An essential premise of libertarianism is that public (i.e. state) and private (i.e. non-state) activities are fundamentally distinct, and this distinction is of great moral signficance. Whereas to me, the distinction between state and non-state is historically constructed and ultimately empty; therefore, it is without moral significance, and libertarians are guilty of grave moral error (that is to say, a grave error about what is moral.)

As an individual, whether my freedom is constrained by the decisions of private enterprise, contract law, private property, etc., or by the state, is not an essential difference — my freedom is constrained all the same. I see no fundamental difference between paying tax to my government and paying rent to my landlord. In a feudal sense, my landlord is my immediate liege-lord, and Her Majesty the Queen of Australia is my ultimate lord. My lease restricts what I can do on the property I rent, and the government’s laws are in a way just like conditions of a superior lease.

If we are to go for minimal government libertarianism, why not go all the way and adopt anarcho-capitalism? But, without antitrust laws, what is to stop all the “protection companies” or “law enforcement companies” or “defence companies” or “judicial system companies” merging together? What is to stop all the land becoming owned by one super-mega-corporation, which can then merge with the protection-law-enforcement-judicial-defence super-mega-corporation? How would that be different from a state? The abolition of the state could naturally produce its own re-establishment, proving in the process that state and non-state are essentially identical, and the distinction between them is fundamentally empty.

Comment of “Simon K” on The Volokh Conspiracy » Martin Wolf’s Critique of Libertarianism.

Some blogs have comments worth reading. The standard libertarian response to this line of argument is that monopolies are inherently unstable unless backed by government, which overlooks the possibility of the monopoly simply becoming a government.  

In any event, the Schumpeterian ideal of monopolies being displaced by new developments assumes a dynamic economy, where there are new technologies and modes of organization that can arise to displace the old guard.  While dynamic economies characterize the past few hundred years, they’re not historically normal and I see no reason to assume that technological progress and economic growth will continue into the future indefinitely. The future may be one of quasi-medieval economic stasis or contraction, and in such a scenario I do not think that you can count on “creative destruction” to displace concentrations of economic power over time.