The Libertarian Welfare State

Abstract

This review essay, occasioned by Robert Frank's new book titled The Darwin Economy, elaborates and celebrates the author's unique, positional-externality-informed blend of Millian libertarianism, Coasian bargaining, and modern social contract theory. The essay begins by first noting that Americans' cherished value of liberty is a multidimensionally relational concept, such that your being free - as against me or others - to do this or that always entails both (a) your not being free, once you have done this or that, to do what this or that physically forecloses, and (b) our not being free - as against you - to impede your doing it. Liberty thus always comes at the expense of liberty. But this means that optimizing the quantum of liberty in a life or in a society always involves working tradeoffs of liberty for liberty, meaning in turn that appeal must be had to some normative principle additional to liberty if we would determine which liberties 'outweigh' which in working to 'maximize' liberty. Mill's 'harm principle,' the essay continues, constitutes an early and incomplete attempt to articulate such a principle for the case of a society, while Coasian bargaining - much like early renditions of the normative 'economic analysis of law' that Coase inadvertently inspired - affords some, if but incremental, additional guidance. Ultimately what is required for the social case is an account of distributive justice such as can give content to the notion of Millian 'harm' or Coasean-inspired 'welfare' or 'wealth,' as this author has argued many times elsewhere - and as Frank implicitly acknowledges in arguing from a rendition of the Rawlsian 'original position,' the normative appeal of which lies precisely in its modeling a form of impartiality, when elaborating on what libertarian principles yield by way of a political society. Incorporating, as he does, a keen appreciation of positional externalities and other collective action problems into the picture as only he could, however, Frank also significantly enriches both the Coasian bargaining scenario and the venerable 'veiled choice' social contracting scenario familiar to readers of Harsanyi, Rawls, Dworkin, and other theorists. In so doing he plausibly arrives at some very surprising results, not least of which is the likelihood that libertarians contracting to build a political society from scratch would be apt to adopt taxation and social welfare policies much more redistributive than those that today's vulgar libertarians appear to realize. They would contract, in short, for a 'libertarian welfare state.'