Is Capitalism Incompatible with Libertarianism?
March 2, 2018
The answer is “Absolutely not!” A private property system is perfectly compatible with all the well-known facets of a libertarian society.
Yet there appears an article on a libertarian website (The Libertarian Institute) that claims the opposite.
How did the author, Craig Cantoni, achieve this inversion? He did it by taking a reasonable definition of capitalism and then embedding it in a non-capitalistic historical context, namely, the context promoted by Alexander Hamilton. Only by declaring Hamilton a capitalist and by linking the term capitalism to a long train of Hamiltonian anti-capitalistic laws was Cantoni able to arrive at the false conclusion that capitalism and libertarianism are incompatible.
Cantoni gives us a very good summary of what libertarianism entails and he even defines capitalism in an acceptable way, but then he crosses the line into left-libertarian drivel. How? He links capitalism to a specific history; but this is not necessary to analyze the question, and it simply confuses the issue. To answer such a question, we have to analyze matters by sticking to clear definitions, understandings (theory), and methods of separating different causes and linking them each to their different effects. It is of no help in answering such a question to accept historical developments as defining the systems we are analyzing.
The clue to Cantoni’s left-libertarian thought appears in one brief phrase in which he mentions that capitalism in its historical development depends on “especially the state-sanctioned advent of the corporation.” This charge is false. It blurs the distinction between a corporation that fits into a libertarian scenario of voluntary association and one that does not, by obtaining state-enforced privileges. Capitalism doesn’t entail the granting of privileges by the state.
Are we talking about limited liability without bringing it into the open? Indeed, we are. In a free market, a corporation can fashion its securities with limited liability for their payoffs and offer them for sale. No state-enforced law of legal liability is essential to this important feature of a corporation.
Cantoni writes of Hamilton that he advocated a “great nation”. “And finally, a great nation had a large tax base to grow government revenue, so that the power and reach of government could expand and facilitate economic growth while subsuming individuals to the common good. In other words, Hamilton was a capitalist.” And later: “Hamilton personally participated in ending the Whiskey Rebellion.”
Instead of seeing Hamilton as the anti-capitalist and anti-libertarian that he was, Cantoni sees him as a capitalist engaging in anti-libertarian measures. Ergo, Hamilton becomes his poster boy for the incompatibility of capitalism and libertarianism.
But does a true capitalist stand, as Cantoni characterizes Hamilton, for using the “power and reach of government” to “facilitate economic growth” while running roughshod over “individuals” for “the common good”? Does he stand for “a large tax base”? Of course not, because such Hamiltonian beliefs are incompatible with private property. Hamilton was anti-capitalist in that he favored a state-conditioned economy, which meant state intrusions upon private property.
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