I am no fan of the ‘Occupy Wall Street’ movement, which one or two libertarians notwithstanding, is a gathering of the ‘usual suspects’ on the reactionary left. That said the one virtue of this so-called ‘movement’ has been the attention it has focused on ‘structured inequality’. Most people do not care about the massive inequality between J.K Rowling or the late Steve Jobs and themselves or your average street cleaner but they do care that there may be a self-perpetuating elite (especially in the banking sector) which disproportionately influences the political system and reproduces the current power structure.
Broadly speaking there are two views on how to deal with this inequality. The OWS brigade along with the more mainstream left believe that greater regulation, more political control of markets and higher taxes on the wealthy will rebalance the system, breaking up the existing power structure. They fail miserably however to explain why the wealthy won’t use their current power to find ways of manipulating this increased intervention via continuous rent seeking. Adding yet more interventions and taxes which discourage the formation of new fortunes will simply provide additional opportunities for the current elite to avoid the ‘creative destruction’ characteristic of un-fettered market competition. The Classical Liberal/ Libertarian solution, by contrast, is to dis-empower the interventionist apparatus that enables the wealthy to shelter behind bail-outs and protective barriers of various sorts. Yet, Libertarians also fail to explain why those who benefit from the status quo would give up their privileges in order to return to a genuinely free market model.
In the final analysis, both the leftist and the Libertarian/free market ‘solutions’ to ‘structured inequality’ require a fundamental shift in the climate of public opinion such that the relevant institutional changes can be implemented in spite of opposition from the ruling elite. It is here that the Libertarian solution though unlikely in the current climate, seems much more plausible to me. Once the interventionist state is dismantled it will be very difficult for any individual or group to propose new interventions because it will be glaringly obvious to the general population that special privileges are being sought. The leftist alternative, by contrast, does not propose to dismantle the apparatus of government power but to make sure that ‘the right people’ are in charge of it and the ‘right interventions’ are in place. Yet, it is precisely because voters find it so difficult to tell the difference between ‘good’ and ‘bad’ interventions and between ‘good’ and ‘bad’ politicians that affords the opportunity for rent seekers and crony capitalists to create ‘structured inequality’. The Libertarian model requires no such competence from voters because it dis-empowers the very apparatus of organised coercion that every would-be rent seeker wants and always will want, to control.