Evolved Libertarians - Or Why Gary Johnson Couldn't Name a World Leader

Chris Mathews asked presidential candidate Gary Johnson to name a world leader who he admired. Johnson couldn't do it.

It's easy to dismiss Johnson's drawing a blank as proof that he's simply not that aware of the outside world. I suspect it instead gets to something more fundamental: Libertarians don't really have real-world examples of what they're advocating.

It's worth contrasting Ayn Rand - libertarians favorite thinker - with other folks who have founded economic theories. Most importantly, Rand was a novelist and possibly the best writer of the lot.

Adam Smith's Wealth of Nation is still a great read but it doesn't really have a plot like Rand's books. He had observed and heard reports of phenomenal changes that were taking place as the Industrial Revolution was beginning to transform Britain and its colonies. (1776 was an amazing year.  James Watts had made some final changes to the design of the steam engine that would allow it to spread across numerous industries, automating work as it did. The first engineering textbook was published. The American colonies began the most fascinating experiment in the history of government. And The Wealth of Nations was published. All of this fueled a transformation that began lifting incomes for the first time since Homer and the ancient Greeks.) He opens with specialization and how focusing on one element of a task can greatly increase output. It might not be an empirical work in today's sense of the word but it certainly was grounded in real world events that he projected outwards in time and impact. Adam Smith did less to describe some abstract possibility than explain what was already happening.

Karl Marx's Das Capital is, by contrast, a dense and confusing read. He did point to abuse and poverty and suggested the possibility of government intervention in this. That might have been a lasting contribution. But his explanations of how the economy actually works are more literary than practical, more a demonstration of genius locked behind closed doors than genius forced to accommodate real events. The book and the policies based on it make little sense and don't do a particularly good job of explaining current affairs, predicting future events, or guiding policy.

John Maynard Keynes' General Theory of Employment, Interest, and Money is also a tough read but it rewards the effort.  He wrote it in the wake of the Great Depression, arguably the most wrenching economic event since Wealth of Nations had been published. The Great Depression had driven unemployment up to 25% and cut GDP by half. This demanded some sort of an explanation and Keynes provided one. He explained that it is possible for capital markets to hit an equilibrium that leaves labor markets in dire shape. That is, investors might have a great reason to avoid investing which could depress hiring which could, in turn, depress investing and so on. Economies can perpetuate misery if action isn't taken to intervene in this cycle. Put another way, there is a general equilibrium for the whole economy - measured in things like GDP and employment - that doesn't automatically or always realize its potential just because capital markets are at an equilibrium. Keynes' theories helped to create legislation, policies, and agencies that kept the West from anything close to the Great Depression until much of that legislation was dismantled in the 90s and aughts, just before the Great Recession.

Keynes wrote about capital markets and actually made millions investing in stocks. He did have bouts in which he lost money, as any investor does, but on the whole his returns beat the market by a considerable margin. He understood capital markets at the practical as well as theoretical level.

Which brings us to Ayn Rand.

She didn't do so well at the level of actual policy recommendation or personal success. It's worth remembering that she wasn't a researcher who based her studies on extensive analysis of data. She was a novelist. Fountainhead and Atlas Shrugged were exciting books but they are works of fiction. (The story of great people who dared to defy convention to go their own way is both central to progress and inimical to it. It is true that people who stand up to tradition are the source of progress; progress only follows, though, from their convincing the rest of their society to follow their lead, whether it be in the use of telephones or democracy. Social creators first separate themselves from the herd and then bring the herd along. Progress isn't like a monastery that you can retreat to alone; that's nature.) Her ideas are exciting but they're not actually based on data or anything you can translate into policy.  At a theoretical level, she didn't really leave much that could be translated into coherent policy, the way that Keynes did.

She also struggled at a personal level. Keynes was rich. Rand died living in public housing, dependent on Medicare and welfare. She wasn't exactly an example of fierce independence. Keynes' life helped to clarify his philosophy; Rand's life merely muddled hers.

And yet she is the intellectual parent of the libertarian movement in the same way that Marx was parent to communism or Smith father of capitalism and Keynes the modern welfare state. Ron Paul - perennial libertarian candidate - named his son Rand after her.

We can point to countries that have adopted Smith's capitalism, Marx's communism, and Keynes' managed market economy. There are dozens of examples of each.

We can't point to any countries that have adopted Rand's libertarian philosophy. There are a host of reasons for this but bottom line, this explains that when asked who he admired, Gary Johnson drew a blank because there are no examples of presidents or prime ministers or kings who have illustrated what Ayn Rand was advocating. The fact that there are no examples helps with the libertarian movement because it leaves the definition of libertarian loose enough that it has wider appeal than it might hope for had it been defined more specifically for actual countries or situations. ("Oh! You mean that we shouldn't regulate driving speeds but should just leave it people's judgement? I can't go along with that!" Or, "You don't think that we should have an FDA but should just let people sell whatever drugs or foods they can sell and let the market punish or reward them depending on whether their product ends or enhances life? Hmm. That sounds promising.")

Yet for all my criticism of libertarians - and I have plenty - I do think that it would be a fascinating experiment to see what happened if a random group of - say - 10 million people were put into a space without any laws or economic regulations to see what would happen. I think it would be fascinating and think that we could learn so much from such an experiment. That said, I also think that with time, we'd have government emerge, welfare for sick and elderly, community investment in childhood education, and even mechanisms put in place to make sure everyone had access to potable water, roads, and electricity. It's perfectly conceivable to me that more of those solutions would be purely "market" based but it also seems highly probable to me that this community would not only realize that even defining that market would actually mean agreeing on and passing laws that have to be enforced but also would mean the emergence of a public sector to solve the problems that markets simply don't. What would we get if we put in place a purely libertarian state? Within a quarter to half a century, I think that we'd see it evolve into what we have in places as diverse as San Francisco, Copenhagen, Singapore, and London. That is, I think we'd see a modern market-based, government enhanced economy tapping the dynamics Adam Smith described and subject to the occasional intervention Keynes recommended, just like we have now. Nixon famously said in the 1970s, "We're all Keynesians now." In the same way, I think it's true that we've been evolved libertarians for some time now.