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As a rule of thumb, I submit: the more radical libertarianism is, the more does it radicalise, i.e. bring out starkly, the contradictions that lurk more ensconced in classical liberalism.
A case in point: the radical libertarian believes that the ubiquity of markets is possible, more specifically: that it is desirable and feasible in principle to replace politics by markets.
On this issue, the classical liberal is more restrained in that she avoids absolutes, championing an unspecified low percentage of government in the overall pie chart of society and a high yet similarly unspecified degree of abstention from interference in the economy.
While the radical libertarian is wholly wrong, the classical liberal has a good, though vague and often hard to operationalise intuition. Still, both are entangled in a serious misconception -- the former fatally, the latter with a chance of escape (by repentant realism).
Putting aside other social forces such as custom and creed, what they do not appreciate is that through law politics is interwoven with the economic world, at every turn.
You cannot leave the world of political competition behind you to disembark on the better shores of commerce-as-such.
In order to highlight the ubiquitous penetration of the economic fabric by legal determinations, let us take a look at
Miller at al. v. Schoene
... a case which involves red cedar and apple trees [plus their respective owners,G.T.] ... and cedar rust, a plant disease whose first phase is spent while the fungus resides upon its host, the chiefly ornamental red cedar tree, which is not harmed by the cedar rust. The fungus does have a severely adverse effect upon the apple tree during a second phase, attacking its leaves and fruit.
The legislature of the state of Virginia in 1914 passed a statute which empowered the state entomologist to investigate and, if necessary, condemn and destroy without compensation certain red cedar trees within a two-mile radius of an apple orchard.
Samuels, W. (1988), Institutional Economics, Volume II, Edward Elgar, p. 254,
The owners of red cedar trees and the owners of apple trees had distinct and mutually exclusive aspirations, with either red cedar trees or apple trees having to go. Incidentally, apple trees were big business in Virginia, at the time.
What the case illustrates is
the ineluctable necessity of choice on the part of government. The state had to make a choice as to which property owner was to be made not only formally secure but practically viable in his legal rights. The Court, as part of the state, had to make a judgement as to which owner would be visited with injury and which protected. [It] had to decide which party would have what capacity to coerce the other ...
(Ibid. pp. 256-257)
Who was to be given the coercive advantage, which initially lay with the owners of red cedar trees?
[T]he state must and does choose: there exists scarcity in the sense that conflicting interests and claims cannot each be secured at the same time ... giving rise to conflict ... and the necessity of choice.
(Ibid. p. 258)
Freedom is embedded in a structure of power such that any free person, say A, is being granted freedom that restricts the freedom of others, while at the same time being exposed to the freedom of others which, in turn, constrains the scope of A's freedom. These are extremely complex relationship structures that constitute non-trivial inequalities and therefore invite competition for prevalence and change.
Market forces emerge and take on shape and slope only within the pattern of, inter alia, legal choices as to relative rights, relative exposure to injury, and relative coercive advantage or disadvantage.
Private rights, for example, property rights, are in effect capacities to participate in the economic decision-making process as a coercive force; they define and delineate loci and conditions of power, or participation.
That means, then, that since relative effective rights are a partial function of law, the pattern of mutual coercion (relative withholding power) is a function of law, and moreover, that the distribution of relative risk, business costs, and resource allocation, income distribution and general level of income are a partial function of law. [...]
The economy is a system of power, of mutual coercion, of reciprocal capacity to receive income and/or to shift injury--whose pattern or structure and consequences are at least partially a function of law.
(Ibid. p. 258)
It should be noted that
... Miller at al. v. Schoene is not a case of government or no government, or of laissez-faire or intervention. Government is present in either case: it is present with respect to the already existing law of property working as it turned out to the advantage of the red cedar tree owner, and it is present under the new, altered law of property working by legislative intent (and court acquiescence) to the advantage of the apple orchard owner. Damned if it did, damned if it didn't, government had to choose between the effective promotion of one group or the other: government is in both cases a participant in the economic decision-making process.
In neither case can one simply be "against" government. The issue is not government or no government but, rather, the old law or the new law, or, [put differently] the one interest or the other. [...]
It is a matter neither of intervention into a new situation nor of "socialism"; it is a matter of which interest government will be used to support, ergo a matter of continuity versus change with respect to the pattern of freedom and exposure to freedom or distribution of power or structure of mutual coercion.
(Ibid. p. 259 - emphasis added)
In conclusion:
The legal system (government, law) is not something given and external to the economic decision-making process. [...]
There is an existential necessity of choice over relative rights, relative capacity to visit injury or costs, and mutual coercive power (or claims to income). The economy ... is a system of relative rights, of exposure to costs shifted by others, and of coercive impact of others. In choosing between conflicting rights' claimants ... the choice is between one interest or another. The choice is over capacities to participate in the economic decision-making process. These choices are a function of rights which are a function of law ... It is ineluctable, then, that government is involved in the fundamental character, structure, and results of the private sector.
(Ibid. p. 260 - emphasis added)
Good legislators are of the essence.
See also The Market Is Not a Democracy, Alchian on Politics, and Property Rights.
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