In a word, no. This question is often asked by those who have come across the so-called "libertarian" right. As discussed in section A.1.3, the word "libertarian" has been used by anarchists for far longer than the pro-free market right have been using it. Indeed, outside of North America "libertarian" is still essentially used as an equivalent of "anarchist" and as a shortened version of "libertarian socialist."
This in itself does not, of course, prove that the term "libertarian socialist" is free of contradiction. However, as we will show below, the claim that the term is self-contradictory rests on the assumption that socialism requires the state in order to exist and that socialism is incompatible with liberty (and the equally fallacious claim that capitalism is libertarian and does not need the state). This assumption, as is often true of many objections to socialism, is based on a misconception of what socialism is, a misconception that many authoritarian socialists and the state capitalism of Soviet Russia have helped to foster. In reality it is the term "state socialism" which is the true oxymoron.
Sadly many people take for granted the assertion of many on the right and left that socialism equals Leninism or Marxism and ignore the rich and diverse history of socialist ideas, ideas that spread from communist and individualist-anarchism to Leninism. As Benjamin Tucker once noted, "the fact that State Socialism . . . has overshadowed other forms of Socialism gives it no right to a monopoly of the Socialistic idea." [Instead of a Book, pp. 363-4] Unfortunately, many on the left combine with the right to do exactly that. Indeed, the right (and, of course, many on the left) consider that, by definition, "socialism" is state ownership and control of the means of production, along with centrally planned determination of the national economy (and so social life). This definition has become common because many Social Democrats, Leninists, and other statists call themselves socialists. However, the fact that certain people call themselves socialists does not imply that the system they advocate is really socialism (Hitler, for example, called himself a "National Socialist" while, in practice, ensuring and enhancing the power and profits of capitalists). We need to analyse and understand the systems in question, by applying critical, scientific thought, in order to determine whether their claims to the socialist label are justified. As we will see, to accept the above definition one has to ignore the overall history of the socialist movement and consider only certain trends within it as representing the movement as a whole.
Even a quick glance at the history of the socialist movement indicates that the identification of socialism with state ownership and control is not common. For example, Anarchists, many Guild Socialists, council communists (and other libertarian Marxists), as well as followers of Robert Owen, all rejected state ownership. Indeed, anarchists recognised that the means of production did not change their form as capital when the state took over their ownership nor did wage-labour change its nature when it is the state employing labour (for example, Proudhon argued that if the "State confiscate[d] the mines, canals and railways" it would only "add to monarchy, and [create] more wage slavery." [No Gods, No Masters, vol. 1, p. 62]). For anarchists state ownership of capital is not socialistic in the slightest but rather a tendency within, not opposed to, capitalism just as the growth of larger and larger companies does not imply in any way a tendency to socialism (regardless of what Lenin or Marx argued — see section H.3.12 for more on this). Indeed, as Tucker was well aware, state ownership turned everyone into a proletarian (bar the state bureaucracy) — hardly a desirable thing for a political theory aiming for the end of wage slavery! So what does socialism mean? And is it compatible with libertarian ideals? What do the words "libertarian" and "socialism" actually mean? It is temping to use dictionary definitions as a starting point, although we should stress that such a method holds problems as different dictionaries have different definitions and the fact that dictionaries are rarely politically sophisticated. Use one definition, and someone else will counter with one more to their liking. For example, "socialism" is often defined as "state ownership of wealth" and "anarchy" as "disorder." Neither of these definitions are useful when discussing political ideas. Therefore, the use of dictionaries is not the end of a discussion and often misleading when applied to politics.
With that warning, what do we find?
Webster's New International Dictionary defines a libertarian as "one who holds to the doctrine of free will; also, one who upholds the principles of liberty, esp. individual liberty of thought and action." As we discussed earlier (see section B.1, for example), capitalism denies liberty of thought and action within the workplace (unless one is the boss, of course). Therefore, real libertarian ideas must be based on workers self-management, i.e. workers must control and manage the work they do, determining where and how they do it and what happens to the fruit of their labour, which in turn means the elimination of wage labour. The elimination of wage labour is the common theme of socialism (in theory at least, anarchist argue that state socialism does not eliminate wage labour, rather it universalises it). Or, to use Proudhon's words, the "abolition of the proletariat." [Selected Writings of Pierre-Joseph Proudhon, p. 179] It implies a classless and anti-authoritarian (i.e. libertarian) society in which people manage their own affairs, either as individuals or as part of a group (depending on the situation). In other words, it implies self-management in all aspects of life — including work. It has always struck anarchists as somewhat strange and paradoxical (to say the least) that a system of "natural" liberty (Adam Smith's term, misappropriated by supporters of capitalism) involves the vast majority having to sell that liberty in order to survive.
