UPDATED.

Wow, this guy is by far my favorite to read in order to wake up in the morning. I will come back and update this post, but for now just enjoy DeLong's explanation of why classical liberalism (today we'd call it soft libertarianism) failed.

UPDATE: I don't have too much to say, but I promised to come back to this. I will focus on just two issues:

It is not completely true that it is from the self-interest and not the benevolence of the butcher that we expect our meat. Self-interest, yes, but benevolence too: a truly self-interested butcher would not trade you his meat for your money but instead slaughter you and sell you as long pig. So this opens up a gap between the libertarian view and the world.

That said, and modulus this basic human--well, call it "sympathy" as Adam Smith did--modern liberal economists were very happy for a long time with classical liberalism.

Do you see what DeLong has done here?! He first distorts Adam Smith's position, then he follows with a false claim, and finally he "fixes" it by reiterating what Smith's position really was all along--and he doesn't even bat an eye when using Smith's own term to do the heavy lifting in the statement of Smith's original position!!

Yes it IS true, Prof. DeLong, that we can't expect mere benevolence to motivate the butcher to give us meat. Nobody would devote much of his waking day to preparing fine cuts of meat for others, unless there were something in it for him. However, if you want to understand why most butchers ALSO wouldn't slaughter people for the chance of turning a few extra bucks (let's put aside issues of retribution), then you can certainly bring up the fact that people have a default sympathy for each other. What I have said is completely compatible with Adam Smith's writings.

The modern Ametican liberal economist's view of libertarianism is much the same: libertarianism is false in theory, but it is very much worth figuring out a set of limited, strategic interventions that will make the libertarian promises roughly true in practice.

As I said over at MR, here DeLong is saying something akin to, "Protestantism is wrong, but the Pope can approximate it."