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.
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.