Andrew Lilico says:
I would prefer a system in which the wealthy were allowed to lose their money if their investments go bad, in which the state does not intervene in the economy to keep the rich rich. I grant that we do not have such a political system now – the bank bailouts of 2008 and since have made that clear to everyone.
The bailouts, though, are only a small part of the story here. There are countless other ways in which the state helps keep the rich rich, for example:
- The state enforces property relations, including intellectual property rights. "Private property cannot survive without the guarantee of government" says Ferdinand Mount, who's hardly a rabid leftie. This guarantee, though, is asymmetric; if you have a troublesome tenant, the police might turn up mob-handed. But if you have trouble with your phoneline, they are unlikely to raid BT's offices.
- Planning restrictions help to keep house prices high, to be the benefit of landlords, and help to maintain local near-monopolies for example by restricting the number of retailers in an area.
- The state played a key role in the process of primitive accumulation - imperialism and slavery - which provided a basis for capitalist wealth today. It wasn't Marx who wrote "All rights derive from violence, all ownership from appropriation or robbery", but von Mises.
- Government spending is a form of corporate welfare. At its best, it helps sustain demand for capitalist products. And at its worst - for example in overpaying for military equipment, paying for welfare-to-work programmes that don't work or just outright fraud - it gives capitalists something for nothing.
- The ordinary welfare state helps the rich too. Most obviously, housing benefit subsidizes landlords. But it's also the case that welfare benefits help underpin and stabilize aggregrate demand, and help to maintain a supply of labour, all of which benefits capitalists.
In saying all this I'm not denying that inequality wouldn't arise in a freed market. My point is just that such inequalities - the Robinson Crusoe example Andrew gives - would be very different from the inequalities that actually exist now.
Nor am I denying that there might be a case for such massive state intervention. When investment is in private hands, it will only occur if those hands can be reasonably certain of a return. In this sense, economic growth - at least within a capitalist economy - requires the state to guarantee capitalists' wealth.
Instead, my point is simple. If Andrew is serious about wanting the state not to intervene in the economy to keep the rich rich, he must adopt a very radical position indeed. I warmly welcome him into the left-libertarian fold.