My previous post Critical Rationalism and Libertarianism may provide helpful background knowledge for the present one.
One of the most common criticisms of libertarianism is that it is not “practical”. The implication whenever people ask the question “then who will build the roads?” is that the lack of coercion under libertarianism might be nice in some theoretical sense, but that there are a variety of situations in which the use of force is necessary in order to solve specific issues. Another oft-cited problem is failures of markets, such as when the medical industry fails to develop new antibiotics because financial incentives do not align with encouraging their development. While there are a plethora of good responses to these individual criticisms, critical rationalism provides a general response that covers them all.
In David Deutsch’s The Beginning of Infinity, two truths are said to be worth carving in stone: the first is that problems are inevitable and second is that problems are soluble. Here, a problem is a conflict between two ideas. This sense of problem covers a wider variety of cases than the conventional sense of the word, which implies a subjectively negative situation. The fact that the infinite implications of any idea cannot be instantiated in any individual mind means that the vast majority of problems have not been consciously attended to.
So, restated using this definition of problem: conflicts of ideas are inevitable and conflicts between ideas are soluble. It’s important to recognize that the way in which problems will be solved in the future is usually impossible to know ahead of time, as most problems require growth of knowledge, which is inherently unpredictable. It is not a valid criticism of the possibility of something to say that it can’t be imagined how it would be accomplished, nor that no one has yet offered a solution for how it could be accomplished. The only valid criticism that can be made of something’s plausibility is that it is forbidden by the laws of physics. Everything else is, by definition, possible.
Unless one offers an explanation as to why it is physically impossible to solve the climate crisis, develop antibiotics, or build roads without coercion, they have not successfully criticized the possibility of doing any of these things. The same goes of course for doing any of those things well. What is often imagined to suffice as a criticism of libertarianism is the non-existence of a practical solution in the past or an intellectual solution in the present to some problem expected due to the lack of a government. Neither of these actually indicate impossibility, just as the possibility of landing on the moon was not impossible in a time when it had neither happened nor been comprehensively worked out theoretically.
It is one thing to say that it is possible to do anything that is currently done using coercion (paying for a variety of things through the levying of taxes) without coercion, but it is another to say that anything done through coercion could be done better without coercion. Popperian epistemology explains why the latter is true. There is no infallible authority to which to defer on any matter, so the best thing to do is to ensure that the means to detect and correct errors are protected and improved.
The current democratic system in place in the freest countries today is the best yet instantiated because it is far better at correcting errors than authoritarian systems such as dictatorships. Dictatorships prevent the correction of errors by placing one person (often one family) in the position of dictator without offering a means for removing them peacefully. Most dictatorships end in violence for exactly this reason. Democratic systems are an improvement because they allow for the removal of government officials without violence.
Democratic systems still leave room for improvement in the removal of organizations and this is exactly where capitalism excels. Capitalism is an evolutionist system in which entire systems (businesses, corporations, non-profit organizations, etc.) can be dissolved and created based on the demand or lack of demand from customers. Organizations only exist through their ability to offer some desired service or product to people through voluntary exchange, whereas a democratic government can maintain a monopoly on a variety of services through the use of theft (often referred to as “taxation”) and force generally.
It is important to note that capitalism is a system of evolution applied to organizations, not people. While people are certainly not exempt from genetic selection, capitalism offers a far better, fairer, and compassionate form of selection than the natural sort. Organizations can dissolve without having significant impacts on the well-being of individuals, as opposed to the inherently violent system of natural selection. Today the loss of a job can have a significant negative impact on individuals’ lives, but this is not a problem inherent in capitalism anymore than the inability to create cell phones was a problem inherent in capitalism before their development and spread. Non-profit organizations, charities, or unemployment insurance agencies are free to develop which may offer benefits to those without work and generally take over for a variety of government functions. But again, while specific solutions to various problems may be comforting or pragmatically relevant in the context of instantiating them physically, they are unnecessary when arguing for the possibility of solutions. What is important is that capitalism offers the freedom for individuals or organizations to offer up solutions and strenuously test them against competitors.
The sense in which organizations must adapt or die under capitalism, therefore, is only metaphorically violent. They must adapt to the needs and demands of consumers or be outcompeted by rival organizations, but this need not inflict suffering on the individuals that make up the organization. Businesses very often grow and then go out of business only after making all involved (customers, employees, etc.) better off than they would have been before. Voluntary organizations are required to meet important criteria in order to exist: they must be the best known option available for employees, customers, and/or members. Without meeting these criteria, they cannot continue to exist.
Governments and other coercive institutions are not required to meet these criteria because they receive revenue by force. Someone might have a better idea for how to provide protection to individuals from criminals, but under a government which holds a monopoly on force, individuals are not free to offer these services to customers. So government can force an inferior service on individuals at whatever price.