Pros and cons of Libertarianism

I have much sympathy for libertarianism and libertarians because of course healthy humans love freedom and dislike stupid rules, incompetent or mean bosses (or slave owners) who wield power over us, senseless laws, exploitive rents and taxes, stupid burocrats who waste our time and wield petty power.  And we have seen the horrors of mobs and cults (but are often ignorant of their ecstasies). I agree that there is something sacred and important about human individuals, that freedom and happiness are the domain of the individual human, not of the cells inside a human body, nor of any higher level of organization of humans, such as a family, tribe, village, nation, the EU or United Nations. But individual happiness can sometimes be maximized by trading some individual freedom for the benefits that come from belonging to a family, a tribe or a village. 

Libertarians respond to this challenge in two ways, either ontologically or based on a different calculus of ethics (I'm not going to categorize them in economic or political ways). The ontological libertarians deny that there is any reality to organizations beyond individual humans, that they are not more than the sum of the individual humans, that the only real thing is individual humans interacting (and possibly a separate God).. The opposite view is embraced by deep ecologists, who think that individuals are an invention of late stage capitalism and have no ontological reality, that individuals are always inextricably embedded in a  family, tribe and ecosystem and can't exist without those. I disagree with both these views based on my understanding of emergence and evolutionary game theory (which I won't go into here),  and think they are complementary not exclusive of each other.  I understand how the both arise. The deep ecological view was the default before western civilization. The individualist view arises when people are so little dependent on others around them for goods and services, villages and tribes can't survive. Instead there is a dependence on abstract entities with a dubious independent (of us) ontological reality, like global markets and the military, money, an Abrahamic God, and large governments, all of whom supposedly bring goods and services from all corners of the globe to our local stores, giving an illusion of island individuals. Moreover these entities are more of a nuisance, convenience, protection, authority or a danger to us, than a source of joy and communion. The family, village and tribe provided a means for people to commune with each other (and the natural world), not just annoying transaction costs. They provided a set of traditions, values, boundaries (around the family, tribe or village, not around the individuals) where communion could be refined and concentrated. In such an environment libertarianism never arose. Instead there was the distributism of the Catholic church and village, the primitive communism of tribes and families, the mysticism and pantheism of individuals who know what it is to deeply belong to something bigger than their own individual selves.

Then there are the other kind of anarchist libertarians who love freedom and individualism above all else and won't trade it off for any amount of happiness, or maybe they just have never tasted the kind of happiness that can be had from deep communion with other people or nature in a supportive institutional environment. No social contract for them, except between individuals, no laws, but also no ecstasy or ego-transcendence. These folks acknowledge the reality of higher order entities/institutions than individuals, but see individual freedom as the highest value, never to be traded off with happiness, theirs or someone else's, and so these higher order institution seem evil to them, because they invariably impinge on individual freedom. Not only do they see the higher order institutions as evil (except the religious ones who don't see God as an entity to know and be part of but as an independent entity to fear, worship, obey), but the people who promote these institutions are sometimes seen as evil. They mistrust generosity or altruism or sacrifice of one's own (immediate) best interest for someone else's well being (except when Jesus does it). They are more interested in establishing boundaries than transcending them or allowing others through. They are more interested in taking personal responsibility than letting go of control. And they are correct in a limited, paradoxical way, and so are the collectivists, the cultists, the addicts (who long for ego-transcendence but can't achieve it within western individualist culture without their addiction), the artists, the great scientists, tribalists, deep ecologists, the co-dependents, the mystics, the distributists, the neo-primitivists, in that what they are all reaching for is part of the human experience, which is both individual and collective. They might even agree to a government that would be given (only) a policing and protecting power, as these would presumably maximize individual freedom. Happiness to them is an individual choice, despite much data that contradicts this claim, showing that happiness depends on community, family, stability, flow (aka grace), nature and other things not under direct control of individuals (see The Happiness Hypothesis by J. Haidt)

The problem with usury

Usury has two legs, an individual intentions leg and a systemic/societal leg. It can stand (shakily) without one or the other, but not without both.

