April 29, 2011
From Rap Battles to Libertarian Myopia
Following that brilliant first instalment, Keynes versus Hayek Round II is here:
There’s no denying this is greatly entertaining stuff. But as with the first video, I find the pro-Hayek message rather irritating (well I would, wouldn’t I?)
To pick up on one specific thing, however, I’m frustrated by the Hayek character appropriating some words of Adam Smith about human beings not being mere pieces on a chessboard.
The original Smith quote, from his Theory of Moral Sentiments, runs thus:
“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”
Smith’s point is simple but extremely important. However ingenious and complex a plan or system may be, it can never match the complexity of the world upon which it is unleashed. Each action sets off incalculable further reactions. Each human agent affected by these actions and reactions will in turn be propelled by his or her own “principle of motion” in ways that cannot be predicted or controlled. No plan or system ever works out the way “the men of system” hope. As Smith, in his typically understated way implies, failing to see this can lead to social, political and economic disaster.
Libertarians (and “classical liberals”, Austrian economists and whoever else is on the wagon this week) are fond of quoting this passage. Over at CafeHayek it is proffered as advice for “would-be czars and other experts to remember”. Yet libertarians (et al) rarely realise that Smith’s reflections apply – with devastating force – to their own state-minimalist politics.
Even in the world of minimal-state libertarian fantasy, there will inevitably be economic recessions.* Eventually, at least one of these will be severe. In recessions people suffer; that’s what unemployment and poverty entail, especially under the minimal state where there is presumably no welfare support. When people suffer, however, they do not sit around idly and wait for the market to fix itself – whenever that might be. They take action to alleviate their sufferings as soon as possible.
Under such circumstances, large-scale collective action will be taken by individuals seeking relief from suffering. Action of this sort is known as “politics”. In this “politics”, human beings mobilise so as to put the levers of power into the hands of those who will (or at least promise to) alleviate their sufferings. In modern societies this is done via the state apparatus. Hence even if (magically) we start out with libertarian state minimalism, we will not stay there. The power of the state will eventually be deployed so as to interfere with the market forces currently failing to alleviate the sufferings of ordinary people.
Two things follow. First, and with especial irony, the libertarian minimal state can only be sustained by coercive state force. When ordinary citizens mobilize to demand state action to alleviate suffering, the politicians they select, and the movements that propel them to power, must be repressed in order to preserve the minimal state which refuses to interfere in the economy or to provide state support. Minimal state libertarianism either organically gives way to state interventionism, or resists this organic development by becoming an anti-democratic tyranny. At a conceptual level, this basically means minimal state libertarianism tears itself apart upon any contact with the constraints of reality.
Secondly, with such considerations in place we can return to the real world and look at the alarming historical record. During the 20th century, when economic situations became sufficiently dire for sufficiently long, it was not mildly interventionist Keynesians who took power. It was murderous Fascist, National Socialist and Bolshevik regimes, who either wrested control of the state by force or were selected by desperate populations via popular vote.
Hayekians (or whatever) are being extremely myopic when they denounce Keynesians and other interventionists who broadly support market-economic systems whilst attempting to actively mitigate their worst failings. For the Hayekians fail to see that Keynesianism and other economic interventionist programmes take place against a complex real world background. A real world in which attempts at basic economic management (i.e the alleviation and prevention of suffering) are a bulwark against disaster. A bulwark against the sorts of regimes that are deeply and murderously antithetical to individual and economic liberty in ways economic-interventionist capitalist democracies have never been, nor ever will be.
Libertarian state-minimalism and attendant Austrian laissez-faire economics are fine for fantasists pining to live in a fantasy world. But for those of us preoccupied with the perils, dangers and constraints of this real world, they and their loud-mouthed proponents are usually little more than a nuisance.
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* The really nutty crowd, of course, claim that without government there would never be any market failure, recession or depression. This piece of deliberately self-serving wishful naivety is best treated by simply being ignored.
November 8, 2010
Workfare, Slavery, Libertarians and History
Don Paskini demonstrates how unworkable the Coalition’s “workfare” plans will be in practice. Yet thinking philosophically about the implications of “workfare” – i.e. the state forcing people to work – can also be fruitful.
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State minimalist libertarians are fond of arguing that taxation is a form of slavery. Apparently, if you pay 30% of your income in tax, then allegedly 30% of your working time is owned by the state, and that allegedly means you’re enslaved for that period. Although intricately fancy, such arguments are in fact relatively straightforwardly refuted.
But if anything looks prima facie like state-imposed modern slavery, it’s forcing some group (e.g. the unemployed) to work for nothing. Indeed that description might appear a plausible candidate for a starting definition of slavery. Yet appearances can be misleading, so let’s consider the obvious objection that “workfare” is not a form of slavery: that unemployed people will not work for nothing because they will receive unemployment benefit which will now be conditional upon the aforementioned work.
