Most people associate the theory of class conflict with Marxism, and its view that modern society inevitably leads to a zero-sum conflict between "capitalists" and the "working class." But, ever since the 19th century, some libertarian thinkers have advanced their own theories of class conflict - ones that emphasize the division between those who bear the costs of government and those who are net beneficiaries of the state. Unfortunately, libertarian class theory has many of the same weaknesses as the Marxist version.

This recent piece by libertarian writer Sheldon Richman provides a good summary of libertarian class theory:

[T]he [19th century economic] theorists whom Marx credits with teaching him class analysis placed in the productive class all who create value through the transformation of resources and voluntary exchange. The "capitalist" . . . belongs in the industrious class along with workers. Marx didn't learn this part of the lesson.

Who are the exploiters? All who live off of the industrious class. Besides common crime, there is only one way to do that: state privilege financed by taxation. "The conclusions drawn from this . . . is that there existed an expanded class of 'industrials' (which included manual labourers and . . . entrepreneurs and savants) who struggled against others who wished to hinder their activity or live unproductively off it," Hart writes: "The theorists of industrialism concluded from their theory of production that it was the state and the privileged classes allied to or making up the state ... which were essentially nonproductive. They also believed that throughout history there had been conflict between these two antagonistic classes which could only be brought to end with the radical separation of peaceful and productive civil society from the inefficiencies and privileges of the state and its favourites"... In this view, political-economic history is the record of conflict between producers, no matter their station, and the parasitic and predatory political class, both inside and outside of government. Or to use terms of a later, British subscriber to this view, John Bright, it was a clash between the tax-payers and tax-eaters. (emphasis added).

Many libertarians find this theory appealing. So too have some nonlibertarians, such as John C. Calhoun. Unfortunately, it has serious flaws remarkably similar to those of Marxist class theory. It fails to consider the importance of collective action problems, and also ignores what political scientists call "cross-cutting cleavages."

Collective Action Problems.

Marxists have never succeded in explaining what incentive individual capitalists or workers have to advance public policies that benefit their "class" as a whole. A "procapitalist" policy that benefits the entire group is a public good shared by thousands of people, perhaps millions. Why shouldn't the individual greedy capitalist simply sit back and free ride upon the lobbying efforts of other capitalists? If they act to promote their common interest, procapitalist policies will be implemented even if an isolated individual doesn't contribute. If they don't, his individual efforts probably won't be enough to force the policy through by himself. The same point applies with even greater force to workers, a much larger group than capitalists. The average worker has even less incentive to invest time and effort in promoting proworker policies than capitalists have in promoting procapitalist ones.

What is true of Marxian classes is is also true of the libertarian theorists' "taxpayer" and "taxeater" classes. Both taxpayers and taxeaters are very large groups who have strong incentives to free ride on the lobbying efforts of their fellows. Indeed, given widespread rational political ignorance, many people probably don't even know which group they belong too. If you recognize, as Richman does, that the cost of government includes the burden of regulation and other nontax measures, while the "taxeater" class includes those who benefit from such policies, figuring out whether you are a taxpayer or taxeater becomes quite difficult, and not worth the necessary investment of most individual voters' time.

The basic economics of collective action and free-riding seriously undermines both Marxist and libertarian theories of class conflict. If anything, the latter is even weaker than the former. In Marxist theory, most people can easily tell whether they are "workers" or "capitalists"(though the existence of human capital, unrecognized by Marx, makes things more complicated). By contrast, it's often difficult to tell where one falls on the taxeater-taxpayer continuum.

Cross-Cutting Cleavages.

Get your minds out of the gutter! Unfortunately, cross-cutting cleavages have nothing to do with sex. Rather, the cross-cutting cleavage is a concept that recognizes that most people have multiple interests and identities that affect their political views. A person who considers himself a "worker" doesn't necessarily define his political identity exclusively by this characteristic. He might instead also focus on race, ethnicity, religion, gender, the particular industry he works in, and so on. Some or all of these other identities might well play a greater role in determining his political orientation than his belonging to the "working class." And, empirically, political systems divided along Marxist class lines are far less common than those where other cleavages play as much or more important roles.

The same point applies to the libertarian taxpayer/taxeater divide. For most people, this is a much less important dividing line than a variety of other conflicts. Indeed, most people are perfectly happy to favor increases in government spending and regulation for some purposes (say, morals regulation), while opposing it for others (say, welfare).

Both Marxist and libertarian class theorists like to dismiss the reality of cross-cutting cleavages by claiming that non-class based political identities are "irrational" or an example of "false consciousness." Perhaps so, though I doubt that this is necessarily true. But it is in fact perfectly rational for people to embrace irrational political ideas, because for the individual voter the cost of doing so is extremely low, and the psychic gratification of indulging in irrationality potentially much higher. Even if class-based ideology (whether Marxist or libertarian) is the most rational viewpoint for people to embrace, that doesn't prove that they actually will adopt it.

Unfortunately, libertarian class theory is no better at explaining real-world political development than the Marxist version. To the extent that many fewer people see themselves primarily as "taxpayers" and "taxeaters" than as "capitalists" or "workers," it may even be worse.

UPDATE: For some related criticisms of libertarian class theory, see this post by Bryan Caplan.

UPDATE #2: To avoid misunderstanding, I should emphasize that both Marxist and libertarian class conflict theories are empirical as well as normative. That is, they not only claim that people should base their political actions primarily on their "class" identities, but predict that most people actually will do so. If class conflict theory is correct, we should see political conflicts that largely track the class divisions that the theory in question sees as crucial (taxeater vs. taxpayer for libertarian theory; worker vs. capitalists for the Marxists). It is these empirical predictions that has been falsified by events, and that I criticize in the post. I don't consider the purely normative aspects of class theory, though obviously I have serious reservations about those too.