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Constitutional Law, Corporate Power, and Liberal Imperialism

Mises Daily: Friday, January 06, 2006 by

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Issue 19.4 of the Journal of Libertarian Studies offers path-breaking and controversial articles on topics ranging from jurisprudence to economic history, and from sixteenth-century Spain to contemporary Iraq. (And check out 19.3 online too!) Here's what you'll find in 19.4:

  • The United States' intervention in Iraq is one of the defining issues of our time. In "Democratizing the Middle East: A Conservative Perspective?," Alexander J. Groth accuses the Bush administration, in its quest to build a democratic polity in Iraq, of turning its back on what was once a central insight of the conservative tradition Bush claims to represent: that democracy can be successful (whether successful in protecting liberty or successful in surviving at all) only in a favorable cultural context and cannot be imposed from the top down. Groth appeals to the historical experience with "democratic" institutions in Germany, Yugoslavia, Colombia, and elsewhere to cast down on the viability of current U.S. foreign policy.


  • The 1980s ended with high-profile prosecutions of Michael Milken and others for alleged corporate malfeasance. The 1990s began with a lengthy recession. Might these two events be connected? William L. Anderson and Candice E. Jackson argue for the affirmative. In "It's the Economy, Stupid: Rudy Giuliani, the Wall Street Prosecutions, and the Recession of 1990-91," Anderson and Jackson charge then-prosecutor Rudy Giuliani with a share of the blame, not for initiating the recession (they accept a standard Austrian business-cycle explanation on that point) but for delaying the recovery. The groundless Giuliani prosecutions, they suggest, paved the way for anti-junk-bond legislation, fueling a credit crunch that contributed both to unemployment and to the collapse of the savings & loan industry. Anderson and Jackson also argue that the chief beneficiaries, and to a considerable extent instigators, of Giuliani's allegedly "anti-big-business" prosecutions were in fact the more established business elites who thereby obtained governmental protection from economic competition by upstarts like Milken.


  • In the previous issue (19.3), Piet-Hein van Eeghen defended Henry Simons' anti-corporatism on the grounds that the corporate form of business organization, embodying state-like powers without democratic accountability, is inherently incompatible with classical liberal principles. In the present issue van Eeghen continues his critique of the corporation with "The Corporation at Issue, Part II: A Critique of Robert Hessen's In Defense of the Corporation and Proposed Conditions for Private Incorporation." In his now-classic 1979 work In Defense of the Corporation, Randian historian Robert Hessen argued that corporate features like entity status and limited liability are not special privileges granted by the state but unobjectionable products of voluntary contract. To the contrary, Van Eeghen argues inter alia that mere contract among shareholders could not create an entity to whose assets they have no title, nor could it bind third parties outside the contract to accept limitations on shareholder liability. Van Eeghen concludes by suggesting some stringent restrictions on the right of private incorporation.


  • Kelo v. New London, the recent U.S. Supreme Court case upholding the right of states to expand their powers of eminent domain, has raised some controversy among libertarians after the fact (see, e.g., here, here, and here). But one libertarian attorney, Joseph F. Becker of the Mountain States Legal Foundation, submitted an actual Amicus Curiae Brief in the case itself. Becker argues that the court should rule against the expansion, on the grounds that the function of the judiciary is to protect individual rights against democratic tyranny, that the phrase "public use" in the Fifth Amendment cannot be stretched to cover "public benefit," and that forced redistribution to promote economic development would not count as public benefit in any case.


  • In issue 19.2 J. H. Huebert's review of Randy Barnett's Restoring the Lost Constitution: The Presumption of Liberty criticized Barnett for advocating a centralist model of jurisprudence (relying on the federal judiciary, rather than on jurisdictional competition, to protect libertarian rights) and for softening his earlier free-market anarchism by defending a theory of governmental legitimacy. In "Libertarianism and Legitimacy: A Reply to Huebert," Barnett denies that he has retreated from anarchism; instead Barnett distinguishes legitimacy from justice. No government is just, since no government claiming a coercive monopoly of power rests on genuine consent; but an unjust government may be legitimate, in that there can be a prima facie duty to obey its laws if its constitutional structure and legal procedures are such that laws issuing from them are likely to be just. The advantage of this distinction, Barnett maintains, is that legitimacy is a matter of degree and so allows libertarians to distinguish between better and worse governments, as well as providing a foreign-policy rationale for imposing legitimate governments on currently oppressive regimes.

    In "No Duty to Obey the State: Reply to Barnett," Huebert responds that our only duty is to obey laws that are actually just, not those that are likely to be so; that libertarians can still distinguish better and worse governments even if all are illegitimate; and that attempts to impose liberal values by military means must be both unjust and practically unsuccessful.


  • In 1947, libertarian philosopher-novelist Ayn Rand testified before the House Un-American Activities Committee on communist influence in the movie industry. Stephen Cox reviews Robert Mayhew's recent book Ayn Rand and Song of Russia: Communism and Anti-Communism in 1940s Hollywood, which both documents the communist elements and history of the film Rand was asked to discuss, and defends Rand's decision to appear before the committee. Cox finds the book useful and filled with fascinating information, but also numerous errors; he also regrets that Mayhew relies too exclusively on "approved" (Ayn Rand Institute) Rand scholarship and fails to address the complex moral questions involved in "naming names."


  • The Scholastics have sometimes been portrayed as anti-market thinkers, committed to doctrines of "just price" and the condemnation of lending at interest. Thomas E. Woods Jr. reviews Alejandro Chafuen's book Faith and Liberty: The Economic Thought of the Late Scholastics (a revised and expanded edition of Chafuen's 1986 Christians for Freedom: Late Scholastic Economics), which – following in the footsteps of Schumpeter, de Roover, and Rothbard – makes a case for viewing the Scholastics as sophisticated economic theorists with a subjectivist theory of value and broadly libertarian policy conclusions. Woods finds the book convincing and accessible, the "best stand-alone study" of its subject, and useful ammunition against anti-market tendencies in contemporary Catholic social thought.
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Roderick T. Long (email) is senior fellow of the Mises Institute, professor of philosophy at Auburn University, and editor of the Journal of Libertarian Studies. His website is Praxeology.net. Subscribe to the Journal today. Post your comments on the blog.