Overcoming a Catch-22 on the Path to Greater Liberty

A world with greater liberty doesn’t just mean less government, it means better institutions of governance in its place. At last week’s Harwood Graduate Colloquium, hosted by AIER, students and professors discussed the nature of such institutions. Many people assume less government means chaos or one group of people dominating another, but the colloquium participants offered concrete examples and proposals for institutions that are less coercive, more robust, and more adaptive than the government we have today.

In thinking about how we might achieve this vision, I ran into something of a catch-22. Reducing the size of government as we know it requires clearly articulating what would exist in its place. But we can’t know exactly what would exist in its place, because such decentralized and voluntary institutions can only evolve over time in a world with less government.

A Positive Vision

It’s easy for libertarians, classical liberals, or anarchists to get caught playing defense and spend most of their time arguing against further government intervention in society. But what attracts me to this loosely defined movement is the positive side. Absent control from the top down, people can cooperate to organize the world more effectively, voluntarily, and humanely.

Smaller units of governance — whether towns or neighborhoods, people who do business together, or those with common interests — would suffer less from the knowledge problems that plague more-central authorities. People favoring different policies could have many more options based on where they live or what groups they join compared to the handful of options in play in the endless, corrosive political debate we have now. People from all over the political spectrum, more deeply connected within their own communities, could help each other on a more personal level than the blunt instrument of the current welfare state can.

Large reductions in the size of government will never be politically feasible unless people understand the alternative. It’s often said that once a government program is created, taking it away is nearly impossible. People need to know what they would be getting, not just what they would be losing. But there’s a problem. The vagueness with which I describe these alternative institutions is not just a lack of creativity on my part. Almost by definition, these institutions must gradually evolve, and that makes them a hard sell.

Why We’re Stuck

Writing down exactly what one thinks a complex network of voluntary institutions should look like isn’t liberty, it’s social engineering. Just like how a central planner can’t penetrate the vast complexity of a large economy, a group of smart people in a room can’t spell out a comprehensive system of the type we’re after.

It would be wonderful if we could foster the growth of alternative governance institutions in parallel with the government and let them take over if they proved superior. But the existence of a powerful central government makes it very hard to get them off the ground. Communities can’t write the rules they need with overarching rules still in place.

As game theorists would say, we’re stuck in a bad equilibrium. But there are several possible ways forward (and likely many I’ve missed).

Getting Unstuck

Finding incremental ways to reduce the size of government’s footprint on our society can be effective, but, once again, focusing on the positive side of the argument is essential. Explain why a smaller military will make us safer. Emphasize how more private schools will necessarily lead to more innovation in education. And I may ruffle some feathers here, but stop lecturing about the immorality of punishing successful people, and talk about how lower taxes will spur growth that allows more people to prosper and free up money for more focused, private aid. Don’t try to change people’s moral compass, explain how the change you want will accomplish their goals too.

Shifting more power away from the center to local governments is also promising. Local governments can experiment and demonstrate what approaches actually work. Some communities will have a greater willingness to experiment with private institutions of governance. If that works well, it will spread further.

Finally, understand and embrace new technology that can bypass central authorities or middlemen. The matching economy (sharing economy, if you must) connects individual buyers and sellers who never would have been able to find each other. And distributed ledgers offer the possibility of stateless currencies and trust between strangers without courts or police to enforce rules. These innovations won’t lead to a utopia, but they allow us to interact on a peer-to-peer level that we previously didn’t think possible.

As our society grows ever more complex and technologically advanced, controlling it from the top down is increasingly like herding cats. Attempts at more top-down control, though well-intentioned, won’t work. Rethinking governance itself is an even more challenging path, but offers a multitude of reasons for hope.

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Max Gulker

Max Gulker is an economist and writer who joined AIER in 2015. His research often focuses on free markets and technology, including blockchain and cryptocurrencies, the sharing economy, and internet commerce. He is a frequent speaker at industry conferences, especially on blockchain technology. Max’s research and writing also touch on other economic topics, including governance, competition, and small businesses.
Max holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.