Welcome to Freedom Democrats

Kevin Carson has posted his his first paper, Industrial Policy: New Wine in Old Bottles over at theCenter for a Stateless Society that I would like to comment on.

Carson, of course, is a well-known left libertarian critic of "Corporate Liberalism" and especially of modern day corporate organization theory attributed to Alfred Chandler. Whereas, for example, the Chandler School views technological shocks(say, the 2nd Industrial Revolution) as purely exogenous, and the
Chandlerian Managerial Firm as a rational organization development to mobilize capital necessary to exploit such shocks, Carson borrows heavily from "revisionist" historical deconstructivism that places a much greater premium on Political class expropriation of technology as the basis the modern industrial enterprise. In the latter view, strict technological determinism is rejected for a more a contextual treatment that views the evolution of technology and the modern corporation heavily intertwined with Statist intervention/interference(a recent example is Gerald Berk's, Alternative Tracks: The Constitution of American Industrial Order, 1865-1917 that places much more emphasis on politics as opposed to technological imperatives in shaping 20th Century Corporate Liberalism).

At the forefront of such an interpretation is the role "War" and "militarism" has played in shaping the evolution of the modern industrial State. For example, New Left historian, William Appleman Williams views the Civil War as greatly fascilitating 19th century industrialism, or as he put it: "the Civil War "produced an industrial system rather than being fought with one." Williams is also credited with coining the term "Open Door Imperialism" to describe the behavior of American Foreign Policy under the influence of "Corporate Liberalism." Essentially,this doctrine posits "the use of U.S. political power to guarantee access to foreign markets and resources on terms favorable to American corporate interests, without relying on direct political rule." A libertarian interpretation of William's Open Door Imperialism is that domestic cartelization a la State Capitalism leads to sectoral “overproduction,” and hence to demands for overseas markets. For a historical examination of this concept from a libertarian perspective, reference The Role of State Monopoly Capitalism in the American Empire by Joseph Stromberg published in the Journal of Libertarian Studies.

Using Williams' Open Door Imperialism model to examine historical context, it's fairly trivial to conclude how Wars, starting with the Civil War and extrapolating up to the current War on Terror, simply serve as testosterone shots for the Corporatist State and the Chandlerian Managerial Firm. Nevertheless Carson views Corporate Liberalism as standing on it's last legs, driven to the precipice of collapse because "Peak Oil" will prevent further state subsidization of energy inputs necessary to sustain the the type of demand that makes the Chandlerian Firm viable. Thus, Carson forecasts a "collapse event" that will sweep away the Chandlerian Firm and in it's stead will rise the household firm and the worker cooperative, geared more toward local production. Freed from State subsidy and the influence of politics, technology will be naturally incorporated into the social relations of the community(rather than driving the social makeup of the community), thus finally giving rise to the Mumford neotechnic era of decentralized production.

While I generally agree with Carson's critiques of Corporate Liberalism itself,I tend to strongly disagree with his embrace of a "Peak Oil" collapse event (for a particularly dire forecast of such a collapse, reference this recent post by Jim Kunstler that seems to be simultaneously channeling both Matthew Simmons and Peter Schiff to concoct a particularly nasty scenario) to trigger his vision of a new socio-economic order built around neotechnic decentralization. Firstly, I think Peak Oil at this time is bunk; supply has not reached it's peak, and secondly, assuming for the sake of argument that it has, I would project that Americans would embrace outright fascism as an attempt to preserve their way of life before going gently into that good night of decentralized anarchy, which would drastically impact most for the worse at the start. Be careful what you wish for. The collapse of the Wiemar Republic didn't result in a triumph of anarcho-syndicalism; rather it resulted in the anarchists being rounded up and shot.

My next point of objection with Carson is that technologically the Neotechnic electricity era is in the rear view mirror of the 20th century. The 21st century will be the ea of the molecular nanotech machine. At this point, it is an open question whether nanotechnology will be expropriated by the Political classes so that we end up merely repeating the lessons of the 20th century or whether nanotechnology,and in general, the wider elements of the coming technological singularity will serve as a liberating influence from the Corporatist State. To the extent that (left) libertarianism embraces the "collapse" instead of the "jump," I would posit it largely loses any relevancy. Sitting around and speculating how Peak Oil is going to force everyone to move in with grandma and learn how to garden to produce their own food, while the real questions revolve around who controls the future is an exercise in wishful thinking. And we will be long gone by the time 22nd century revisionist historians get around to deconstructing the influence of State Capitalism on the evolution of the 21st century Nanotechnological/Knowledge Firm.

