Lester’s main aim in his book is to defend the compatibility (of his understanding of liberty with welfare) thesis. The curious part is the somewhat strange definition of liberty in Lester’s book as minimization of “imposed costs.” In classical Rothbardian theory, liberty would prevail in the absence of injustices or upon minimization not of costs but of unjust costs or harms. On the other hand, welfare seems to be concerned with maximization of profits or the overall difference between benefits and costs, not with minimization of costs simply. I am not even fully sure how it can be meaningful to consider, let alone minimize, costs without considering benefits also.
Thus, the first objection to his definition Lester considers involves “genocide.” The idea is that a world devoid of humans entirely or a world with only a single man in it seems to have zero imposed costs. Crusoe on his island is absolutely free. “So if such liberty is literally to be taken as a goal to be maximized, then we need to aim at minimizing the population.” (62) Lester replies that both genocide and forced “prevention of the births of potential people… would seem to impose a still greater cost.” I agree; however, the problem remains. A large capitalist society produces a great deal of welfare but has considerable imposed costs, such as by every private property around me wherever I go which I must not take or trespass on. On the other hand, Adam upon expulsion from his Garden of Eden or Crusoe on the desert island were miserable paupers, but had no costs imposed on them at all. Hence over time higher welfare was purchased with lower liberty and vice versa. The growth and development of civilization then involved a trade-off of liberty in Lester’s sense for welfare. This seems to undermine his compatibility thesis.
Lester may reply that this thesis refers to immediate compatibility of liberty and welfare at any given time rather than over time and especially over the very long term. But this won’t work. For “welfare” is nothing fixed; nor is capitalism defined by any given amount of welfare. Rather, the essential feature of capitalism is everlasting progress, constant and rapid daily improvement in welfare. Yet it appears that this improvement must involve a diminution of liberty in Lester’s sense. He may again counter that maximum possible liberty at t1 facilitates maximum speed of economic development at t1, and the same is true for any other moment in time, even if liberty at later t2 will be smaller than liberty at earlier t1. But this seems to me to be unnecessarily conceding too much to the statist.
Businessman Smith who invents a new mousetrap imposes a cost on his competitor Jones who is still peddling inferior mousetraps. Regarding entrepreneurs only, one man’s gain is another man’s loss. On the whole, there is a net loss to society, since entrepreneurs expend time and effort, thereby imposing costs on themselves in addition to on others, in this imposed-costs zero-sum competition. So, preventing competition and freezing society into some evenly rotating economy would seem to minimize imposed costs and hence maximize liberty. Now of course, when benefits are also taken into account, we can see that the competition is in the interest of the whole society and the great mass of the consumers: entrepreneurs are recruited into the service of society, driving economic progress, through the cunning of the economists. Regarding welfare, it is good to have capitalism; regarding liberty in Lester’s sense, it is altogether bad.
Lester is aware of this argument but rejects it: “a business competitor does not impose a cost on us by winning away all our customers. We could never, non-contractually, own custom without imposing a cost on the customers, and so we merely lose the benefit of their custom rather than have a cost imposed on us.” (91) From the Rothbardian point of view, Smith does impose costs on Jones, but those are not unjust. Smith has a natural right to compete with Jones, and consumers have a right to choose whose mousetraps to buy. This answer is unavailable to Lester who insists rather that there is no harm done at all but merely withdrawal of benefits. Again, however, taking entrepreneurs as a subset of society, their huffing and puffing only redistributes income and wealth. One becomes a “winner” only by making other entrepreneurs (and workers nominally + temporarily) “losers.” Moreover, it’s true that the consumers by switching their demand to Smith’s mousetraps withhold benefits from Jones. But Smith himself by entering the competition imposes definite costs on Jones. Similarly, a woman choosing me instead of you for a lover, withholds benefits from you. But I, by attracting her, impose costs on you. My existence really is upsetting to you; you might even prefer that I drop dead.
As a result, the criterion of minimizing imposed costs in these two cases yields results opposite those of maximizing welfare, spelling a bit of trouble for Lester.