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Monday, February 21, 2011

What is liberalism?

by John MacBeath Watkins

In response to this post, a person whose opinion I value referred to me as a "typical liberal."  I am, of course, proud to assume the mantle of Hobbes, Locke, and Mill, but it occurred to me that this raises a larger issue: What is liberalism? I maintain that both those now called liberals and those called conservatives are part of the American tradition of liberalism, which is heavily influenced by British thinkers.

The term was invented about 1840, but the way of thinking about politics goes back a couple hundred years farther.  Hobbes laid out the system of value, in particular that the legitimacy of governments comes from serving the needs of the governed.  He also was the first to talk about man in the state of nature, to reason from there to what government is natural to man, and to the social contract.

Locke pursued the social contract further and asserted the right to depose a leader who does not serve them as they wish to be served.  This was sufficiently dangerous talk that he chose not to publish his Two Treatises of Government under his own name in his lifetime.

The central value of classical liberalism is liberty.  It's right there in the name.  And for about 300 years, what liberalism was did not seem controversial.  Hobbes system of value was central to it, most compactly described in Chapter 10 of The Leviathan: " The ‘value,’ or ‘worth,’ of a man is, as of all other things, his price; that is to say, so much as would be given for the use of his power; and therefore is not absolute, but a thing dependent on the need and judgment of another."  Value dependent on the need and judgment of another is radically subjective, and has enormous consequences for the organization of society.  Democratic government is a way of discovering the value we attach to leaders, and giving consent to be governed.  Free speech allows us to discuss matters of interest, and arrive at the judgments we express through voting.  This system of value means markets should be organized to reflect the values of those who participate, rather than, say, the power of those who participate.

Elected governments, freedom of speech, assembly, and religion,  the rule of law rather than the will of the ruler, and secure property were therefore the natural characteristics of a liberal society.

To me, that's still what liberalism means.

Frederick Hayek thought liberalism had degenerated, and was threatened by changes taking place in the economic organization of liberal democracies.  He made a series of predictions based on this idea that turned out not to be accurate, but he continues to be influential in that brand of liberalism embraced by conservatives.  He believed that liberal democracies were threatened by other ideologies, such as socialism and communism.

Socialism stems from valuing equally the power of all participants in a society, which means that things that unequally distribute power, such as ownership of the means of production, should be controlled by society rather than by individuals.  Hayek wrote in a 1973 encyclopedia article on liberalism that the term had come to be applied to people with "socialist aspirations," which was at best an exaggeration, because at least in America liberals never advocated socializing the means of production.

Although Locke is sometimes called the father of liberalism, he didn't use the term.  In 1839, Lord John Russel started referring to his coalition of Whigs and Radicals as the Liberal Party, though the party was not formally founded until 1859. The Whigs had broadened the voting franchise and the liberals advocated free trade, notable in the repeal of England's Corn Laws.

In December of 1872, the London Times reported the following speech by a liberal politician, Sir William Harcourt, that summed up his view of liberalism:

If there be any party which is more pledged than another to resist a policy of restrictive legislation, having for its object social coercion, that party is the Liberal party. (Cheers.) But liberty does not consist in making others do what you think right, (Hear, hear.) The difference between a free Government and a Government which is not free is principally this—that a Government which is not free interferes with everything it can, and a free Government interferes with nothing except what it must. A despotic Government tries to make everybody do what it wishes; a Liberal Government tries, as far as the safety of society will permit, to allow everybody to do as he wishes. It has been the tradition of the Liberal party consistently to maintain the doctrine of individual liberty. It is because they have done so that England is the place where people can do more what they please than in any other country in the world...It is this practice of allowing one set of people to dictate to another set of people what they shall do, what they shall think, what they shall drink, when they shall go to bed, what they shall buy, and where they shall buy it, what wages they shall get and how they shall spend them, against which the Liberal party have always protested.

The essence of liberalism, and the conflict within liberalism, is contained in one phrase in that paragraph:  "a Liberal Government tries, as far as the safety of society will permit, to allow everybody to do as he wishes." Conservatives criticize the permissiveness of liberals, which stems from exactly this sentiment.  Yet while they condemn permissiveness in the sense of the social behavior of individuals, they advocate greater permissiveness in economic behavior (except when this involves permissiveness in social behavior, as in legalizing marijuana.)

Most of the conflicts between different heirs to the liberal tradition boil down to a question of what "the safety of society will permit." Will it permit you to dump raw sewage into public waters? We've come to agree that it won't. Will it permit you to put water, sand and chemicals down a well at pressure to fracture rock so that natural gas can be extracted, even if this mixture (or the gas itself) might reach water supplies? Current law says this will be permitted. The latter is an issue which pits the liberal tradition of laissez-faire capitalism against the tradition that, as Oliver Wendell Holmes put it, "The right to swing my fist ends where the other man's nose begins."

Concern for the state of the nose is a higher priority to modern liberals than to modern conservatives, who are more likely to worry about the freedom of the fist, and would call themselves classical liberals or market libertarians.

