You are on page 1of 7

Tame Award 2008 Submission by

Anders Mikkelsen

Tame Award

Essay Title: "Can a Libertarian Society be Described as 'Tesco minus the State'?"
Essay Length: 3,000 words excluding notes and bibliography
(Submit by October 10th.)

Explanatory Note

Many socialists and conservatives regard libertarians as cheerleaders for big business.
Our belief in free enterprise is understood as support for the bigger, and therefore the
more successful, corporations - General Motors, Microsoft, HSBC, Tesco, and so forth -
and for an international financial system centred on the City of London.

Some libertarians are happy to be so regarded. They dislike the way in which big
government provides opportunities for big business to acquire privileges that shelter it
from competition. Even so, they believe that a world without government, or a world
with much less government, would be broadly similar in its patterns of enterprise to the
world that we now have. It would be much improved, but not fundamentally dissimilar.

Other libertarians disagree. They regard big business as fundamentally a creation of big
government. Incorporation laws free entrepreneurs from personal risk and personal
responsibility, and allow the growth of large business organisations that are
bureaucratically managed. These organisations then cartellise their markets and
externalise many of their costs. The result is systematic distortion of market behaviour
from the forms it would take without government intervention. These libertarians often
go further in their analysis by denying the legitimacy of intellectual property rights and
ownership rights in land beyond what any individual can directly use.

Where do you stand in this debate? Are you broadly comfortable with a global capitalism
that is raising billions of people from starvation towards affluence. Or are you a radical
with a vision of a society that has never yet been tried and is as alien and even frightening
to most people as anything promised by the Marxists.

You tell us.

Can a Libertarian Society be Described as

'Tesco minus the State'?
The Libertarian Alliance’s 2008 Chris R. Tame Memorial Prize essay contest
( asked contestants to answer the
"Can a Libertarian Society be Described as 'Tesco minus the State'?"

The winning essay was by Keith Preston, and is well worth reading and comes complete
with footnotes and an excellent bibliography.

I submitted my own response, where I read the question as follows.

1. Are corporations like Tesco inherently opposed to liberty like the state or are they
permissible under libertarianism?

2. Will the system of enterprise remain primarily the same under liberty? Are
corporations like Tesco functional in a free market? Or does Tesco become
unrecognizable in the absence of the state?

I answer “No” to the first and “Yes and No” to the second.

I would also add that liberty for all is at once comforting and a radical and scary idea.

Are Corporations Wrong?

To be wrong and against liberty we have to show how corporations aggress, have
privileges, violate rights, or are fraudulent.

As long as people in their corporate capacity are expected to follow the same rules of
non-aggression, corporations must be valid. The state is impossible if state officials are
held to the same rules as everyone else – no taxation, wars, conscription, spying, etc.

Corporations are unable to cartelize or externalize with out the state. Typically cited
abuses of corporate power make no sense except in the context of the state. This
surprisingly can hold true in popular culture, the story in a movie like Syriana intimately
involves the state and makes no sense without it. Other movies show a state system that
permits favored private individuals to get away with murder or otherwise act contrary to
justice and liberty. The state supports such abuses and even legitimizes them – in contrast
as the proponents of liberty we do not support aggression or the violation of rights.

So is limited liability fraud? In short – no it is not. One doesn’t have to do business with
those who insist on limited liability.
Libertarianism respects choice – freedom of contract, as well as well as property rights
(which individuals have the right to make choices about real and specific things.) The
fundamental operations of corporations are in precisely these areas.

It should be noted that social cooperation is part of any economic system. Corporations
are just another form of cooperation, they are people following rules that define longer
term patterns of social cooperation. So are contracts. Corporations do permit participants
to exit and for the dissolution of the corporate social structure.

With freedom of contract people can set up corporations that may grow like Tesco.
People can trade their property or give it away. People can choose whether to do business
with corporations or whether to work for them. People have choices as long as they don’t
aggress or commit fraud.

As long as the property is owned with rules such that decisions can be made about the
property’s disposal, then corporate and partnership rules should make sense under liberty.
Rules that do not permit future or present owners to dispose of property, thereby
preventing ownership, would not work under liberty. Examples of rules that don’t work
under liberty include entail and covenants preventing future owners’ sales or transfers of
a specific property to minorities or strip miners.