Viewed from a careful philosophical and historical perspective, however, this argument may generate more problems than solutions – for libertarians in particular.
Firstly, benefits are – by their very nature – not a form of remuneration for labour undertaken. The whole point of out-of-work benefits is that they exist to support those who would otherwise be destitute. Benefits are a safety-net, a source of income for those without other means of support.
Secondly, benefits have never been part of some 20th century egalitarian revolution, the tides of which are being turned by making benefits “conditional”. Unemployment benefits (in particular) are a pragmatically-evolved political response in the post-war era to the realisation that leaving people to the mercies of capricious market forces will – in times of economic hardship – push the destitute into the “solutions” of desperate political extremism, like fascism, Nazism and communism. Benefits are a safeguard against the extremist politics that grow in the fertile soils of disempowerment and economic hardship. That is – historically – a major reason for their existing as precisely unconditional supports, supplied by the state and financed from general taxation.
Out-of-work benefits are thus not – and never have been – remuneration for labour. To make them such entails that they are no longer benefits. In turn, to threaten to take away such now-conditional “benefits” from those who do not undergo state-prescribed work placements is to effectively force people to labour for (barely) subsistence remuneration. It’s: work-for-the-state, or be destitute in the gutter.
To re-iterate: if “benefits” become dependent upon work, then that work becomes – for those who would prefer not to starve in the gutter – enforced labour extracted by the power of the state. Accordingly, that now starts to look rather like a form of state-enforced slavery in the context of societies that have developed legal structures and norms that previously provided for the unconditional protection of the most vulnerable. The more general point being that these sorts of issues cannot properly be analysed out of the relevant historical context.
A switch to benefit-conditionality cannot, as a basic fact of reality, happen in vacuo. Its impact upon state-citizen relations must be understood against the background of what has gone before. Hence: if people were previously guaranteed a basic subsistence minimum, and now they will only get that if they work for the state, there is a strong case for saying they are now being forced to work for the state. And forced work is, at some level, at least analogous to slavery.
I’m happy to admit that the analogy with slavery will not hold anything like all the way down, however. The psychological and moral dimensions of actual slavery – the rendering of thinking, feeling human beings into mere property, left wholly at the mercy of owner-dominators – are deeply objectionable, and put slavery-proper on a different moral and political plain to the Government’s “workfare” proposals. But having said that, “workfare” may look a lot closer to slavery-proper than the polemical libertarian suggestion that paying tax (via a developed and established legal-social structure, ratified democratically, and backed by rule of law) is akin to slavery, because of the alleged appropriation of worker’s labouring time by the coercive extractive power of the state.
Unless, of course, you’re a libertarian. Then, your response is likely to be: the state is not forcing anybody to work via “workfare”-type proposals, because if people would rather not work they can forego their “benefits” and starve in the gutter; it’s their choice.
What I want to end by suggesting today is not simply the usual charge that this is a bizarrely brutal political outcome to advocate, and which strikes most ordinary people as abhorrent and very possibly mad. (After all, the proposition that the worst-off should be abandoned so as to “protect” the property rights of the already more fortunate, who would allegedly be “enslaved” if they were forced to pay tax to fund wider welfare support systems, looks blatantly bonkers to especially the non-philosophically minded majority).
To that oft-repeated observation, I would add two further points however. Firstly, that the libertarian response is defective insofar as it refuses to engage withthe reality of a preceding practical context against which to understand the state-citizen relationship in something like “workfare” reforms.It is just not good enough to attempt to analyse political interactions and changes in vacuo – at least if one wishes to produce a serious and rounded analysis. Changes and power structures happen in concrete political and historical contexts; abstracting from those tells you only about your abstraction, not about the world people actually must live and interact in.
Secondly, that much libertarianism is astoundingly historically ignorant, insofar as it does not pay attention to why systems of benefit support have evolved in our societies. And in turn libertarianism is naive, insofar as no attention is paid to the empirical evidence that when people are left to the capricious mercies of the market they do not sit around picking their noses, but agitate for (often violent) forms of political extremism to address social and economic short-comings.
Thus, the irony: because libertarians are generally historically ignorant and naive, they advocate likely self-defeating political programmes. In the short term, the newly-established Republic of Libertopia would see benefits (etc) withdrawn and taxation drastically reduced to defend the (alleged) property rights of the better-off, so as to prevent their “enslavement” through “coercive” taxation. Yet in the longer-term, the inevitability of economic strife at some point* would push the destitute and abandoned to seek-out radical political solutions that would not only over-turn the libertarian arrangements of the status-quo, but (if the 20th century is any guide) risk instituting forms of political organisation that would be drastically more antithetical to the aims and desires of most libertarians than the oh-so wicked tax regimes of western liberal democracies. Correct me if I’m wrong, but Adolf Hitler was rather more of a threat to people’s liberty and property-owning prosperity than Clement Atlee or FDR.
