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The Great Disruptor

Yesterday I participated in a conference titled "Erroneous Autonomy: The Catholic Case Against Libertarianism." The following is a lightly edited version of my remarks.

As the legal scholar Eduardo Peñalver has pointed out in a forthcoming Commonweal article, there are two kinds of argument for libertarianism. The first kind is mainly economic and utilitarian. It is the argument of those like Friedrich Hayek who believe that free markets produce the best social outcomes. Market signals, undistorted by meddling technocrats, tell the producers of goods and service what people need, or at least what they want. This kind of libertarian believes in the liberty of individuals primarily because he believes in the wisdom of crowds—not crowds of voters choosing representatives to enact laws for a commonwealth, but crowds of consumers accidentally effecting public benefits by pursuing their private interests. This is the kind of argument behind Adam Smith’s famous metaphor of the “invisible hand.” As Peñalver points out, such arguments rest “on empirical claims about how the world works” and so they are testable, at least in theory. But perhaps only in theory—since, while we may be able to measure the success of global capitalism in lifting people out of poverty, we cannot answer the question of which economic system best promotes the common good before we have a definition of the common good. And this the economists cannot give us without the help of political philosophy.

The other kind of libertarian argument is less concerned with outcomes. It is an argument about first principles and natural rights, and it is finally an argument about human nature. According to this kind of argument, what matters most is not the efficiency that free markets foster, but freedom itself. Government efforts to redistribute wealth or regulate economic activity are a violation of this fundamental freedom. They constitute a kind of tyranny—even, or especially, if the tyrant behind them is a majority of one’s fellow citizens. Whereas the first kind of libertarian argument is mainly interested in the wisdom of markets as efficient and self-correcting social mechanisms, the second kind of libertarian argument is mainly interested in individual autonomy for its own sake. It is not an empirical theory that can be verified or falsified by social scientists; it is a political philosophy and usually, though not always, a moral philosophy. This is the kind of libertarianism that we associate with Ayn Rand, but probably its most sophisticated and persuasive expression is to be found in the work of the philosopher Robert Nozick, whose book Anarchy, State, and Utopia has become a touchstone for contemporary libertarian thought.

It is worth noting that Friedrich Hayek, Ayn Rand, and Robert Nozick would have been among the first to insist on the incompatibility of their ideas with Catholic social teaching. All three were atheists, and all three were as leery of ecclesiastical power as they were of state power. But it is not an accident that sophisticated Catholic champions of free-market ideology tend to rely less on the work of Rand or Nozick than on that of Hayek and the Chicago School economists. For Rand and Nozick make claims that are obviously at odds with the Gospel. This may be truer of Rand’s vulgar Nietzscheanism than it is of Nozick’s analytically fastidious case for self-ownership, but it is generally true of both of them. Both were suspicious of any claim about what an individual owed his or her community. The very idea of the common good, as anything other than the aggregate welfare of individuals, was in their judgment nothing more than a mystification. The idea of solidarity implied collectivism; and collectivism, they thought, always entails coercion. It is clear to most people, including most Catholics and most libertarians, that this way of thinking is not only alien to the Catholic moral tradition but fundamentally antithetical to it. Rand would have considered Paul Ryan’s efforts to split the difference between her and Leo XIII ridiculous, if not intellectually fraudulent, though she may have tolerated it as a shrewd political tactic.

And so the Catholic defender of laissez-fair ideology is left with Panglossian arguments about invisible hands and rising tides lifting all boats. These are typically conjoined, especially by Catholic libertarians, to arguments about how markets depend for their proper functioning on personal virtue. In the wake of the 2008 financial meltdown, we were told by such people to blame not the financialization of the American economy nor the deregulation that made this possible, but greed—a vice that no regulator could ever hope to stamp out. And that, in a way, was the point: since regulators and lawmakers cannot stamp out the personal vices behind our economic woes, they shouldn’t even try. The problem is cultural or spiritual, not political. And therefore so is the solution. Thus, in the face of staggering wealth and income inequality, which the financial crisis has only exacerbated, we’ve been told to rediscover the value of thrift and industry and, where that fails, to put our faith in the charity of the One Percent. To be fair, the One Percent—and sometimes also the Ten Percent—have also been encouraged to turn their attention away from conspicuous consumption and toward philanthropy. But, as Pope Francis reminded us in his apostolic exhortation, Evangelii Gaudium, private acts of personal virtue are not a substitute for distributive justice:


Francis echoes Pope Benedict’s insistence that the solution to economic injustice necessarily involves the state, even if non-state actors including the Church itself can help to relieve the suffering caused by injustice:


Libertarians insist that the state cannot promise distributive justice without violating the liberty of the individual citizens whose private property it expropriates. Human beings, they say, will never feel truly free in such a state, even if it succeeds in making them more secure. But if the people of a democratic political community cherish equality as an important social value—though not, of course, the only social value—then policies that produce greater equality will be felt by them not as a burden imposed by an alien power but as an extension of their own freedom. The citizens of such a state would presumably say what Barney Frank famously said: “Government is simply the name we give to the things we choose to do together.” These are words that can be endorsed by all small-d democrats—that is, by people who believe in the possibilities of self-government. They can also be endorsed by Catholics, who believe that the things we do together as communities, including politics, can be every bit as important, and just as expressive of moral virtue, as the things each of us does on his or her own.

