“…as long as they do no harm to another.” A tale of actual capitalism

Individualism and Libertarians

Americans are renowned for their sense of individual identity and empowerment. de Tocqueville noted this back in the 1830s in his Democracy in America. Hollywood and mass media have mined it continuously. Politicians appeal to it frequently. In my lifetime the position of the individual has been raised to a position of complete supremacy over society.

The Libertarian Party is one significant element in this development. It presents a clear statement of the arguments for the role of the individual in society and limits on the powers of government. These combined with religious adulation of capitalism.

From the homepage of the Libertarian Party website:

The Libertarian Party (LP) is your representative in American politics. It is the only political party that respects you as a unique and responsible individual.

Our slogan is that we are “The Party of Principle” because we stand firmly on our principles.

Libertarians strongly oppose any government interference in your personal, family, and business decisions. Essentially, we believe all Americans should be free to live their lives and pursue their interests as they see fit as long as they do no harm to another.

Here are a few snippets from the LP website discussion of their platform

  • “We believe that ending the racist War on Drugs is an essential part of any plan to improve our justice system.”
  • “The United States relies too heavily on our military might in foreign policy.”
  • “Imagine if China had a military base in Montana. Or Russia had a military base in Texas. How would Americans feel about that? We would likely feel insulted, oppressed, and mad.”
  • “Libertarians believe that people should be able to travel freely as long as they are peaceful. We welcome immigrants who come seeking a better life. The vast majority of immigrants are very peaceful and highly productive.”
  • “We also believe that the government must treat all people fairly and equally before the law.
    Towards this end, we seek to:

    • Protect freedom of religion, association, speech, press, and assembly.
    • Reverse the militarization of law-enforcement agencies.
    • Reform asset-forfeiture laws.
    • Restore Fourth Amendment rights against unreasonable searches and seizures.
    • Restore voting and gun rights for those convicted of non-violent drug offenses.
    • Fight against federal overreach and government spying programs.
    • Restrict law-enforcement use of general surveillance technologies.
    • Protect internet freedom & privacy.”

So, there are many good points in the Libertarian Party platform. Many of its comments about racism, sexism, justice and jails, drug policies, and more are based on a sound grasp of the realities they are addressing.

Libertarians and Capitalism

When we turn to the economy Libertarians engage in some of the same fanciful thinking about how capitalism works as our neoclassical economists in Econ101 and business schools.

(continuing here with italicized snippets from the LP website)

Our current economy is more crony capitalist than it is free, and that is responsible for the majority of problems that some try to blame on capitalism.
The free market, when it is allowed to do so, provides tremendous opportunity for people of all backgrounds, interests, and abilities.
Crony capitalism, however, benefits the wealthy, powerful, and special interests who know how to influence policy makers.”

“Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class.” (definition from Wikipedia).

A key counterfactual idealization here is the phrase “The free market, when it is allowed to do so….” There are a number of unstated assumptions here. First,  any regulation of market behaviors by government, except to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is conducted, will make markets less productive, less innovative.  Second, markets make optimal decisions about what to produce. Markets take no necessary notice of fundamental human needs, for example, food, housing, family life, health, and general safety. Markets will only produce that which can produce a profit. Given the unequal power relations of markets for labor, wages are continuously driven lower. Third, markets automatically coordinate the right amount of production at the best price point. Fourth, none of the talk about free markets takes into account the impact of market concentration, monopolization, on the functioning of the economy. The last forty years in the US, in particular, have demonstrated what a highly concentrated economy that is almost exclusively focused on maximizing the return of maximum dollars to managers and stockholders looks like. Fifth, this whole discussion of “free markets” treats the economy as if it were a completely separate, independent of the greater society within which it is embedded. Free markets have never existed except in the idealized thinking of capitalist ideologues and the world of Econ 101 neoclassical economics. Governments played a central role in the development of capitalism from the beginning. The rich and powerful have always set the rules and used government assets (think armies and police) as well as regulations to drive development on paths that suited their needs, not the needs of “free markets”.

