[Opinion] Some Thoughts on Libertarianism and the Current Economic Crisis

Note:

I wrote the following in March, 2009 as a post to an internet discussion group.

I am blogging my old post here unchanged.

My basic view has not changed:

(1) Man is created in the image of God which means man intrinsically possesses freedom and liberty.

(2) Man has fallen in sin and therefore his sinful dispositions and actions need to be restrained.

(3) Government should minimize laws and regulations to promote freedom and liberty.

(4) Government should also maximize laws and regulations to restrain man's sinful dispositions and actions.

(5) How many laws and regulations a government should enact requires wisdom to balance these two basic oppositional constraints.

(6) But after what happened in the financial crisis of 2007–2008, I find those who advocate an unrestrained free-market to have little credibility.


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1. Among contemporary non-Christian political philosophy, I have the most sympathy for Libertarianism: the valuing of individual liberty, free markets, private properties, and limited government.


2. These values are interrelated and tend to reinforce each other.

Individual liberty leads Classical economists to postulate the existence of "economic man": economic agents that only act in his own rational self-interest.

The doctrine of the "invisible hand" justifies the existence of free markets under the constrain of economic man: "in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole." ("Invisible hand", Wikipedia)

Private property rights is a precondition for the existence for a free market - i.e. without private property rights, a free market would not exist.

A property is a "private property" if the owner of the property has: "(1) the right to exclude others so that he alone may decide on its use, (2) the right to extract exclusive income from its use, and (3) the right to transfer the property (including labor) to or to exchange with anyone he sees fit." (Steven N.S. Cheung)

A market exists whenever one or more persons exchange goods or services of value.

And in order for a market to function freely and efficiently, there should be a minimum of interferences by civil government in the operation of markets.


3. I was struck by Alan Greenspan's testimony before the U.S. Congress last October: "As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."

It seems economic man is not that rational after all.

Economic man seems to be willing to sacrifice his long-term interest for short-term gain.

And in doing so, economic man has acted to the detriment of the community as a whole - contrary to the doctrine of the Invisible Hand.

And government has failed to restrain economic man by providing the needed regulations.


4. The current economics crisis that originated in the U.S. may be viewed as a failure:

(a) of the doctrine of the invisible hand, and

(b) of the government to regulate the markets.


5. I too value individual liberty.

I believe individual liberty is a gift from God.

So consequently, I too value free markets, private property rights, and limited government.

But I differ from the Libertarian in that I also belief in the reality of sin.

From the Bible I learned that man has fallen into sin and therefore possesses a sinful nature.

Therefore, I believe that:

(a) man is not always rational, and

(b) civil government is necessary to regulate the affairs of man in order to restrain sin.


6. Gordon H. Clark, "Human Nature and Political Theory" (circa 1970) reprinted in [Essays on Ethics and Politics (1992)], pp.122-3:

The result of Adam's sin is the total depravity of the human race. Instead of loving and obeying God, men naturally hate God. Instead of always acting rationally, they often act irrationally.
...
 
Therefore, civil government, though it be an evil in that it restricts men's liberty, is a necessary evil because men at liberty are dangerous. The Old Testament too says that God ordained civil government for the good of sinful men. The New Testament specifically upholds the government's power of taxation and of waging war and executing criminals.

But there is one tremendous difference between Christian and pagan politics. The pagan theories are totalitarian. The State is supreme. But King Ahab in the Old Testament was condemned by God for stealing private property. The King did not make the law, nor could he change it. Theft and murder are condemned by the laws of God. Therefore in Christian theory there are some things a State ought not to do.

This is, of course, consistent with the view that all men are totally depraved. Government is necessary because anarchy with evil men is intolerable. But the rulers also are evil and need to be restrained. Power always tends to corrupt, and absolute power corrupts absolutely.

Civil government is not God's only method of restraining sin. ...


7. I believe in liberty for human persons because liberty is a gift from God.

I believe in limited liberty for human persons because human persons are sinful.

Therefore, I believe in maximizing liberty for human persons subject to the constraint of the reality of sin.


8. I believe in free markets because I believe in liberty.

I believe in civil government regulating markets because I believe in the reality of sin.

Therefore, I believe in minimizing civil government regulating markets subject to the constraint of the reality of sin.


9. Government is instituted by God to restrain sin.

Government is itself make up of human persons who are themselves sinful.

Therefore, I believe in minimizing the functions and size of government subject to the constraint of the reality of sin.


End.