*  *  *

Most Catholic defenders of laissez-fair ideology describe themselves as conservative. But, left to its own relentless logic, the free market is not a force of conservation; it is, as its less pious and more clear-eyed admirers freely acknowledge, the great disruptor, its gales of creative destruction sweeping away traditions, institutions, and communities that stand in its way. Under capitalism, Marx wrote, “all that is solid melts into air.” He was right about that much at least. G. A. Cohen made this point especially well in his description of the modern Tory Party:

When the rich morphed, fully, into capitalists, the British Conservative Party became the anti-conservative market party. As a matter of history, the bottom line of Conservatism with a capital “C” turned out to be not conservatism with a small “c” but preservation of wealth and inequality. With fierce international competition, conserving old ways is too costly to the maintenance of wealth. And with historical working class gains in place, small-c conservatism becomes a buffer against inequality. For the sake of protecting and extending the powers of wealth, big-C Conservatives regularly sacrifice the small c- conservatism that many of them genuinely cherish. They blather on about warm beer and old maids cycling to church and then they hand Wal-Mart the keys to the kingdom. They are thereby in tune with the propensity of capitalism, which is to maximize a certain kind of value, in sovereign disregard of the value of any things.

By “things” Cohen meant not value in the abstract, but particular bearers of value, whether these are buildings, businesses, or customs. It isn’t just inefficient modes of production that unrestrained market forces threaten, but also ways of life and habits of mind and heart. Some of these habits we consider virtues, including loyalty—or to use a more theological word, fidelity. If conservative Catholic libertarians are interested in fortifying the institution of marriage, they might give some serious thought to how a culture increasingly shaped by commercial imperatives undermines our ability to make and keep solemn vows. Consumerism, a natural by-product of the Sovereign Market, encourages us to think of all our choices as provisional calculations. Gradually, and mostly unconsciously, we learn to regard other people the way a shopper regards merchandise. The Catholic moralist will of course say that a well-formed conscience will resist this temptation, but the moralist can hardly deny that the culture characteristic of late capitalism—a culture libertarians promote, intentionally or unintentionally—makes this temptation harder to resist, and harder even to recognize. It isn’t just that commerce coarsens our manners, which is the old, aristocratic criticism. It’s that the creeping commodification of everything we value leads us to ask, not only about things but finally about people too, “Can I do better? Can I afford better, given what I have to offer.” That is the kind of question that a libertarian society would have us asking and answering about every part of our lives. Catholic libertarians may use the language of natural law, especially as it applies to a narrow range of questions concerning bioethics and sexual morality, but their vision of the good society is functionally utilitarian. A conscience formed by such a society will be inclined to treat personal commitments, and finally human persons themselves, as disposable. This seems to be what Pope Francis had in mind the following passage of Evangelii Gaudium:


I doubt anyone at, say, the Acton Institute would object to this observation. But the Catholic libertarian would surely want to distinguish between individualism and libertarianism, which is fair enough. They are, at least theoretically, not the same thing. But for us as Catholics and as citizens of a democracy, the important question is not whether they’re the same thing but whether they’re separable from each other in practice. The historical evidence suggests that even if they are separable, they rarely arrive separately. Show me a country that has surrendered its politics to the dictates of the market, and I will show you a culture where personal attachments of every kind are less secure than they once were and where the poor and every other vulnerable population are at most an afterthought.


Commenting Guidelines

Fine address, Matthew.  

How did Cardinal Maradiaga's speech go over with that audience?  By the way, what should he be called -- C. Maradiaga, C. Rodrigues, or both?

(Are you sure Hayek was an atheist?)

The late Mr. Cohen claimed that Conservatives want to "hand Wal-Mart the keys to the kingdom.”  He would be happy to learn that laissez faire ideology is far from prevalent in New York City.  Not only will there not be a great disruption at the hands of Wal-Mart stores but that company’s charitable giving will be firmly discouraged. "More than half the members of the City Council have fired off a letter to Walmart demanding that it stop making millions in charitable contributions to local groups here."

I hope that those who think the ideas of Nozick and Rand are dangerous might also recognize that anti-market ideologies can be just as harmful, and even more foolish.  We can expect not disruption but stagnation, vacant lots and bans on charity, if our “public spirited” guardians have their way.

