Liberty provides the framework for all individual accomplishment.  Liberty is exactly that condition whereby an individual may pursue his own ends.  In any human endeavor then, there are only two courses of action: that provided by liberty, and that provided by coercion.  Either an individual is employing means to reach an end of his own choosing, or he is being forced to work towards someone else's end.  Libertarians maintain that not only is liberty the natural and ethical way for humans to live, but that it also benefits them the most.  In order to see why this is so, we must analyze human action.

In this world, resources are scarce.  We do not have an infinite amount of food, or an infinite amount of land.  Perhaps the most valuable resource to humans is time.  Since humans live in a world where the objects they desire are finite, they must use goods in such a way to maximize their own happiness.  In other words, they must economize goods.

Since resources are scarce, individuals must judge how best to employ means to reach their desired ends.  These ends always involve the satisfaction of some want or need.  The end could be anything from eating a meal to enjoying a day in the forest.  Regardless of what end a human aims at though, he must act in order to obtain it, and in order to act, he must manipulate real resources in the world.  If he desires to eat, he must act to obtain food.  If he wants to enjoy the forest, he must position himself to be inside of one.

There exist only three manners in which an individual can obtain goods.  He can mix his labor with natural resources, he can obtain them from someone else who voluntarily gives or trades them, or he can forcefully take them from others.  Humans necessarily own themselves and their labor, so if an individual mixes his labor with raw nature, he is appropriating goods.  The products of his labor are now his property.  The concept of property refers to the question of use.  We say that a man owns himself, which means that he and only he may properly and ethically control the movements of his body.  In other words, no one may enslave, kill, or physically coerce him.  The same concept of ownership is transferred to the property that he obtains from a state of nature.  He and only he may properly dictate how the goods are used.

Since individuals may appropriate goods from a state of nature and make them their own property, they may also voluntarily trade them with each other.  This is the second manner in which an individual can obtain a good that was mentioned above.  It is important to note that when two individuals interact, they both do so for mutual benefit.  If Smith trades a few stalks of corn to Jones for a bushel of apples, both men make the trade because they believe they will be better off as a result.  Any individual who is involved with such an interaction believes that he can better use the object he obtains to reach desired ends than the object he trades.  Smith might have a field full of corn, for example, and he might feel that he benefits little from keeping the last bit of corn.  He feels he would be better off with some apples, of which he has little.  Jones, though, might be in the opposite situation, with an orchard full of apples and no corn. 

Objects do not possess any intrinsic value.  Instead, individual humans assign value subjectively to objects according to how useful they are in satisfying their wants.  If Smith trades five stalks of corn for ten apples, it might be tempting to say that five stalks of corn are "worth" ten apples.  But it is precisely because Smith and Jones don't think they are of equivalent value that they trade.  Smith values the ten apples more than five stalks of corn, and Jones vice versa; if they did not value the objects so, they would never trade in the first place. 

Trade is the great catalyst for human society.  It is only through trade that men organize themselves under a division of labor for mutual benefit.  Jones might discover that he is better at growing apples than anyone else and that others are willing to trade the objects they produce for them.  He will then specialize in producing apples.  The division of labor works because different people and resources are better suited for producing some things than other things.

Even if one person is better at producing everything than another person, they can still benefit from the division of labor and trade.  If Williams is a doctor and can earn $100 an hour practicing medicine, he will find it to his benefit to pay Connor, who has few serviceable skills, to mow his lawn, even if Williams can do it more efficiently.  Williams, unless he really enjoys mowing his lawn, can obtain the most value by working as a doctor and paying others to do less costly tasks.  In this case, we would say that Connor has a comparative advantage in mowing the lawn.

