The Oxford Handbook of Freedom (
2017)
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Abstract
Many political theorists take the phenomenon of market failure to show that arguments
for libertarianism fail in a straightforward way. This chapter explains why the most
common form of this objection depends on invalid reasoning, and why a more
sophisticated examination of the relevant economics has led most contemporary
economists and policy experts to a view that might be called Default Libertarianism,
according to which the strong default for public policy—even in response to market
failures—should be toward decentralized, pro-individual freedom policies that involve
minimal government intervention in markets. Some experts (but by no means all)
similarly believe that even in the face of substantial market failures, libertarian policies
are generally best all things considered. This shift toward more libertarian policy
represents an important change from the middle of the twentieth century. This chapter
explains the structure of the arguments that have led to this shift.