Paul Krugman poses the following question:

if you believe that a surge in private spending would raise employment — and even the critics agree on that — it’s very hard to explain why a surge of public spending wouldn’t have the same effect.

Well, actually, all things being equal, a surge in private spending would come at the expense of savings, thus decreasing the supply of loanable funds, hence merely shifting employment more toward the later production cycle as opposed to the early phases of production. At least that's the Austrian take.

However, playing on Krugman's turf of Demand-Side Economics, he attempts to answer his own question here:

But one argument I keep reading bugs me: it’s the claim that spending-based stimulus is bad because economic theory tells us that a marginal dollar of private spending is better than a marginal dollar of government spending.

That’s just wrong; it’s a misreading of basic, Econ 101 level, economics.

Yes, the standard theory of consumer choice says that a consumer gains more utility if he or she gets to freely allocate a dollar of spending than if someone else makes the choices: I’d rather buy myself a $10 meal than have you feed me $10 worth of food that you select.

But that’s not what we’re talking about when we talk about stimulus spending: we’re not talking about the government buying consumption goods for the public at large. Instead, we’re talking about spending more on public goods: goods that the private market won’t supply, or at any rate won’t supply in sufficient quantities. things like roads, communication networks, sewage systems, and so on. And every Econ 101 textbook explains that the provision of public goods is a necessary function of government.

However, Krugman is deliberately conflating "Public Works" with Public Goods. Let us recall from Econ 101 to note Public Goods has a technical meaning, specifically denoting those goods that are non-rivaled and non-excludable. As I indicated previously, the "public goods" argument is a dubious one at best. Even--for the sake argument--you allowed a concession of market failure for such goods, the number of such goods are limited at best, and "government failure" in producing such goods often results in "pareto-inefficient outcomes" as well(perhaps worse than the pareto-inefficiencies from "market failure").

For example, consider the notion that Broadband Internet access should be treated as a "public good" and will serve as a "stimulus" in the process. Clearly Broadband Internet access is neither non-rival nor non-divisible and hence not a public good. If you want it, you can pretty much get it anywhere, even in remote areas if you go the wireless route. However, declaring the "internet as a public good" and subsidizing to the extent it effectively becomes non-rivaled and non-excludable good will inevitably invoke a version of the "public airwaves" argument for content-based regulations, leading exactly to the regulation scenarios I posted below. And it should be noted the new Copyright Czar is in large part a government crackdown on P2P distribution, the one killer app that would actually drive greater demand for household broadband access. So give me a break. Finally, it should be pointed out that Japan's government subsidy of NTT's nationwide build-out of fiber-optic lines to homes hasn't done much for their stagnated economy.

Krugman's deliberate conflation of "public works" with "public goods" in this instance to reassure the believers of the scientific basis of the "Stimulus" is a bit amusing. Otherwise, he has been fairly straight forward in advocating an old school production shift toward centrally-planned government demand under auspices of "stimulating" employment, a Keynesian tenet that both predates "public goods" and Public Choice Theory. He's also been more or less equally straight forward that he desires such a shift to be permanent, not temporary, as this succinct US News & World Report blurb points out. Krugman, in the pages of the NY Times, has not been shy in espousing his hope to use crises as basis for creating organs of central planning.

It shouldn't come as a surprise that at the National Press Club, Krugman admitted he has been wishing his entire life to be able to live through a depression. As summarized here, Krugman is merely repeating his thesis from his book, The Return of Depression Economics, that failures on the private demand side of the global economy are resurrecting the "Keynesian Liquidity Trap" that will serve to kill off the Chicago School Monetarist doctrine a la Stagflation of the 70s served to kill off Keynes. Krugman cynically embraced Naomi Klein's Disaster Capitalism absurd thesis that Milton Friedman is somehow at the root of a doctrine to use war and natural disasters as a means to impose "free markets" on people who otherwise would have rejected such outright. Anything to discredit the great Keynesian nemesis. Of course, there's not one iota of such nonsense ever perpetrated by anyone associated with the Chicago School, the Austrian School, or any legit school of libertarianism. However, there is a long word trail left by the likes of Krugman that embraces "crises" as a means to impose permanent Statism on people who would otherwise reject it. Of course, Krugman does not advocate socialism, or the State ownership of the means of production, rather he embraces Corporatism, the old-style Keynesian Corporatism. And he's counting on disaster and crises to achieve it...

