Some folks have heard me beat this drum. But it’s a fresh-enough thought – going to fundamentals that run deep beneath normal politics – so that I am moved to raise it yet again. In part because someone recently asked me, as author of The Transparent Society: “Can transparency and libertarianism complement each other?”
Now let’s have the simple answer first. Yes. A sane, better-focused libertarianism would be utterly compatible with transparency. In fact, it should be the very top priority.
Both Adam Smith and Friedrich Hayek proclaimed that markets are healthy in direct proportion to the number of skilled and knowing player-participants. Indeed, one chief indictment against every pre-modern economic system is that nearly all of them were based on “allocation” of resources by elites. Allocators are inherently knowledge limited and likely to be delusional, precisely because they are few.
Just to be doubly clear on that: almost all previous cultures used GAR – or Guided Allocation of Resources – as their guiding economic principle. Whether the allocation was done by kings, feudal lords, priests or communist nomenklatura, it was nearly always the same: decisions over how to invest society’s surplus, which endeavors to capitalize and which products to produce were made by a small clade of delusional elites, as wrong in their models as they were sure of them.
Starting with Adam Smith – and later fervently preached by others, including Hayek – the notion of FIBM, or Faith In Blind Markets, began to compete against GAR. The core notion? That the mass wisdom of millions of buyers, sellers, voters and investors will tend to emphasize or reinforce better ideas and cancel or punish bad ones. Delusions – the greatest human tendency – will be quickly discovered because no longer will some narrow group be able to nurse them without question. Hence, getting back to the original question: the more transparency – and the greater the number of participants – the more people can come up with relatively accurate models and act upon them… or acutely criticize flaws in the models of others.
But let’s extend that thought and ask an even more general question.
Isn’t libertarianism fundamentally an appreciation of competition?
Think about all the core enlightenment processes — entrepreneurial markets, science, democracy and justice. Each of these modern systems produce the modern miracle of positive-sum games… creating win-win scenarios for everybody. The famous rising tide that lifts all boats.
Now sure, there’s a lot more involved than just competition! There are many cooperative or consensus or even moral aspects… read Adam Smith’s The Theory of Moral Sentiments, to see that “competition” does not mean “cut-throat” or the brutal image of social darwinism. Many of today’s libertarians oversimplify, especially the followers of Ayn Rand.
Nevertheless, it is wholly right and proper for a libertarian to emphasize and focus on one main feature of these positive sum processes. The fact that they all arise by harnessing and encouraging fair rivalry among human beings. So let me reiterate.
Competition is the great creative force of the universe.
That’s proved. Competition produced all of nature’s evolutionary marvels… and us. By far the most successful human enterprise – science – is an inherently competitive process and scientists tend, by personality, to be extremely assertive in going after rivals. Moreover the arts, supposedly our “highest” endeavors, are inherently – often ferociously – competitive, even when they are lecturing us about cooperation! And yes, in professing this vast generalization you can see the libertarian in me – (despite my deep disdain for Ayn Rand.)
But the sane libertarian also knows that competition – in nature and primitive human societies – contains an inherent contradiction. A runaway process of self-destruction that historically always led (and I do mean always) to calamity…
…to the winner turning around and cheating! Victors in ancient combat were never content with incremental or partial success in war. Can you picture the victorious helping their adversaries to their feet and welcoming them to come back to another equal fight the following year? It was human nature, rather, to destroy opponents. The battlefield may have made you great, but you do not want to return there again and again for an endless series of even matches!
Think. In order to have maximum creative output, competition has to go on and on, maximizing innovative aspects and minimizing blood. The clearest example of transforming destruction into endlessly vigorous competition may be the ritualized combat systems called rule-based sports.
Nor is this just about war. Adam Smith saw what had happened in markets and societies for 4000 years. Winners in capitalism tend not to be satisfied with success in the latest market battle, with a cool product or in achieving recent financial or political success. Human nature propels us to use our recent victory to ensure that competitors will fail in future struggles. To bias the next competition. Or to stomp our defeated competitors flat! To absorb their companies. Squat on patents. Create monopolies or cartels to divvy-up markets. Eliminate transparency. Spy on competitors but keep them – and consumers in the dark. Capture regulators and make them work for us. Capture politicians and make the laws favor us.
Suppose that I become rich and powerful. What will I do, if I am one of the 99% who let human nature play out? Then I’ll use wealth and power to game the system so new competitors won’t challenge me! If you deny this, you’re just being silly. It was the way of oligarchy, in 99% of human cultures. The top priority of the owner-lords in all those nations was one distilled goal – to prevent bright sons of the the peasant class from competing fairly with the children of the rich. Admit it. Go ahead, choose a random decade across the last 60 millennia, in some random locale that had metals. And tell me this wasn’t the pattern.