Perhaps it is therefore fortunate – for want of a better word – that most libertarians in practice don’t actually go Galt at all. They just live in affluent American suburbs, and vote Republican.
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*To those who would reply that under the (Austrian?) economic system of state-minimalist Libertopia there would be no economic crises or hardships, we simply reply with the derisory silence this sort of self-assured refusal to engage with reality (by living in imaginary sky-castles of convenient a priori theory) deserves.
September 25, 2010
The French Physiocrats Institute
There was a rather silly post up at the Adam Smith Institute blog recently. ASI founder Eamonn Butler’s argument (such as it constituted one) basically went: market competition has all sorts of good consequences; free-market capitalism guarantees such competition; state regulation always strangles such competition; this is what Adam Smith thought and so Vince Cable was wrong to cite him in support.
The first premise is fine. The rest is silly (though admittedly Butler’s post is confused – and confusing – so it’s not clear whether he fully endorses this silly argument or even recognises it to be silly).
Pace Dillow we know that markets, left to themselves, do not always produce and sustain competition quidquid evenit. Situations which start out as competitive may evolve into ones in which one or more businesses corner enough of the market to establish oligopolistic or monopolistic dominance. At which point competition is strangled, and its myriad benefits – efficiency, innovation, etc – are lost.
Regulation, whilst sometimes reducing competition (e.g. when big business and state forces collude) can also generate or sustain it. That, after all, is why the economic regulatory structures of most western democracies include competition laws whose purpose is to prevent oligopolistic or monopolistic consolidation.
Unsurprisingly, Adam Smith wasn’t so dumb as to subscribe to the crude reasoning Butler attributes to him (“Business people would love to rig the market in their favour. But it is only the power of governments that enables them to do this”). Butler alludes to this famous Smith quote:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
And he then says that if you read the “following paragraphs” you see that Smith believes “that it is regulation that brings on these cartel meetings and makes the conspiracy stick.” Technically, this is correct. But as presented by Butler the nature of Smith’s position is quite severely distorted.
Smith notes that by forcing (what we would now call) entrepreneurs to be publicly registered, you may alert them to each other and provide them with the knowledge required to start colluding anti-competitively. And he says that “though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”
But then, this is just common sense. Smith is merely pointing out that magistrates should bear in mind the possibility of unintended consequences. A laudably-motivated piece of regulation may actually have adverse unintended effects, but legislators shouldn’t impose reforms that actually make things worse (e.g. supplying information to merchants hell-bent on skullduggery). So sometimes regulation is indeed a bad idea. But equally, government intervention may sometimes be required (for example, to restore the system of “natural liberty” when monopolies have been established). If the benefits of regulation outweigh the likely negative consequences, then government action may be acceptable. But how often this turns out to be the case is an empirical question, and cannot be settled in advance by the sort of a priori dogma Butler goes in for.
Moving further afield from these few brief paragraphs, it is stonkingly clear that Smith thought the state could intervene in market affairs in desirable ways, improving upon pure free-market outcomes. Over at the Telegraph, David Green makes the point well:
In The Wealth of Nations, Adam Smith often condemned “projectors”, as speculators were called in his own time. For example, he favoured a legally-imposed maximum interest rate of 5 per cent at a time when the market rate was about 4 per cent. If the legal rate of interest went up to 8 per cent, he said, then more money would be lent to “prodigals and projectors”, who alone would be willing to pay that much. “Sober people”, he argued, would only pay rates that would allow them to make a profit from solid ventures. Without a maximum of about 5 per cent money would be thrown into the hands of people who “were most likely to waste and destroy it”. With a legal maximum “the capital of the country is thus thrown into the hands in which it is most likely to be employed with advantage.”
Contrary to Butler, Green is right to note that “Adam Smith was making the very same point as Vince Cable.”
Now, ASI partisans might want to complain that Smith got it wrong. Which is fine, they are entitled to do that. But what they cannot do is both have their cake and eat it. If it is admitted that Smith advocated market interventions incompatible with the laissez-faire economic policies pushed by the ASI, it is by-the-by whether or not he got those things right. The point now is that Smith wasn’t the poster-boy of Thatcherite market liberalism the ASI like to claim. Which simply raises the question of what on earth is Adam Smith about this institute.
I’ve explained before that the simplistic free-market zealotary at the ASI has more in common with the French Physiocrats than Adam Smith – the former being the latter’s great intellectual opponents. Smith was a theorist primarily of political economy; economic theory was of value only when filtered through the prism of real-world politics and its inevitable distorting impacts upon applied economic policy. The theory-heavy market liberal dogma of the ASI stands a long way from The Wealth of Nations.
If this organisation were really a think-tank, rather than a vehicle of partisan Thatcherite politics, I’d suggest a name-change in the spirit of intellectual honesty: ‘The French Physiocrats Institute’ would be a most appropriate re-branding.
