A few years ago in Obion County, Tennessee, a homeowner called 911 to report that a trash fire in his backyard had gotten out of control. The operator told him, however, that because he had forgotten to pay his $75 annual fee, the newly privatized city fire department wouldn’t help him. The fire brigade eventually showed up to prevent the blaze from spreading to the property of a paid-up neighbor, but they let the fire consume the debtor’s house.
In his new book Burning Down the House, Northwestern University law professor Andrew Koppelman sees this episode as reflecting the form of libertarianism that has been popular with much of the modern right, which manifests as a callous indifference to other people’s misfortunes. But Koppelman sees this as a corrupted form of the libertarianism outlined by one of its greatest twentieth-century exponents, the economist Friedrich Hayek. Although Hayekian libertarianism shares the right’s faith in capitalism and its distrust of central economic planning, it also shares much of the left’s concern for the well-being of the poorest members of society and accepts significant government action. In fact, in 1960, Hayek proposed a health care plan that anticipated the general idea of the Affordable Care Act.
In Koppelman’s view, libertarianism as a right-wing phenomenon owes to its reinterpretation by greedy interests and extremist thinkers like Murray Rothbard, Robert Nozick, and Ayn Rand, who opposed nearly everything that government does. Rothbard, in fact, “takes the libertarian’s hatred of state oppression to its maximum. He demands a world with no government at all, in which the market rules everything. Even police and legal services should be offered by competing entrepreneurs.”
In this podcast discussion, Andrew Koppelman traces how Hayek’s moderate, pro-market libertarianism was twisted into the service of right-wing extremism, such as Charles Koch’s program of climate change denial. He calls for a reclamation of the original Hayekian vision in a way that can bring about more robust capitalism and more stable and inclusive societies.
Transcript
Andrew Koppelman: Libertarianism is the view that the state, if it has any legitimate function at all — not all libertarians agree that it does — its function is simply the protection of persons and property from force and the enforcement of contract, and that’s it.
Geoff Kabaservice: Hello! I’m Geoff Kabaservice for the Niskanen Center. Welcome to the Vital Center Podcast, where we try to sort through the problems of the muddled, moderate majority of Americans, drawing upon history, biography, and current events. I’m delighted to be joined today by Andrew Koppelman, who is the John Paul Stevens professor of law at Northwestern University. He is also professor by courtesy of Political Science and a Philosophy Department-affiliated faculty at Northwestern. As those affiliations suggest, his scholarship focuses on issues at the intersection of law and political philosophy.
He is a prodigious and enviably productive writer on all of those issues that lie at the bloody crossroads of our present politics. He’s the author of countless articles for both academic journals and mainstream media publications, and is the author of seven books. The most recent of these — slated for publication on October 4th — is Burning Down the House: How Libertarian Philosophy Was Corrupted by Delusion and Greed. Welcome, Andrew Koppelman, and congratulations on the publication of this terrific new book.
Andrew Koppelman: Thanks. Very happy to be here.
Geoff Kabaservice: I was really fortunate that you last year allowed me to read the draft of this book in manuscript. I thought it was brilliant then and now it’s even better in its final form.
Andrew Koppelman: Thank you.
Geoff Kabaservice: Andy, there’s a quote from the British economist John Maynard Keynes that I’ve often (perhaps too often) repeated on this podcast, but which occurred to me repeatedly while reading your book. In his 1936 work, The General Theory of Employment, Interest, and Money, Keynes wrote that “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”
And along these general lines, your book posits that Democrats, Republicans, and independents, although they may think of themselves as varying types of liberals or progressives or conservatives or free thinkers, are mostly either members of the party of Friedrich Hayek or Murray Rothbard, two economists whom many of them may never have heard of. But before we get into that discussion, I just want to ask you a few questions about yourself. Where did you grow up? Where did you go to school? What were some of your early influences?
Andrew Koppelman: I grew up in the suburbs of New York City, Rockland County. I went to college at the University of Chicago, where I was a humanities major. I think one of the distinctive aspects of my approach to political philosophy that carries over from intense readings of Tolstoy and Joyce is that I’m always interested in the story that is being told. I think that the reason why Keynes was obviously right, in the passage you just quoted, is that people, whenever they act politically, are telling a story about the world they inhabit and what they are doing in that world.
Political action makes sense because the world is a certain way. What I am doing politically, if I’m going to make any sense of my interaction with other people, I’ve got to tell a story about what I’m doing. Libertarianism is a story about the relationship between people and the state. It’s a very different story in the way that Hayek tells it versus the way that Rothbard tells it, so libertarianism comes in flavors. That’s one of the big takeaways of the book. But I want to say that what is ultimately driving the appeal of this — it’s not just libertarianism, any political philosophy — is to some extent a literary narrative about where are we in the world and why is it that we are doing what we are doing.
Geoff Kabaservice: I like that very much. I think we should try to make more brilliant law professors by having them read Tolstoy and Joyce as undergraduates. You went on to Yale Law School after that?
Andrew Koppelman: That’s right. I was out for four years. I worked for some of that time as a newspaper reporter, so I learned to write fast and had some encounter with the real world. I’d also say, as something that inflects this… I wanted to get as far away from the University of Chicago as I could, and I worked as a manual laborer in Louisiana for a while. My fellow workers were quite unsophisticated and quite vulnerable to abuse and exploitation, and so I had some personal experience of what capitalism is like when workers have no protection and have to negotiate one-by-one with their employers. And the result is not pretty. So I think that to the extent that I continue to identify myself as a leftist — a pro-capitalism leftist, but a leftist — that’s part of what drives that.
Then I went back to school. I got both a Ph.D. and a law degree from Yale. Then I spent a year working as a law clerk for the Chief Justice of the Connecticut Supreme Court. I taught political science at Princeton for five years, and then I came to Northwestern and I’ve been here for more than 25 years.
