Institutionalizing Idealism

by Wendy McElroy

Many factors have contributed to the tragic collapse of Russia, but one of the most prominent is the lack of a network of institutions that would constitute the 'rule of law'. Russia simply does not have in place the basic social structures -- such as a predictable and accessible court system -- upon which the daily functioning of freedom depends. As the totalitarian structures were swept away or rendered ineffectual, free market ones did not arise to fill the vacuum. For example, there was virtually no means by which to register land titles or to enforce business contracts. In his book Socialism, Mises comments, "it is no accident that it is precisely in the defense of property that Law reveals most clearly its character of peacemaker."(1969, 45) Without a tradition of common law to draw on and hindered by a lumbering government, the Law could not function as a peacemaker.

The laws and customs of a society are expressed through its institutions. Random House dictionary (1980) defines an 'institution' as "a well-established and structured pattern of behavior or of relationships that is accepted as a fundamental part of a culture, such as marriage." Some of the traditional institutions of society are the family, the court system, and churches. Generally, institutions evolve over a long period of time to reflect the history and dynamics of a culture. For example, the institution of common law, though hardly perfect, has the charm of having evolved on a grassroots level to meet the real perceived needs of people. In broad terms, common law reflects the laws that the average human being was and is willing to accept and abide by. Equally, the institutions of money and the market place arose naturally to satisfy human needs and they continue to change in response to shifts in those needs.

But to say that society's institutions arise naturally is not to say human beings did not and do not play an active role in designing particular aspects of their structures and procedures. To say that court systems evolved naturally in response to a need to peacefully resolve disputes in society does not mean that individuals did not design the particulars of the institution. Trial by a jury of one's peers, for example, was a procedure consciously conceived of in order to maximize the justice of verdicts. At some point, specific individuals decided to employ this procedure, which then weathered the test of time well enough to become a cornerstone of Western jurisprudence.

Politics is the institution with which contemporary libertarians seem most preoccupied. And of the political system, libertarians often observe that it 'institutionalizes corruption': that is, current political structures and procedures inherently tend toward bad results, such as the redistribution of wealth or the personal corruption of those who are elected. In a sense, this is an optimistic statement. If institutions can be sculpted to embody corruption, then they can be designed in order to maximize libertarian ideals. They can be designed with a tendency toward freedom rather than tyranny. The Founding Fathers attempted to embed 'proper' tendencies within government institutions when they constructed a system of checks and balances in order to curb the centralization of power. For example, the President can veto a measure, but the Congress can overturn the veto. Ultimately, the Supreme Court can be called in to adjudicate the matter, but since the President appoints the Supreme Court Justices and Congress has to approve each appointment, the power of the Court is checked as well. Whatever your view of government, the tripartite balance of powers is a skillfully designed brake on power.

The specific structures and procedures of any institution will largely determine the results it produces. And, although the institutions advocated by libertarians may seem minimal -- amounting to what Ayn Rand called 'a night watchman' government, and what even more minimal anarchists call 'society by contract' -- it is crucial that they embody free market ideals rather than statist ones, because the structure will determine the result. For example, the procedures must respect the consent of each human being rather than impose majority rule (democracy) upon unconsenting individuals.

The question becomes: how can institutions be designed so as to express and tend toward libertarian ideals? Answering this question requires an unfortunate bit of backtracking as the concepts of 'ideals' and 'idealism' have come under vigorous attack within the movement, and they require a defense of their own before proceeding.

Libertarians as Inescapable Idealists

Anyone who advocates a society or a social condition that is remarkably different than what exists is an 'idealist' in the classical definition of the word: that is, you become a person who represents things as they might or should be rather than as they are. Whether you are an anti-electoral anarchist or a limited government political candidate, being a libertarian means advocating a society based on individual rights rather than on collective social control. It means arguing for a social structure that is markedly different than the current one. Thus, for libertarians -- whether they like it or not -- idealism is inevitable. Part of trying to alter the basic rules of society is to have a vision of the proper rules and, hopefully, of the proper structures that should exist but do not.

Nevertheless, the word 'idealism' is often pronounced with scorn and used as an ad hominem to dismiss an opponent's position as being too impractical to deserve serious consideration by reasonable people. Some attacks may spring from an honest confusion arising from the definition of idealism -- the advocacy of things as they "might or should be". The words "might be" implies the possibility of translating an ideal into reality. The words "should be" carry no such necessary connotation. idealism a practical stance, or not?

There are two distinct forms of idealism, both of which I consider to be practical and useful. The first is almost a psychological position. I am an anarchist, but I never expect to see a perfectly voluntary society -- that is, one without crime and violence -- just as I never expect to be in perfect health. Yet I advocate society by contract just as I take vitamins every day, because I want to get as close as possible to both ideals. In short, the only way I can approximate this ideal is to hold it firmly in front of me as a standard against which to measure the world. In this sense, an ideal is like true North on a compass, and it serves a valuable function whether or not true North (the ideal) can be reached. This is the form of ideal embodied in the wording "things as they...should be."

