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One new frontier of libertarianism: mining for Ethereum.

Photographer: Akos Stiller/Bloomberg

Photographer: Akos Stiller/Bloomberg

A little more than a year ago, a lifelong libertarian (quotes very much necessary) took stock of the movement and declared it pretty much hollowed out. For one thing, he wrote, it cannot solve or even very well address a number of major problems, most significantly climate change. For another, Internet culture encouraged smart and curious people to seek out and synthesize eclectic views, making capital-L Libertarianism pass.

Its successor was something he called State Capacity Libertarianism an ideology that acknowledges both the power of markets and the need for government. To quote from the article: Strong states remain necessary to maintain and extend capitalism and markets.

As it happens (spoiler alert), I happen to know the author here: It was me. And given the importance of Operation Warp Speed in getting the U.S. out of the pandemic, I remain happy with what I wrote. Still, not all libertarians liked my approach, especially the state capacity part of state capacity libertarianism.

Fair enough! And given all thats happened in the past year, its worth considering the question anew: What does it mean to be libertarian now? I would say that the purer forms of libertarianism are evolving: from a set of policy stances on political questions to a series of projects for building entire new political worlds.

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To understand this path, some history is necessary. American-style libertarianism in the 1970s was a novel movement that had many useful (and I would say correct) policy recommendations. Libertarians complained about high inflation, excessively high marginal tax rates, airline regulation, extreme protectionism and labor union privilege (especially in the U.K.), among other issues.

The good news is that many of these battles were won, at least partially. Libertarian views had significant influence on the mainstream. The paradox is that they were no longer defining issues for libertarians.

Principled opposition to central planning and communism was another defining stance. But the real world did us the remarkable favor of dismantling most of the major communist regimes, and at least moving China toward significant and growth-enhancing market reforms.

Libertarians promoted other ideas too, such as a critique of major government involvement in health care and indeed of the social welfare state. These ideas have not gone anywhere. Many countries have reformed in market-oriented directions, but they have not dismantled their social welfare states.

The U.S. in particular has moved in the direction of greater government involvement in these areas, both with Affordable Care Act a decade ago and the Cares Act last year. Countries such as Chile and Singapore, both successful reformers in earlier times, have moved toward a greater reliance on social welfare programs.

Past instantiations of libertarianism have emphasized the anti-war roots of the movement. Half a century ago, it drew energy and inspiration from the ongoing failures of the Vietnam War, which every day reminded people that the American state could be a force for great evil. Nowadays, however, even unpopular wars tend not to stoke outrage for very long. The current tactic of frequent drone strikes may well be a huge mistake, but it is hard to get the American public very upset about it.

More recently, the American Institute for Economic Research attempted to make resistance a central feature of the libertarian movement resistance to lockdowns. But its Great Barrington Declaration was fatally flawed. More important, with vaccinations rising, most lockdown issues are likely to recede.

The failure of the libertarian movement to generate public opposition to or even public interest in government overreach is more than a transitory defeat. It has resulted in a kind of tectonic shift: Instead of emphasizing the failures of current systems, libertarian energies are now focused on the possibilities of entirely new ones. Much of the intellectual effort in libertarian circles is concentrated in two ideas in particular: charter cities and cryptocurrency.

Very recently a charter city was inaugurated in Honduras, with its own set of laws and constitutions, designed to set off an economic boom. Entrepreneurs are seeking to create such cities around the globe, typically as enclaves within established political units. The expectation is not that these cities would reflect libertarian doctrine in every way, but rather that they would be an improvement over prevailing governance, just as Hong Kong had much better outcomes than did Maos China.

A milder version of the charter cities conceptis the YIMBY (Yes In My Backyard) movement, which is not founding new cities but seeking to transform existing ones by deregulating zoning and construction and thus building them out to a much greater extent.

Another area attracting energetic young talent is cryptocurrency. Bitcoin gets a lot of the attention, but it is a static system. The Ethereum project, led by Vitalik Buterin, is more ambitious. It is trying to create a new currency, legal system, and set of protocols for new economies on blockchains.

Unlike Bitcoin, Ethereum can be managed to better suit market demands. Imagine a future in which prediction markets are everywhere, micropayments are easy, self-executing smart contracts are a normal part of business, consumers own their own data and trade it on blockchains, and social media are decentralized and you cant be canceled. The very foundations of banking and finance might move into this new realm.

Consistent with these developments, the most influential current figures in libertarianism have a strong background as doers: Elon Musk, Peter Thiel, Buterin and Balaji Srinivasan, to name a few, though probably none would qualify as a formal libertarian. All of them have strong roots outside the U.S., which perhaps liberated them from the policy debates that preoccupied American libertarians for so long.

All this said, it is far from certain that these movements will succeed. Will many governments give up partial sovereignty to charter cities, and will these new political units maintain their credibility and integrity? Will consumers find sustainable and generally accepted uses for the products of an Ethereum-based commercial ecosystem, or will blockchains prove too cumbersome?

In essence, the new versions of libertarianism are seeking to act where action is possible. They are scaling up the vision rather than winnowing it down. Those visions probably wont be enough to arrest climate change, but they nonetheless could be transformative for peoples everyday lives.

The most radical form of the new libertarianism combines the two visions. Imagine a series of autonomous, competing cities, replacing the old nation-states. These cities are built on crypto institutions, cannot rely on resource confiscation, and they are more like start-ups than the large, centralized governments of the mid to late 20th century.

It is fashionable these days to claim that libertarianism is dead. Instead, before our very eyes, it has reinvented itself to focus less on policies than on projects. In this sense, it hearkens back to the Pilgrims and a much earlier set of ideologically driven projects that helped to build the current Western world.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:Tyler Cowen at tcowen2@bloomberg.net

To contact the editor responsible for this story:Michael Newman at mnewman43@bloomberg.net

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Read more from the original source:
Libertarian Ideas Are Evolving in Response to Covid and Recession - Bloomberg