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Seen as we’re talking about Smith, academic readers of this blog should be aware of this:
August 25, 2010
Fish, Barrel
With perfect timing given today’s earlier guest post, platinum imbecile Chris Mounsey – leader of the UK Libertarian Party – has given an interview to Total Politics magazine in which he claims his “political idol” is Adam Smith.
You will recall that Mounsey was recently humiliated on national television when Andrew Neill quizzed him about the slanderous and obscene nonsense that Mounsey wrote at Devil’s Kitchen.
So in truth, I don’t really need to link through to the recent posts showing why Adam Smith is no friend of modern libertarians (and especially not of the crude UKLP sort) – though what the hell.
All I actually need to do is point out that Adam Smith wrote a book called the Theory of Moral Sentiments, which puts sympathy with others at the heart of its account, and in large measure reads as a good-etiquette guide to interacting with other human beings. By which I mean: it’s hard to imagine Adam Smith taking too favourable a view of the violent pornographic obscenity Mounsey used to polute the internet with – at least before his national public humiliation.
Verdict: epic fail.
August 11, 2010
How to think about…Adam Smith
It’s quite common to see people across the blogosphere haranguing over the legacy of Adam Smith. Typically, leftists will make angry noises about how Adam Smith was not a swivel-eyed free-market zealot; a Thatcherite avant la lettre of the sort now found at the (so-called) Adam Smith Institute.
But unfortunately such noises usually lack detailed substantiation. And this isn’t surprising; outside of academia it can be difficult to find clear explanations for why Smith was a more complicated figure than the libertarian caricature allows for. What I’d like to do, therefore, is offer a small attempt to rectify this dearth of easy-access resources. Consider it a minor public service, born of post-dissertation boredom.
My aim however is not to show that Smith was somehow a hero of “the left”. Personally, I think that’s simply anachronistic, and thereby unacceptable. There’s no honest way of claiming that a thinker deeply embedded in 18th Century political situations and concerns can unproblematically be signed-up to one broad tribe in today’s vastly different economic, political, historical and social setting. But what I do want to provide are some reasons for appreciating that Smith’s ideas stand in tension with much modern free-market right wingery.
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Normally a starting point is shared between both modern left and right: that Smith was the first “modern” economist. But this isn’t very accurate. It’s much better to describe Smith as a moral and political philosopher who wrote a major tract – his Enquiry into the Nature and Causes of the Wealth of Nations – focusing on the political economy of modern commercial nation-states in competitive international arenas.
That long redescription matters. Smith did not set out to write some sort of “textbook” about how economics “works”. No doubt there is much in the WofN which does attempt to understand the structure and functioning of economic processes. Yet the purpose of such analysis is to underpin Smith’s primary project: of understanding and explaining how commercial nation states interact with each other, when driven not simply by the logic of economic production but also by the more powerful and often countervailing logic of war and military competition. Thus, the WofN is as much a piece of international political strategising as it is of economic theory.
Core to Smith’s outlook, however, was something he shared with his friend and predecessor the great philosopher David Hume: that the logic of economics and the logic of politics (including especially that of war) had to be understood as intimately and permanently inter-related. Whilst it might be intellectually enlightening to hypothesise about a world of pure economic interactions, it was useless and naive to think that such a world could ever exist in practice. In reality, the dictates and demands of politics would forever be present, warping the logic of economics to serve the ends and demands of statesmen as well as citizens. The outcome was what Hume called “jealousy of trade”; a situation whereby competitive nation states would twist the workings of commerce and trade to the perceived needs of national defence and aggrandisement. For Smith as for Hume, this was an inevitable fact of life in the real world, and it had to be faced-down and dealt with, not wistfully imagined away or ignored.
However, I’m actually going to draw here on two quotes from Smith’s first book, The Theory of Moral Sentiments. Although this work was published in 1759, before the WofN, the passages I’m interested in were actually added by Smith to the final 1789 edition, 13 years after the WofN was first published. (There is little doubt amongst contemporary scholars that Smith wanted his final version of the TMS to be read in conjunction with his economic ideas, which he also revised until his death).
The first passage which commands our attention is this:
“This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.”
To understand this passage we need to contextualise it a little. Smith was responding to – and indeed partially conceding – a point made most forcefully by Jean-Jacques Rousseau. That commercial society – or what we would now call capitalism – inevitably corrupts those who live within it.
Rousseau’s classic statement of this idea came in his polemical essay A Discourse on the Foundations of Inequality (better known as the Second Discourse). There, Rousseau railed against the rise of commercial society, which he saw not only as grounded upon avarice, self-interest and greed, but as leading to unacceptable levels of inequality and the simultaneous corruption of human beings into nasty, selfish, competitive creatures.