At the present moment, the chart below presents the crux of our problem. From 1948 to the late 1970s productivity growth (dollars of goods & services produced per hour of labor) rose 118%. Wages rose 107%. Very nearly completely in parallel. From 1979 to 2019 productivity continued upward by another 59%. Wages, however, rose only 13%!

Where did the 49% difference go? What happened to all of the money in the 49% differential between productivity and wages go? The answer is the top 20% of Americans have scooped it up. The rest of us have seen little or now real income growth since 1979.

Why did this take place? It was not the result of the automatic functioning of free markets. Largely it resulted from the application by the rich and corporations of a set of ideas, usually referred to as neoliberalism, through changes in government laws and regulations and the transformation of corporate management practices. First, labor unions were greatly discouraged. Second, international trade treaties opened global markets.  American corporations fled to low-wage countries, chiefly China initially. This eliminated hundreds of thousands of high-wage manufacturing jobs. Third, most Americans were forced into the low-wage services sector. Fourth, US corporations fell under the demands of Wall St. to maximize shareholder value, higher stock prices. This led to further cuts in labor and other costs. And internal re-investment in corporations fell. The age of CEOs earning 300 times the average worker began. Profits that in earlier days would have been reinvested in a company were instead used to buy back company shares. This of course jacked up share prices.1

So, lets return for a moment to the Libertarian Party’s central value statement. “Essentially, we believe all Americans should be free to live their lives and pursue their interests as they see fit as long as they do no harm to another.” The party’s platform seems to turn a blind eye to the harm caused by a dogmatic view of a capitalism that does not exist combined with an anti-government mantra that effectively cuts off any possibility of making corrections to capitalism’s workings.

We call for an end to any tax-financed subsidies to candidates or parties and the repeal of all laws that restrict voluntary financing of election campaigns.” This element of their platform essentially guarantees the continuation and even deepening of control by the rich and corporations, their crony capitalism.

External Costs and Libertarians

A central feature of capitalism is the cost-avoidance strategy of getting someone else to pay for the cost of your production. Pollution of air and water, plastics, forever chemicals, industrial foods, and more are all examples of this strategy in action. For example, industrial food takes advantage of our genetically driven desire for sugar, salt, and fat to sell us food products. In what is now a global phenomenon, industrial foods are causing an enormous surge in chronic diseases, especially diabetes and its sequelae.2 The corporations using our desire for sugar, salt and fat take no notice of the external cost of the global epidemic of disease caused by their use of these cheap, tasty additives they put in almost every conceivable product. Next time you go to the supermarket stop in the bread aisle. Pick up a few loaves and look at the ingredients. White enriched flour will usually be the first ingredient. This by itself is not very healthy because the body digests the flour almost instantly turning it into glucose. Then look at the next few ingredients. My bet is that you will find one of the 56 names the food industry uses for sugar. As you move through the center aisles of the supermarket pick up almost any can or box and you will find sugar in the ingredients.

What would Libertarians do about this?

Given the Libertarian principles already mentioned here, you will not be surprised. Here is a chunk from the Libertarian platform:

2.2 Environment

Competitive free markets and property rights stimulate the technological innovations and behavioral changes required to protect our environment and ecosystems. Private landowners and conservation groups have a vested interest in maintaining natural resources. Governments are unaccountable for damage done to our environment and have a terrible track record when it comes to environmental protection. Protecting the environment requires a clear definition and enforcement of individual rights and responsibilities regarding resources like land, water, air, and wildlife. Where damages can be proven and quantified in a court of law, restitution to the injured parties must be required.

There are so many claims made in this statement that defy the facts of capitalism and how our society works that I hesitate even to begin an explication.

“…as long as they do no harm to another.”

It might do as a good starting point for Libertarians to take this little phrase seriously. It poses challenges to much of their creed; provided you dig into the actual workings of capitalism and our society.


  1. Until 1982 the Federal Securities Exchange Commission considered stock buybacks by corporations to be illegal price manipulation
  2. see Robert H. Lustig Metabolical: The Lure and Lies of Processed Food, Nutrition, and Modern Medicine. New York: Harper Wave 2021