According to the American Heritage Dictionary "socialism" is "a social system in which the producers possess both political power and the means of producing and distributing goods." This definition fits neatly with the implications of the word "libertarian" indicated above. In fact, it shows that socialism is necessarily libertarian, not statist. For if the state owns the workplace, then the producers do not, and so they will not be at liberty to manage their own work but will instead be subject to the state as the boss. Moreover, replacing the capitalist owning class by state officials in no way eliminates wage labour; in fact it makes it worse in many cases. Therefore "socialists" who argue for nationalisation of the means of production are not socialists (which means that the Soviet Union and the other 'socialist" countries are not socialist nor are parties which advocate nationalisation socialist).
Indeed, attempts to associate socialism with the state misunderstands the nature of socialism. It is an essential principle of socialism that (social) inequalities between individuals must be abolished to ensure liberty for all (natural inequalities cannot be abolished, nor do anarchists desire to do so). Socialism, as Proudhon put it, "is egalitarian above all else." [No Gods, No Masters, vol. 1, p. 57] This applies to inequalities of power as well, especially to political power. And any hierarchical system (particularly the state) is marked by inequalities of power — those at the top (elected or not) have more power than those at the bottom. Hence the following comments provoked by the expulsion of anarchists from the social democratic Second International:
"It could be argued. . . that we [anarchists] are the most logical and most complete socialists, since we demand for every person not just his entire measure of wealth of society, but also his portion of social power, which is to say, the real ability to make his influence felt, along with that of everybody else, in the administration of public affairs." [No Gods, No Masters, vol. 2, p.20]
The election of someone to administer public affairs for you is not having a portion of social power. It is, to use of words of Emile Pouget (a leading French anarcho-syndicalist) "an act of abdication," the delegating of power into the hands of a few. [Op. Cit., p. 67] This means that "[a]ll political power inevitably creates a privileged situation for the men who exercise it. Thus it violates, from the beginning, the equalitarian principle." [Voline, The Unknown Revolution, p. 249]
From this short discussion we see the links between libertarian and socialism. To be a true libertarian requires you to support workers' control otherwise you support authoritarian social relationships. To support workers' control, by necessity, means that you must ensure that the producers own (and so control) the means of producing and distributing the goods they create (i.e. they must own/control what they use to produce goods). Without ownership, they cannot truly control their own activity or the product of their labour. The situation where workers possess the means of producing and distributing goods is socialism. Thus to be a true libertarian requires you to be a socialist.
Similarly, a true socialist must also support individual liberty of thought and action, otherwise the producers "possess" the means of production and distribution in name only. If the state owns the means of life, then the producers do not and so are in no position to manage their own activity. As the experience of Russia under Lenin shows, state ownership soon produces state control and the creation of a bureaucratic class which exploits and oppresses the workers even more so than their old bosses. Since it is an essential principle of socialism that inequalities between people must be abolished in order to ensure liberty, it makes no sense for a genuine socialist to support any institution based on inequalities of power. And as we discussed in section B.2, the state is just such an institution. To oppose inequality and not extend that opposition to inequalities in power, especially political power, suggests a lack of clear thinking. Thus to be a true socialist requires you to be a libertarian, to be for individual liberty and opposed to inequalities of power which restrict that liberty.
Therefore, rather than being an oxymoron, "libertarian socialism" indicates that true socialism must be libertarian and that a libertarian who is not a socialist is a phoney. As true socialists oppose wage labour, they must also oppose the state for the same reasons. Similarly, libertarians must oppose wage labour for the same reasons they must oppose the state.
So, libertarian socialism rejects the idea of state ownership and control of the economy, along with the state as such. Through workers' self-management it proposes to bring an end to authority, exploitation, and hierarchy in production. This in itself will increase, not reduce, liberty. Those who argue otherwise rarely claim that political democracy results in less freedom than political dictatorship.
One last point. It could be argued that many social anarchists smuggle the state back in via communal ownership of the means of life. This, however, is not the case. To argue so confuses society with the state. The communal ownership advocated by collectivist and communist anarchists is not the same as state ownership. This is because it is based on horizontal relationships between the actual workers and the "owners" of social capital (i.e. the federated communities as a whole, which includes the workers themselves we must stress), not vertical ones as in nationalisation (which are between state bureaucracies and its "citizens"). Also, such communal ownership is based upon letting workers manage their own work and workplaces. This means that it is based upon, and does not replace, workers' self-management. In addition, all the members of a participatory anarchist community fall into one of three categories:
(1) producers (i.e. members of a collective or self-employed artisans); (2) those unable to work (i.e. the old, sick and so on, who were producers); or (3) the young (i.e. those who will be producers).
Therefore, workers' self-management within a framework of communal ownership is entirely compatible with libertarian and socialist ideas concerning the possession of the means of producing and distributing goods by the producers themselves.
Hence, far from there being any contradiction between libertarianism and socialism, libertarian ideals imply socialist ones, and vice versa. As Bakunin argued in 1867:
"We are convinced that freedom without Socialism is privilege and injustice, and that Socialism without freedom is slavery and brutality." [Bakunin on Anarchism, p. 127]
History has proven him correct.