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Most libertarians oppose capital punishment. They argue that capital punishment is an extreme exertion of state power, it is contrary to the values of a free society, authoritarian countries tend to be retentionist, and liberal-democratic societies generally abolitionist.

Proponents of capital punishment believe that such punishment may be justified as a deterrent to particularly atrocious crimes and as a means of keeping dangerous individuals permanently incapacitated. Furthermore, if people commit crimes, they may sacrifice their rights and if the legal system is legitimate, perhaps capital punishment is justified. The U.S. Libertarian Party, a right-libertarian American third party, opposes "the administration of the death penalty by the state" despite the large stake that conservatives would have in abolishing the death penalty.

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