Economic libertarianism
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Economic libertarianism is a strain of political thought that emphasizes the freedom of individuals to order their economic lives without state interference. In the free-market economy advocated by economic libertarians, individuals coordinate their economic decisions through the institutions of private property, freedom of contract, and the free price system. Economic libertarians argue that the free market produces greater prosperity and personal freedom than other economic systems. In the international arena, economic libertarians advocate free trade among nations.
[edit] History
Perhaps the first prominent economic libertarian was Adam Smith, who wrote The Wealth of Nations in 1776. Smith explained how, in a free market economy, the self-interest of market participants is channeled toward the good of society, as people compete to provide goods and services that will be valuable to others. The book also critiqued the mercantilist position on international trade, arguing that all nations benefited from freer trade.
The Nineteenth Century was a heyday for economic libertarianism, as monopolies were dismantled and trade barriers fell across much of the Western world. Prominent Nineteenth Century advocates of economic libertarianism include British free trader Richard Cobden and French polemicist Frédéric Bastiat.
Economic libertarians were on the defensive for most of the 20th Century, as they faced a strong challenge from communist, fascist, and welfare liberal economic philosophies. Prominent economic libertarians during the 20th Century included Friedrich Hayek and Milton Friedman. Economic libertarianism saw a resurgence in the 1980s, with the election of Margaret Thatcher in Great Britain, the election of Ronald Reagan in the United States, and economic liberalization in many developing nations, including South Korea, Taiwan, and Chile. In the early 1990s, economic libertarianism advanced further with the fall of Communism and economic liberalization across Latin America.
[edit] Economic Theory
The Austrian School of economics and the Chicago School of economics are important foundations of the economic libertarianism. Economic libertarians, as well as generalized libertarians, advocate laissez-faire capitalism, where all the means of production are privately owned, economic and financial decisions are made entirely privately, goods and services are exchanged in a free market, and there is little or no positive state intervention in the economy.
Like most mainstream economists, the Austrian and Chicago schools support the subjective theory of value, which says that only a buyer and seller, while using information shared and available in the marketplace, can determine how valuable goods or services are to them and thereby set a mutually agreeable price. Libertarians contend that supply and demand, as ordered by the incidence of independent, subjective valuations in a free market, are the only sensible means of establishing prices. Moreover, they believe that only prices rendered in a free market can synthesize and communicate the preferences and relevant, time-sensitive data to millions of consumers and producers alike, and that any attempt to objectify these transactions by a centralized authority will fail. According to them, any government intervention such as regulation, trade barriers, or taxes, interfere with this judgment being reflected accurately in the price (though economists often argue that market failures can interfere with pricing as well). Most economists agree that accurate pricing is an important part of efficient markets, and thus important for maximizing economic utility.
Market failures are a tremendous source of controversy amongst libertarians. This is what usually divides the mainstream ones who advocate for continued public ownership of policing, military and so forth and anarcho-capitalists who want full privatization of goods. For many of the hard line group, the principle of liberty must overcome the goal of wealth. The public good of police, for instance, could be seen as immoral coercion no matter how efficient over private security).
Libertarians do not see unequal wealth distribution as a moral problem, and firmly support the private ownership of land and capital. They oppose mandatory egalitarian redistribution of wealth because they believe this would qualify as initiation of force against individuals and their legitimate property (see Non-aggression principle for more on this idea, and its criticisms). In addition, libertarians claim that redistribution of wealth takes capital from the most productive sectors of the economy, and that enforcing economic egalitarianism reduces the incentive to work [1]. They may further argue that any temporary equality of outcome gained by redistribution would quickly collapse without coercion because people have different levels of motivation and native abilities, and would make different choices based on their differing values. Those that were more productive or traded more effectively would quickly gain disproportionate wealth, others would waste their resources, and some of those would choose to save for retirement or earn little on their own. Some may choose not to generate wealth, preferring to spend their time in other areas they find more fulfilling like non-commercial artistic expression or religious growth — an avenue libertarians do not oppose. However, they do oppose forced subsidization of such any venture. Material inequality, they argue, is a necessary outcome of the freedom to choose one's own actions without imposing on others. To the extent that they accept any kind of welfare, libertarians tend to prefer Milton Friedman's negative income tax as an alternative (but not a supplement) to the existing system, arguing that it is simpler and has fewer of the "perverse incentives" of "government handouts".
Libertarians tend to believe that minimizing the amount of money citizens pay to government minimizes the ability of the government to fund bad programs and prevents citizens from needing government assistance because they have more of their own money (see "starve the beast"). Because they oppose taxes, libertarians also oppose most programs funded by taxes. Many libertarians oppose government run or regulated schools, hospitals, industry, agriculture, and social welfare programs. Others justify public schools on grounds of efficiency, fairness, or both, though most would prefer a school voucher system to the status quo.
Libertarians, especially the Cato Institute have long supported Social Security privatization as a first step to dismantling Social Security [2].
Lastly, many libertarians support the gold standard as opposed to paper currency because they do not trust the government to restrain itself from over-expanding the money supply which would result in inflation. Inflation is commonly regarded by libertarians as a surreptitious method of taxation employed to usurp value from privately held money without levying an apparent tax and demanding physical transfer of money (see Chicago School of economics).
[edit] Repairing History
Theft is considered illegitimate regardless of how long ago it occurred, but libertarians tend to oppose reparations that do not involve the thief and victim directly. For most practical purposes, such property is treated as if it were legitimate: if the original participants are long dead, taking property from its current owner and giving it to the victim's descendants is considered initiation of force, and the property should remain with its current holder. On the subject of reparations for slavery, a related issue, Steve Dasbach, executive director of the Libertarian Party said that "Forcing people who had nothing to do with slavery to pay others who were never enslaved is the height of injustice." [3] To prevent such complications in the future, libertarians argue that property rights should be strictly protected and enforced, and that all future transfers of wealth should occur through the market (as in trades or gifts).
The issue of theft in the past remains a thorny one for most libertarians, with many critics arguing that libertarianism is either inconsistent or wildly impractical: inconsistent if it simply ignores theft that occurred a certain amount of time ago (because this might imply that if a person steals something and that object is kept in his family long enough, it suddenly becomes legitimate property at some arbitrary point), or wildly impractical if it doesn't ignore theft in the past (because some would argue that, for example, much of the land in North America should be given back to various American Indians).
Most libertarians believe that under a libertarian economic system, where people were permitted to succeed or fail by their own decisions, and corporate welfare, insane taxation, over-regulation, and political patronage were eliminated, the wealth would redistribute itself.