I realize the British Labor Party has a wee bit of an Orwellian, authoritarian streak, but I would admonish saps like Andy Burnham not to cream his pants with the notion that the election of Barack Obama is a harbinger of American adoption of the British Surveillance State.

Andy Burnham told The Daily Telegraph newspaper, published on Saturday, that the government was planning to negotiate with the administration of President-elect Barack Obama to draw up new international rules for English language websites.

"The more we seek international solutions to this stuff -- the UK and the U.S. working together -- the more that an international norm will set an industry norm," the newspaper reports the Culture Secretary as saying in an interview.

Giving websites film-style ratings would be one possibility.

"This is an area that is really now coming into full focus," Burnham told the paper.

Internet service providers could also be forced to offer services where the only sites accessible are those deemed suitable for children, the paper said.
Any moves to censor the Internet would go to the heart of a debate about freedom of speech on the World Wide Web.

"If you look back at the people who created the Internet they talked very deliberately about creating a space that governments couldn't reach," Burnham told The Telegraph. "I think we are having to revisit that stuff seriously now."

He said some content should not be available to be viewed.

Apparently, the Sheeple of Airstrip One are required to have a license to watch television, but somehow I think us Yanks would have more of a averse reaction to such government propaganda below.

H/T: Delaware Libertarian

NOTE: Funny reaction over at Free Republic. I haven't seen any indication that Obama is going to take Burnham up on his offer. However, if we start to see "Coalition of the Willing" Banner Ads at Moveon.org with Burnham's mug plastered on them, then we will know something is up.

tarran over at the The Liberty Papers makes the case for Free Banking. From a libertarian perspective, given that the US Central Bank these days is effectively in the business of "corporatizing" money and credit, it would seem that Free Banking should be experiencing a revival or sorts(well at least among those who take a dim view of such things as corporatization).

tarran essentially lays forth the Misean View of Money and Credit that treats the demand for cash balances(a good not to be consumed itself, but to be held to exchange for later consumption) the same as the demand for any other good, subject to the same principles of marginal utility and subjectivism. In this context, money is more or less a commodity or good, and "the Bank" is treated more or less like any other firm that rises to supply goods. However, there is an implicit "coordination problem" with the Misean view of money, one that is typically characterized by Austrians as the "Austrian Circle." Specifically, given that money itself is not a directly consumable good, a marginal utility treatment of money presupposes some coordination when it comes to it being valued as a good in and of itself. Mises posited his "regression theorem" to assert that such coordination ultimately must germinate from a barter economy and that historically, it has been Gold that has emerged from such barter economies as that commodity that has demonstrated such utility. Thus from a Misean perspective, Gold plays a central role in any conception of "Free Banking," and any notion that money can originate either from government edict or by some form of social compact is rejected (As a corollary of sorts, it should be noted that State Fiat Money then, to subsist, must necessarily evolve out of something originally based on a commodity such as gold).

If we take the Hayekian perspective on the fundamental role prices play in terms of economic coordination, then a necessary a priori proposition is that money itself must have some sufficient level of immunity to economic rent seeking. Otherwise, the market price system will invariably break down. Historically, it should be noted that Hayek himself more or less took for granted the existence of a central bank until the 1970s stagflation/inflation radicalized him more towards the Free Banking position. Hayek, however, was largely dismissive of the need for Gold in Free banking, viewing it as an ancient convention/superstition that could be superseded by modern day spontaneous orders.

Thus, an interesting dichotomy between the likes of Mises and Hayek when it comes to money. Of course, both Mises and Hayek were classical liberals, not anarchists, and the presumption of Free Banking in the context of the State has become a moot point. Although Mises was hostile to the notion of anarchism, the reality is that State Failure lies at the nexus of any practical application of "free-market money" these days. An interesting development of late is the growing popularity of barter-based monetary systems. In the current conditions of "tight credit," agents may be resorting to bartering exchanges to preserve cash balances. However, if the large amounts of liquidity being injected into the financial system eventually leads to a stagflation or hyperinflation scenario, the popularity of these barter-based monetary systems would skyrocket as demand for cash would plummet.