Smith disagreed with much of Rousseau’s diagnosis. In particular, he saw a liberalised commercial society as being to the justifiable benefit of the poorest because although great inequality would inevitably result from the establishment of commercialism, the material gains to the worst-off would justify this. Indeed, insofar as Smith was prepared to tolerate considerable inequality on the justification that it was correlated to rising living standards for all, he does share much in common with the non-egalitarian free market right of today.
But what Smith does not share with the modern free market right is a concession to Rousseau that commercial society – that is, systems of production and distribution founded upon the interaction of self-interested profit seekers – is deeply and worryingly corrupting of individuals themselves. Although Smith did not take the diagnosis to be as severe as Rousseau, Smith was also deeply concerned that a system based on self interest – as capitalism must be – carried worrying consequences for the well-being of individuals engaged in it. As Tim Worstall – of the Adam Smith Institute, appropriately enough – ably demonstrated here, this concern about the psychological effects upon individuals of a system based on competitive self-interest is hardly common to today’s free-market right.
The second passage I want to consider is as follows:
“He seems to imagine that he can arrange the different members of great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great “chessboard of human society, every single piece has a principle of motion of its own, altogether different from which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”
This, of course, is part of Smith’s famed attack upon “the man of system”, once invoked by no less than Margaret Thatcher. Although to modern eyes this passage reads like an attack on bureaucratic state planners – of the Soviet sort right through to the Social Democratic left – it was originally directed at quite another group.
The “men of system” that Smith had in his sights were the French physiocrats of the second half of the 18th Century. Paradoxically, the physiocrats had much in common with Smith. Like him, they thought that economic logic clearly showed that societies would flourish if free trade were instantiated (particularly in the grain trade) and commercial restrictions removed so as to allow the market to allocate resources more efficiently than mercantile planners could possibly achieve. In terms of economic “theory”, both Smith and the physiocrats thought that moving to a system of “natural liberty” – i.e. free market commercialism – would be superior to the confused and counterproductive attempts by individual states to restrict trade with the aim of undercutting their rivals. Both Smith and the physiocrats recognised – correctly – that protectionism hurt everyone but that (counter-intuitively) freeing trade within and between states would lead to the “opulence” of all participating states.
But where Smith differed – and differed fiercely – from the physiocrats was in his recognition that free market reforms could not work in practice as they would in theory. The reason for this was a facet of the wider issue mentioned above: jealousy of trade. Although in theory if everybody accepted the free-market liberalisation of (say) the grain trade without question and set-about acting rationally in response to it, everything would work out fine, and indeed production and efficiency would increase. The “game” of society would go well.
In practice, however, this simply would not occur; the “pieces on the chessboard” had their own principles of motion. For example, individuals threatened by temporary fluctuations in grain price due to the interactions of supply and demand would (quite reasonably, from their own perspective) react adversely and demand that the powers-that-be intervene so as to secure prices, and in turn food supplies. Although Smith agreed with the physiocrats that in the long-run this would likely have perverse consequences and make food production lower and famine more likely, the fact was that in the short-term panicked individuals would make demands upon those in political power to interfere with the market, and that political leaders desiring to keep both their positions and their heads would respond accordingly.
As a result Smith was adamant that any economic reforms had to be made cautiously, slowly, and in full recognition of the fact that the logic of economics was always liable to be rapidly usurped and twisted by the logic of politics. Whilst Smith doubtless favoured the liberalisation of (for example) the grain trade, he opposed the programme of the physiocrats to implement free-market reforms instantly, as though the real world were a chessboard where each piece would behave exactly as the controlling player wished and demanded. In reality, the logic of politics – however disruptive from the viewpoint of the economist – would always be present, and had to be accepted as a fact of life. Economic policy must be adapted accordingly, and liberalising reforms suspended insofar as the unavoidable impact of the logic of politics made them dangerous to the stability and immediate well-being of society.
Smith’s sophisticated acceptance of the divergence between economic theory, and its inevitable corruption when put into political practice, thus comes into neat contrast with those modern-day-physiocrats of the cruder wings of the Thatcherite economic right. Then as now there abound economic policy makers who – with the best of intentions – construct free-market reforms based on theories which posit the individuals affected as acting rationally from the viewpoint of economics. What such reformers often neglect, of course, is that the logic of politics is inevitable and inescapable in real-world practice: that the pieces on the chessboard will not always move as the logic of the market would like them, and that as a result “the game of society” will go “miserably”.
Of course this last point applies to much of the left, too. Smith’s point about the men of system applies now to bureaucratic planners who believe that the state can always intervene and direct affairs without the “pieces on the chessboard” having their own alternative principles of motion, leading well-intentioned reforms to have unexpected and undesirable consequences. The disaster of state Sovietism proves that well enough.
But what’s important to remember is that Smith originally intended the point to be made against those who would too quickly introduce the market into situations where its effects would be intolerable for the people affected by them, leading to unforseen and destructive political responses. This, for Smith, was just a fact of life, and economic policy had to be shaped accordingly. The consequent complexity of this view means that even as a pro-market, liberalising proponent of nascent commercial society, Smith stands a long way from the cruder free-market sections of today’s economic and political right.
