By Vladan Lausevic

The social-libertarian thinker and philosophy professor Matt Zwolinski, who also promotes basic income, argues that libertarianism is not about supporting completely free and unregulated markets. Instead, as in A Libertarian Case for the Moral Limits of Markets, Zwolinski argues that even libertarians have to support certain moral values regarding economic interactions and policies. 

As an ideological setup, libertarianism is often connected with aspects as limited government (or even the absence of governments and states), individual autonomy and self-ownership, free and more or less unregulated market, that interactions between humans should, in general, be conducted in the private sphere of life.

Economist and socialist thinker Karl Polanyi once argued that libertarians believe in a “market society,” where instead of the economy being embedded in social relations, social relations are embedded in the economy. Zwolinski explains Polanyi’s position that the market society is a society where market values, norms, institutions dominate and shape all other values, norms, and institutions. Thereby, libertarians who favour a market society are thus thought to favour markets everywhere, in all things, regardless of how those markets might affect or undermine other moral values, other non-market norms, or other important social institutions.

According to Zwolinski, not all libertarians share nor even should share such stances and behaviours when it comes to markets and economic interactions. He explains that libertarians, in general, do favour markets because markets can facilitate a voluntary, decentralized, and mutually advantageous form of social cooperation but at the same time that not every market has these morally attractive characteristics. 

Zwolinski also argues that libertarians are characteristically deeply sceptical of authority. Libertarians are individualists not only in the political sense of believing in the primacy of individual rights but in the normative sense of believing that each person’s life is a moral end in itself, and in the ontological sense of believing that individuals constitute the ultimate unit of social analysis, in terms of which all other units such as nations, races, and governments must be understood. Also, partially by virtue of their individualism, libertarians are cosmopolitans who deny the moral significance of national boundaries, racial and sexual divisions, etc. 

Via individualism and other social aspects, Zwolinski argues that the libertarian support for markets is not foundational or definitive but is instead dependent on the more foundational moral and empirical commitments as described earlier. Libertarians believe in markets because and only to the extent that they constitute a form of spontaneous order, a corollary of respect for private property rights, a way of treating individuals with equal respect, and an important competitive mechanism for restraining individuals’ ability to wield dominating power over others.

Therefore, libertarians support markets when they are: 

1. Voluntary (rather than coercive)

2. Decentralized (rather than centralized)

3. Competitive (rather than monopolistic)

4. Positive-sum (rather than zero- or negative-sum)

Slavery & Sweatshop

Zwolinski makes an example of slavery because a slave market is a market. Still, human beings are being bought and sold against their will and, for the benefit of others, renders them morally grotesque from a libertarian perspective.

Another example Zwolinski takes up is regarding sweatshops, often famous for bad working conditions, child labour and other abuses of human rights. Many libertarians note that sweatshops are almost always a significantly better opportunity than the alternative sources of employment available to workers in the developing world as in Africa. According to Zwolinski, libertarians tend to think that individuals who take such jobs regard employment as a mutually beneficial

one. Thereby, taking away that option through legislative fiat or over-regulation of the labour market would, according to many libertarians, only harm the sweatshop workers. 

Zwolinski writes that libertarians often are against all labour market regulations as the right to work as by criticising how labour unions restrict labour market competition, thus benefitting their own members at the expense of other non-union workers, and to the various special political privileges that unions receive from the state, such as the right to exclusively represent all workers in a unionized workplace, even if workers would prefer to negotiate their own contracts.

The situation of sweatshop labour is complex according to Zwolinski because the choice of workers to accept a sweatshop’s offer of employment is generally a mutually beneficial one and that by banning sweatshop labour or regulating it out of existence would leave such workers in the very conditions of desperate poverty that drove them to sweatshops in the first place. At the same time, Zwolinski writes, even if it is true that sweatshop labour is often workers’ best option for meeting their needs and the needs of their family, we must still ask why it is their best option?  

Sometimes, Zwolinski writes, the causes will be unexceptional where sweatshop labour is workers’ best option in a particular country because that country is poor, and the country is poor because of the things that need to happen to create wealth creation never happened. Therefore, Zwolinski argues that libertarians should be careful in drawing inferences about real-world markets from their theoretical ideals.

For example, it is one thing to argue that inequality between capitalists and labourers would be acceptable in a situation in which private property was justly acquired through a peaceful process and where freedom of contract, property, and association are rightly protected by law. It is quite another to argue that they are acceptable in this world, where those conditions are decidedly not satisfied. 

This lesson is, according to Zwolinski, that libertarians believe free markets are good, but it does not follow that they believe that unfree markets are also good. The fact that an unequal distribution of property might have come about in a morally acceptable way should strike libertarians as no more relevant to the justification of actual property rights than the fact that the state might have originated in a voluntary social contract is to the justification of the actual state.


Libertarians support privatization because of the basic idea that privatization involves transferring power out of the hands of the state and into the hands of the market and by moving society in the direction of greater competition, greater efficiency, and smaller government. But at the same time, not everything that goes under the label of “privatization” is something that libertarians should approve.

For example, Zwolinski writes that sometimes privatization does not really end the coercive government monopoly at all and instead shifts the management of that monopoly into private hands. In such cases, it means that government resources and power are nominally transferred into private hands, but with virtually none of the benefits libertarians typically see in markets. 

Zwolinski writes that the privatization of prisons in the United States since the early 1990s exemplifies this problem since prison contracts take the form of state-backed monopolies and that such contracts involve the “privatization” of work that shouldn’t just be taken out of the hands of government but should be taken out of the hands of everybody. In addition, Zwolinski argues that many of the people inside U.S. prisons are there for non-violent drug offences. At the same time, libertarians generally believe that coercive punishment and imprisonment ought to be used only against those who have fraudulently or violently violated the rights of others. 

As Zwolinski argues,  libertarians should support policy changes that move us in the direction of freer markets and oppose ones that move in the opposite direction. Of course, the ideal of perfectly free markets is one to be aimed at, but the commitment to that ideal as the ultimately desirable end-state should not prevent us from taking small steps in its direction.

Photo by Remy Gieling via Unsplash

Vladan Lausevic is active as opinion-maker and co-founder of Syntropia community for democracy based in Sweden.

Libertarianism and markets – morality, workers and privatisation
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