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Tyler Cowen is pulling on a dangerous thread

American economist Tyler Cowen has invented a new term, 'state capacity Libertarianism'

January 23, 2020 - 7:00am

Libertarianism died in 2008. The banks were bailed out, exposing the deep dependency of capitalism on the capacity of the state.

It was proof β€” as if proof were needed β€” that some problems are too big and complicated for individuals and companies to deal with on their own.

The economist Tyler Cowen, who is sometimes described as a libertarian, writes that “smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.”

Cowen goes on to define this new creed. He starts from the position that “markets and capitalism are very powerful, give them their due.” But then comes a significant divergence from free market orthodoxy:

“Many of the failures of today’s America are failures of excess regulation, but many others are failures of state capacity. Our governments cannot address climate change, much improve K-12 education, fix traffic congestion, or improve the quality of their discretionary spending. Much of our physical infrastructure is stagnant or declining in quality… Those problems require state capacity β€” albeit to boost markets β€” in a way that classical libertarianism is poorly suited to deal with.”
- Tyler Cowen, Marginal Revolution

This new way of thinking is influential within British politics too. The Dominic Cummings agenda is all about the effectiveness of the state, not rolling back its frontiers.

Both Cowen and Cummings have libertarian instincts, but understand that there are things that the state can do that the capitalism can’t (and yet depends upon). Thus even if it comes at expense of an unfettered market, it is worth investing in state capacity.

And yet couldn’t the same be said about family and community? Or indeed things like faith and virtue? These frameworks also have a vital role to play in helping individuals to flourish and societies to hold together. Capitalism depends upon these things every bit as much as it does upon a well-functioning state.

So shouldn’t state capacity libertarians also care about family capacity, community capacity and what might be called moral capacity?

They should, but I think we’d need a snappier name for the balanced, holistic ideology that would result.

Conservatism, for instance.

Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.


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