Geoff Kabaservice: In your book, you offer a gracious thank-you to Richard Epstein, whom you identify — correctly, I think — as America’s most influential living libertarian. When did you first encounter him?
Andrew Koppelman: I first encountered him when I was completely unknown. My dissertation, which was on the philosophy of anti-discrimination law, was in part a critique of his work. Richard thinks that there ought not to be any anti-discrimination law; that whatever problems of discrimination there are in the world, the market can take care of them. I disagreed with this, and as I was working on the dissertation, I sent him the manuscript out of the blue. He didn’t know who I was, he had no particular reason to respond to me, but he sent me detailed comments in response to what I had written.
That both made clear to me that Richard was an unusually kind and generous person, and also taught me something about how well-established senior people ought to treat junior people. And it gave me more reason to engage with his ideas. There is a section on Richard in the book — because he is, I think, the most influential living libertarian. And I say in the book that he is right about a lot of things.
Geoff Kabaservice: You were not a libertarian yourself as a law student, but you’ve written about grappling with the Supreme Court’s 1986 decision Bowers v. Hardwick, which was issued while you were a law student, which said among other things that the idea that gay people had a right to privacy in their sexual relationships was “at best facetious.” Yet you found the arguments from the left that were advanced to counter this decision to also be unsatisfying.
Andrew Koppelman: In the world of gay rights advocacy, with which I always had a great deal of sympathy from my first semester of constitutional law, I thought that the Hardwick decision, which was outrageous, was something that ought to be revisited.
There were two arguments. Well, the argument that was standardly made was that people have a right to do anything they want as long as it doesn’t hurt other people. I thought that there were problems with this argument. One was that it meant that you would have to get rid of any legislation that protected people from themselves, which meant that methamphetamines and fentanyl would have to be available for sale in the corner store. I wanted to decouple these things. I wanted to say it’s possible to be in favor of gay rights and not think that there should be unlimited ability to market these addictive drugs.
There was also — and this is more pertinent to the discrimination issue — if people have a right to do whatever they want without the state interfering, then how can you possibly justify any anti-discrimination law at all which forces people into transactions that they would prefer not to engage with? So both of those problems made me think that the simple libertarian story, which lots of my friends in the gay rights movement were drawn to, was exaggerated and that perhaps the cause of gay rights — to which I’ve always been committed — ought to rest on a different foundation.
While I was a law student, I came up with an alternate argument, which is that discrimination against gay people is sex discrimination; that if you treat a woman who dates a woman worse than a man who dates a woman, you are discriminating on the basis of sex — which it’s already established in American law you can’t do. I made this argument in my student note in 1988, and it quickly sank out of sight. And I was a marginal crank on this issue until just a couple of years ago when, to everyone’s surprise, the Supreme Court embraced it in an opinion by Justice Gorsuch in the Bostock case, for which I co-authored an amicus brief.
Geoff Kabaservice: I should say that those who want to learn more about your reasoning along these lines should read your 2020 book Gay Rights vs. Religious Liberty?, among other things.
Andrew Koppelman: Yes, I talk about that there.
Geoff Kabaservice: I have to admit that I’m uncomfortable with political philosophy. I tend to avoid books on the subject when I can get away with it. So the fact that I read and enjoyed Burning Down the House is a real tribute to your skill at making a lot of very abstract and abstruse concepts comprehensible — partly through storytelling, as you say, but also by showing how they matter in our politics. Nonetheless, for the philosophy-averse like myself, can you give perhaps a few just basic, bare-bones definitions of libertarianism so we can establish what we’re talking about here?
Andrew Koppelman: Right. Well, first of all, I teach in a law school, and so I’m constantly dealing with people who are averse to political philosophy but come here to learn political philosophy. They came here to learn to be lawyers, but the classes that I teach always have a political philosophy component. The way that I justify that is by saying that law is just political philosophy plus guns.
People tell a story about the appropriate deployment of coercive force, and then in law they put that into effect by enforcing it through courts and police. Libertarianism is the view that the state, if it has any legitimate function at all — not all libertarians agree that it does — if it has any legitimate function, its function is simply the protection of persons and property from force and the enforcement of contracts, and that’s it. No regulation, no redistribution, just a night-watchman state that protects persons and property. That’s the view that has been put forth by — well, the writers that I engage with are Murray Rothbard, Robert Nozick, Ayn Rand, and Charles Koch, who has embraced that view.
As opposed to the earliest libertarians — some of them identify themselves as classical liberals — who are willing to have the state regulate and redistribute, but only under very limited and precise conditions. Libertarianism starts with that more limited view of constraints on the state. It really starts with Friedrich Hayek’s effort to try to show that central economic planning, which was quite popular in the 1930s and early ‘40s, was a mistake. The book is to some extent chronological in trying to explain, in answer to your question, what is libertarianism, but the answer to that question shifts over time. And the origin is not as extreme as where it has ended up.
Geoff Kabaservice: You write that the “valid core of libertarianism has prevailed across the political spectrum, so completely that the label ‘libertarian’ is no longer meaningful as a way to describe it. What was valid in libertarianism has been assimilated into mainstream liberalism.”
Andrew Koppelman: Libertarianism begins with a book called The Road to Serfdom, written by Friedrich Hayek in 1944. It was unexpectedly a huge hit. He was rejected by a number of publishers until finally the University of Chicago Press deigns to publish a run of 2,000 copies. And then it’s an enormous hit.
So you have to understand the context in which Hayek is writing. In the late 1930s, the world’s most admired economic managers are Joseph Stalin and Adolf Hitler, because they are the ones who have turned their economies around. Russia, this rural backwater, is industrializing rapidly and Germany, which had been in this terrible depression and inflation, is booming. Meanwhile, the United States and France and Britain are still sunk in the Depression. And so a lot of folks think, “We don’t admire the dictators’ methods, but central economic planning has got to be the way to go from now on.”
