How a Free(d) Market Would Give Us Zero Unemployment

One persistent problem in America’s political discourse is the misuse of the term “free market.” So-called “conservatives” like President Bush and his Republican acolytes like to claim that they support the “free market,” and liberals, normally skeptical of everything that comes out of conservatives’ mouths, take their word for it. The Right defends the system we have as “free market capitalism,” which aids the Left in its straw-man attacks against it. A side effect of this inexact taxonomy is that real free-market partisans are misconstrued as defenders of “Big Business.” But as Austrian theorist and Cato blogger Roderick Long demonstrates , this is far from being the case.

There is currently a debate raging between the so-called “left” and “right” factions of the libertarian underground. The so-called “left” faction, led by Professor Long, insists that businesses would be smaller and more democratic in the absence of the state. The “right” faction, while not defenders of the current system (which many of them consider to be “fascist”) argue that businesses would be even larger under completely laissez-faire, and this would probably be a good thing.

The libertarian-right’s case is based on the size-limiting effects of anti-trust laws and protectionist trade policies, among other regulations. At first, this argument is compelling, but as Long points out, these effects are likely very minimal when compared to the tremendously destructive impact the government has on would-be small businesses. Just imagine, he says, if there were no longer any licensing requirements for starting a taxi service: tens of thousands of cab companies would start up tomorrow. What if you could open a restaurant in your living room? What if you could start a daycare without jumping through burdensome regulatory hoops? What if you could hire people at any wage at which they were willing to work? Indeed, there would likely be no unemployment under laissez-faire.

It should be stressed that, for the most part, the “left” and “right” factions of anarcho-libertarianism agree on the proper role for government: none . Neither faction supports the regulations that keep firms small or prevent them from starting up at all. This is largely an academic debate about how laissez-faire would work if ever adopted, but both sides agree that it would work better than the current system, and that it is more moral.

Personally, I come down on Professor Long’s side, and I think it’s important for libertarians to differentiate themselves from conservatives at every turn. Libertarians are not conservatives — they are liberals in the classical sense. In fact, modern liberalism is merely a variant of classical conservatism, which is one reason there’s so little difference between the two Establishment parties. Long says that today’s liberals attempt to use conservative means to achieve liberal ends, such as full employment. But in reality, classical liberal ends (laissez-faire) would achieve those ends more effectively, and more morally, too.