An interesting observation is that in instances of State Failure, spontaneous alternative currencies tend to follow models suggested by E. C. Riegel rather than Mises. Riegel's dictum that "money is but a medium of evidencing barter balances" is a subjectivist case for free-market fiat money arising from voluntary exchange. This competes with the Misean warehouse receipts version of commodity money(Gold) arising from barter exchange. No doubt, the Misean conception of warehouse receipts is rooted in history, specifically, the British tradition, but it's debatable whether the British Tradition is really rooted in free-market, spontaneous order. In any event, the likes of David Friedman, for example, has made a compelling argument that private commodity money would likely result in fractional reserve banking. So-called "fiduciary money," of course, is an anathema to the Misean notion of money that equates fiduciary money with either theft or fraud. However, as James Leroy Wilson notes, there's no real case for fraud to be made as long as the notes in circulation are ultimately backed by other assets of equal value belonging to the bank. This was essentially the same point that David Friedman made with the caveat that the the value of such assets not be linked to the value of said money--for example bank corporate stock. Indeed, Friedman pointed out there would likely be little preference for banking with "limited-liability corporations," so that in the case of failure, the assets of the investors would be fair game to satisfy depositor claims.

In the absence of the State, money is what the free market says it is. Hayek classified economics as a coordination problem, which certainly includes "money" itself. Mises may have posited his regression theorem to resolve the money coordination problem in favor of gold and warehouse receipts, but the same regression theorem technique can be applied, for example, to demonstrate that free-market fiat money can arise out of barter exchange as well. Coordination problems typically do not have unique solutions. Free market fiat money, free market fiduciary money, and free market warehouse receipts are all "solutions" to the money coordination problem. In conditions of market anarchism, where there are no legal-tender laws, an inferior solution is not going to drive out a superior solution. Clearly inferior solutions will die out on their own.

I just have to smirk at stuff like this. Like that's going to stop anything. If you can't afford the original energy booster on a night of drinking, I've noticed the proliferation of late of these 2 oz. energy shot drinks. Perfect for downing before enjoying that 6'er. Then again I was always a bit partial to coffee with shots of Kahlua.

Recall back in 2001, the since qua non of the early Bush Admin was how to divvy up that projected 6 trillion dollar Surplus. That was the fight in Washington. Well, of course, as it turned out, there never was any surplus; the projections were based on flawed economic and technical assumptions. With increased spending and static revenues, the likely end result for the time frame will be more along the lines of a 5-6 Trillion dollar deficit. Just a wee bit off in those projections, Jack.

Now, the punctum saliens of the early Obama Admin is the "Stimulus." The fight this time in Washington will be how to divvy up the Stimulus, projected to be around 500 billion. The New York Times provides a sampling of economist opinion of what should be in the Stimulus. I compiled a brief summary of their collective suggestions below.

Give it to the Governator so Cali doesn't go bankrupt
Increase "Green" R&D and restructure the economy for higher energy prices
Digitize Medical Records
FICA Holiday
More Homeland Security Investment
Public Infrastructure Upgrades
Subsidize Worker Unproductivity
Tax Credits for Health Insurance
Increase Unemployment benefits as a Demand-Side Stimulus
Create Clean Energy Corps
Restore ecosystems in the Florida Everglades
Incease Pell Grants
Cut Taxes
Mortage Bailouts
Universal high-quality early childhood education for three- and four-year-olds
subsidize home care workers
Subsidize the "Smart Grid"

Of course, given the economic policies of massive reflation and deficit spending the past 7 years, the above "stimulus" would likely serve the equivalent of throwing water on a drowning man. Indeed, there is now growing talk about massively ratcheting up the "Stimulus" into a FDR-like Public Works Program. This point of view is being promulgated by the likes of Paul Krugman and seems to be finding a receptive audience with the Obama Economic Transition Team. The meme seems to be that we are on the verge of a 1930s depression, hence a renaissance of FDR and old-style Keynes General Theory.

However, truth be told, 1990s Japan provides a much applicable model to reference than resurrecting the ghosts of FDR. As the US is now experiencing, Japan experienced a similar money and credit induced boom-bust in the mid 80s to early 90s. This type of boom-bust business cycle is characterized by positive productivity shocks accompanied by credit and monetary expansion. Japan's financial bubble was one of the biggest in history, and it should be recalled at the the apex of it, the US media and politicians were clamoring that the US was on the verge of becoming a wholly owned subsidiary of Japan, Inc. When the bust hit, Japan engaged in massive intervention, not only bailing out the malinvestment, but over the course of a decade throwing every tenet of Keynesianism and Monetarianism against the Wall to see if it would stick. Japan over the course of the 90s engaged in a policy of monetarist reflation, going as far to set the Central Bank discount rate to essentially zero. Simultaneously, during the course of the 90s, Japan enacted 10 fiscal stimulus packages in the range of 100 trillion yen (roughly 1 trillion US dollars), with roughly half devoted to "Public Works." The end result of all this Japanese Statist intervention(both in precipitating the bubble boom and trying to "fix" the bubble bust) is a massive increase in a public debt and an economy mired in stagflation.

