a few good libertarians?

by Brian on July 8, 2003

It seems like it is Nozick-bashing day Down Under. First Ken Parish links to his favourite online criticisms of Nozick. Then John Quiggin follows up with a different criticism. Quiggin’s argument is that given some plausible assumptions about history, we can justfy (heavy) taxation even by Nozick’s lights. Premise one is that Nozick agrees that if one person, say the king, or one group, say the parliament, owned all the land, then they could justly charge rents on all who inhabited that land. Whether we call these taxes or not doesn’t change the fact that they are justified. Justification does not turn on whether something is called a rent or a tax. Premise two is that at some stage the land was owned by some such person or group. Premise three is that current states can be construed as owning the land they govern because they traded for it with the previous owners. Conclusion, all taxes are justifiable rents.

Quiggin illustrates premise three with a little folksy history of property law in Britain. It goes something like this. Once upon a time there was a king called William who owned everything and leased some of it out under various conditions, including the right to sublet. Later his heirs agreed to not change the annual rents without the approval of a body corporate of the renters. Later heirs transferred ownership to the body corporate (which continued collecting rents from lease-holders) in exchange for some nice palaces and a comfy annual payment. The body corporate expanded its membership to include everyone. Thus the modern state.

Now this isn’t meant to be a justification for any kind of taxation. A good libertarian could take it to be a reductio of Nozick’s views. Or they could take it to be an argument for emigration to some country where there is no such Nozickian defence of taxation available to the government. Quiggin thinks their hopes will be disappointed. He thinks "that given any plausible starting point, Nozick’s approach leads to the conclusion that the status quo, including taxes, regulations and other government interventions is just". But it’s hard to see how we can defend a version of premise three for all countries, or even for most countries. Indeed, at the end of the just-so folk history, we get the following conclusion.

The general implication is that, in any society with a constitutional history, the only set of property rights that can be supported by a Nozickian analysis is the status quo, including state powers such as the power of eminent domain and the power to tax. (My emphasis)

But many countries don’t have constitutional histories in the relevant sense. The various revolutions of 1776, 1789 and 1989 constiute decisive breaks in the stories of the revolting countries, as did several of the 1848 revolutions. We might be able to provide a chain of ownership from William the Conqueror to the people of Britain for the lands of Britain (provided we squint a little around 1649) but a similar story for Poland will be hard to tell.

That’s not to say it isn’t a lot of fun tweaking various libertarians from time to time. And Quiggin may still have an argument against Nozick, just not the one he intended. If his principles allow for unfettered taxation in Britain but not in Poland, that’s probably absurd enough to overthrow the theory. (Which is not to say, as several commentators on Ken’s site noted, that libertarianism itself is damaged. Lots of good theories have bad defences.) The whole thing reminded me of my favourite passage from Locke.

140. It is true, governments cannot be supported without great charge, and it is fit every one who enjoys his share of the protection, should pay out of his estate his proportion for the maintenance of it. But still it must be with his own consent, i.e. the consent of the majority, giving it either by themselves, or their representatives chosen by them: for if any one shall claim a power to lay and levy taxes on the people, by his own authority, and without such consent of the people, he thereby invades the fundamental law of property, and subverts the end of government: for what property have I in that, which another may by right take, when he pleases, to himself? (My emphasis)

As my colleague Dave Estlund once remarked, in the highlighted section Locke goes from being Newt Gingrich to Teddy Kennedy without drawing breath. (I would have said John Hewson to Jim Cairns.) The point is not that Locke was abandoning his individualist principles here. The point rather is that once we allow for any kind of collective bargaining at all, even completely voluntary collective bargaining, the terms of the social contract could end up looking a lot like familiar states. Some might think this was a good reason for libertarians to not rest too much weight on Lockean arguments, or anything like them.

