Laissez-Faire Capitalism Solves “The Tragedy of the Commons” and Deals With Negative Externalities: A Dialogue

Enjoy CapitalismAs the reddit user, /u/sobersymphony, I participated in a discussion on reddit on the subject of capitalism vs. socialism. Another user asked me in a private message (PM) about one of my statements in that discussion. The ensuing PM discussion is reprinted here with his permission:

Him: In that conversation, you said, “Circumstances that arise due to people’s voluntary choices are not examples of force. They are simply the law of cause and effect in action. That people have to work and be able to dispose of the product of their labor to live in the long term is a fact of reality that no one can wipe out. It is not coercive.”
The usual response to this is that we value freedom, but we value other things too, so we make tradeoffs. We obviously don’t want to be coerced, but we do want to live in what might be called a “fair” or “humane” society. Everyone (tautologically) wants to act in their self-interest, but sometimes it is in their self-interest to have some governing authority solve coordination problems in ways that leave everyone better off. The same author I linked to uses a hypothetical tragedy of the commons situation to illustrate this point. He explains how even a system of voluntary contracts would not solve this problem.
Analogously, in the “work or starve” situation: behind a veil of ignorance, everyone would prefer some form of coercion to prevent work conditions becoming too terrible.
How would you respond to this argument? Apologies if this is too basic, but I haven’t yet heard a satisfying answer to this.

Me: 

Apologies if this is too basic, but I haven’t yet heard a satisfying answer to this.

No, that’s fine. They’re understandable questions that are worth analyzing.

The usual response to this is that we value freedom, but we value other things too, so we make tradeoffs.

The first question I would ask is: Who is this “we”? Do all individual human beings in a society share a collective mind and collective values, like the Borg in Star Trek? No, I might disagree with you and value different things than you do. My judgment is my own, and yours is your own. So on what basis can you say that “we” value some coercive governmental programs more highly than freedom?

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