In the Libertarian Universe, in which the individual is sovereign, agreements and contracts are made between and among purported equals. These interactions of mutual interest benefit both the individuals involved, and thus in the aggregate all of society. In the simplest cases, such agreements play upon the coin of trust and self-interest. If a party to an agreement were not up uphold and abide by his obligations, the invisible hand of the market in trust would intercede and inhibit the wrong doer from being able to conclude future arrangements with knowing interlocutors, and thus greatly hinder his efforts to improve his station in life. But as business and contracts become more intricate and complicated, can we expect our intrepid and hardy individual to police all the interactions he has with others? People being people, and business being business, there is the constant temptation to seek advantage between the lines of an agreement, or to stretch the ethical boundaries of one. Is it then philosophically acceptable in this world of Liberty to outsource the effort of monitoring and enforcing adherence to the rules?
Indeed, free individuals can combine their efforts and resources in a variety of ways, taking advantage of the economies of scale to achieve their ends. In the legal and business worlds our freedom loving man can become corporate with others—and now thanks to the Supreme Court achieve immortality, since now corporations are people too. (Why wait for cryogenics when all one has to do is incorporate!) As an enforcement mechanism, the board members of a corporation are charged with overseeing its activities—presumably to keep it within certain boundaries while still providing value for the owners. But who’s to look overhard when the compensation is so fine? And the stockholders themselves have the power, through their voting shares, to punish directors and executives who stray from the text and spirit and ethical boundaries of the corporate business agreements. But as long as the dividends keep coming, and the stock value keeps rising, why rock the boat? On the other side of the business ledger, individuals can enhance their voices and strengthen their hands in the contract process by forming unions. But surprisingly, to the Libertarian this smacks of coercion rather than free association. (Why shouldn’t the individual be free to sell his labor and effort as an individual in the marketplace—and indeed he should. But is it not also a smart and legitimate tactic for labor to use economies of scale as well?). Labor and unions too can add a salubrious influence into the corporate atmosphere, shining light on some business practices that may need disinfectant. But the worker may be content to have a job or worried about keeping it—and not wish to jeopardize the company which supplies his paycheck. So what happens when the members of the corporation, the stockholders, the unions, and the customers all are enmeshed with irrational exuberance and not exercising proper oversight? Who’s to mind the rule book?
Of all the associations of free individuals the most notable is that of government by mutual consent. To collectively form a system to synthesize, maintain, and enforce the ground rules upon which we all operate is the essence of self-governance. The body politic to which we all belong may willingly outsource the enforcement of the rules of the game that we freely and collectively agree upon in our business dealings with one another. And when through hubris and greed particular corporations have enriched themselves, their executives, and their board members, defrauding customers and stockholders by hiding transactions and behaviors, is it not the proper position of our freely constituted government to bring order and accountability to the system?
Today the banking, securities, and housing markets—intertwined as they may be—have demonstrated, in spades, that it takes more than open eyes of free individuals to monitor and regulate their behaviors. Certainly the Libertarian ideal of ‘caveat emptor’ is a necessary guide to an individual’s entry into the market. But is it sufficient? Perhaps such an injunction and warning would be if we could assume the banks and others would deal with customers openly and fairly, accurately detailing risks as well as benefits; would deal with stockholders honestly and ensure executive compensation reflects business performance; would deal with regulators on the up and up, adhering to the spirit as well as the letter of a rule. As amply demonstrated of late, such an assumption could easily land one out of a job, out of a pension, and out of a home.
If we can’t assume our immortal collections of individuals who have incorporated will deal with other mere mortal individuals in an open, honest, transparent manner in the marketplace, then what recourse is there but to have our freely constituted government take a hand in enforcing remedies and exercising oversight? How, pray tell, is this socialism? How, do say, is government ‘interfering’ in the market when it is we who are the government? And how, if we allow the perpetrators of financials shenanigans to remain or become even more unfettered, is the individual who is in need of financial services going to exercise due diligence if the requisite information is not available or disguised? Isn’t it wise for us to outsource this tasking to agents who are more competent to handle the challenge? Isn’t such a task the very essence of government? Or does “Promote the General Welfare” just mean let the money write the rules? So it would seem, today—and most everyday. How does this promote the exercise of Individual Liberty? Mitt? Newt? Ron? Anyone? I’d like to know.