Brink Lindsey and Steven Teles’ essay – and the book that lies behind it – are part of a broader liberaltarian challenge. Liberaltarianism, as I understand it, looks to use classical liberalism as a set of foundations for a very different understanding of market and state than libertarianism. Rather than starting from the market order as a beau ideal, and programmatically looking to shrink the state, Lindsey and Teles emphasize the benefits of a well working democracy. This doesn’t mean that they are part of the left – but it does mean that the argument between them and the left is likely to be productive.
To really deliver on their ideas, they need to shuck off some of the residual libertarian language that still holds them back. Here, Ilya Somin’s essay – which looks to pull them back into standard libertarianism – is exactly wrong. To really do what Lindsey and Teles want it to do, a democratically mandated state needs to be more radical in its approach. Rather than simply looking to curb regulatory abuses, it needs to reinvent itself, bringing its role in making and remaking markets to the fore.
Somin’s challenge to Lindsey and Teles emphasizes the general argument (going back to Schumpeter at least) that democracy is vulnerable to regulatory capture, since ordinary voters don’t have the knowledge or incentives to understand what is good for them, and politicians don’t have much interest to act in the public good. However, Somin notably fails to address the key problem which animates Lindsey and Teles – that some forms of regulatory capture are far more pernicious than others. Lindsey and Teles document how we have moved from a world in which much of the capture happened sideways, providing benefits to a broad cross-section of society, to one in which regulatory capture is redistributing income upwards to a narrow elite, creating a feedback loop of increasing inequality.
If anything, self-reinforcing inequality would be worse if we moved to the kind of weak state world that Somin would prefer. Indirect feedback loops would be replaced by direct predation. Moreover, as Christopher Achen and Larry Bartels’ important recent book discusses, democratic “realism” need not lead to skepticism about democracy; it can lead as readily to a focus on the key role played by intermediating institutions such as political parties. This is especially true given that markets have systematic information failures too.
Lindsey and Teles’ arguments plausibly fit well with Achen and Bartels’ stress on how actually-existing-democracy would work much better if power relations were more equal. One of the further attractions of Lindsey and Teles’ approach, as their essay suggests, is that the kind of push-and-shove deliberation that you get in real democracies will be better able to process “big, simple, transparent” interventions than complex regulatory frameworks.
However, Lindsey and Teles’ version of liberaltarianism still has too much traditional libertarian DNA. In particular, it uses concepts such as “regulatory capture” and “rent seeking” that are borrowed from libertarian-leaning public choice, treating the underlying problem of regulation as one of “artificial scarcity, in particular government policies that confer special advantages on favored market participants.”