Individual intentions

Usury comes from the same root as the verb "to use". A world in which individuals see each others as a means to their own ends, or more bluntly as Hobbes said "a war of all against all" leads to hell, and many traditional religions recognized this and forbade usury, at least within the tribe (aka intra-tribal).  We're talking mostly rent and lending at interest, but it generalizes beyond that. This has an easy "fix": if we see each other instead as manifestations of the sacred and try to make our relationships with each other based on that perception, we may have a taste of heaven on earth. From an evolutionary game theory perspective, forbidding usury and instilling the sacred intra-tribal relationships perspective is a way to reduce intra-tribal conflict and impose a cost (when the rule is broken) on "defectors" (aka free riders, landlords, money lenders, some politicians, etc), which gives a selective (inter-tribal) advantage at the group/tribe level compared to groups/tribes that don't use this strategy.

However, even the best of intentions, where we want to create a relationship based on the sacred within the people involved in an economic transaction, can lead to hell, in a system whose foundation is short term individual benefits with only long term individual costs, or externalized costs to others. Such a system (e.g. our current global economy, whether in capitalist or socialist form) inevitably goes towards massive inequality, which destroys communities and families, which ironically individuals need for optimal functioning. This is a systemic problem, not an individual one, and it's solution is also systemic (as in we need a different economic system).

Systemic dynamics

Here's how it plays out: some get wealthy just by having land or money, which they can leverage to make a much greater (money) / (labor spent) ratio than most people with less money. If we start with everyone having an equal amount of resources and add a tiny amount of random inequality of resources, or even random inequality in self-interest, it's an unstable equilibrium where the initially slightly richer (or slightly more self-interested, or even just slightly more entrepreneurial) get even richer and the initially slightly poorer (or less self-interested, etc), who have to pay the bulk of the interest and the rent to the rich, get poorer. Sometimes it's even indirect, where the rich rent to other rich people, who are using other poor people through rent or interest. The short term stable equilibrium is massive economic inequality, but that is also unstable in the long term as the poor revolt against the rich. And this can happen at any scale, even a small village, or a family. That is why stable families are mostly based on a gift economy, and long-lived villages do not have money lenders or landlords within the village. And that is why villages and families which adopt and mimic the current global economic system within themselves are not stable, also leading to individual unhappiness.

Possible solutions

One possible solution is to forbid usury (as some mainstream religions have done), but people are very clever about circumventing prohibitions and attempts to legislate morality. Things are not always black and white: I'm not really renting the house to these folks, it's a mutual gift....

Another possible solution (favored by conservatives, though they won't necessarily admit what is being done) is propaganda (this word does not necessarily entail deceit) campaigns by the government and the wealthy to make the poor either aspire to be rich or at least middle class (and sometimes succeed to various degrees) by playing the game, to look forward to a reward in an afterlife, or to identify with the rich or middle class through other shared "identity" traits (even though they are wealthier and have all these perks that we don't, we can identify with some of them who are white, black, women, men, american, pakistani, christian, jewish, muslim, gay, straight, entrepreneurial, hard-working, talented, coke-drinking, etc), and by identifying with them, resist the temptation to be murderous towards them (in sociological terms, they are no longer considered an out-group, they become part of our in-group). This is a containment solution that might succeed in preventing revolt for a while, but does not prevent the massive unhappiness of a large part of the population that is either not able to be of use to family and community (aka unemployment), is toiling under alienating conditions, and is often causing harm to nature or other people far away and in the future.

A third possible solution (favored by many liberals) to this systemic problem is the redistribution of wealth by a big government through taxation, or subsidies to the poor. It has the problems of creeping burocracy (with its own version of inequality and dampening of initiative) and disempowerment of poor people, which I don't want to get into here, suffice it to say that it is not a good long-term solution.

I don't know what a good solution is (can you help me figure it out?), but I can speculate based on my best understanding of the problem that it involves localizing the economy so that it is easier to see the effects of our actions on other people and even on ourselves, in a short enough time. This is the solution that was favored by tribal societies, families, rural villages before the industrial revolution, Gandhists, and catholic distributists.