Star Ford

Essays on lots of things since 1989.

Libertarian Socialist

on 2009 October 16

Two main lines of thought today are libertarian and socialist. They are sometimes thought to be opposites, but actually are compatible. Libertarians believe that the free market is the best way to allocate labor and stimulate efficiency. Socialists believe we should work cooperatively and fairly, rather than allow an owning class to exploit a working class, and that a limitation on the concentration of economic power is the best way to allocate labor towards human needs.

The truth of the libertarian view can be seen easily in certain highly competitive and rapidly changing markets such as electronics, where it is fairly obvious that free competition benefits the consumer. On the other hand, highly regulated sectors like health care and public transportation do not experience a truly free market and as a result, they are stuck with rising costs and stagnating quality. In these sectors, the incentive to improve the product does not rest with those who have the power to do it – a libertarian view of that situation.

The socialist view is backed by reality in the sense that countries with the most protection against concentrated wealth have the least poverty and a high standard of living.

Those who ally with socialist thought might trust free markets in the original sense (farmers selling their wares in a marketplace), but mistrust them when they become dominated by a small number of large interests, which is also known as capitalism. Those who ally with libertarian thought might trust the general idea of protection from exploitation, but mistrust the notion that economic fairness can be legislated. Thus, both sides have a basic compatibility with the other philosophy, but mistrust the other side taken to an extreme.

A blend of these two lines of thought is what is needed today. That blend can be summarized by the rule that the public – through government – should referee the economy, but not play in the economy. To referee means to make sure the playing field is level, so a free market can thrive, and ensure it does not get dominated by monopolies. It also means the government should not be handling trillions of dollars, because you can’t both play in the game and be the referee.

Health care is a timely example of a sector that can be corrected by the combined “libertarian socialist” thinking. As aspect of the debate is whether the government should be a gigantic economic player in health care or not. One side says yes because medical decisions should not be driven by profit, and public control would give everyone equal access, and supposedly take money out of the equation. The other side says no because the free market is theoretically better at providing the best service at the lowest cost, and it keeps each person in charge of their own life, free from centralized control and possible corruption. If we think instead in terms of refereeing the economy, not participating in it, then there are many ways to create a free market system with distributed control, and also ensure fair access. Public policy would deal with transparency, fairness, truth in labeling, and upholding contracts, rather that deciding who gets paid for what. The rule that “if you insure anyone, you must insure everyone” is an example of the government playing referee – not being in the insurance business itself, but setting the groundrules for those who play. That rule helps us achieve our egalitarian objective while also remaining competitive.

As with health care, in so many other areas of the economy, the single word “referee” can help us determine the best way for the government to be involved.

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