And it worked. It’s in our blood. We’re all descended from the harems of guys who pulled off that trick.
And here is where Adam Smith came in. He looked around, saw all the cheating by owner-oligarchs destroying the creative effectiveness of markets. And – in the seminal year 1776 – he called for something new. A way to get the best, most creative-competitive juices flowing, in the largest possible variety of human beings, while preventing the old failure mode. And it turned out there was a way.
As in rule-based sports, competition can only becoming self-sustaining… continuing to deliver its positive-sum outcomes… amid a network of transparent, fine-tuned, relentlessly scrutinized — and universally enforced — rules.
The vital importance – and difficult complexity – of “fairness”
Fair competition isn’t just a matter of morality. It is also the way to maximize competitive output, by ensuring that bright people and teams get second, third chances and so on. And creating ever-flowing opportunities for new competitors to keep arising from the population of savvy, educated and empowered folk. That kind of fairness requires rules and careful tending to ensure new competitors can and will always arise to challenge last year’s winners. And that earlier winners can’t cheat. Because… we’ve seen… they will.
Let’s be plain here. The founder of both liberalism and libertarianism – Adam Smith – weighed in about both of these reasons for fairness, To him, they were equally important. All right, liberals and libertarians each emphasize different ones. Liberals talk about the moral reasons for fairness and libertarians the practical, competition-nurturing ones. They tend to forget that – as followers of Smith – they actually want the same end result!
What they share is something deeper that both movements ought to recognize. They want every child to hit age 21 ready and eager to join the rivalry of work, skill and ideas.
Liberals should recall that fair competition is the driver, the engine of our cornucopia. The source of the wealth that made social progress possible. And libertarians need to pause, amid their dogmatic, “FDR-was-Satan” incantations, and recall that the word “fair” is the only thing that can make competition last.
Ironically, government can play a role there, if carefully watched. e.g. by ensuring that all poor kids get the care and education needed to become adult competitors! By ensuring that social status – whether poor or hyper-privileged – is never the prime determinant of success or failure. In other words, a sane libertarian who loves competition does not scream “Socialism!” at every state intervention. Instead, that grownup libertarian calmly judges every intervention by one standard.
“Will this help to increase the number of skilled, vigorous competitors?”
And by that standard, suddenly, liberals and libertarians have something to discuss. Without a scintilla of doubt, measures for civil rights, sanitation and public health, infrastructure, childhood health care and… yes… the vast increases in literacy wrought by public education… vastly increased the number of citizens capable of independent engagement in markets and innovative goods and services.
Sure, we are finding flaws in our schools! But that judgment (let’s remember) is from the higher plateau of expectations and desires that public education created! It is only because we achieved 99% literacy that – suddenly – 99% literacy is no longer anywhere near enough. Is it time to bring market tools and competition into education? Sure. Probably. And I am willing to discuss the assertion that teachers’ unions have “become a cartel.” Still, when criticism turns into willful dogmatism, a failure to acknowledge the accomplishments and effectiveness of mass society – brought into effect by government, exactly as demanded by Adam Smith(!) – well that’s churlish ingratitude and hardly a basis for saying “let’s move on to something better.”
And there are things government should not do! Some well-intentioned things that stymie competitive creativity, instead of enhancing it. “Equalizing all outcomes. is socialism and I am not on that boat! But maximizing the number of skilled and ready competitors is a different goal and I am here to hold that conversation. You may be surprised how many liberals and moderates will be willing to discuss it (and occasionally vote libertarian) if you make that the issue, instead of “FDR-was-Satan!”
A Movement based on LOVE of something, not HATE…
Sorry, but this needs to be hammered home, so let me repeat it. Screeching an incantation that government inherently suppresses competition is pure religious cant, disproved by countless counter-examples, from education and public health to the vast stimulative effect of public investments in science and technology and infrastructure. Again, look at 4000 years of history. Instead of simple-minded hatred of government, be more interested in pragmatic ways to enhance creative competition. Then the movement might have the subtlety of a surgeon or mechanic, instead of the sensibility of a berserk lumberjack. Make it about love of something, not bilious blame and hate.
So… is libertarianism consistent with transparency?
By that standard, transparency is clearly one of the most vital things that libertarians could defend. Hayek himself said that markets (and democracy and science and justice) only work when all participants know as much as possible. Absence of light is death to all four positive-sum games.
Alas, today’s libertarians are (I grieve to say it) in-effect quite mad. They worship unlimited private property, even though it was precisely the failure mode that crushed freedom in 99% of human cultures. And they rage against a system that in general resulted in vastly more wealth, freedom and more libertarians than any other.
This is a quasi-religious idolatry. It makes them complicit allies of the enemies of competition. It makes them murderers of the thing that they should love.