July 7, 2010
Unapologetic Self-Indulgent Long Philosophy Post
It recently occurred to me that there’s an important objection against my recent post about property rights. I argued that because the state guarantees all property (without a state, property would be seized by the strongest), the economic system within a given territory is simply a function of whatever the state decides to permit. Free(ish) markets might be chosen in most western nations, but the point is they are chosen and in theory something else (guilds, state monopolies, nationalisation, full-blown soviet economic planning) could be put in their place.
However, a thoughtful libertarian – let’s call him Dan – might reply:
You’ve correctly described the world as it is, insofar as without a (minimal) state no property could be secured. But your mistake is in supposing that there are therefore no constraints upon what the state can do regarding property rights. To fail to see this is to reduce the state to the equivalent of a slave owner or gangster boss. For just because one of these types might have de facto – or possibly even de jure - power over the life of another, it doesn’t follow that it is morally right that they abuse their captives. Similarly, just because a state guarantees property rights it does not follow that it may act with moral impunity. Instead, in Nozick’s famous phrase “individuals have rights, and there are things no person or group may do to them (without violating those rights)”.
Dan’s response looks to me powerful and important. But I can think of two lines of resistance.
The first takes the proposition “it is morally incumbent upon the state to respect the property rights of individuals” and replies: “says who?” The thrust of this reply lies in refusing to be diverted by Dan’s response, and indeed re-affirming the underlying principle originally appealed to. Call it the Thrasymachus answer, if you like.
On a very crude formulation this consists of saying that in the case under discussion “might makes right”. That insofar as the state guarantees property rights by being the monopolist of (legitimate) force, the state calls the shots. To believe there is some sort of morality which transcends power, especially when there is no higher court of appeal than the agents of the state, is at best naive philosophical abstraction and at worst to live in denial about the fundamental truths of politics.
Many will not like this answer. I am uncomfortable with it myself. Power certainly has a place in politics (and ethics), but the mistake here is to reduce everything to power. And insofar as we possess working conceptions – established over centuries and born of the bitter experience of history – that might shouldn’t make right, and that if it does we have cause for deep concern, the Thrasymachus answer isn’t good enough. I’ll return to this.
Instead, I prefer to focus on the end component of Dan’s objection: for what exactly is a “right” that people “just have” and which the state must respect? There is a danger here of, in Raymond Geuss’ words, leaving that statement flapping like a great big fish on the deck of a trawler, before proceeding to draw conclusions from it.
So let’s keep things relatively focused and ask: what are these “property rights” that people just have independent of the state, and antecedent to it? Many libertarians like to claim that they trace their philosophical heritage to the “classical liberalism” of John Locke, who did indeed assert a natural right to property. But more often than not this is a cheap and counterfeit lineage bought in ignorance. For as John Dunn has shown at length, Locke’s thought can and does only make sense insofar as he was a very peculiar sort of protestant Christian, positing a God who provided a natural law realisable by reason and applicable even in the state of nature prior to any political power.
I try to give a flavour of this here (though criminally with no reference to Dunn), which should demonstrate the extent to which Locke’s idea of a (natural) property right simply cannot get off the ground without God as a starting condition. Now, libertarians who want to bring God into the picture are welcome to. I will reject the premise that there is a God who guarantees natural property rights, and I think my arguments from Humean scepticism will win. But that’s another debate, and I take most libertarians to be arguing from a base of secularism anyway.
Rather than going through other thinkers periodically claimed by libertarians (with varying degrees of exactitude) to be progenitors of the idea that individuals just do possess individual property rights, I think it will be easier to call into question the whole idea of what a (natural) property right could possibly be. It is helpful to approach from a historical perspective.
We can start by observing that many societies in the past recognised no such thing as a “right”, let alone one which all individuals have by nature, and especially towards property. The Ancient Greeks had no concept of a right whatsoever. The Romans did, but it was closely connected to Roman law and citizenship status; certainly slaves and women did not possess rights, and especially not by virtue of their humanity alone. Throughout most of European history the concept of a right was alien, applying at most to feudal lords and certainly not to landless peasants. Gradually things changed, in particular after Thomas Aquinas’ major work Summa Theologica on natural law in the 13th century induced subsequent theologists and jurists to explore the possibility of natural laws and duties incumbent upon men because of a combination of “right reason” and the need for mutual society. Eventually this thinking resulted – via the important innovations of Grotius – in natural right theories such as Locke’s.