Hayek’s book is a protest against that idea, and Hayek tries to show that central planning is going to be wasteful and tyrannical. And that view, answering your question, is a view that has now been embraced by Democrats and Republicans alike. Even Bernie Sanders is not proposing central economic planning as the British Labour Party was doing in the early 1940s.
Geoff Kabaservice: Let’s back up a little bit. Friedrich Hayek was born in Vienna in 1899 into an educated and cultured family. I believe that on his mother’s side, he was second cousin to the philosopher Ludwig Wittgenstein. He fought in World War I with the Austro-Hungarian army on the Italian front. Although he had done poorly in school prior to that time, he then went back to university and was influenced by conservative thinkers like Ludwig Von Mises and Eric Voegelin. He ended up leaving Austria in 1931 when he was given an offer to join the faculty of the London School of Economics. In his book, The Road to Serfdom, as you say, he was actually worried about what would happen after Britain had won the war, because he quoted from the National Executive Committee of the British Labour Party report of 1942 that they really wanted to embrace centralized planning — not just in wartime, where it’s a necessity, but in peacetime as well.
Andrew Koppelman: Yeah, so that is his target. He is trying to show that that’s not going to work. And his core insight is that in a market, there’s just way too much information: too much information about the cost of different inputs, too much information about changing consumer preferences. No central economic planner can possibly decide how much of each good ought to be produced. No central economic planner can possibly decide what prices ought to be. If you try to have central planning, there will inevitably be shortages and there will be surpluses. But more than that, when you are trying to allocate labor in different places, you are going to have to order people about, and the orders are going to be tyrannical and ineffective. They’re going to be wasteful, they’re going to be inefficient.
The other point that Hayek made was that if you are concerned about poverty, which is the central concern of the left, the best way to ameliorate poverty is economic growth. Because markets are so much more efficient, if you are concerned about the working classes, the people at the bottom, free markets are going to raise their standard of living much more quickly than central economic planning possibly could. And that has been largely vindicated. The proportion of the world’s population that lives in dire poverty has plunged in recent decades, simultaneous with the triumph of Hayekian free-market thinking. The last few decades have really shown both the power and the limits of Hayek’s approach.
Hayek had a huge effect on Ronald Reagan and on Margaret Thatcher and on the International Monetary Fund. Lots of political power has, in fact, been exercised in a Hayekian way. We’ve seen the benefits of that. There has been enormous growth, but we have also seen its pathologies.
Geoff Kabaservice: One of the things I most enjoyed about the book was, in a way, seeing you grapple with Hayek’s thought and relating how he persuaded you on certain issues, though not on others.
Andrew Koppelman: I’m a lefty. I am concerned about how the society is treating its worst-off members, which I take to be what defines the left. If I were going to tell the history of the left — you are, of course, the authoritative chronicler of the Republican Party; I’m on the other side — I think that what defines us is we are concerned about the people who are losing out in the system. The definition of that has changed over time. Originally, it was just the economic losers. We are now more concerned (or equally concerned) about issues of cultural imperialism and cultural oppression, of which the gay rights movement is an instance.
Reading Hayek, I became persuaded that he was right. I read him in college and I didn’t like him nearly as much as when I read him a few years ago. I couldn’t find anything in The Road to Serfdom that I disagreed with. I thought that some of his later views got crankier and more marginal and I had issues with those, but the basic argument that free markets are going to work to the benefit of the people at the bottom, I think that’s right. It has been vindicated by experience.
Geoff Kabaservice: As someone who often touts the virtues of moderation, I was surprised — and delighted, frankly — to see you present a picture of Hayek as something of a moderate. You put at one point in your book that “Too many on the left fail to grasp that the original libertarian strategy has been massively vindicated,” while “Too many on the right fail to grasp that unregulated markets cannot deliver a livable world.” Hayek was actually closer to the middle ground, in that sense, than many of his critics on the left or the right.
At the same time though, there’s a famous story about Margaret Thatcher visiting the Conservative Research Department in 1975 — this is the internal think tank of the Conservative Party. She listened to this scholar present a paper on “the middle way,” the pragmatic path that the Conservative Party should take. Then she reached into her briefcase and slammed down a copy of Hayek’s The Constitution of Liberty on the table and said, “This is what we believe.”
But you’re right that Hayek thought that central planning would inevitably lead to tyranny and poverty, but he also rejected the nineteenth-century ideal of a laissez-faire minimal state. He sought to delineate a middle path.
Andrew Koppelman: What Hayek saw was… Well, first of all, he tried to show that, as against nineteenth-century writers like William Graham Sumner, he tried to show that markets do not in fact give people what they deserve, that there’s all kinds of arbitrariness and unfairness to how markets work. What people deserve is a function of what they have done in the past. When you give somebody what they deserve, you reward them for what they’ve done in the past.
But markets are forward-looking, not backward-looking. Markets reward people who produce what people are going to want in the future. So if I am an inventor and I spend years virtuously trying to come up with a medicine that will deal with some awful disease, and I succeed and this medicine is terrific — it has an unpleasant side effect but it really works — and then two weeks later some lazy louse comes across a substitute for my medication without the side effect, then even though I’m much more deserving than he is — I worked for years for this — I’m out of business. And I should be out of business. Nobody wants my medicine. We shouldn’t produce it. The other one is better.
Hayek thought that the great thing about markets is that it absorbs information about these changing conditions. It might take a while for a central planner to notice that this substitute is better than my medicine, but the market will notice immediately. The day after this substitute comes out, my stock price crashes. And it should crash, because it’s a waste of investment dollars for me to get any more money.
