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Should Businesses Have the Right to Discriminate Against Homosexuals?

This is an immensely important article by Dr. Sean Gabb of the Libertarian Alliance. He provides a nuanced discussion of the conflict between vulgar libertarians who defend any existing set of nominally private economic arrangements as “free enterprise” and left-libertarians who end up taking positions not particularly different from those of social democrats. My own position on discrimination law is this: Small businesses, companies that are for the most part genuinely private, and private associations of a non-commercial nature should be allowed to discriminate for whatever reason they wish. However, government agencies, publicly owned enterprises and mass corporations that are clear net beneficiaries of statism should not be able to engage in discrimination of a clearly invidious nature.
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My own view is that, while the arguments put forward by Roderick Long and Kevin Carson, among others, cannot be dismissed out of hand, we should be very cautious in applying these arguments. Where state welfare is concerned, I, for one, will accept their arguments. We have a ruling class that has pretty well monopolised the means of production. Welfare is a drug – paid for by those outside the ruling class and with incomes worth taxing – to and to anaesthetise those at the bottom to what they have lost. There are libertarians who can sit looking though a plate glass window in the Kings Road and announce very grandly that there are always jobs available for those willing to work. Really, though, the choice for many is state welfare or taking a job on minimum wage that works out to a net gain, after tax and job expenses, of £10 or £20 a week. It may be in someone’s long term interest to take the job. On the other hand, the long term can be a long time in coming. At the same time, it is difficult to go off welfare and then, if the job folds, go straight back on at the old level of benefit. It may be a rational decision to avoid the risk. It is not an unreasonable decision. I say then that we should private first and cut welfare afterwards.

Oh, and when I talk of “privatisation,” I do not mean the Thatcherite switch from a less to a more efficient mode of rent seeking. I mean a radical attack on the sources of corporate privilege. Welfare is bad for all manner of reasons. It is a heavy burden on the middle classes. It pauperises the lower classes. The only real beneficiaries are a ruling class that has bought the quiescence of those who might otherwise turn into a screaming mob. But it really is one of those secondary controls to mitigate the working of primary controls.

The Necessary Coincidence of Principle and Pragmatism

This being said, I do not accept the wider applications of the arguments. Just because someone is regulated does not make him a net beneficiary of state privilege. Just because he is regulated does not mean that he has consented to the regulation. Just because he is regulated does not make further regulation legitimate.

The John Snow public house has a licence to sell alcohol. This may make it a net beneficiary – though it may not. Certainly, however, its licence does not give it a monopoly privilege. There is no shortage of other pubs in Soho. Because no one who wants to drink is obliged to drink there, the pub should not be prevented from discriminating. The John Snow public house does not operate in a free market. But it does operate in a market sufficiently free for the usual libertarian defence to apply. If the licensing laws were so strict that it was the only public house within a ten mile radius, the case would be different. But there is competition.

In the same way, I should not be subject to regulation in my teaching methods – subject, of course, to whatever my employers and customers might demand. In the same way, I think the example of the pharmacist is wrongly argued. There are very few places – at least in England – where there is no choice of pharmacists. We should argue against all occupational licensing, but also be prepared to defend the right of the licensed to run their businesses as they please.

Very big companies like Tesco may be an exception to this rule. On the other hand, we are talking about corporatism, not state socialism. In the Soviet Empire, entrepreneurship did exist, but was confined to the margins of a system where production and pricing decisions were made and enforced at gunpoint. In England and America, most large companies are state-privileged trading bodies. But they also survive and flourish in part because they make the right entrepreneurial decisions. If Tesco is allowed to externalise many of its costs, it is also a success because it gives us what we want. If it makes mistakes – as, for example, in its American venture – it has to bear the costs of failure. It is part of a state-privileged cartel, but is also in fierce competition with the other supermarket chains.

I agree that the scales are systematically tipped in favour of big business. But I do not agree that this justifies the kind of regulation that is often accepted by the left libertarians. Actually existing markets do produce obvious dynamic efficiencies that would only be reduced by further regulation. Moreover, these further regulations only raise up oppressive bureaucracies that result in a less libertarian outcome than simply putting up with the facts of privilege.

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4 replies »

  1. Thanks for reposting this, Keith, and for your very kind comments. I think I agree with your solution to the problem, though am interested to hear all else that can be said on the issue.

  2. I agree that the question of what kinds of policies we should advocate or accept within the context of the institutions and economic arrangements we actually have is a very important one. For too long, I believe “vulgar” libertarianism tended to dominate much of the debate. Carson, Long, Chartier and other “left” libertarians are a necessary correction to that, I believe, but it also seems to me the left-libertarians go a bit overboard in the other direction at times.

    I agree that strategically and pragmatically it’s necessary to focus on the abolition of corporate welfare, central banking, and other kinds of plutocratic privilege before we focus on the abolition of the social welfare system. Not only does this seem more just, but I would also suspect that it would be a necessity in terms of gaining the political support of the public at large.

    I would take a similar approach to some other issues as well. For instance, given the realities of our present economic arrangements, I’m suspicious of the efficacy of “free trade” of the kind many libertarians who are more mainstream than myself push for. I think a case can be made for a cautious economic nationalism given the nature of the international plutocratic order. I also tend to agree with the arguments of Milton Friedman, Peter Brimelow, Hans Hermann Hoppe and others that “you can’t have open borders and a welfare state.”

    But I’m very suspicious of trying the apply these kinds of analysis to social issues or domestic policy more generally. If we do that, it’s seems there is no stopping point. For instance, some socially conservative libertarians say that drugs should not be legalized until the welfare state is abolished (something that may never happen). The left-libertarians seems to be going in the same kind of direction with anti-discrimination laws and other forms of leftist-inspired social legislation. If we go in that kind of direction, it seems to me there’s no stopping point and, ultimately, libertarians become no different from either ordinary conservatives or ordinary leftists, depending on their cultural orientations or economic preferences. What then becomes the point of libertarianism?

  3. We live in different countries, and post-revolutionary strategies would need to different in each. Where foreign trade is concerned, I suspect that ending transport subsidies and other forms of corporate welfare, and ending regulations on small business, would quickly reduce the nature and extent of trade. Because we just don’t know what a natural order would look like, it’s impossible to know for sure how much present trade is free and how much is driven by the state.

    No doubt, however, we want a free society, and we don’t get there by aiming at Tesco minus the State.

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