The empirical fact is that the massive Japanese efforts over a long course of almost 2 decades to ward of the deflationary effects of a bubble bust has only succeeded in replacing deflation with stagflation. In the US, the remedies of monetarist reflation and deficit spending over the course of a decade in response to credit bust shocks (starting with the dot.com bust) have now lead us to the "conventional wisdom" of the need for massive public works. We are simply repeating the failed Japanese experiment.

An interesting note is that Krugman, a student of the Japanese Experiment against deflation, roundly denounced Japanese Public Works as useless:

Japan's Public Works projects have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital empolyed producing what nobody wants.

Krugman interpreted both Keynesian and Monetarist failure in Japan as evidence of a "liquidity trap," and advocated that the Japanese Government openly promote a policy of "credible inflation," or as he put it, "a credible promise to be irresponsible."

LOL...bankrupt macroeconomics. It should be duly noted that Krugman in his NY Times Op-Ed column frankly acknowledges that FDR's "New Deal" required WW II to be viable.

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.

Let's think about Krugman's remarkable contention for a second. Is he contending that it takes a type of top down military centralization that resulted in 100 million deaths world wide in a World War to provide the necessary fiscal stimulus to make FDR-type Public Works viable? Likely not...what is clear, however, is that Krugman obviously believes that it's the role of the State to legitimize some severe bullshit when the orthodoxy fails. It is also pretty clear that Krugman is also engaging in some "Disaster Corporatism" to use crises as an opportunity to push some seriously smelly, Statist Ideological Bullshit.

It is interesting that the Japan and US credit bust-booms cycles have revived interest in the Austrian Business Cycle, specifically in the recent analytic branch known as Capital-based macroeconomics. Capital-based Macroeconomics explains the Japan and US credit bust cycles quite well and prescribes remedies for such, but unfortunately the Laissez-Faire remedies of allowing the liquidation of malinvestment, painful recession, and private savings/loanable funds to accumulate to trigger the next stimulated phase of the early production cycle seems naive in the context of the State. Of course, the alternative, shifting the structure of production to satisfy government demand instead of allowing the market to adjust to consumer demand will only worsen the problem. No doubt, there will be quite a bit of government propaganda that portrays such a shift as necessary in the context of "global climate change," but in the end, such "Public Works" malinvestment, to the extent it is pursued vigorously, will likely not end well.

I must say I'm a bit perplexed at those who vociferously opposed the Wall Street Bailout now being equally as vociferous in supporting the Big 3 Auto bailout. Perplexed because the same arguments justifying the Big 3 bailout certainly would be just as valid if applied to the Wall Street bailout. There is little doubt that the New York economy would have experienced a severe recessionary downturn--with all the effects of severe job losses, including middle class jobs--if not for the Fed bailout. Not to mention, of course, little old ladies hold bank stocks too, you know.

When it comes to down to it, is it just about bailing out the UAW? David Z. over at No Third Solution proposed an insightful suggestion. Given that GM's real value is approximately zero these days and that during the past 15 years, GM has paid out 103 billion to former workers in terms of pension and health benefits while only paying out 13 billion in dividends to shareholders, the real owners, in a sense, are the workers. Why not just make it official and have the UAW take over GM?

The UAW should let General Motors fail, they should be rooting for bankruptcy. The UAW should buy all of the debts and assets and obligations from the bankruptcy at pennies on the dollar. Anything else is just proof that they’d like someone else to subsidize their existence.

A new (for me) cover of War Pigs:

I like it.

Some ideas related an earlier post (It hits the fan...) have fermented over the past few days, and convince me of the need to briefly state an argument for a principle that is central to my conception of libertarianism, though it is not quite libertarian in itself. At times, my writings have conveyed sympathy for people who engage in destructive acts, or I have suggested that I would prioritize equality over productivity. Likewise, my criticisms of consumerism might be taken as criticism of prosperity. I want to make one thing clear (John may appreciate this):

The production of wealth, and the ability to create additional wealth, is of vital importance to all humanistic/philanthropic goals, and the frivolous destruction of wealth is abhorrent.