That means that there isn’t a principled objection to redistribution and a social safety net, because the people who are losing out in the market don’t necessarily deserve it. We have seen that. I mean, the devastation that has happened to working-class Americans in the last few decades, when high-paying jobs for people with high school degrees have evaporated, with all the pathologies that came from that — it’s not because they became less deserving. It’s because the market came up with a substitute for what they were doing in the past. The United States manufactures about as much as it ever did. The problem is that an auto factory now doesn’t need a lot of guys on the assembly line who just know how to tighten bolts, because we now have robots that do it and the robots do it better. Those high-paying jobs are gone. Whatever the objection is to intervention on behalf of those people, it is not that they suddenly became less deserving.
And so Hayek is open to redistribution. I think that this has penetrated across the political spectrum. Tom Cotton just introduced a bill to have massive federal investment in vocational training for people who don’t want to go to college. Cotton, he’s a conservative Republican, but he proposes to tax the rich — as it happens, endowments of rich colleges which he doesn’t like. But still he’s proposing to tax the rich to redistribute for people who are his constituents.
In broad macro terms, Hayek would say, “You’re certainly not taking money away from people who deserve it more.” He did worry about redistribution because he wanted there to be large accumulations of capital in order for there to be easy entry into the market. But his view was coldly instrumental about this. It’s not that the rich deserve what they’ve got, it’s that we need a class of investors who’ve got money to invest.
Geoff Kabaservice: In that sense, Hayek was different even from some modern meritocrats, who feel that they deserve everything they’ve got, and the poor lack virtue and merit and that’s why they’re poor, and maybe they just should have tried harder. That’s not a view one gets from Hayek.
Andrew Koppelman: Hayek specifically rejects that view on multiple occasions.
Geoff Kabaservice: In fact, Hayek, I think in the early 1960s, was coming up with something really quite similar to Obamacare, which would have required citizens to buy health insurance in the private market, but would offer subsidies if they needed them.
Andrew Koppelman: The specific proposal is in that same book that Margaret Thatcher slammed on the table, The Constitution of Liberty, where he’s criticizing the British National Health Service. He’s saying, “Why do we need to have doctors on the payroll? Why don’t we just give people vouchers to buy insurance on the private market? We’re going to have to require everyone to have insurance. We don’t want them to freeload off of us if they get sick. And we’re going to have to require the insurers to cover everybody, even sick people. And we’re going to have to subsidize the people who can’t afford it.” What I just said is Obamacare. That is the basic scheme.
Geoff Kabaservice: Hayekianism, again, to use that term, is something that people as somewhat varied as Dwight Eisenhower in the 1950s, and Barack Obama in more recent times, would I think have identified at least with its basic tenets.
Andrew Koppelman: But also we see the weakness of Hayek’s view. Hayek was terribly afraid that if the redistribution was anything more than a social minimum — basic medical care, enough of an income to keep you from starving — if we did anything more than that and tried anything like the kind of income stabilization that we have in Social Security — where if you earn more while you’re working, you get a higher Social Security check — he thought that any inequality like that was going to take us on a slippery slope to socialism. And he then becomes somewhat cranky, because we’ve had Social Security for quite a while now and it doesn’t seem to have put us on that slope.
The other thing that I think that he misses is that it is possible for government to intervene in markets from time to time responsibly in order to protect industries during downturns. He certainly would have had a big problem with the bailouts of the auto industry at the beginning of Obama’s term, which saved upwards of a million jobs. But the dynamic character of capitalism, which he pointed out was the great thing about it, makes it very difficult for people to live and plan a life. It makes the world riskier than people, in fact, want to inhabit. He always resisted that.
Geoff Kabaservice: You also seem skeptical at best, shall we say, of his mistrust of labor unions.
Andrew Koppelman: Yes. He thought that labor unions were just another kind of cartel, and he didn’t like cartels. But he does want a government that protects everyone’s rights, and if you are going to have that kind of government, there has to be some organized means for uneducated workers who are not policy wonks to have their interests represented. For a long time, that was labor unions. If you don’t have somebody representing the interests of labor, it is not clear that you can get basic protections like regulation for workplace safety.
Workplace safety is one of many examples where regulation is necessary to ameliorate the problems of the market, one of which is what economists call “asymmetrical information,” but really is the boss knowing something that the worker doesn’t — such as, for example, that the fumes you inhale in this workplace, they’re really dangerous. They’re going to give you cancer. If you’re going to work here, you really should be wearing personal protective equipment. But if the boss pays for the personal protective equipment, that comes out of his profits, and the worker is probably not going to get cancer until he is working for somebody else. In a free market, you are going to get a kind of fraud — harms that are not bargained for.
The same thing with pollution. The people who live near the stink works are not party to the transaction between the factory and its customers. The only way to make sure that harms that markets can’t fix are prevented is with a regulatory apparatus. Hayek understood this and he thought that some degree of regulation was appropriate. Hayek was really pretty careful about this. He didn’t think that you could say, in advance of learning the specifics, what kind of regulation was appropriate. So he opened the door for the enormous administrative apparatus that we’ve got in the United States today, which regulates market transactions, subjects them to cost-benefit analysis to make sure that the regulations aren’t wasteful, but understands that pollution is not a problem the market can possibly fix. Only regulation can do that.
That separates Hayek from the more extreme kind of libertarian such as — well, Charles Koch is the most potent example — who thinks that any kind of regulation is illegitimate and we should leave everything to the market. And the theorists who I take on in the book, people like Murray Rothbard or Robert Nozick or — best known, although I think the weakest philosopher — Ayn Rand.
Geoff Kabaservice: But I would also say that an economist like Milton Friedman, who is basically in the Hayekian framework, is far less skeptical than Hayek of the possibilities of market failure and externalities, or of government’s capacity to respond to them.