Patrick ... beware.  If one chooses to take pigs' money, don't be surprised if you end up smelling like you-know-what:

Just because Holy Mother Church has failed to realize this over the years doesn't mean the New Yorkers have to repeat the same wrongful moves.

For years, libertarians have been saying that crony capitalism, monetary expansion by the Fed and regulatory chaos would ultimately lead to a financial collapse.

Yet, when the financial collapse finally comes, Boudway and his ilk blame it on non-existent laissez-faire capitalism, and make up some nonsense about libertarians saying it was all unavoidable because of human greed. Can you say "straw man?" No libertarian of any repute makes this absurd argument.

And let's not forget the role played by Fannie Mae and Freddie Mac — both government sponsored entities that wouldn't even exist in a true free market.

Furthermore, where is the libertarian who says that we need to "put our faith in the charity of the one percent"?  This is a completely dishonest rendering of the libertarian position on charity. And it fails to take into account the libertarian belief that the poor would be better off under a true free market (argue if you want, but at least state the libertarian position accurately).

But Boudway reveals that he has no intention of being fair or accurate when he says that all Catholic libertarians have in their arsenal is "Panglossian arguments about invisible hands and rising tides lifting all boats."

Really Matt?  How childish can you be? That doesn't even come close to summing up the position of libertarians, Catholic or otherwise. And you know it. (BTW, mocking an idea doesn't constitute a refutation of it.)

You have a moral obligation to accurately state your opponents' actual views before you attack them.  Is that really too much to ask? Considering the spate of articles like this and Cardinal Maradiaga's similarly ill-informed remarks at the "Erroneous Autonomy" conference, I'm beginning to think it is.

Looks like this post set off someone's Google alert. Welcome, Mr. Peterson.

It is one thing to misrepresent your position, another for me to present your position less favorably than you would. I'm not surprised or alarmed that you find my description of your world view less flattering than you would like it to be. My remarks at the CUA conference were not intended (or expected) to offer a neutral overview of libertarian ideology—though, if it's an overview you want, I recommend this one by Stephen Schneck, which was presented earlier at the conference.

Libertarians love to contrast "crony capitalism" with the unadulterated (and purely theoretical) kind of capitalism they would like to see. Of course, no one is going to defend crony capitalism, or rent-seeking, or any other kind of corruption. But as long as there are regulations, people will find ways to game them. The libertarians says this is a good reason to get rid of all the regulations, or as many as possible—so that there's less to game. Social democrats like me say we should improve the rules wherever necessary, taking account of perverse incentives and other unintended consequences. What we should never do, though, is assume that an industry will regulate itself adequately. This is the assumption that precipitated the financial crisis of 2008. Bank lobbyists insisted that banks understood the subprime-mortgage market, credit-default swaps, and other innovations of financial engineering better than regulators ever could, and our lawmakers foolishy believed them.

Mr. Peterson points out that there were libertarians who predicted the financial crisis. There were also liberals and socialists who predicted the financial crisis, and probably a few astrologers. Since they all made the same vague prediction, it might be more useful to compare their explanations of how and why the crisis happened. I don't have the time to do that here, but let me make two quick points.

First, the same folks who, like Mr. Peterson, blame the financial crisis partly on the Fed's "monetary expansion," have been predicting ever since the crash that the Fed's policies would soon lead to runaway inflation. They have been predicting this for many years now, but the inflation never comes. So they revise their definition of "soon" and double down. Just you wait, they say—a little longer. But most people outside their tight ranks have stopped paying attention to them. As for Fannie Mae and Freddie Mac, we've been over this at dotCommonweal many times. There's no denying the involvement of Fannie and Freddie in a mortgage crisis that touched almost every big lender, but the idea that Fannie and Freddie caused the crisis by implementing a policy that favored low-income borrowers has been thoroughly discredited. Libertarians have an a priori commitment to the idea that every serious economic problem is caused by state intervention, and so they landed with both feet on Fannie and Freddie—it had to be them. After all, the private lenders weren't following Barney Frank's orders; they were just responding to the market, which never errs.

Mr. Peterson approvingly mentions the libertarian belief that the poor would be better off under a "true free market," but then complains a couple of sentences later about my reference to the invisibe hand and rising tides lifting all boats. But of course these clichés are just figurative ways of making the same point Mr Peterson and other libertarians want to make, which is that the market, left to it's own devices, does a better job of improving everyone's standard of living than a government ever could. This point is central to libertarian ideology. The stock metaphors may not be the best way of conveying it, but there's a reason we hear them so often from politicians who celebrate the free market and demand "limited government," which always means minimal government. These metaphors have a certain intuitive appeal. They suggest that distributive justice is what happens naturally when officious politicians just get out of the way. What makes the rich richer will automatically make the poor less poor. I called that kind of just-so thinking Panglossian, but at least Pangloss was pretending to describe the world we all know, which makes it easy to see the absurdity of his description. Libertarians celebrate a world that is always just over the horizon—the best of all possible worlds that will magically take shape once we get rid of all trade restrictions and the public provision of health care, education, old-age pensions, food stamps, etc.