It is only through the division of labor that man adjusts himself to satisfy the wants of others.  This is because in order to satisfy his own wants, he must trade goods to other people.  The more that others value his goods, the more goods he will receive in return.  We can picture a simple economy where individuals trade goods directly, like corn for apples or bread for cattle.  But such an economy cannot advance far because different objects cannot be divided evenly.  One cannot trade a tenth of a cow for a chair, for example.  In order to overcome this obstacle, objects are traded for an intermediate good, called money.  Money not only solves the divisibility problem, but it also allows a greater diversity of people to be involved in the division of labor.  Without money, the man who desires a pig but has only candles to trade must find another person who has a pig but desires candles.  Now he can trade his candles for money and in turn use the money to seek out a person offering a pig, regardless of whether that person desires candles or not.

Civilization is based upon the voluntary division of labor and time preference.  Individuals desire goods, but in order to obtain them they must either produce their own goods to trade or invest time and resources to produce the goods themselves.  The amount of time that an individual is willing to wait in order to obtain an increased return on his investment is reflected in his time preference.  Jones might consider ten apples in the present to be worth about the same as if he were to receive twelve apples in one year.  Time preference manifests itself in the real world as interest rates.  If one accepts a loan of money from another, an extra amount of money will have to be paid in the future from the principal loan in order to account for time preference.  The same rules of trade apply here as they did to Jones and Smith.  The loaner values the amount he receives in the future more than the amount he must pay now, and the debtor values the present money more than he values the amount he must pay in the future.

If civilization and human society are based upon the voluntary division of labor, then barbarism is based upon the opposite: coercion.  We have described the first two manners in which an individual may obtain goods in order to satisfy his wants.  He may appropriate property from nature, or he may trade property with others (or receive property as a gift).  The last manner in which he can obtain goods is to forcefully take them from others.

Some individuals decide that they do not wish to meet the demands of nature by producing goods that other people value; they decide to take these goods from others.  Clearly, when one individual steals something from another, only one person benefits.  The victim does not act in this situation and therefore does not anticipate reaching a desired end.  Only the thief acts, and only the thief reaches a desired end.  Compare this to the case of the free market.  In the free market, the individual would have to produce a good that the other person desired in order to receive a good in return.  Adam Smith's "invisible hand" of the market guides all participants in society to promote the best wishes of everyone else by pursuing his own wants and desires.  It is a fine world indeed, when the more selfish one is and the more one desires goods, the harder one must work to first satisfy the desires of others!

But a society can only function if it is based on the free market and voluntary cooperation.  A society based on the opposite, coercion and force, would be a war of all against all.  If people did not produce goods to trade others free of coercion, they could only obtain goods by stealing from others.  There is no third way.  The socialist dream of both having no need for property and no coercion is not based in reality.  The socialist doctrine denies that resources are scarce and that men have to act in order to meet nature's requirements.

Any real society has elements of both the free market and coercion.  No matter how successful the free market is, there will always be anti-social individuals who refuse to meet their needs and desires peacefully.  The libertarian seeks to reach a society where the anti-social element is minimized.  That is, the libertarian ideal is for a society where the free market is maximized, where individuals are free to use their property in the manner they choose, as long as the use does not infringe upon the equal rights of others to use their property as they choose.

The libertarian also recognizes that theft is theft, whether it is performed by a highwayman or by a group of individuals calling themselves a government.  If it is unjustified for one person to take your money, then it is just as unjustified for ten people to get together, take a vote, and then pay someone to take your money.  The difference between the two situations, Spooner noted, is that in the first no one claims that the highwayman is doing it for your benefit, while in the second case they claim that they are.

The justifications for government intervention into the free market are numerous: The free market is unstable, the free market is chaotic, people aren't informed enough to make decisions, businesses exploit consumers, etc.  But the consequences of any intervention into the free market are the same: The voluntary decisions of individuals working together for mutual benefit are replaced by the whims of someone else.  The people who benefit from the intervention are those who implement it.  Those who lose are all of the people who are affected by the intervention against their will. 