Andrew Koppelman: I take up Friedman, and also my friend Richard Epstein, in that first chapter that deals with Hayek, because their framework is basically Hayekian. They emphasize the virtues of markets. Both of them point to government regulations that are wasteful and counterproductive. Both Friedman and Epstein do a very good job of this, and they are sometimes right. But both of them, I think, are way too optimistic about what an unregulated market will do. They’re less cautious about this than Hayek was.
Geoff Kabaservice: When Hayek’s Road to Serfdom was first popularized in the United States in the 1940s, it appeared in Reader’s Digest. It’s probably fair to say that Reader’s Digest presented a somewhat cartoonish version of Hayek’s thought, shorn of a lot of the qualifications and finer nuances. In fact, The Road to Serfdom also appeared actually as a cartoon in Look magazine, which ends with a firing squad executing an underperforming worker — which needless to say is not really the essence of what Hayek was all about.
Andrew Koppelman: Hayek didn’t make that claim in particular. Libertarianism, right at the start, took both a sophisticated and crude form, and both of them were Hayek. Way more people read the Reader’s Digest version than read the original book. To some extent Hayek is always somewhat misplaced in the United States, because the United States never had anyone who proposed a program like that of the British Labour Party that Hayek was responding to. Franklin Roosevelt flirted with a kind of corporatism at the beginning of his first term, but he had pretty much abandoned that about two years in. After that, he became a welfare state free-marketer, which he certainly was by the time Road to Serfdom was published in 1944.
Geoff Kabaservice: Not to give away too much here, but the book’s title takes its origin from a news story that appeared about a dozen years ago, which is about how a fire department in Tennessee was called to the scene of a house on fire and ended up letting it burn because the homeowner had forgotten to pay his annual fee. You wrote that this decision on the part of the fire department reflected an idealistic but corrupted form of libertarianism. What do you mean by that?
Andrew Koppelman: Well, so the county had decided to essentially privatize its fire protection, so everybody pays for their own, because they were reluctant to raise taxes. And they are still — I talk to people there now who say it’s very hard to get anybody to vote to raise taxes on anything, in any way. I think that that’s a consequence of a generally libertarian mindset in which any taxation is bad.
I think that is not a view that Hayek would have had. Hayek would say, “Well, of course government can act in order to protect people from unpredictable misfortunes such as fire.” So Hayek is not someone who proposed this kind of allowing a house to burn. But I use “corruption” in two senses. In one, it just means distorted in some way; it sometimes means an accidental transformation in which the original message is garbled, as we talk about corrupted computer code. But it also can mean the abuse of authority for personal gain. And I think both meanings are relevant here, because this garbling of the original meaning of libertarianism has beneficiaries.
If you are an industry that wants to pollute — most pertinently for present purposes, if you are an industry that produces or burns fossil fuels — you want free markets. You don’t want any kind of government regulation. You certainly don’t want government doing anything about climate change, because that will cut into your margins. And the role of industry there is not the role that is promised in Road to Serfdom. The best justification for capitalism is a network of transactions between willing buyers and willing sellers; it makes them both better off and produces a web of cooperation that works to the benefit of everybody. But if you and I are engaging in a transaction that hurts third parties, then we’re just another kind of bandit.
And so the corruption that I talk about when I say that it was corrupted by delusion and greed — what I mean is that the ideology of small government attracts two very different groups. There are principled ideologies like the philosophers who I take on in the book — people like Rothbard and Nozick who are driven by philosophical commitment — and predators who want to hurt people without the police interfering, of which the champion is the fossil fuel industry, which is working right now to bring disaster on the whole planet.
Geoff Kabaservice: Yeah. And in fact, a lot of the people who fall into that predator category might also be categorized as crony capitalists or people who seek to capture the state.
Andrew Koppelman: But it’s a distinctive kind of capture. When people talk about “capture,” when libertarians talk about capture, what they generally have in mind is regulations that create barriers to entry, so that somebody who wants to enter a market is blocked by a regulation. And those exist; the Interstate Commerce Commission for a long time made it impossible to set up new trucking companies that carried things across state lines, and it raised prices for everybody, and it was stupid and wasteful. But there is another kind of capture, which is getting the state not to do something that the state ought to do. And this is a familiar kind of corruption. The Mafia commission owned police and judges in New York City in the 1920s, and that’s the reason why the police were being paid just to look the other way, not to interfere with the beer deliveries or in some cases not to investigate murders.
Geoff Kabaservice: So although he’s not wholly responsible for all of the excesses of this corrupted form of libertarianism, the person who’s identified with its turn away from a lot of Hayek’s beliefs is Murray Rothbard. So let’s talk about him. He was born in 1926 in New York City and died there in 1995. He got his B.A. and Ph.D. from Columbia University, where he claimed to be one of only two Republicans in the entire student body. And while a student he attended the NYU seminar of Ludwig von Mises, who was another one of the Austrian School economists, who had actually been Hayek’s teacher once upon a time. But he then took his own form of libertarianism in a much different direction.
Andrew Koppelman: So one of the weaknesses of Hayek is that Hayek doesn’t really know how to talk about rights. He believes in maximal productivity. He thinks that people are going to have more choices if we have free markets. But Hayek doesn’t do rights talk. And Rothbard is all about rights talk. Rothbard starts with the premise that it is categorically wrong for anybody to aggress against anybody else’s persons or property. And then he looks at the state and he says, “The tax man just comes and takes my stuff, which he’s not entitled to do.” And so he ends up being a kind of philosophical anarchist, who’s arguing that taxation is just robbery and there just shouldn’t be a state at all; we should have private protective associations that protect us, and those private protective associations will have an interest in peacefully transacting with one another because they’re repeat players, and we don’t need the state at all.
