Argentine President Javier Milei delivered an impassioned rebuke of global elites at the World Economic Forum this week, accusing them of endangering an economic system that has “lifted 90% of the global population out of poverty.”
“Today I’m here to tell you that the Western world is in danger. And it is in danger because those who are supposed to have to defend the values of the West are co-opted by a vision of the world that inexorably leads to socialism and thereby to poverty,” Milei said.
“Unfortunately, in recent decades, the main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism,” he continued. “Some have been motivated by well-meaning individuals who are willing to help others, and others have been motivated by the wish to belong to a privileged caste.”
There is no more privileged caste than those attending the event in Davos, Switzerland.
Milei is a welcome corrective away from the collectivist impulses that dominate much of the world — especially in Latin America, where Venezuela has already collapsed into a failed state with Ecuador and Columbia teetering on the edge.
But as welcome as Milei’s message is, his libertarian worldview is ultimately insufficient to combat the collectivism that is impeding human progress.
“Economic freedom, limited government, and unlimited respect for private property are essential elements for economic growth,” Milei said. “Do not surrender to the advance of the state. The state is not the solution. The state is the problem itself.”
What Milei seems to forget is that not only is the state essential for private property to exist, but the state also sets the very definition of what private property is.
In most hunter-gatherer societies, for example, while there is an understanding of private property that includes one’s immediate possessions, the same is not true of food. In most hunter-gatherer groups, once food is harvested, it becomes the property of the whole group to be shared — not always equally but there are understood customs for dividing food up.
This system prevents people from investing in making land more productive since whatever extra harvest is produced after investment is just enjoyed by everyone in the group. The concept that someone can own land and exclude other people from even stepping on it, let alone using it, is not natural to humanity. The rules of private property must be enforced by the state.
And then, there are the very real market failures that Milei claims do not exist. If I own a factory that is spewing particulates into the air, and those particulates are falling on a community, damaging residents’ homes and making it hard for them to breathe, who are they to tell me what I can do with my factory? It’s my land. I have an “unlimited” property right. I should be able to do what I want.
Only the state can come in and force a factory owner to bear the cost of the externalities the use of his land is inflicting on others.
And then, there is intellectual property: trademarks, copyrights, and patents. These are all state-created monopolies whose terms are entirely determined by the government. What things are copyrightable? What things are patentable? How long do the monopoly rights granted by copyrights and patents last? None of these questions are answered by the “free market.” They are all determined by the state.
And big corporations are absolutely using the state’s ability to define property rights to impoverish us all. In almost every area of economic life, corporations are trying to turn things we own into things we rent.
Think about your computer. In a sense, you own that. But you are really just renting all the software that runs your computer. And thanks to the internet, and how fast updates occur, a perfectly good computer that you bought five years ago could now be completely useless because the software companies no longer write updates for the hardware on your new computer. So you have to buy a new computer, even though there is nothing wrong with your old one.
The same thing is ultimately true of your car. Every time carmakers add a new computer to your car, it is becoming more and more like a computer. You can’t even start a Tesla if it doesn’t have the right software update.
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This problem even extends to food. For literally thousands of years, farmers have used some of the grain from one harvest as seed for the next. But not in today’s corporatist economy. Now farmers can only buy a license for one year’s seed, and if they try to use any of the grain they grow as seed for the next year, the corporations will sue them into oblivion for violating the terms of their seed lease contracts. This is only possible because the state creates the terms by which corporations can patent their seeds.
It would be nice if we could so easily separate the world into “state” and “free market.” But ultimately, the state has to set the rules for how any market operates. Until Milei and other libertarians can admit that, their success in beating back collectivists will be limited.