Economics shows what happens when government intervention occurs.  When the government fixes prices, shortages and surpluses occur.  When the government taxes income, people are discouraged from working and producing.  When the government artificially supports businesses, smaller, more efficient firms are forced out of the market.  A government monopoly on money results in a continuously devalued dollar as well as the boom/bust cycle that afflicts the economy.  

So what then of the rationales for government intervention?  We are told that central planning is needed because the free market is inherently chaotic.  But the free market only works because it is not planned by a central authority.  There is much more planning occurring in the free market than there is in government intervention.  Each individual plans how to best use his own resources and property to satisfy his desired ends.  To say that a central authority must perform the planning is to say that some individuals are best suited to decide how everyone else should act.

Some people would exactly maintain the above position, that some individuals are naturally better suited to make value judgments for others.  They say that people are not smart enough to be able to provide for themselves and make themselves happy.  They need others to make these decisions for them.  But then the question arises, how are the central planners to be decided upon?  If people cannot best judge how to plan for their own retirements, how are they supposed to pick the people that are best suited to plan their retirements? 

One rationale for government spending is that it stimulates the economy.  However, government spending can only occur after the money is extracted from the people.  The money, instead of being used how the people would best think it would serve their own needs and desires, is instead spent on what politicians and bureaucrats want.  The free market allows individuals to creatively produce goods.  If individuals have a desire, it is likely that a businessman will capitalize on this and make a good to satisfy the desire.  In the free market, people have incentives to produce goods and help each other out.  However, the incentives of any government agency are starkly different.  Bureaucrats and politicians do not care about profits or satisfying consumers.  They care about funding and power.  Whereas a private firm's best interests are served by making better products, a bureaucracy's best interests are best served by failing and thus showing that they "need" more funding.  Thus witness the ever-declining public schools, which as they get worse and worse cry out for more and more funding.

Government is often defined as a monopoly provider of legal force.  That is, a government enforces its own justice system within an arbitrary geographic region.  It does not matter how the government is structured; all governments support themselves by extracting wealth from the people and only operate by intervention into the market.  As such, governments do not produce anything of their own doing.  Governments can only redirect production.

The fundamental difference between how government operates and how the free market operates can best be seen in how they act to allocate goods.  In a democracy, goods are allocated according to majority rule.  As such, no flexibility or creativity is allowed.  Can you imagine a world where music was dictated by government rule?  Everyone would be forced to listen to Britney Spears.

In the market though, every vote counts.  If enough people like jazz or rock, people can listen to jazz or rock.  On the nature of market allocation, economist Ludwig von Mises wrote, "In a capitalist society wealth can be acquired and maintained only by a response corresponding to the consumers' requirements. Thus the wealth of successful business men is always the result of a consumers' plebiscite, and, once acquired, this wealth can be retained only if it is employed in the way regarded by consumers as most beneficial to them."

The effects of the free market and voluntary division of labor are clear: civilization, peace, and mutual benefit.  Alternately, the effects of government and coercion are the opposite: barbarism, enmity, and conflicts of interest.  Classical liberals and libertarians recognize that individuals are best served when they make their own decisions.  No reason can make one person better suited to run another person's life.  All individuals necessarily own themselves and their labor.  The free market is the only ethical system for such individuals to live, since it is the only one where people are left free to provide for their own desires as they see fit.  Since one must first provide for others before others will return with goods, the free market has a civilizing effect and promotes the best interests of all involved.  Governments, on the other hand, can only redirect resources that individuals already produced, thus resulting in a disincentive towards production.  The allocation of goods by government is according to the wishes of a few judging for others.  As such, it results in conflicts among people and is not consistent with the principles of private property. 

The ethical case against government is enough to show that it is inconsistent with the natural liberty of people.  Additionally, economic analysis shows that government intervention can only benefit one group of people at the expense of another group.  Government is therefore in direct opposition to the voluntary cooperation of the free market and as such tends to foster barbarism and enmity.         

January 29, 2003