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Matthew Yglesias has a good post on the distinction between libertarianism and liberalism:

One way that I think liberals tend to go wrong is to adopt libertarian-style arguments in favor of the liberal position on issues where there's overlap between the liberal and libertarian policy positions. Take the example of gay rights. You could take a libertarian position on this issue and say that irrespective of what you think of gay people, their conduct, and the social consequences of toleration for homosexuality that it's simply not the role of the state to be trying to influence human behavior in this regard. Alternatively, you could take what I would consider to be a more forthrightly liberal position and say that people who think there's something morally wrong with homosexual conduct are simply mistaken, and that the reason it would be wrong for the government to discourage gay sex isn't that it would be wrong for the government to do that, but rather simply that it would be wrong to discourage conduct that is no better or worse, morally speaking, than heterosexual conduct.

But I think he misses a crucial point of difference, which if missed leads into the problem of "big government" and planned societies. Liberalism is a social philosophy, whereas libertarianism is a strictly governmental philosophy. Libertarianism is concerned only with what the government may or may not make laws about. Liberalism is concerned not only with what governments should do, but also with what should happen in the socio-cultural sphere. When Matt points out that liberals want homosexuality to be not just permitted but accepted, it does not follow that government legislation should be the method of attaining that end. One of the more encouraging developments in recent years on the left is a shift away from assuming that government was the appropriate tool to achieve whatever ends were deemed desirable, and the greater development of non-coercive institutions and cultural forces. So there are really two traps for liberals thinking like libertarians: 1) That libertarian rationale will not sustain the fight once the legal battles (often the easiest ones, since the target is so clear) are won -- this is in part the reason so many people consider feminism passe now that women by and large have equality before the law. 2) That libertarian preoccupation with government will be carried over into liberal cultural territory -- leading to things such as hate crime laws and speech codes.


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