{ 10 comments }

1

Chris Bertram 07.08.03 at 10:05 pm

“Premise one is that Nozick agrees that if one person, say the king, or one group, say the parliament, owned all the land, then they could justly charge rents on all who inhabited that land.” Obviously we need to interpolate a “justly” before “owned”. Now Quiggin claims that Nozick doesn’t interest himself in the justice of original acquistion. Even without my copy of ASU to hand I know that’s false, since Nozick requires such acquistion to be consistent with his modified Lockean proviso. Nozick’s proviso is pretty weak, and without consulting my copy of ASU I can’t be sure that it would necessarily violate it for William to acquire all the land in a territory as large as England. But if this is the problem, the natural way for N to go is surely to strengthen the proviso somewhat. He could also look at limiting the right of bequest (not plausibly a natural right because of its dependence on legal fictions). Those two moves would shift Nozick somewhat in an egalitarian direction, but he’s surely going to do that before conceding the Quiggin case for statism.

2

Pathos 07.08.03 at 10:09 pm

The difficulty with Libertarianism is that the inviolability of property rights is something that everyone agrees on, but there is no a priori definition of “property rights.”

A good starting point is that you can do whatever you want, as long as it doesn’t hurt anyone, but everything hurts someone a little. Building on my land decreases the available land for drainage. If everyone paves their land a little, we get floods. In 1776, no one had heard of a 50 story building. Building one now cuts off access to the sun to my neighbors. Was the right to build a 50 story building inherent in the initial land purchase? What bargain would the original sellers make? We don’t know.

Libertarianism today is less a philosophy than a political movement. The answer to “how many rights” is “more than we have now.” There can be no ‘moral’ defense of the position — only pragmatic ones. Not to say that the pragmatic ones are worthless, just that the attempt to turn libertarianism into a coherent philosophy is doomed to failure.

3

John Quiggin 07.08.03 at 10:12 pm

I don’t think revolutionary changes of government help Nozick very much. In most cases, the new government takes over the property rights and obligations of the old one, including debts, powers to tax etc. We can just start the clock at the most recent revolutionary change, ignoring (as Nozickians must) the legitimacy of the acquisition, and the argument works as before.

But, given the fact that support for Nozickian libertarianism is confined almost completely to the English-speaking world, an argument that works only there is fine by me.

4

John Quiggin 07.08.03 at 10:22 pm

Chris, I agree that it’s an overstatement to say that Nozick says nothing about justice in acquisition, but as other critics like James Hammerton he gives nothing that would amount to a coherent account, and encourages the view that the problem may be disregarded as far as the property rights that currently prevail in capitalist societies are concerned.

5

Brian 07.09.03 at 1:06 am

Sorry about this

I just wanted to point out that anyone with IE who has their text size set to large or extra large has problems loading the page because the text runs with the people in the lumber room.

I’m glad you people got together for a blog, it will be on my daily list once that problem gets fixed.

6

Perry de Havilland 07.09.03 at 1:10 am

Nozick’s are the weakest arguments for the whole libertarian edifice so don’t congratulate yourself all too much on hitting such a large slow moving target.

See http://www.libertarian.co.uk/lapubs/philn/philn039.pdf for an en-passant skewering of Nozick.

Likewise you really need to say what sort of libertarianism is being discussed before describing its vulnerability as property rights.

7

Brian Weatherson 07.09.03 at 2:29 am

I agree with Perry that objections to Nozick aren’t objections to libertarianism as such. Indeed a real refutation of libertarianism would need a much more sophisticated discussion that I’ve attempted here, being much clearer with the definitions and covering the vast variety of arguments for various libertarian positions. Bit too much for one blog post, even on a blog like this. That was all part of what I tried to say with the little quip that good theories (unlike good football teams) can have bad defences.

8

dan 07.09.03 at 3:59 am

I’ve gone many rounds with some very smart libertarians on precisely this aspect of Locke’s theory of taxation and consent. Brian is precisely correct: the important point is not that Locke contemplated the welfare state, but that his notions of property and consent do not preclude it.

I think the more interesting issue that derives from Locke is whether it is really possible to argue that the right to property is presocial (or, at least, pre-social contract). Locke, after all, has to essentially abandon the labor theory when he describes how property works in civil society. Some of his contemporaries were even more explict, arguing that any “right to property” founded on, for example, the right to survive in the state of nature was merely an analogy for the right of property in civil society.

I understand that there are major strands of libertarianism that eschew natural law doctrine, but it seems to me that Locke’s difficulties in this regard create serious problems for any claim that property rights are inviolable.

9

dan 07.09.03 at 4:00 am

Ooops, should have been Chris… My bad.

