Tyler Cowen’s ‘libertarian heresies’

By skepticlawyer

Tyler Cowen gave last night’s keynote address at the Institute for Humane Studies Fellows’ Research Colloquium, and in it he revealed a selection of five ‘libertarian heresies’. Three of them particularly struck me.

First, he made a cogent case for the idea that we (in the developed world, at least) are freer now than we were in the past, and that it’s unwise for libertarians to look back on any particular era as some sort of libertarian elysium. If government was small way back when, in large part it was because everything was small. There is a tendency among some libertarians to argue for the future by going back to a past that did not exist; Cowen exposed this tendency very effectively.

Next, he argued for a form of positive liberty. This is not the positive liberty of Isaiah Berlin, with its totalitarian tendencies and desire to tell others how to live – something that has plagued the political left for many years and arguably persists to this day. Rather, Cowen’s positive liberty is closer to Amartya Sen‘s account of ‘capabilities’ – people should be able to do certain things, and the most successful society is one where the most people can do the most things. Then – and this is where there was an audible gasp around the room – he argued that roughly 70% of the liberties worth having fall into this ‘ability’ version of positive liberty.

Once people had cleared up that he wasn’t riffing on a notion of ‘ve vill give u zees because vee think it vill be gooood for you’, some of the grounds for the audible gasp drained away. Cowen’s and Sen’s ‘positive liberty’ has a modesty absent from Berlin’s account, and lacks the obsession with inequality that – later in the address – Cowen dismissed using Hayek’s words: as a ‘category mistake’.

Finally, in language sure to gladden the heart of jurisprudes everywhere, throughout the address he placed considerable emphasis on the rule of law and the benefits that flow from it. What poor countries need is not more liberty, but more law, law that is abstract, end-independent but – and this is the clincher – also enforced. He then moved into territory that is politically dangerous, but needs to be addressed: one of the things that helps promote both liberty and prosperity throughout the Anglosphere is citizens’ widespread ability to be loyal to a set of abstract concepts. Russia, he pointed out, is failing as a free society not because it is poor – Putin’s shrewed management of high commodity prices has put paid to much Russian poverty – but because Russians tend to privilege their friends and contacts above all else, leading to epic levels of corruption. Corruption, of course, is a signal rule of law failure.

He then asked, somewhat rhetorically, if liberty was confined (and defined) by culture: ‘We should not presume that our values are as universal as we often think they are’. What happens, he asked (also rhetorically), if – in order to enjoy the benefits of liberty and prosperity – societies have to undergo a major cultural transformation, including the loss of many appealing values? Cowen focussed on Russian loyalty and friendship, but there are potentially many others. Think, for example, of the extended family so privileged throughout the Islamic world, or the communitarian values common in many indigenous societies.

Serious food for thought.

(And for those looking forward to a collection of DC pics, two things. One, I forgot to bring my camera cable to the US, so I can’t upload anything until I get back to Oxford; and two, I got rained on for the length of the National Mall yesterday. The weather – not to put too fine a point on it – has been shite. Truly shite).

UPDATE: The DC pics are here, and I’m currently looking for my notes so that I can blog the rest of Prof Cowen’s address. Watch this space.

18 Comments

  1. TerjeP
    Posted May 12, 2008 at 5:30 am | Permalink

    I think the idea that everything has got bigger so government should also have grown is simply crap. Just because GDP doubles it does not mean the per capita cost of government should also double (the ACCC should examine the rising cost of government). In fact it should mean a retreat of the welfare state and a fall in the cost of government as those that depend on government subsidies lift themselves above the previously defined thresholds. The reason the state has expanded is because the state, having rooted our economies for a big chunk of the 20th century, left many people feeling helpless, and in desperation they ceceded power to the state. Currently it coasts into even bigger territory on the tradition of measuring size relative to GDP and the lack of any civil response that might halt the momentum. Collectively we still have a fear of freedom even though freedom was never the foe.

    The idea that Russian loyalty is a misfit value incompatible with liberty is I suspect wrong. I suggest that you watch “Gangs of New York” or examine sectarian conflicts in early Australia. The rule of law matters but most cultures are capable of implementing laws sufficiently effectively. What matters is the extent to which laws protect property rights effectively and how long they have been effective. Russians are still better off with the liberty they have then the authoratarianism they endured previously.