Finally, I am a little confused about what exactly Mr. Peterson is accusing me of—ignorance or disingenuousness. He says of my account of Catholic libertarianism that it "doesn't even come close to summing up the position of libertarians, Catholic or otherwise. And you know it." (How does he know that I know it? Have we met, Mr. Peterson? Or should I call you Brad?") But then he writes that Cardinal Maradiaga's remarks were "similarly ill-informed."  So I know better, but, also, the cardinal and I know nothing. Is it too much to ask for a coherent complaint from Mr. Peterson. I'm beginning to think it is.

Matthew, thank you for your response. You make some good points and get in some great zingers. I appreciate your willingness to engage me. I have just a few added thoughts and an apology:

My complaint isn’t that your presentation of the libertarian worldview is “less flattering than [I] would like.” It’s that you have incorrectly presented the libertarian worldview.

Your original article implies that libertarians thought everything was just hunky dory with our supposedly unregulated financial markets before the financial crisis and that we blame the crisis on unavoidable human greed.

In reality, libertarians have long been critical of how the financial markets are regulated and blame a confluence of several factors for the financial crisis, including credit expansion by the Fed.

As for Fannie and Freddie, I didn't say they were solely to blame for the crisis. I mentioned them as an example of government intervention in the financial markets and to counter the often-repeated leftist myth that we live in a laissez faire society with no regulation and minimal government.

When it comes to the invisible hand and rising tides, you neglected to address my primary objection to your point. You contended that libertarians say we need to "put our faith in the charity of the one percent.” I know of no libertarian who says this.

Instead, as I pointed out, we believe the free market — when allowed to operate — is the best friend the poor ever had. It has done far more to lift up the poor than any amount of charity, whether private or public. (Just so we’re clear, I do believe private charity has an important role to play.)

My objection to your “rising tide” comment is the implication that we libertarians are all starry-eyed optimists who believe economic growth is a panacea that solves everything, and that we have nothing else to say on the matter.

And just so we’re clear, libertarians also acknowledge that some people do get left behind even in a booming economy. Some by the process of creative destruction, some due to the circumstances of their lives, some for reasons I know nothing about.

As for ignorance vs. disingenuousness, I hereby retract my “And you know it” comment, and apologize for saying it. However, this doesn’t mean I consider you “ignorant” (your word). Just ill-informed about what libertarians truly believe. 

Matthew, I've been catching up on my Commonweal reading, read with interest the excerpt "Warm Beer an Old Maids" in the July 11 print edition and was guided to the full talk. At one time I thought it might be possible to be both a Catholic and a Libertarian. For me, today, it is not, for much the same reasons as you bring forth. On the moral front, libertarianism's embrace of a radical individualism includes acceptance, if not promotion, of "abortion on demand" and "suicide," among other moral choices condemned by the the Church. (In fact, modern Progressive Democrats embrace the same sort of individualism regarding such moral choices. For consistency, and intellectual honesty, I wish the editors of Commonweal would take them to task as well.)

Yes, a total laissez-faire approach to economic activity on the part of libertarians seems almost impossible, as you point out, to reconcile with many of the economic justice positions of the Church. One would have to be a real intellectual contortionist to be both a committed Catholic and a committed libertarian. One point not explcitly addressed in your talk is the fact that libertarianism includes its own contradiction, in that a complete adoption of the economic part of their philosophy on the part of society would inevitably, and probably in short order, make libertarianism disappear and be replaced by an oligarchic dictatorship, or at least control, of society, stifling individual initiative and advancement. The economically nimble, the hard-working and, yes, lucky individuals who come out on top first in the complete laissez-faire economy will gain huge economic rewards. Even if we consider these rewards justified, they will create an economic, and thereby usually social, elite, who will dominate society. We see the beginnings of that today in America. They will control access to the best of education for themselves and their offspirng, control most of the real property, control capital and largely how it is distributed, control, perhaps indirectly, but control nonetheless political access and media access. So, then, how do the vast majority of those who are not part of the elite, and their offspring, take advantage of laissez-faire economics when now so much is stacked against them. And how will society remain dynamic and creative when a small elite will inevitably control so much of the economic wealth and social capital of the nation? The triumph of libertarianism will destroy libertarianism and make it impossible to implement for those who are not among the first winners of the economic competitions.