Techno-libertarianism is nonsense on stilts

The tawdry Musk-Altman legal battle brings to mind utilitarian philosopher Jeremy Bentham’s famous quip about those who believed that natural rights could exist independently from a state. It was “nonsense on stilts” to argue that rights could have any existence without the underpinning of a sovereign authority he wrote.

In a similar vein the OpenAI lawsuit reveals the law-free world envisaged by today’s techno-libertarians (or if you prefer techno-anarchists) like Musk to be mere posturing. In reality, when things get serious, the would-be libertarians lawyer up like the best of them.

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Musk’s suit epitomizes the myriad ways the tech titans rely on the legal system at every step in their dealings.

Multiple layers of legal claims underlie the case. The basis of the complaint is the creation of a nonprofit corporation and a series of limited partnerships under Delaware law.

To create the entities, company and limited partnership law must exist and the administrative structures for issuing documentation must also function. Due to Delaware’s competent and efficient bureaucracy these rules can be relied upon to structure deals creatively as evidenced by the 20 limited partnerships formed under the main OpenAI nonprofit company. (Colleagues practicing in foreign jurisdictions marvel at the fact that one can set up a corporation in just minutes in Delaware.)

Likewise, for nonprofit entities to be established, the federal government had to create a statute recognizing their tax free status and enabling them to claim tax exemption.

The substance of the suit alleges a litany of wrongs that fall into three main categories. The first includes a variety of fraud claims. The second is based on the federal civil racketeering (RICO) statute. The third asserts various instances of unfair dealing, including breach of contract, unfair competition, breach of fiduciary duty, false advertising, and tortious interference with contract. The three sets of arguments are based on federal, Delaware and California law. (The latter is rather ironic, given that Musk claimed to have relocated to Texas to avoid the Golden State’s onerous legal and regulatory standards.)

The role of law in facilitating investment and commerce is a common theme of this newsletter. Rather than merely facilitating trade and investment, the legal system actually constitutes the market. Without instruments of contract and property law, people don’t invest and trade is limited. As Musk’s lawsuit shows, every aspect of OpenAI and his transactions with it are legally structured.

The appeal of these legal structures is based on their enforceability. When techno-libertarians want to execute their legal claims, they rely on the courts and, when circumstances require, the police. The fact that both courts and police are established and maintained by tax revenues is never acknowledged.

Techno-libertarians’ policy and ideological views are not often scrutinized for consistency with their actions. The reality is that they don’t actually want to eliminate the law. Rather they want to use the legal system solely for their ends. They want all of the rights but none of the responsibilities that law entails. They want to carve themselves out of the political community that sustains the legal system that is the foundation for their wealth.

What the techno-liberatarians seek is not the absence of the state but instead, what Quinn Slobodian and Ben Tarnoff capture brilliantly in their new book Muskism: A Guide for the Perplexed, “sovereignty-as-a-service”. They show that techno-libertarians are incredibly dependent upon the state—but only when they need it.

Though overused at this point, David Foster Wallace’s observation about the fish and water is apt. Swimming in an ocean of law that has enabled the development of the entire technology industry, the techno-libertarians no longer see their environment. Yet the law and strong state institutions permeate every aspect of their lives and is the basis upon which their individual businesses and the entire technology ecosystem exists.

If you really want to know what the techno-libertarian bros really believe, don’t listen to what they say, watch what they do in court.