First, I want to qualify this by stating that I am not a pacifist, nor a fanatical conservationist/preservationist. I can tolerate quite a bit of destruction if there is good reason to believe that it is necessary to create a better world. I love the idea of creative destruction. Furthermore, I do not believe that the value of wealth is simply summed up in the total market price of everything in the world--food for a baby is more valuable than a pleasure yacht.

Putting those issues aside, the importance of this principle has been brought to focus by recent discussions relating to rioters. I can sympathize with rioters. I believe that there are many people, both in the USA and abroad, who have good reason to think that they are not valued or respected by society, and I understand how that could lead them to not respect others, and to lash out in anger. These destructive outbursts (e.g. riots) are foolish, and surely enraging for those who are harmed; but in the perspective of the daily, systematized destruction caused by others who are under hardly any pressure, rioting is rather tolerable behavior.

In a situation where the legitimacy of property is contested (as it frequently is in our world, whether in particular, in general, or even in principle), I'm not all that bothered that people sometimes use force to secure ownership in violation of my ideals, or the status quo. Instead, I am much more bothered by the destruction of items generally recognized as valuable (most likely, the rioters also recognize the value of what they destroy). Of course it does matters who owns what, and it matters that people generally abide by universal/objective rules of ownership that reflect a general consensus, but this only matters as a way of securing material welfare. Senseless destruction can be expected to generally decrease everyone's wealth, not just the owner's...so arguments over rightful ownership are moot.

In contrast to riots, actions like the recent sit-in at a Chicago factory accomplished specific goals of the laid off workers (such as keeping their homes), and involved no destruction. I'm not going to throw a hissy fit over the fact that these protesters were violating someone's property fetish* (see Update 2).

In light of all this, I am repulsed by the suggestion that rioters (or factory trespassers) are detestable human beings that deserves no mercy. This is not because I necessarily approve of their actions or like them as people; I object because these justifications for the use of force end up being as senselessly destructive as the vandalism itself.

This issue becomes one of punishment and how it is justified. If you weren't aware, much of the above writing has been a critique of Stephan Kinsella's views on ownership and punishment. He has actually produced a very clearly written essay on justifying punishment, which I will refer to as an example of the "retributionist/retaliatory" theory of punishment. I think this theory is quite common in our society, and I actually subscribed to it at one point, but have since rejected it.

Kinsella's theory relies on strict individualistic formalism, and focuses on what sort of retaliation can be justified by a victim of a crime:

...a property aggressor, such as a thief, may be dealt with any number of ways. The victim may satisfy himself solely out of the aggressor’s property, if this is possible, or through corporal punishment of the aggressor, if this better satisfies the victim (as discussed in further detail below). In short, any rights or combinations of rights of an aggressor may be ignored by a victim in punishing the aggressor (implying that the aggressor actually does not have these purported “rights”), as long as general bounds of proportionality are considered.

 As you can see, this viewpoint permits the victim to engage in an act of violence even when it has no purpose other than to satisfy the victim. In that sense, it is no different than the vandal or the sadist. Of course, being human, I understand that a victim has reasons to be angry at his aggressor; so, I would be more tolerant of retaliatory violence than of unprovoked violence, but I would never endorse, encourage, or enable such violence. If I were the victim myself, I would be deluding myself to think that this theory of justice makes retribution appropriate. (FWIW, my own views of "punishment" arise from concerns with of incapacitation, restitution, and to a lesser extent, deterence).

I'm not going to say that the "retributionist/retaliatory" theory of punishment is unlibertarian, but it definitely doesn't jive with my sense of libertarianism, let alone my sense of life. Emotionally, I detect a lot of similarities between it and the domineering paleo-conservative's (and street thug's) view of punishment. It focuses on creating a power-relationship (an inversion of the aggressor-victim relationship), which is always messy since few people will submit to the imposition of domination. It also converts the issue from one of material welfare (our original concern, remember) to one of emotional satisfaction. I'm not comfortable with the idea that we will sometimes use force/violence as a means of emotional satisfaction -- I want to keep those two things separate from each other, both in my personal life and our political life.

