QUESTIONS FOR LIBERTARIANS.

Hello all, this isn’t 100% related (it would be nice if Mises.org had a forum where topics could be posted by readers)

I’ve read books by Hayek and Mises from cover to cover and underlined the parts I liked best (there were many), but honestly, there are many aspects of right-wing libertarianism which frankly baffle me. It’s not so much that I agree or disagree, it’s that I’m not sure I understand the argument, or if there is an argument. One aspect which particularly baffles me is the hard-line position that the government has basically no legitimate role in the marketplace.

To keep it in the real world, how would this position apply to the current problems faced by the citizens of Juarez, Mexico, which is currently one of the worst places to live in the world. Now, I fully agree and then some that the current problems in Juarez are caused by the Mexican and U.S. government, especially as they related to drug policy. I am in full agreement that we have a right to take the drugs we want, and that drug prohibition is serious overreach by any government and only contributes to gangster-ism and dangerous products.

But let’s consider the hard-line position, that the Mexican government should not legalize and regulate the sale of drugs, but leave the marketplace altogether, or even cede power and disappear. Let’s imagine also that all but one major gang also become convinced that they would be better off competing non-coercively in a free market. Would not the one remaining gang have a significant advantage over all of the others, by using its soldiers to take over the businesses of rivals by force? Let’s say then that the rival drug gangs are not so naive, and form a mutual defense pact against outside aggression. Such a defense pact would have to have some kind of arbitration abilities to resolve conflicts between member gangs or it would be likely to fracture over internecine disputes. The arbitration process would have to have agreed upon rules and penalties for those who flout them in their business practices. If it had an armed force, a set of rules and an arbitration process, it would basically be a new pseudo-government, with executive, legislative and judicial functions. It would probably be safe from the rouge gang, but only by forming a kind of government. And if this were to happen, and let’s say that the new drug cartel’s pseudo government was better organized and better armed then other defense pacts in the economy, how would libertarians propose to deal with it if it turned from a defense pact into an offense pact? I’m not sure I believe that there can be a power vacuum, and I do believe that the human nature of some people is to attempt to establish coercive power over others. I personally think the solution to this conundrum is decentralized directly democratic government, but I’d welcome an explanation of an alternative approach.

Let’s take a second example, Which is Carlos Slim, who is by some estimates the richest man in the world, and certainly is in Mexico. He’s claimed to own $50 billion in assets, compared to a Mexican GDP of only $1 trillion. Let’s assume that Mr. Slim is a good man an acquired this fortune only through free exchange, but that his heir is another story. Now let’s imagine again that the Mexican government shrinks down to a tiny size and steps out of the market completely, and Mr. Slim’s heir, Slim the Second inherits the Slim fortune. It seems to me at least that if any talented individual has direct control over a full 5% of a nation’s economy, it would be an easy game for that individual to either take significant control over an existing government and use it to his economic advantage, or to simply use his fortune to establish a new government. How many young Mexican thugs could $50,000,000,000 hire train and arm? All of them?

It seems to me that the free market is efficient in producing goods and services partly because it creates unequal outcomes. Efficient producers are rewarded and inefficient ones are not. It also seems to me that if this inequality of outcomes becomes too severe or if wealth becomes too concentrated, then it becomes almost inevitable that eventually a coalition of the wealthy will attempt to use their fortunes to limit competition against them, either by influencing an existing government or by simply buying a new on under their control into existence.

What would the libertarian response be to this? Would a truly free market have any defense mechanisms against an extreme concentration of wealth, or the use of concentrated wealth to purchase market coercion? How could it be sustainable for more than a short period if not? How wide is the range of libertarian opinion on this, and are there any works which cogently lay out the hard-line libertarian position in regards to this issues?