10

P.M.Lawrence 07.09.03 at 7:54 am

Well, after looking at his blogsite I’m not so sure that JQ’s view is that cut and dried. But just addressing this version, I see the following:-

- Premise one is a tautology. It isn’t just begging a question though, it is rearranging one by defining our terms.

- You shouldn’t call these charges taxes but rents; while it makes no difference to a straight economic analysis, it does make a difference to people’s experience, i.e. whether they have the feeling that something is being taken for nothing. As a rent, they experience it as a present payment for a continuing benefit arising from a past quid pro quo. Whether you consider it a mere psychological illusion is irrelevant; what counts is how they react to it (not by calling it “theft”, unless they are full blown Georgists).

- Premise two can be stipulated for the sake of argument, only to find…

- …that Premise three has no basis. It is a non sequitur in itself, and it assumes that rights of recovery were retained, that reappropriation is not expropriation. Interestingly, JQ did explicitly state that; his version is complete. But either way, to take these things without compensation – or take them back, whichever – is to expropriate an interest in them, if only the value embedded in the land and not the land as such.

Now for my own thoughts. I’d like to use the word “equity”, but it is used for both “fairness” and “title”, and here I want to distinguish between them so I’ll use the last two.

One of the most catastrophic means of raising revenue is just to print money. Yet from a fairness point of view, it is almost the only one that isn’t a “taking” in the tax as opposed to rent sense (yes, it does deprive people of value they hold, but only in a “whose face is it on the coin” way, a way that like rent they already conceded and do not feel directly – whereas even an indirect tax is direct at the point of impact or legal incidence). There are minor exceptions, as in the sale of Crown Lands, but those only work when you have them to sell – and that is drawing down capital. Revenues from mines, classed as royalties on stocks belonging to States, are of this sort and material though insufficient in some places even today.

But the two can be combined. Just as capital in Alaska was ploughed into a revenue earning portfolio, so also “printing money” can be applied to building up a revenue yielding portfolio of assets. Yes, I know the fallacy of composition means that governments can’t build the same type of portfolio as Alaska did if they all try, and also that Alaska is passing on costs of maintaining property rights in investments to a wider framework, but bear with me.

Precisely this was done by the Dutch when they introduced their “cultivation/culture system” in the East Indies. They had run the place extensively on a raid or trade basis until the British interregnum during the Napoleonic Wars, but that inspired them to build on the more intensive British methods that were modelled on the “ryot” middleman tenancy system in India. The Dutch reorganised everything so that peasants had to put aside a proportion of agricultural production into cash crops, and they organised middlemen to distribute and process it for the “home” market. The interesting feature from our point of view is that they financed it by an issue of new copper coinage, depreciated at a two for one rate to earlier values. This was a one off, like the French post 1918 return to the gold standard at a two for one rate to earlier values that Keynes considered a better compromise, and instead of going to current needs it all went to building up a revenue source. Clearly this shows that the trick can be done, if only the asset class itself is created (this bypasses flooding the investment base and causing asset price inflation – I said to bear with me).

The Dutch probably got their financial insights into using depreciating currency to acquire assets from the French Revolutionary period practice in occupied Holland and Northern Italy, where assignats were used to “evacuate” resources. The tradition is much less well known in the English speaking world, where we mostly know printing money as an expedient for current emergency needs and not for transforming a situation. Even so, Marx suggested using “debauching” the money as a way to marginalise the bourgeoisie. And we have modern examples in how the French maintained cheap assets and resources in North Africa, and later on how the Nazis did the same to Vichy France (and through that to North Africa too).

This whole thing may well be happening right now through the USA exporting inflation by exporting a surplus of printed reserve currency. However they are only getting current consumption, while it is the middlemen who are passing the buck by buying assets elsewhere – like here. That is why there is a problem with the free flow of capital that globalisers want; it isn’t all real but some is only nominal, and it is allowing our own revenue earning assets to be acquired without a 100% matching inflow of real wealth. For us it is even worse, since we have the absentee landlord problem that Nassau Senior showed hits primary producers harder than industrial exporters; with less of the downstream value chain, there is a multiplier and we have to remit correspondingly more to service our obligations.

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