Using Economic Means for Political Ends

In his 1919 work The State, Franz Oppenheimer noted a dichotomy between the two ways that a person could acquire wealth in society – via either political means or economic means. He defined the political means as all forms of theft, fraud, or re-appropriation – any way in which a person could acquire wealth by taking it from someone else. The economic means, then, were the ways in which wealth was created through labor and mutual gains from trade, and superior to the political means, because while wealth acquisition through the political means was zero-sum, wealth creation through the economic means was win-win. At the root of the political means is coercion, and at the root of the economic means is choice.

Oppenheimer’s work was a powerful influence for some early radical libertarians –Albert Jay Nock, and Murray Rothbard. They used it as the ultimate justification for libertarian politics, arguing that an ideal society would minimize the extent to which people used political means to acquire wealth, and maximize the degree to which people used economic means.

This is all well and good. But there’s an internal contradiction that exists in libertarian political thought. While preaching the virtues of the economic means for social interaction, they are trying to achieve political ends through political means. They want to replace the existing rules with a new set of rules. To do so means depriving individuals of a choice – the choice to continue living under the existing set of rules, rules which they might find preferable.

At this point one might wonder “How else would one achieve political ends except through political means?” The answer is to look to create new systems instead of forcibly replacing the old ones.

Paul Romer’s TED talk highlights the importance of this when it examines the problem of how to create change in countries with dysfunctional rules. Romer provides a picture of a group of students, in an African country, studying under street lights at an airport, because they don’t have power hooked up to their homes. This shortage is not due to a lack of wealth in society – most of these students probably have cell phones. It’s created by bad rules – price controls. While the leader of a country might see that these controls are constricting growth, they can’t change those rules without angering those who benefit from the current rules – those who are getting power at a cheaper price than they otherwise would. He contrasts the situation of such a country, to the situation of China, where special economic zones made it possible for leaders to implement and experiment with new rulesets without taking choices away from their citizens – to achieve political ends through choice, and not coercion.

There are a million political movements out there. Most of them seek success via political means, which is the reason that most of them fail. Nearly all of them could find a home in the competitive government movement, because it’s not about any one ideology being right. It’s about allowing people to use economic means to achieve political ends.