If people choose to work in a corporate or bureaucratic manner, then that is their choice.
They can also live in a commune, or march around in silly uniforms. As long as they’re
not aggressing against or defrauding others, then their behavior is not an issue of liberty
but of choice.

Changes to the Legal System under Liberty

Several other aspects of the present corporate system would change dramatically due to
legal changes. Copyright and patent will change quite a bit. Finance will change
somewhat. Finance and intellectual property (e.g. pharmaceuticals, publishing + media,
software) are two areas are responsible for many of the largest fortunes, and they have a
vested interest in state support. Land ownership may change in some areas.

Copyright will not be able to function without the state. Copyright implies there is no real
ownership of the copyrighted material by the buyer. It implies that if you find a CD you
can’t put it in your computer and use your property to create MP3s and send them to
people. It asserts that you can’t really do what you want with your property. Copying is
not theft, because theft implies taking real goods away from someone, not creating more
goods. Copyright prevents possessors of individual copies from ever owning the copies.
Patent also implies that people can’t use their property to make thing other people have
made. (This is not to say that real contracts similar to non-disclosure agreements could
not be enforced.) With Patent and Copyright the lack of real contracts and a victim
missing real goods make enforcement difficult to impossible, even under the state. It is
impossible to see how they could be enforced under a system of liberty.
Fiat money is unlikely to implausible. It is hard to see how fiat money will be accepted
without the state to prop it up by enforcing fiat money contracts, including accepting fiat
money as taxes and spending fiat dollars. This bad money drives out the good. This
would definitely change the world financial system – no one would be obligated to accept
fiat money nor would there be a ready market for it except at steep discounts, thereby
making fiat money pointless. To the extent that businesses and their business models
depend on being the early recipients of fiat money, those businesses would no longer be
successful. However under liberty people would still have money and be able to make
loans, invest in businesses, and receive profits and interest, and banks could loan out
money with a 100% reserve requirement and sell products like certificates of deposit.
Some people would obviously become quite successful and wealthy doing this, just as
with there are top people in any field.

Land use may change. It might be shown that there are many large land owners whose
monopoly land holdings are contrary to liberty (Latin America comes to mind.) However
under present economic conditions a small area like a Hong Kong can support large
numbers people and offer the great economic and personal opportunities. Even if much of
the land in the western world is owned contrary to liberty, enough is owned freely to
allow opportunity for all under liberty. It places like the US there is also much federal
land that would be open to development and conservation by private organizations.

Historically many large fortunes have benefited from State intervention in their favor.
These include large feudal land owners (comparatively unimportant today,) financiers,
beneficiaries of copyright and patent rules in media, software, pharmaceuticals, etc.
beneficiaries of regulation and trade restrictions in a multitude of industries. Large
corporations often benefit from rules protecting the status quo, however small
corporations grow all the time to become large. Without a state to symbiotically support
them and cajole their support of the state, these large fortunes and corporations might
have been much more modest and purely beneficial suppliers of the capital, jobs, goods,
and services that are always in demand by society.

Are Corporations Functional?

We’ve seen that in theory corporations are just under liberty. We’ve also seen that many
large concerns and types of businesses today depend on state intervention and would be
organized differently without it. Would corporations still be recognizable under a system
of liberty?

Libertarianism is about human choice. It is hard to predict how people will act. However
we can predict the bad effects of their actions.

Let’s use the example of Tesco. It is hard to predict what will happen under a system of
liberty. There are two sides – consumer side and producer side. People will have the
choice to use Tesco as they do today. More people will have the choice to compete
against Tesco, and it is probable Tesco is favored by regulations (otherwise it couldn’t
have grown.) However Tesco may also have more choices under liberty in how it
responds to consumer demands. People may very well decide that Tesco offers more
convenience and choice than alternative. Or they may not and prefer smaller more local
suppliers and markets that can compete better under liberty. But Tesco itself might change
as it has more options as to how to works with its suppliers and with customers, it may
offer decentralized shopping or more delivery service as well as more purchasing of local
produce. Tesco may resemble a network of local and small businesses – maybe even a
franchise or co-op model in some places. Similarly removal of Agricultural subsidies,
rules and regulations will create new opportunities for existing and new firms to improve
their models. Technology may make it easier for smaller local firms to co-ordinate with
local suppliers and customers, but will also enable working with far flung suppliers.
Similar choices will open up in other areas of the economy.