  2. NPOV
    Posted May 12, 2008 at 6:10 am | Permalink

    Terje – you really think the reason that Scandinavian countries have such big government is because their people feel “helpless”?
    America surely has far more people feeling helpless than most over Western democracies, and yet there’s little indication they have any interest in bigger government.

    I’m not sure there is a good explanation for why the cost of government is so much greater than it was 100 years go, but it could simply be a combination of

    a) voters deciding that there are more and more services they feel are better provided by the government than privately
    and
    b) the fact that there’s not really much room for productivity improvements in the services governments provide, meaning that, relative to economic activity where there have been big opportunities for productivity improvements, it has become more and more expensive. The areas of the economy that benefit most from productivity improvements are those where external energy inputs can be used to replace human energy: i.e. automation + fossil-fuel energy. The government doesn’t tend to provide goods and services of that nature, so the costs of what it does provide will rise relative to those that are.

  3. NPOV
    Posted May 12, 2008 at 6:42 am | Permalink

    One case in point – 100 years ago agriculture dominated the economy. In the century since, agriculture has seen such massive productivity improvements that it now capable of generating sufficient output even as a fairly small part of the economy. Government as a percentage of the non-agricultural GDP is today is quite possibly quite a lot smaller than it was 100 years ago. I’m not sure if data is available to confirm this.

  4. Posted May 12, 2008 at 7:37 am | Permalink

    Interesting! I have always liked Sen’s take on economics and capabilities.

    Terje, I think it’s inevitable that government expands somewhat when population expands. It doesn’t have to expand proportionally, but it will necessarily become bigger when society becomes more complex and less homogeneous. There’s just more stuff to manage.

    Also, I suppose in earlier times in Europe, the Church would have contributed significantly to governance (directly or indirectly), whereas it is not part of the mechanism of the state now. That’s just a theory I’ve come up with off the top of my head, but worth thinking about.

  5. Chad Van Schoelandt
    Posted May 12, 2008 at 12:18 pm | Permalink

    Terje – Cowen’s case was not that government grew with GDP. His claim was that the government institutions grew with other sorts of institutions, primarily business corporations. He suggested that if you look back at the U.S. a few hundred years there was really small government, but there were also really small businesses, and that the size of government grew with the size of corporations. He even conjectured that were you to graph the size of the government and the largest corporations, you would see a fairly good correlation. This could be a suggestion about different institutional capacities at different times, for Cowen suggested that things like the telegraph contributed both to larger corporations and larger government. I am not trying to recreate his whole case, but I hope this made it a bit clearer.

  6. TerjeP
    Posted May 12, 2008 at 3:44 pm | Permalink

    Legal Eagle,

    During the John Howard years the cost of federal government grew by 34% after ignoring GST, allowing for inflation and even after adjusting for population growth. Government is a good/service whose price seems to rise well and truely beyond these factors.

    The notion that government has had no scope for efficiency improvements kind of ignores the IT revolution. Document management (eg legislation and land and titles type functions) is vastly automated today relative to where it was just 20 or 30 years ago. Welfare outlays could have declined as more people found jobs. Information movement and provision is also more efficient with wide area networks, online information self servicing etc. The cost of looking after the aged should be falling even as the numbers rise because more and more have private funds to support them especially as the superannuation generation flows through. And until recently the costs of educating children should have been falling as per the demographic shift.

    It seems that there are loads of apologists for more and more expensive government yet if grocery prices or petrol prices (which must incorporate government costs) rise quicker than inflation then people are out in force calling for a royal commission.

    As I said in my opening comment the argument that we need bigger more expensive government is crap. If anything the case for smaller government is stronger than ever.

    Regards,
    TerjeP.

  7. TerjeP
    Posted May 12, 2008 at 3:53 pm | Permalink

    Chad,

    In Australia 50% of workers are employed by a small business that has less than 25 employees. The case for big government based on the argument that business are bigger would if it were valid have less application in Australia than in the USA.

    The growth of big business has been a function of government intervention in many cases anyway. Whether it was the creation of propriatory legal structures, the administration of mineral rights (in Australias case), the entry requirements for a banking license, the nature of lobbiests, to any of many other rules and subsidies that big governments routinely create. That corporatism is rife in an age of big government should hardly surprise.

  8. TerjeP
    Posted May 12, 2008 at 3:56 pm | Permalink

    Skeptic – I saw the article about you in the SMH magazine on the weekend. Have you see it?