Certainly we west European moderns now take the notion of universal (human) rights for granted. But the question remains: why did most of the rest of history not see this, and indeed why do vast chunks of human society in the modern world still not subscribe to this view? One self-congratulatory answer is that other societies lacked (or lack) the sophistication to realise the truths we have. But that sort of Whiggish history looks rather unlikely – the Greeks, after all, were not stupid. It is even more undesirable an answer when we consider that there is a more plausible alternative: that our conceptions of rights (i.e. that individuals just have certain rights by virtue of being human beings) are the end-product of a very long process of historical development, and are accordingly social constructions. Part-legal guarantee, part-shared ethical commitment, part shared belief in what human beings are as moral agents, human rights are the end product of a long process of political and intellectual history.
Now this is not to deny that thinking about rights as innate and natural to individuals can be very desirable and effective. Such thinking is, amongst other things, likely to increase the extent to which rights are upheld and respected. And one thing history teaches us is that human lives and societies go much better when people are considered as having rights, and those rights are thoroughly respected.
Accordingly, there will indeed by good grounds for urging the agents of the state to continue to enact, observe and support the mechanisms by which individuals’ rights are made meaningful and constant, as well as to set up long-term institutional measures to ensure this is so. This, incidentally, is an important reason why I was right to earlier express concern at the narrow answer of Thrasymachus. For whilst the state certainly wields the power, we also need and desire a world in which that is not the end of the matter. And we are right to do so.
But this will not change the fact that, at root, as rights are social constructs their practical meaningfulness is ultimately guaranteed by the state. There are no a priori rights to property that can be asserted against the state just as a matter of course, because the historical story of the development of rights is intimately connected to the way in which modern western nation states have grown to grant and guarantee such rights. Accordingly, whilst staying within the constraints gestured at above – those which lead to situations in which states broadly respect property rights for the good consequences this generally delivers – states, as the intimate (because their relationship consists of more than just power, but of historical actualisation and continued recognition) guarantors of property rights, can and do possess the authority to license whatever form of economic system they see fit.
Again, history indicates that broadly free-market capitalist economic and social arrangements have been the least worst. But those enjoying the benefits of this arrangement – particularly wealthy capitalist elites – would do better to recognise that they are the recipients of privilege from the state, and act with more gratitude and deferal to the rest of society. And in certain cases the agents of the state would do better to remind relevant parties of the nature of their privilege, and in cases such as Network Rail move to curtail it.
June 25, 2010
Network Rail and the Illusions of Property
It is a basic truth – though one hated and resisted by libertarians – that all property is ultimately dependent on the state. This is because without the coercive power of the state to defend and uphold the private property of individuals (or for that matter, corporations) no property could be meaningfully secured from seizure by others.
Connectedly, any economic system based on the holding of property is ultimately a function of whatever the state deems to be permissible. Because the state is the ultimate enforcer of property rights, and of legal contract, the specific economic system permitted within any given state is exactly that: permitted. In modern western democracies like Britain we have opted for an economic system which gives great privilege to individual property rights (of persons and corporations), protects and enforces contracts, and has developed to favour a broadly free-market system for the allocation of resources.
Of course it wasn’t always thus. The transition in Western Europe from medieval feudalism, through variations of mercantilism, onto something like free-market capitalism by 1800 was a long and complex one. America’s unique history complicates things further. And until recently many parts of the world did not license extensive private property and contract rights or grant precedence to the market, and instead assigned monolithic state bureaucracies the task of allocating resources. Indeed this still goes on in a (very) few places, like North Korea and (in different ways) Cuba.
But overall the lesson of history is that capitalist free-markets (for all their myriad faults) tend to work much better in terms of allocating resources and respecting individual freedoms than alternative systems
However, over roughly the last 30 years western capitalist democracies like Britain and America have increasingly moved towards further dependence upon free-market structures, and a further emphasis on the role of private enterprise (built on a foundation of private property), as oppose to state provision. This emphasised role for free markets is usually what is referred to (with frustrating wooliness and usually implying disapprobation) as “neo-liberalism”.
It’s worth noting that a particular feature of successful capitalist systems, that give pride of place to individual property rights and free-market transactions, will likely be – and in our case, has been – a legal structure that puts considerable and extensive measures in place to slow down and curtail the ways in which particular powers and agents of the state may interfere with these rights and transactions. However, this is ultimately done by the state itself; a sort of self-denying ordinance designed to enshrine and especially privilege private rights and transactions, upon the belief that society and economy turn out best this way.
An upshot of this is that such rights and transactions start to take on the appearance of being somehow prior to the state, or of standing outside of its remit in some innate or essential sense.* Thus, it is easy to lose sight of the fact that such economic arrangements are allowed, and guaranteed, by the state. Furthermore, in a democratic state those arrangements can ultimately be changed by approved democratic process. i.e. by governments with democratic mandate.
However, with the advent of “neo-liberalism”, this point has increasingly been lost upon many, particularly politicians and especially those currently ascendent in the Liberal Democrat party.
