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December 3, 2016

A Penrose Stairway

Why the Free Market and Limited Government Are Incompatible





A thing cannot both be and not be
at the same time and in the same respect.

— The Law of Contradiction

You can’t have everything.
— Restatement of the Law of Contradiction


SINCE AT LEAST 1960, the modern libertarian movement has been divided between those who believe that the free market is best served by a night-watchman kind of government limited to the protection of personal and property rights by providing police, judicial, and national-defense services, on the one hand, and those who believe that those services can and should be supplied by the market itself. The latter normally hold that a government is in fact an institution that by its nature must violate the personal or property rights the defense of which is its raison d’être. They argue that it is a blight on society and that social structures can and should exist without it. In the strictest, literal sense, they are anarchists, but they should not be viewed as shadowy figures with hats to hide their faces and cloaked in long coats hiding makeshift bombs. Because they are exponents of the free market, they may be called free-market anarchists.

The two sides agree that the case for the free market is sound, both morally and practically. They accept as a moral starting place the non-aggression principle, which holds that the use of force against those engaged in peaceful action is always wrong. The matter at issue, then, is whether a government necessarily and inherently must use force against some who have committed no such act against others. If it is true that government, by its nature, will act coercively against anyone, then libertarians who favor a government — however limited it may be — must abandon the non-aggression principle or they must abandon their support for a government.

It is not the purpose of this book to present the arguments for the free market, and it is not the purpose of this book to present the arguments that government by its nature must violate the non-aggression principle. It is my position that both of those cases have already been made conclusively. Those who favor a limited government are, for the most part, familiar with the arguments for the latter position, and for reasons of their own have not found them convincing.

My purpose is to look into a separate but related matter. Those who favor limited government believe that it is possible for it to exist and not to intrude into the workings of the free market. By “intrude” is meant both to attempt to regulate the market with statutes and by its actions to grant advantages to some market entities not available to others. Both actions are repugnant to the exponent of the free market. I believe this position is critical for libertarians: since the case for the unregulated free market is — at least for them — settled, if I can show that it is incompatible with the existence of a government, it is my expectation that a libertarian reader will retain his support for the free market and abandon his support for limited government.

In logic, of course, he could instead abandon his support for the free market, but since that case has been made in so many different ways by moral philosophers and by economists, I am counting on its having a stronger hold on the minds of libertarians. I am counting on the sturdiness of the case for a free market, as opposed to the uncertainty of the case for limited government, to be the decisive element in the judgment of libertarian readers.

It is common that arguments for a limited government also include objections to free-market anarchism. Necessarily, then, in presenting my case, there will be some discussion of the ethical arguments for free-market anarchism, and of ideas of how it would work, but they are not my primary focus. They have been made necessary by some of the specific criticisms of free-market anarchism to which I will be replying. My primary focus is to show that a night-watchman limited government that does not intrude into the free market is a contradiction in terms, a chimera, a Penrose stairway: it may be drawn or described, but it cannot be built. I will argue that by its nature, every government, including the night-watchman limited government, must take actions that exceed the charter of defending the natural rights of its citizens, protecting their persons and property, and adjudicating differences that may arise among them, actions that will affect the market, even distort it. Moreover, those actions will favor some businesses and confer advantages on them to the disadvantage of others. It is important to understand that the difficulties I shall identify are not mere “bugs” in the system that can be worked out with a little time, effort, and imagination; they are built-in features.

My intellectual debts to writers such as Murray Rothbard, Morris and Linda Tannehill, Roy Childs, and Lysander Spooner will be almost instantly apparent. But I should be remiss if I should fail to mention also my friend of 50 years, Tom McPherren, also known as Nicholas Strakon. Our conversations about the state and other philosophical issues have taken so many turns that I am often at a loss to say whether any given idea is my own or one that he shared with me. And even if he should say that a given idea was mine, not his, its genesis would be so completely embedded in our conversations that I hesitate to claim it as exclusively my own. Moreover, for the past 23 years, he has provided me with a forum, his newsletter The Last Ditch and his website, for presenting my ideas on this and other subjects. My debts to him are incalculable.

December 3, 2016


Prologue to Part I:
Jacob Hornberger and the Case for Limited Government


© 2016 Ronald N. Neff. All rights reserved.
Published in 2016 at The Last Ditch by Croatoan Books, a division of WTM Enterprises.

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