  9. NPOV
    Posted May 12, 2008 at 7:18 pm | Permalink

    Terje, efficiency improvements in information management through IT technologies have applied across the board – in fact there’s probably not a single industry that hasn’t benefitted from it.

    I agree that government has grown partly as result of demand from citizens, but I take issue with the idea that it’s because of feelings of helplessness. Under Howard it was obviously attributable to a certain amount of “vote buying” – the unfortunate reality is that pork-barrelling works, and indeed I would love to see better checks and balances in place to ensure there are much tighter limits to it.

  10. Posted May 12, 2008 at 11:07 pm | Permalink

    Damn, just got a comment eaten at my own bloody blog!

    Chad has given a better account of Prof. Cowen’s point than I have, although I do agree with you about John Howard ‘growing the government’ in a pretty spectacular way.

    Haven’t seen the article, will get round to it eventually.

  11. NPOV
    Posted May 13, 2008 at 10:15 am | Permalink

    Terje, I seen the proposal
    “The growth of big business has been a function of government intervention in many cases anyway” many times before, and while it might have something to it, I suspect it’s overstated.

    For instance, how would less government intervention help prevent things like Westpac swallowing up St George, which previously swallowed up Advance Bank, which previously swallowd up BankSA?

    And if there were was no regulation over the banking sector, what would prevent this trend continuining until we had just a single dominant bank?

    The barriers to new players entering the banking sector seem pretty huge already, even ignoring the regulatory requirements.

  12. NPOV
    Posted May 13, 2008 at 12:20 pm | Permalink

    Legal Eagle – that much I do agree with: the mindset that “the government should do something” is something that rarely seems to get questioned. But if it this in an aspect of human nature (the desire to let others look after problems), then what can be done to help combat it?
    Is there way that we can better motivate individuals to contribute towards working to solve problems that they might otherwise prefer to leave to governments? In a multi-party democracy, if one party is blithely offering to solve all prospective voters’ problems, how can others present a more attractive alternative?

  13. TerjeP
    Posted May 18, 2008 at 8:55 pm | Permalink

    The barriers to new players entering the banking sector seem pretty huge already, even ignoring the regulatory requirements.

    Perhaps. However small scale loan operations exist in the black market and there is in my view every reason to believe that small local banks would be more common in a less regulated market.

  14. NPOV
    Posted May 19, 2008 at 10:27 am | Permalink

    Sure, but in most people’s view there is every reason to believe lots of dodgy lenders and loan sharks would set themselves up as banks deliberately lending to people that couldn’t afford their loans in a less regulated market too.
    I don’t think there’s a economically prosperous country in the world without a well regulated banking sector, almost certainly for good reason.

  15. Posted May 30, 2008 at 7:03 pm | Permalink

    Two points on Tyler’s talk (as summarized by skepticlawyer blog):

    1. It might be good for Tyler to speak of positive capabilities as “positive liberty,” but I think that, nonetheless, his doing so is bad for humankind (as compared to his just speaking of positive capabilities).

    2. The expansion of positive capabilities enhances liberty ONLY by the channel that it reduces the coerciveness of restrictions. The coerciveness of a restriction ranges in magnitude, and a restriction is less coercive the less important to you it is. Expanding positive capabilities reduces the importance of any particular restriction. But it is only through this channel that the expansion of positive capabilities enhances liberty. Thus, “negative” liberty remains primary. Positive capabilities figure in only through the channel of negative liberty. Robinson Crusoe, alone on a desert island, is perfectly free, even though his positive capabilities are piss poor.

  16. Posted May 30, 2008 at 8:10 pm | Permalink

    Daniel, I do think you’re right about the labelling. My initial reaction was to think it terms of ‘positive liberty’ as defined by Isaiah Berlin, with its attendant nasties. ‘Capabilities’ is an excellent alternative, and removes the baggage (quite legitimately, I might add) attached to the earlier concept.

    I like your account of ‘removing restrictions’, and I think Sen makes a similar point. Some of his ‘capabilities’ are non-economic, but are about reducing the coerciveness of restrictions. He talks, for example, of ‘being able to appear in public without shame’, which may seem meaningless in the West, but is of vital importance to women in many parts of the Islamic world.

    [I note that Will Wilkinson doesn’t buy your language argument, and thinks that more liberty can be simply construed as more options. I’m not so sure of this. People can have options running out of their ears, but precious little liberty].

4 Trackbacks

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