Which brings us to the case of Network Rail and the £2.4million in bonuses. Here we have a startling illustration of some of the above points. Although Network Rail is nominally a private company, it has no share holders and is propped-up by state finance. In other words, the most blatant case of state-guaranteed property rights imaginable. So when Network Rail bosses award themselves egregious sums in bonuses, it should be straightforward for the Government – as the agent of the state – to step in and say “no that’s not happening”.
Except what actually occurred was that Philip Hammond sent a letter asking the bosses of aforementioned state-guaranteed company to “show restraint”. Which they duly ignored, giving two fingers to the taxpayer.
A core problem here is a prevailing mentality in contemporary politics: that private enterprises are sacrosanct independent entities, rather than existing merely by privilege of the state. This confused belief allows Network Rail to proceed as it has. It also underpins a situation in which the British state backs newly-merged megabanks at a cost of billions, yet which are allowed to make record private profits, pay-out bonuses (even if these are subjected to one-off tax) and still not lend to those who need it, for the good of economic recovery. All without any market risk – the motor and improver of capitalist competition – due to tax-payer guarantee.
Politicians and so-called “men of action” are often scornful of the activities of philosophers. But Britain’s current crop would do well to become acquainted with one of the great masters of the art. Thomas Hobbes could teach Philip Hammond a thing or two:
“[A]nnexed to the Soveraigntie, [is] the whole power of prescribing the Rules, whereby every man may know, what Goods he may enjoy, and what Actions he may doe, without being molested by any of his fellow Subjects: And this is it men call Propriety. For before constitution of Soveraign Power (as hath already been shewn) all men had right to all things; which necessarily causeth Warre: and therefore this Proprietie, being necessary to Peace, and depending on Soveraign Power, is the Act of that Power, in order to the publique peace. These Rules of Propriety (or Meum and Tuum) and of Good, Evill, Lawfull, and Unlawfull in the actions of Subjects, are the Civill Lawes; that is to say, the Lawes of each Common-wealth in particular.” (Leviathan Ch.XVIII)
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* Note: Even if it were true that individuals somehow have “innate property rights”, they would still depend upon the coercive power of the state to give those rights meaning, or else be left at the mercy of the stronger.
April 16, 2010
The Double Demon Maneouvre
One of my favourite internet smears is The Double Demon Maneouvre (consciously stealing the term from this excellent review by Simon Blackburn).
The DDM is a favourite of internet warriors who want to smear their opponents in a sly and covert way. And it just so happens that yesterday a classic example was provided by Bella Gerens, proud apologist for Internet-nasty/Real-world-wuss Chris Mounsey (aka Devil’s Kitchen). Gerens seems to be afflicted by both gender and historical confusions – comparing me to a Victorian Lady no less – but I want to focus on something else she said yesterday.
Over at Stumbling and Mumbling, Sunny Hundal left the following sensible comment:
“Is it not legitimate to ask why should voters take someone seriously who wishes death on his political opponents?
Otherwise, why not have the goons from the BNP or National Front on there regularly inciting violence? They could represent the voices of the ‘silent majority’.”
To which Gerens responded with a classic DDM:
“Oh, Sunny, I was sure it was only a matter of time before you popped up equating libertarians with racists because you can apply the word ‘violent’ to both. I made a bet last night that it would take you less than a day to get round to it – and well done, you! I’m off to collect my winnings.”
But what – I hear you cry – is the DDM!? It’s very simple, and goes like this. First there’s The Simple Demon Maneouvre, which works by tarring your opponent with a nasty brush. For example, calling them a racist when you know they are not one. The aim is to smear, and the smear is attempted in a straightforward manner.
But the DDM is altogether more crafty.
Bella can’t, for example, call Sunny a racist. Partly because he’s not one (he’s one of dem left-librul darkies, dontchya know), but also because it wouldn’t make sense in this context. So instead Bella accuses Sunny of accusing others of being racist – and then pointing out that those others are not racist! In sum: the DDM works by accusing your opponent of playing The Simple Demon Maneouvre, when you know they’re not. Ingenious!
The beauty of the DDM is that the impact is two-fold. It smears your opponent – e.g. by implying that they smear non-racists as racists and are therefore horrible liars – but without any of the overt nastiness, or clear dishonesty, of straightforward ordinary smearing. Secondly, the DDM distracts attention from the topic originally under discussion. Witness how Sunny was promptly deflected into defending his position.
Doubly demonic, I’m sure you’ll agree.
At base the DDM is a nasty smear tactic. Look at Sunny’s original comment again. He is clearly making a very straightforward (and also correct) conceptual point. Only an idiot could fail to see that. Or somebody out to smear him, deliberately distorting his views, by deploying the DDM.
Given that the DDM is a subtle form of smear but a smear nonetheless, and that Bella Gerens is happy to use it, this leaves us with a question. As well as Giles’ queery about why Chris Mounsey’s violent pornographic slanders are so popular, the question contained in Peter’s insightful post pushes through: why is it that so many people associated with the LPUK are apparently nasty and mendacious gits?