The problem is one basic to liberalism.  As Hobbes pointed out, liberty does you little good if others are free to kill you. Man in the state of nature is free, but to enjoy freedom, we must make a social contract and give sovereignty to the state so that our freedoms may be protected. This tension between individual liberty and the social contract is the tension between conservative and liberal interpretations of the American tradition.

One of the more influential writers on the conservative side of the liberal tradition was Frederick Hayek, an Austrian-born economist who taught at the London School of Economics and the University of Chicago. Hayek was a Nobel-prize winning economist who is now best remembered for The Road to Serfdom, a book that claimed that Western democracies had progressively abandoned "that freedom in economic affairs without which personal and political freedom has never existed in the past."

We should keep in mind that he wrote this during World War II. While a free-market economy is an excellent way to decide how resources should be allocated in time of peace, in time of war resources need to be allocated to the survival of a society under attack. As a result, rationing, price controls and other extraordinary measures were in place while he was writing the book. Hayek believed that central planning was inherently undemocratic, and that socialism was inherently hypocritical because its humanitarian goals could be achieved only by means of brutal coercion of which most socialists would disapprove. I guess that depends on whether the socialists you know are British Fabian socialists or the Kmer Rouge, a distinction Hayek might wisely have paid more attention to.

In his 1973 essay, Hayek claimed that "the name 'liberal' is coming to be used, even in Europe, as has for some time been true of the USA, as a name for essentially socialist aspirations"

Hayek made a series of predictions that didn't turn out.  For example, in that 1973 essay, he wrote that "a functioning market economy cannot be maintained under accelerating inflation, if for no other reason than because governments will soon feel constrained to combat the effects of inflation by the control of prices and wages. Inflation has always and everywhere led to a directed economy, and it is only too likely that the commitment to an inflationary policy will mean the destruction of the market economy and the transition to a centrally directed totalitarian economic and political system."

Yet the last president to use price controls was Richard Nixon, who was what passed for a conservative back then.  A liberal Republicans love to hate, President Jimmy Carter, appointed his fellow Democrat, Paul Volker, chairman of the Federal Reserve Bank, and they defeated inflation with monetary policy.  Nixon had tried price controls, President Gerald Ford had tried WIN buttons (Whip Inflation Now,) but it was Carter who put Volker in place, and Carter who drove down the cost of air travel and trucking by deregulating those industries.

Had Hayek been right about the slippery slope from price controls to serfdom, Britain would long ago have been pocked with gulags, rather than having thrown away those parts of Labour's post-war actions that didn't work and kept the National Health, and once the the Swedes nationalized the banks in 1992, the end of democracy and liberty must have been a sure thing.  This would, however, be news to the Swedes.

Now, I've always felt there was something wrong with Marx's ideas. If he was right, Marxist states should have appeared in industrial states like the United Kingdom, but the only indigenous Marxist movements to come to power did so in mainly agricultural societies.  That should have been a clue, even before the commissars had a go at structuring a society.

I have similar feelings about Hayek. If he was right, then the warnings about Social Security and Medicare leading to Americans being crushed under the boot of socialist tyranny that conservatives made when these policies were put in place would have turned out to be true. But the intrusiveness of such social programs is so small that many who benefit from them are unaware that they are served by government programs, a fact which I find remarkable.

And if Hayek was wrong, his predictions about the slippery slope of social programs must have been the equivalent of warning that if you allow people to use electricity for lighting their homes, the inevitable result will be that killer robots who look like Arnold Schwarzenegger will be traveling through time to kill their enemies' mothers before they are conceived. (Of course, that could still happen, and I'm sure some will argue that Hayek's predictions could still come true.)

I propose that the essence of liberalism is not a particular set of economic arrangements, but liberty itself. Mind, I'm a capitalist myself, nearly 20 years a merchant, and you can have my cash register when you pry it from my cold, dead fingers (or pay a price for it that we agree upon, that works too.) Markets have been part of human culture for, most likely, longer than most of our institutions, and I have no wish to see them abolished. But the form our markets take is a made thing, not a gift of nature, but a human set of social arrangements that we may shape as we wish.  Same with governments. We fit these institutions to our needs, we need not only fit ourselves to their needs.

It matters less whether the Swedish banks manage to survive or fail on their own than it does whether the Swedish people agree that their representatives have found a practical solution to the crisis that they can live with.

Liberalism is not a Procrustean bed which we must be made to fit. The whole point of examining the state of nature and reasoning from it to the society appropriate to man's nature was that such a society should fit us more comfortably than any other.

As I mentioned in this post, far too much debate has centered on the notion that if we perfect our relationship to property, we will achieve some Nirvana of liberty and justice for all.  Property is just one of our social arrangements, after all.

The Wealth of Nations was written in that propitious year, 1776, and it took time for its ideas to spread: The Founding Fathers, to the extent that they had an economic philosophy, were mercantilists, the dominant economic philosophy of the time. Mercantilism involved substantial state participation in the development of a nation's economy, yet that participation, and tariffs and projects linked to the American System, did not prevent liberty from flourishing in America.  That's because the notion of liberty -- the freedom to make our own judgments about who should rule us and how we should live -- is more robust than many of its champions imagine.

P.S., there's a delightful cartoon version of The Road to Serfdom here.

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