Is There a Constituency for Freedom?

The redoubtable Fred Smith from the Competitive Enterprise Institute sent this:


Your book notes that the Competitive Federalism features of the Constitution helped transform collective action problems into coordination problems (an ability that has been greatly weakened under today’s Cartel Federalism). That prompts a question that I’ve been pondering stemming from Schumpeter’s view that capitalism will fail (an argument that parallels yours in many ways).

I note that alliances between economic and ideological interests (Bootlegger and Baptist) are common (trial lawyers and enviros, unions and good-government types). Moreover, almost all public choice economists see this not only as natural but the only type alliance one would expect – rent seeking is a dominant outcome of interest group politics. And, certainly, crony capitalism is a dominant feature of our economy.

But why? First, note that markets frequently transform collective action challenges into coordination issue – joint ventures, vertical integration, standardization efforts. But, there have been almost no attempts by business to extend that approach into the political sphere. Business is often reasonably aggressive about defending against the expansion of political control but when they lose they seem only to quickly retreat, dig new defensive trenches, and remain passive pending the next statist onslaught.

Yet, wealth creation and the economic liberalization – privatization/regulatory liberalization/tax rationalization steps needed to achieve it – are decidedly not zero sum games. And we have some examples of efforts to expand the sphere within which wealth can be more efficiently created – the Anti-Corn Law League in Britain, the liberalization of the freight rail industry – but very, very few. Of course, there are free-rider, trust, etc problems with crafting such pro-market alliances but these are the stuff of any entrepreneurial breakthrough.

Indeed, the Coasian perspective – that the existence of a potential wealth creating arrangement encourages entrepreneurs to explore ways to lower transaction costs so that such arrangements become viable. We see political entrepreneurial activity abroad (China, for example and at the state level, Indiana and Wisconsin) but very little from business.

Is there any literature in the political science or public choice literature which seriously considers this asymmetry?


Good and important questions. We can all think of well-rehearsed  answers, enough to sustain a pubchoice-libertarian kvetchfest for hours: legislators and regulators don’t want to hear about hands-off solutions; lobbyists aren’t going to recommend policies that diminish the Beltway’s sway; business firms can’t advocate limited government because the regulators have a million ways to get even; and so on. But there’s something complacent about the rote responses, and they don’t really answer Fred’s deeper query: it’s the point of entrepreneurship to overcome problems of transaction costs, agency, etc.

As Fred hints, moreover, American history provides examples of private businesses acting as constitutional norm entrepreneurs; it also provides examples of private (policy) coordination on small-government terms. The modern edifice of corporate law was invented and put into action by corporations and their lobbies; the “dormant” Commerce Clause, which prohibits states from discriminating against out-of-state commerce, was likewise a product of corporate legal entrepreneurship. (The Upside-Down Constitution discusses these and a few other examples, with literature references.)  Maybe these are outlier cases, but what made them possible? What do they have in common? Are there additional examples; and what do we learn from them?

Also:  if private market forces can no longer innovate or coordinate on limited government margins at all, why don’t we all go home and find something useful to do (like, mow the lawn)?

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on March 06, 2012 at 10:26:03 am

I think you (and Raz) ask important qseotiuns. I suspect any conceptual analysis of law contains at least some presuppostions and makes some assumptions with regard to legal practice and thus there can be no pure, a priori analysis that is utterly divorced from empirical matters: but that does not in any way detract from the value of conceptual analysis as such.And that there may be more than one concept (or conceptions) of law seems more than plausible: it reminds me of several discussions by Iris Murdoch that spoke to competing concepts of morality in the modern period (e.g., one shared by those of Protestant, Liberal, and Empiricist persuason and another more holistic' model common to Hegelians, Marxists, and Natural Law theorists; of course these can be further analyzed, with finer distinctions within each model). Perhaps, after folks like Fuller, and in keeping with the Natural Law tradition (religious and secular), including Hobbes (as Sharon Lloyd interprets him), the preference for conceptual analysis is linked to our presuppositions and intuitions with regard to minimal notions of what constitutes morality (along the lines, say, of Nigel Simmonds), and this would account for our universalist pretensions with regard to conceptual analysis. One of the virtues of the emerging field of comparative law is that we can further examine the virtues (or lack thereof) of our analyses in light of non-Western concepts of law.

read full comment
Image of Nathalie
on March 18, 2012 at 11:28:23 am

1.) “Conservative” judges–those that are peaointpd by Republicans–are much more activist in the past several decades with regards to overturning legislation or rewriting law.That isn't the right definition of activist. Whether or not a judge is activist has less to do with overturning statutes or not than it does with their reasons why they decide to do so.2.) “Conservative” activists–those that favor using the Constitution to write their religious preferences into law–are the ones that started this mess.Which is a position that has absolutely no merit. Laws against abortion existed for centuries until the Supreme Court decided to overturn the laws of 30 states on what amounts to a judicial whim. Moreover, that's not even the issue. If people want to shape the laws based on their beliefs through the process of legislation they have every right to do so under the Constitution, especially the Tenth Amendment. And states that feel differently can legislate the opposite way.The issue at stake is whether unelected judges should be allowed to write sweeping social policy—in a state that adheres to the rule of law they should not.

read full comment
Image of Dewa
on March 19, 2012 at 23:53:42 pm

Two problems: 1.) Conservative jgdues those that are appointed by Republicans are much more activist in the past several decades with regards to overturning legislation or rewriting law.2.) Conservative activists those that favor using the Constitution to write their religious preferences into law are the ones that started this mess.

read full comment
Image of Johel

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.


Obamacare: The States’ Rights and Wrongs

Briefs have been trickling into the U.S. Supreme Court in the Obamacare cases. Soon, they’ll come flooding: briefing on the Affordable Care Act’s individual mandate is starting today. It’s important to recognize that the constitutional arguments in the cases don’t always mesh easily with conservative-libertarian opposition to Obamacare’s policy—or for that matter, with their concerns over the state and trajectory of American federalism. Continue reading to learn more.