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In my last post on economist Tyler Cowen's case for "state capacity libertarianism" (SCL), I took issue with Tyler's claim that SCL is the wave of the future among "smart" libertarians. In this one, I focus on the more important issue of whether SCL is actually a good idea. Regardless of whether SCL is popular among libertarians now, should they adopt it? Here's why my answer is a qualified "no."
Before going into greater detail, it's worth asking exactly what Tyler means by "state capacity." He does not provide a very clear definition. But it seems to me that his SCL theory differs from more conventional libertarianism in so far as it focuses on increasing and improving the capabilities of government, including in at least some substantial areas that most other libertarians would argue should simply be left to the private sector. To the extent that SCL simply means improving government's ability to perform those functions that even traditional libertarians (with the notable exception of anarchists) believe government should carry out, there is little difference between Tyler's theory and other types of libertarianism.
Unfortunately, Tyler fails to specify how we measure the type of "capacity" he considers important, and also how we draw the line between issues where the right approach is improving state capacity and those where we should still aim to keep the state out (which might actually require reducing capacity, or at least keeping it more limited).
This lack of clarity is part of a more general problem with state capacity theory that goes well beyond Tyler's piece. As critics like Bryan Caplan and Vincent Geloso and Alex Salter, point out, state capacity theorists have not done a good job of differentiating cases where state capacity is the cause of good outcomes from those where it is a result of them (e.g.—a state in a wealthier society has more capacity than on ine a poor society, even if the state did little to create that wealth). In addition, greater capacity means an increased ability to do evil as well as good, which is a highly relevant consideration when we are talking about institutions that can regulate, imprison, and kill people.
Until state capacity theorists do a better job of sorting out these baseline issues, we should be wary of making state capacity a central element of libertarianism—or, indeed, any other liberal political theory. These problems may not be insuperable. But they do require better answers than state capacity advocates have given us so far.
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