. NAP like systems can occur at the international stage through alliances and respect of sovereignty, and, admittedly, the threat of nuclear war if absolutely necessary.
So, what makes a realistic naive libertarian society?
The issue is realism and what people ideologically want.
The idea of naive libertarianism is pretty much unworkable as a paradise, with massive harm caused to everyone who isn’t lucky enough to win, and tends to lead to massive concentration of power in the hands of the few in the form of monopolies or through force. Which is totally feasible if you’re willing to address that point head on. Jackson’s Whole is fairly realistic, with massive inefficiencies due a refusal to build public goods, exploitation of people in every sense of the word, a need to pledge devotion to various corporations/aristocratic families for protection, and immoral practices that cause disproportionate harm in comparison to the economic gain.
Which is basically the outcome of unregulated capitalism and a minimized government. That’s the problem, libertarianism may follow the ideas of “I do not interfere, And people become rich by themselves”6
, but there is too much that can go wrong in a way that concentrates power and allows a small number of individuals to affect everything for their own gain. Either those who gain power establish a new government, where the government has a monopoly over force, or other people at similar levels of power balance against them. Also known as warlords or crime families. For example, Kowloon Walled City rapidly was taken over by Triads when neither the UK nor China was willing to exert control over it.
Unless the society is centered only on goods that cannot have a monopoly, such as food in a society of farmers, power concentration of the successful is part of what attracts people to libertarianism. You work hard, you get rewarded with wealth. And wealth means power. And power concentration without regulation offers more opportunity of power concentration in the future, which increasingly undermines the basis of libertarianism. The naive approach doesn’t allow for a more perfect existence because game theory allows and strongly encourages for people to exploit the system for personal gain, and effective banding together against such individuals is nearly impossible.5
A feasible and more mature libertarian society is presented in most trading sims. The government provides a minimum level of security, it has some regulatory capacity (though that is most often abused to block development in these games), and contracts are enforced by, presumably, the judiciary. It is a useful approximation of how businesses most efficiently operate, and helps explain why there is a lot of serious economic interest in more nuanced forms of libertarianism. At the same time, the end game helps demonstrate the long term issues with libertarianism, namely concentration of power. At some point, the player will usually gain enough influence and money for restrictions to become irrelevant. Which, in real life, indicates a subversion of libertarian ideology, where freedoms can be infringed through economic pressure. If you want a lasting libertarian society, you need a minimum level of government intervention to prevent outsize harm to society. This should consist of, at the extreme minimum, a regulatory body to enforce competition and prevent other market failures, in addition to the standard requirements of a military and a judiciary.
Well, basically, nuance exists.
If you want to establish a perfect political system, regardless of form, it’s probably going to pretty damn complex, considering humans haven’t found one yet.
Libertarianism’s issue is that the popular variant is both readily understandable, implying that attempts haven't failed due to not following theory, and the failures on any scale are readily apparent.
When a group of libertarians set about scrapping their local government, chaos descended. And then the bears moved in.
Or Sealand. Or any of a dozen other small scale attempts. Or, for the need for regulations, the US during the Gilded Age.
There are plenty of well regarded economists that have published substantial analysis on limited government in a modern economic system, and the inefficiencies in larger government. I strongly recommend drawing on them, rather than on the more simplistic models that can be found in a highschool or college freshman economic textbook.
If you enjoyed this, other posts in this series include: Money is a lot more complex than authors realize Taxes are a lot more complex than authors realize Slavery is a lot more complex than authors realize