As Bastiat points out in the Parable of the Broken Window, there is that which is not
seen. Removal of subsidies will also affect agriculture in positive ways. Within the US
food choices were definitely affected or distorted by corn subsidies which flood the
market with cheap corn that is used as a feedstock for making ‘junk food’ comparatively
cheap. It is hard to predict what great things people would have produced without the
subsidy, and non-junk food would have been relatively less expensive.

Again liberty is about choice. People have the right to choose. If they decide to shop at
Tesco they may. People also have the right to create a Tesco. If they do so that is their
problem and not yours or mine. It doesn’t matter if we support them or not – it is their

We have to keep in mind that while society is impacted and distorted by the state,
economic activity revolves around routing around the state. An ordinary person who
escaped the confines of government schools will spend his day doing what he wants as
best he can, and fairly successfully. This involves going to work where he can most
effectively be economically productive, and shopping where he can spend economically
and doing his best the whole time to avoid the state. This involves often working or
shopping at a Tesco like organization, but it also involves working at or dealing with
small businesses. Despite everything both types of businesses survive and even thrive.

It should be emphasized that a system of liberty does permit society to be both

conservative and allows social change. It is individual choice and those choices are

Examples of inter-personal economic activity require cooperation. The corporate form of

organization is simply an extension of cooperation, cooperation made regular.
Organization is part of even seemingly non corporate methods of cooperation like open
source software or black market drug trafficking. With corporations, individuals are
allowed to enter and exit this regular cooperation, as is consistent with liberty.
Organization can dissolve through bankruptcy. Thus the corporate method of doing things
does permit social change while allowing people to create regular rules of cooperation for
an extended but not infinite period of time.
Why Liberty if it means Tesco?
Fortunately Liberty doesn’t mean Tesco for all – only for those who want it. Back to the
barricades! You have dreams to pursue and your own life to live.

In the US Wal-Mart is a huge enterprise, however many people never shop in one, and
there are people who’ve never been in one. They aren’t cut off from the world, and they
prefer to shop in local high streets or downtowns, in malls or strip malls, or country stores
and farmers markets, and even on the internet or from catalogs. Many of these places are
small family businesses or locally rooted medium sized businesses with their own flavor.
Not only are different sub-cultures and individual tastes served, but in cities one can go to
the right neighborhood and find markets serving an entirely different culture from your
own. The present and antique productions of many craftsmen and artists can find a ready
market and appreciation. Options abound.

We have every reason to expect more opportunity and variety under liberty. For one
regulations are designed to enforce uniformity and regularity for its own sake. For
another, people will become wealthier and their leisure time will be more valuable. They
can afford to indulge their individual taste in both what they purchase and how they
work. An artist who has to work all the time in the fields just to eat will not have time or
resources to flourish. But under liberty he can support himself working part time and
living simply in a low cost area.

There are many people today who would like to have a family and a proper home for
them. Faced with constant inflation, large tax burdens and regulations it is hard to
become independent so one can experiment in one’s work and business. More people will
have the option to live a simple comfortable life and pursue their dreams, may it be to
create as an artist or craftsman, invent or tinker, pursue science or scholarship, navigate
rivers or climb mountains, or simply enjoy time with the friends and family.

Liberty – Comforting and Scary

The idea of liberty is both comforting and scary for people. One the one hand we all want
to be left alone to pursue happiness. On the other hand people are scared that other people
will not act properly – left alone they will do bad things and make the world an ugly and
violent place.

There is no telling what people will get up to – they may bear arms, shop at wal-mart or
tesco, attend mosques or churches, become atheists, reject evolution, build urban sprawl,
neglect their children, watch TV, work too hard, stop working, drink too much, neglect or
pollute their property, fail to preserve historical monuments or works of art, drop out of
school, and they may even commit violent crimes if not carefully watched.

However support of liberty means we realize that the state, i.e. organized violence, is not
the answer to social problems. The problems of society are made worse by forcing people
to be better. Taking away the choices that people actually make is not the answer.
When we ask - "Can a Libertarian Society be Described as 'Tesco minus the State'?" past
a certain point it is impossible to predict what choices people will make under liberty.
People will do what they choose. Liberty also means that it isn’t any of our business how
people choose to act – even if that means people with corporate lives similar to life today
or something totally different.