And he is probably the most influential political philosopher that you never heard of. He had an enormous influence on a number of better-known people. He was the one who persuaded Charles Koch to create the Cato Institute and other libertarian organizations. The most important libertarian political philosopher is Robert Nozick, who came under Rothbard’s sway early in his career. And I try to show in the book that Nozick’s philosophy is really just a mutated form of Rothbard. Another one of his proteges was Randy Barnett, who was the architect of the legal challenge to Obamacare.
And what comes away from Rothbard is the idea that any redistribution is a violation of the rights of the people who get taxed in order to provide the redistribution. Property rights are absolute, and anything that the state does by way of regulation or redistribution is illegitimate. He’s also deeply suspicious of regulation because he thinks that the state doesn’t know enough to regulate, and really, if there are harms to third parties, they ought to just get settled by private litigation. There’s no legitimate place for state regulation.
Geoff Kabaservice: So you first got into the study of libertarianism in a serious way when you were responding to conservative critiques of Obamacare back around 2010. And you found judges who seemingly had invented a constitutional right that an American citizen cannot be compelled to pay for an unwanted service. And this in some ways seems to have descended from Rothbardism.
Andrew Koppelman: Yeah. So this idea that you’ve got a constitutional right not to purchase an unwanted product — it never had been heard of before, but it seems to come out of a basic premise that “Government needs to leave me alone. I can take care of myself.” Which is a strange thing to believe in the context of medical care, where the only reason why medical care ever exists in any context is because human beings are vulnerable. They are not self-sufficient, and they can’t take care of themselves, and sometimes they need the help of specialists to stay alive. That’s just what medical care is. But when I read these judicial opinions — I just happened to stumble across them, because I was asked to participate in a debate. I really do constitutional law about government powers, but I know all about it because I teach constitutional law, and I have to know what I’m teaching my students. I read these opinions and I thought, “This is bizarre. These judges are just making this stuff up.”
And so as more of these opinions came down, and as the case started moving toward the Supreme Court on the basis of a previously unheard-of constitutional theory, I wanted to understand. And since what I do as a scholar is I work at the intersection of law and political philosophy, and my underlying claim in all of my scholarship is, as I said before, “law is political philosophy with guns.” People have a philosophy, and they take vague provisions of the Constitution and they read their philosophy into it. It was clear that there was a set of libertarian background assumptions that these judges were reading into the Constitution. And so to try to understand what was going on, I found myself reading libertarians trying to understand what is this philosophical framework.
So I went back and read Hayek for the first time since I was in college. I had never really read Ayn Rand before, and I read her for the first time. I found that I liked Hayek much better than I expected to, and I found Rand far more repellent than I had imagined. And then I published this book, The Tough Luck Constitution and the Assault on Health Care Reform, that tried to show that the Obamacare challenge rested on this strange libertarian philosophy. And after I published the book, I still had unfinished business. I thought, “I really want to understand… I think I’ve got a story to tell that hasn’t been told about the different varieties of libertarianism that are out there.”
And one of the things that I learned as I was trying to understand libertarianism was that I wasn’t getting much help in the books for the general reader, because they’re all written by fanboys. I mean, there are good introductions to libertarianism, but they are not critical introductions. They are introductions by people who are proselytizing, people who are themselves libertarians, and who I think therefore give you a distorted picture of just what libertarianism is.
So you will get definitions in some of the leading books that will say that libertarianism is the view that each person has a right to live his life in the way he chooses, as long as he respects other people’s rights. Or the idea is to maximize individual freedom. And this loses the specificity of libertarianism. It’s like saying that what defines Protestantism is belief in God. There are lots of people who believe in freedom, and who want to maximize individual liberty, who find libertarianism repugnant and think that libertarianism is a betrayal. And that’s basically my view. I think that if you accept the view of a limited state that is offered by Rothbard or Nozick — or even Hayek, to the extent that he is suspicious of regulation and redistribution — you are going to get a world in which people are not in fact free to shape their lives as they like, where people are subject to oppression by private power.
Geoff Kabaservice: It’s a curious thing about libertarianism is that it in a sense faces both left and right simultaneously, which is why certain aspects of it can be appreciated by those across the political spectrum — sort of like a stopped clock; everyone can agree with it twice a day. So for example, you write in your book that “Rothbard takes the libertarian’s hatred of state oppression to its maximum. He demands a world with no government at all, in which the market rules everything. Even police and legal services should be offered by competing entrepreneurs.” And you can see why many on the right would find that appealing.
But at the same time, he was very important in the formation of the Libertarian Party. And I can quote from its 1972 platform, which repeats some of what you just said: “We hold that no action which does not infringe the rights of others can properly be termed a crime. We favor the repeal of all laws creating ‘crimes without victims’ now incorporated in Federal, state, and local laws — such as laws on voluntary sexual relations, drug use, gambling, and attempted suicide. We support impartial and consistent enforcement of laws designed to protect individual rights — regardless of the motivation for which these laws may be violated.” And in that sense, they actually were decades in advance of even the left wing of the Democratic Party.
Andrew Koppelman: And that was their attraction. And of course, this was a period when the suspicion of government power was accentuated by the Vietnam War and the military draft. And a big part of their appeal at the time… I can remember at the time I was in high school, and I was worried that I was going to get drafted myself in a couple of years. The fact that the libertarians were offering a principled basis for opposition to the draft made them attractive.
Geoff Kabaservice: But at the same time, Rothbard also helped then-Representative Ron Paul write some of his newsletters. And though he wasn’t responsible for the really ugly racist and antisemitic content that crept in with Lou Rockwell when he was writing and editing those newsletters, there’s part of libertarianism that kind of acted as a gateway drug for a lot of people into the alt-right, as we would now call it. And you said that a lot of Rothbard’s positions anticipated both the alt-right and Donald Trump.