I have a deeper problem with the form of reasoning behind this "retributionist/retaliatory" theory of punishment. As I said, I once subscribed to this type of theory of punishment, and I actually arrived at it by a similar process: individualistic formalism (mine being a sort of contract theory). Such formalism is actually quite common among libertarians, and I've really gotten sick of it. Don't get me wrong, I think it is useful to explore the implications of various assumptions, but if anyone suggests that these mental excercises actually get us close to "the answer", then they are wrong.

One particular problem with individualistic formalism in politics is that politics is fundamentally social. Treating crime as being solely between the aggressor and victim ignores the myriad others who will get involved before the issue is settled -- friends and family of each party (including dependents), along with others who intervene in an attempt to aid whomever they think is being harmed. There is a social interest in seeing that any dispute is resolved as quickly and as peacefully as possible, so that others are not left feeling that they've been wronged.

 These formalisms seem to ignore the fact that humans are social animals. Even if we view individuals as the basic unit of moral worth and agency, we still have to recognize that no man exists in isolation. Our material, economic, and intellectual worlds are intertwined. Furthermore, our cognitive abilities are quite limited. Even if there is an objectively correct view of justice, there's no reason to believe that we have the cognitive ability to find it. Ultimately, that means that our ideals are our own, and any attempt to force them upon others (rather than viewing them as subject to compromise) amounts to imposing our will upon others. Sure we can do that, but a reasonable person has to ask himself "Why bother?"

*A good essay: Demoralizing Moralism: The Futility of Fetishized Values

A stray comment at Swords Crossed has driven me to read up on the French Reign of Terror. Upon reading quotes by Maximilien Robespierre, I recalled a conversation from earlier today with an Indian friend regarding the terrorist attacks on Mumbai. He asserted that the Indian government had made a mistake in repealing some laws relating to terrorism (apparently,the Terrorist and Disruptive Activities Act of 1987, which allows prolonged detention without trial and expired in 1995 following accusations that it was being abused; alternatively he may have been referring to the Prevention of Terrorism Ordinance passed in 2001, updated in 2002, and repealed in 2004 after assertions of abuse).

Anyway, his basic attitude was "terrorists don't deserve procedural rights"--of course, assuming that the government is rigorous and honest in its identification of "terrorists". I've seen this same attitude in Americans who say that they wouldn't care if the government methodically tapped our phones to gather information about terrorism. Today, I saw the same basic attitude reflected in quotes from Robespierre, the architect of la Terreur. For instance:

The revolutionary government has to summon extraordinary activity to its aid precisely because it is at war. It is subjected to less binding and less uniform regulations, because the circumstances in which it finds itself are tempestuous and shifting, above all because it is compelled to deploy, swiftly and incessantly, new resources to meet new and pressing dangers.

The principle concern  of constitutional government is civil liberty; that of revolutionary government, public liberty. Under a constitutional government little more is required than to protect the individual against abuses by the state, whereas revolutionary government is obliged to defend the state itself against the factions that assail it from every quarter.

To good citizens revolutionary government owes the full protection of the state; to the enemies of the people it owes only death.

These ideas are in themselves sufficient to explain the origin and the nature of the laws that we term revolutionary. Those who call them arbitrary or tyrannical are foolish or perverse sophists who seek to reconcile white with black and black with white: they prescribe the same system for peace and war, for health and sickness; or rather their only object is to resurrect tyranny and destroy the fatherland.

 On Revolutionary Government (1793) in The Human Rights Reader

He goes on with the accusations of treason, and concludes by  calling for the reorganization of a special court, the Revolutionary Tribunal. Replace "revolutionary government" with "wartime government" and I wouldn't be able to distinguish this terrorist's rhetoric from George W. Bush's -- though in modern America there is no such thing as peace (In the 63 years since the end of WWII, we've had only 11 years in which we were not involved in either the Cold War or the War on Terror--and during all but two of those years we were at war with Iraq.)

From Wikiquote:

Terror is nothing other than justice, prompt, severe, inflexible; it is therefore an emanation of virtue; it is not so much a special principle as it is a consequence of the general principle of democracy applied to our country's most urgent needs. 

and...

We must smother the internal and external enemies of the Republic or perish with it; now in this situation, the first maxim of your policy ought to be to lead the people by reason and the people's enemies by terror. 

I like to think that Americans are less susceptible to these rationalizations of power than the 18th-century French were, but given how far we've gone when faced with a threat that is totally insignificant relative to what they faced (or even what the US faced at that time), I may lose some of that faith.