The second form is more practical. Ayn Rand was fond of claiming there was no contradiction between the ideal and the practical. If an ideal is being used as blueprint on which to construct reality, e.g. the ideal of privatizing roads, then Rand is undoubtedly correct. If the blueprint is inherently flawed and cannot be translated into reality however you alter surrounding circumstances, then it is flawed and should be abandoned as a blueprint. This is form of ideal embodied in the wording "things as they...might be."

Both forms of idealism are valuable in designing institutions that will act as vehicles for individual rights, rather than as barriers to them. Consider just one institution: the court system. Some legal theorists, such as Randy Barnett, have argued that only civil courts should exist in a libertarian society because all that can properly be redressed or restituted are crimes against property rights, including property in one's own person. When held up to be measured against the true North ideal of libertarianism -- namely, the primacy of individual rights -- the court system suggested by Barnett fares well. Having ascertained this, it is appropriate to move onto the next and more difficult stage of idealism: how can the ideal be best translated into a practical reality? The answer is far from clear. Would a purely civil court system use the traditional civil standard of a 'preponderance of the evidence' or the traditional criminal one of 'beyond a reasonable doubt'? Would there be a presumption of innocence? These procedural matters would evolve with the test of time as people struggled to construct an institution that expressed and furthered the ideal of individual rights. It would evolve naturally in the presence of competing solutions to the problem.

Consider another institution: tariffs. It has been suggested that libertarians should use the revenues acquired through custom duties as a substitute for those raised through taxation. When held up to be measured against the true North of libertarianism -- again, the primacy of individual rights -- there can be no justification whatsoever for the institution of tariffs. Such duties clearly interfere with the individual's right to trade freely. Neither the institution's goal and its design -- its internal structures and procedures -- can be used to further individual rights, only to violate them. The institution of tariffs cannot be reformed or harnessed for libertarian good. It is a step in the wrong direction, and libertarianism should give practical consideration only to how it can be eliminated as swiftly as possible.

Institutional Analysis

Socialist historians and political thinkers have developed a sophisticated institutional analysis of society that contains many valuable insights for libertarians. Such insights are badly needed. And not merely because there is a vacuum of theory to be filled. In the absence of sound institutional analysis, libertarians tend to adopt attitudes and positions that act as barriers to ever having their ideals institutionalized.

One example is the cavalier attitude with which most libertarians view their relationship to institutions. Although libertarian theory requires each individual to assume full responsibility for his or her own actions, almost all of us behave differently toward institutions than we do toward other individuals. Libertarian professors at state universities pocket tax money, while insisting 'taxation is theft.' Libertarian candidates accept matching funds because buying more publicity advances the cause of liberty. These are voluntary actions, which are different in kind from those taken under duress, such as paying taxes.

The usual criticism of those who voluntarily accept tax funds -- when any criticism is voiced at all -- is that the recipients are not really libertarians. The usual defense is that implementing principles is a complicated matter. This back-and-forth masks a more interesting phenomenon: namely, what does the dialogue say about the libertarian view of institutions? Even those of us with poor enough manners to raise questions about tax-supported professors regularly number 'the accused' among our closest friends and accept them as intellectual mentors. Certainly, this is true of me. Like most other libertarians, I tend to apply a different standard of ethics to how people deal with other individuals than to how they deal with an institution. For example, although I might well excoriate someone who stole $10 from the purse of a friend, I willingly shake the hand of a professor who fought for a position in which he receives hundreds of thousands of dollars of stolen tax money.

Several factors may account for the different standards of ethics. Perhaps institutions are seen as cold and corrupt. Perhaps so many steps exist between the theft in terms of taxation and the receipt of stolen money as a salary that the harm appears remote. Or the cultural respect granted to university professors might act as a buffer to criticism. Whatever the reason, it is clear that libertarians badly need to develop a thorough system of institutional analysis, especially since libertarian ideals will ultimately be expressed through or defeated by the institutions of society. The only way to clarify an individual's relationship to and responsibility for institutions -- and to shed defining light upon such paradoxes as anarchist professors who fight to be financed by state theft -- is to seriously pursue a libertarian institutional analysis.


An anarchist friend of mine -- the writer and lecturer, Ken Gregg -- once made a casual comment that I have pondered for years. He said, "If you ever did sweep away the State, another one would arise the next morning because there is a market demand for government." The institution known as 'the State' exists because it offers services people desire, services they demand. Any ideology that seeks to dismantle the State should also plan on replacing it. It is not enough to take over the existing institutions because most of them have been designed or have evolved to serve a purpose that is antagonistic to individual rights. It is not enough to sit idly by and let the market place take care of the problem. The idea of naturally evolving institutions never envisioned human idleness. Quite the contrary, institutions evolve in the presence of industry and ideas competing vigorously with each other.

If the heartbreak of Russia can teach a lesson to those of us who wish to redesign society, I hope it is this: to facilitate the growth of healthy institutions, it is absolutely necessary to develop a system of institutional analysis that expresses libertarian ideals. It is necessary because institutions -- healthy or not -- will inevitably evolve to fill whatever vacuum exists. Every institutions tends toward a certain result and expresses certain ideals, even if those ideals are nothing more than the personal enrichment or aggrandizement of the men whose hands are on the reins of power.

I want the ideal to be individual freedom. It is time -- past time -- to draw up blueprints for the social structures that will support its weight.