Andrew Koppelman: Yep. Now in fairness to Rothbard, Rothbard’s philosophy does not depend on racism in any way. And you can read his major works and they’re completely untainted by racism. On the other hand, he liked anybody who resisted government power. So he liked the Black Panthers and he liked David Duke because both of them were opposed to government power. And there are some aspects of libertarian rhetoric…
So a theme that is particularly prominent in Ayn Rand: “The productive people shouldn’t have to support the moochers who want to live off everybody else.” Now, American racists know who they think those people are. And for American racists, that term — “moochers who live off everybody else” — they immediately think, “African American welfare queens.” That’s what it means to them. And so this kind of rhetoric has appeal to folks over on that side of the spectrum, even though the writers themselves — Ayn Rand repudiated racism. She believed in individualism and she believed in the individual dignity of everybody and she was quite explicit in rejecting racism. But that doesn’t mean that some of her rhetoric isn’t handy to people who are trying to put forth that view.
Geoff Kabaservice: So I realize this is basically an unanswerable question… But to what extent do you think that the adoption within the Republican Party of Rothbardism over Hayekianism was related to the Republican Party’s turn toward the former Southern Democrats and the use of the Southern strategy and other basically racial strategies in terms of making the party more conservative?
Andrew Koppelman: Well, the fact that welfare provision is so much less generous in the American South is certainly related to distaste for its beneficiaries, and the sense that the people who are the least well off deserve it, which is an idea that is more associated with Rand than with Hayek. And Rothbard’s hostility to anything that the state does is going to come in handy if you are opposed to the expansion of the state that’s associated with the Great Society, which disproportionately is supported by and disproportionately benefits African Americans.
Geoff Kabaservice: You point out that those on the left don’t particularly like Ayn Rand, but they actually agree with her and Rothbard that the essence of capitalism is what they describe: that it’s basically heartless, that it’s against all forms of regulation and redistribution, and therefore, as the left would conclude, it’s unjust. But you would think that the business community would’ve known better than to embrace Rothbardism, because the business community knows to what extent, for example, infrastructure and the rule of law are vital to actually productive capitalistic enterprise.
Andrew Koppelman: Well, the business community is divided on this. And the ones who are angry about regulation, they seem to have been more active. I mean, you saw the split in Biden’s infrastructure bill, which some Republicans voted for. The other thing that has turned the Republicans against regulation is that among the various factions within the party, Charles Koch leads one of the best organized factions. And so there are states that badly need road and bridge repairs, and getting the infrastructure spending really would be good for business in those states. But if a bill comes up in the state legislature and Americans for Prosperity comes into a legislator’s office and says, “You vote for this and we are going to give half a million dollars to your opponent,” and that’s all it’s going to take to beat you — that can be quite intimidating. And it’s a familiar fact about politics that organized interests tend to defeat unorganized majorities. And so Koch’s political skill and deftness — that organization, particularly at the state level — is one of the reasons why the United States has underinvested in infrastructure.
Geoff Kabaservice: You clearly have been working on this book for a long time, and you write that libertarianism in its philosophy of a minimal state government is “an increasingly influential philosophy,” particularly within the Republican Party. But I am just recently coming from the National Conservatism Conference in Miami, which explicitly rejects libertarianism and seeks to cast libertarianism and neoconservatism out of the conservative movement. And you hear in people like Tucker Carlson this view that libertarianism may have been useful for a moment under Ronald Reagan’s period, but now it actually is harmful to the interest of the family and that capitalism and big business need to be harnessed.
The keynote speaker at that conference was Ron DeSantis, who has shown a very un-libertarian eagerness to try to push around corporations like Disney and the cruise ship enterprises. And Donald Trump also was only fitfully libertarian, I would say. I think he kind of subscribed to certain Ayn Randian ideas, but at the same time he cast himself as a populist and an enemy of woke capital. So how influential do you think libertarianism still is in the Republican Party and more generally?
Andrew Koppelman: So the big shift that happened, and I think the great discovery that Trump made in his election campaign, was that he was talking about creating lots of good jobs, and Hillary Clinton was not talking about that so much. And so about half of the American population who do not go to college, and who have been made so much worse by economic developments in recent decades, voted Republican. So the Republican Party has got a polity, and so that’s a reason to support industrial policy and economic intervention of a kind that is not particularly Reaganish.
On the other hand, Trump didn’t really deliver anything to those folks. If you look at what he actually managed at a policy level to deliver, he managed to deliver massive tax cuts for the rich, which was very Rothbardian. He almost delivered a massive cutback of Obamacare, targeting the redistributive aspects. So if the Obamacare repeal had gone through, you would’ve had another massive tax cut for the rich. It turned out that that was too extreme for a lot of Republicans, and so that’s why the repeal failed, because it’s hard to vote for just outright taking health insurance away from 20 million people. That’s not what Trump campaigned on. He said he was going to replace Obamacare with something better and cheaper.
And the other big thing that he did that was less prominent was massive cutbacks of regulation: firing experts in regulatory departments across government, replacing cost-benefit analysis (which regulations have been subjected to since the Reagan administration) with an analysis that only asked how much this is costing industry — and if it’s costing industry something, even if the benefits massively outweigh the costs, if it costs industry too much, we weren’t going to do it — which is just pure capture on behalf of the rich combined with small-government ideology. So I think that conservatism today has got a problem.
When I talk to conservatives, they tell me, “Oh, libertarians are now on the outs. Nobody really listens to libertarians anymore.” But when I look at the kinds of policy that actually get delivered, in practice, Trump was very Rothbardian. And I think that he was right that the fact that Clintonism had not served the working class as well created an opening for Republicans, and maybe some other politician will deliver on it. But you actually have to be interested in industrial policy that helps those folks. And so it was a combination of the fact that the libertarians were better organized, and their ideology was better developed, and then the fact that Trump just wasn’t competent enough to deliver on those policies and didn’t really care enough to put people in place who were going to do something that would benefit those folks.
Geoff Kabaservice: Yeah, it’s a kind of inconsistent, cafeteria libertarianism, perhaps, that Trumpism partakes of. Your final chapter is about the COVID pandemic, when you were writing this book. And you point out that Trump did engage in a certain kind of corrupt libertarianism in the sense that he was smashing these structures of pandemic forecasting and international cooperation which might have limited the spread of COVID. And of course there was the resistance to masks and vaccines in the name of individual liberty, partaking of this kind of emotional libertarianism, heroic individualism: “I can take care of myself. I don’t need to depend on anybody.” And you say that that’s ultimately a delusion that we’ll have to get past.
Andrew Koppelman: Yeah, and I think that if I just go back to the literary appeal of libertarianism, the idea of self-sufficiency and invulnerability — it has a real appeal. And there were people who believed it. And so they resisted vaccination, even though vaccination was readily available, because it was inconsistent with that narrative. And they died in large numbers. The other lesson of COVID — and the place where Trump wasn’t libertarian, and the best thing about his administration — was massive public spending on a public good — in this case vaccine research — which is something that the market could never have done on its own because the research was too risky. The only reason why we got a vaccine was because there was massive, centralized spending on really risky research that paid off.
Geoff Kabaservice: And again, one of the senses that I come away from your book with is the need for balance, which is kind of a moderate quality in its way. Government bureaucracies can deserve all of the opprobrium that libertarians heap upon them…
Andrew Koppelman: The Centers for Disease Control, it was a story right out of Milton Friedman. When COVID first arrived, you could only use their tests. They wouldn’t let anybody develop any other test, because they thought that they knew best. And the story about stupid interfering government bureaucrats turned out to be absolutely accurate. Their test was no good, and they blocked any competition. And as a consequence, the disease spread far more rapidly than it needed to because there were no good tests in the United States — because the stupid bureaucrats interfered. That really was the case.
So you got both the pessimistic story about big government and the optimistic story about big government simultaneously vindicated, which I take to teach us that both stories are right some of the time. And anybody who tells you that either story is right all the time has too crude of view of reality.
Geoff Kabaservice: So would your friends on the center-left in the Democratic Party benefit from reading Friedrich Hayek? And would my friends on the center-right in the Republican Party benefit from reading, let’s say, John Rawls?
Andrew Koppelman: Yeah. Well, if you are interested in Rawls… One argument that libertarians are a fond of making is a sort of Lockean social contract argument: “The state is just there to protect people’s persons and property and it mustn’t do anything else. It violates our rights and exceeds its authority when we do anything else.” And John Rawls’ objection to John Locke is that if a social contract is entered into under fair conditions, then it’s indifferent to whether people are born in fortunate or unfortunate circumstances. Everyone has to have a reason to participate and a reason to respect the property rights that are created. And that is going to entail some redistribution, because unregulated markets are not going to create a regime that everyone has reason to support.
If you are a Rawls wonk and you want more detail about this than appears in my book, I have a piece in National Affairs recently that really gets into the Rawlsian arguments and tries to show that Rawls doesn’t really appreciate the merits of capitalism, but some kind of social contract approach of the Rawlsian variety is necessary if you’re going to justify the inequalities that capitalism inevitably produces. The great attraction of a welfare state is that everyone, even the worst-off person, has a reason to support it.
Geoff Kabaservice: And speaking of the possible negative outcomes, you actually wrote a piece for us last year called “Socialists for Capitalism” — a provocative title.
Andrew Koppelman: Right, on the Niskanen Center blog.
Geoff Kabaservice: That’s right. But you concluded there that neoliberalism is unsustainable. It must collapse either into a more generous social democracy or into authoritarianism. The losers must be either accommodated or crushed. Is that a position you still hold?
Andrew Koppelman: Yep. It’s another piece that spun off from this book. In that piece, I tried to engage directly with writers on the left more than I did in the book, which is really about libertarians. And I argue — it’s still my view — that if you want to take care of the people on the bottom, you want a variety of capitalism. I think capitalism is a term that is sometimes used too crudely, as if it were just one thing. Actually, there are a variety of capitalisms.
You can have pure laissez-faire capitalism, in which if you get sick and you can’t pay for it, it really is your tough luck. Or you can have a pretty robust welfare state — which isn’t inconsistent with capitalism. Some of the most robust welfare states, the Nordic countries, simultaneously have a really generous welfare state and more billionaires per capita than the United States. So it is possible to do them both at once. And that seems to be the best kind of regime for people to live in, one in which everyone is able to live in respectful relations with everybody else because everyone has a reason to support the laws that govern them all.
Geoff Kabaservice: I particularly liked an order you issued to your fellow leftists, which was that “The word ‘socialism’ has too many meanings to be useful. Stop using it.” Alas, they have not yet heeded you.
Andrew Koppelman: Well, that’s right. Because when Bernie Sanders says he’s a socialist, he doesn’t mean that he wants to nationalize the means of production, he means that he wants a very generous welfare state. But when he uses the word, lots of people hear that and they think, “Oh, you are Leninist.” And so it just creates unnecessary confusion.
Geoff Kabaservice: Well, Andy Koppelman, thank you so much for joining me today. And congratulations again on Burning Down the House, which is a really creative, important contribution to our political dialogue.
Andrew Koppelman: Thank you. This has been fun.
Geoff Kabaservice: And thank you all for listening to the Vital Center Podcast. Please subscribe and rate us on your preferred podcasting platform. And if you have any questions, comments, or other responses, please include them along with your rating or send us an email at contact@niskanencenter.org. Thanks as always to our technical director Kristie Eshelman, our sound engineer Ray Ingegneri, and the Niskanen Center in Washington, DC.
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