Classical Liberalism vs. Modern Liberalism

What's the best way to secure everyone's mastery over his or her own destiny?

In The Future of Liberalism (2009), Alan Wolfe writes that the true heirs to the liberalism of John Locke, Adam Smith, and Thomas Jefferson are not today's classical liberals (libertarians), but rather the other kind of liberals, those who would use government power to assure autonomy and equality for all. Such "modern liberalism," for Wolfe, is simply an updating of the original: In the eighteenth century, political power crushed autonomy and equality, requiring a free market as the antidote; now private corporate power under capitalism does the same, but this time the remedy is active government.

Early in his book Wolfe writes:

The core substantive principle of liberalism is this: As many people as possible should have as much say as is feasible over the direction their lives will take. Expressed in this form, liberalism, as in the days of John Locke, is committed both to liberty and to equality. . . . [Emphasis in original.]

With respect to liberty, liberals want for the person what Thomas Jefferson wanted for the country: independence. Dependency, for liberals, cripples. . . . When we have no choice but to accept someone else's power over us, we fail to think for ourselves, are confined to conditions of existence resembling an endless struggle for survival, are unable to plan for the future, and cannot posses elementary human dignity. The autonomous life is therefore the best life. We have the potential, and are therefore responsible for realizing it, to be masters of our own destiny.

This sounds pretty good, no? Being subject to another's arbitrary will clashes with the liberal spirit, which projects the ideal of mastery of one's destiny even as one cooperates with others for mutual benefit.

Equality as Core Value

I also agree with Wolfe that equality is a core value of classical liberalism, but not as he means it. True liberal equality is not income equality; nor is it merely equality of liberty or equality under the law. The first would require continuous violent state interference with voluntary exchange, while the other two are inadequate in themselves. By equality, I mean what Roderick Long calls, per Locke, "equality of authority." For Locke a state of equality is one in which "all the power and jurisdiction is reciprocal, no one having more than another, there being nothing more evident than that creatures of the same species and rank . . . should also be equal one amongst another, without subordination or subjection . . . ."

But now I must part ways with Wolfe because he has an utterly self-defeating idea of how to secure everyone's mastery over his or her own one's destiny: the welfare state. Judging by the history and nature of the state, we must conclude that Wolfe's program would lead not to liberation but rather to subjugation of the individual. Wolfe has things turned topsy-turvy:

To advocate today what Smith advocated yesterday—a free market unregulated by government—is to foster greater, rather than lesser, dependency and less, rather than more, equality. . . . [I]n the highly organized and concentrated forms taken by capitalism in the contemporary world, removing government from the marketplace does not allow large numbers of people to become entrepreneurs in ways that enable them to set the terms by which their lives will be led; it instead allows firms to reduce their obligations to their employees and thereby make them more dependent on the vagaries of the market.

Impersonal Market Forces

The latter part of the quote has some validity, but before I get to that, let's look at the general point. I take Wolfe to be saying—and he reinforces the point in this discussion with Russ Roberts—that one is less autonomous when subject to impersonal market forces than when subject to political forces ostensibly designed to ensure autonomy and equality. This strikes me as entirely wrong.

Admittedly, in a freed economy no one person or group would control the market forces (the law of supply and demand, and so on) to which we all must adjust as we carry out our plans. That would seem to impinge on our autonomy. But these forces are called impersonal precisely because they are not the product of any single will or directed at any chosen objective. Rather the term market  forces simply refers to the spontaneous, orderly, and essential process (the price system) generated by other people's freedom to choose what to buy and sell. In other words, each individual's autonomy is bounded by each other individual's autonomy. While we all must take prices and other people's choices into account as we make our plans, we each have great leeway in the marketplace through which we can minimize our vulnerability to the arbitrary will of others. If one person won't deal with you, someone else most likely will, so the prospect of being victimized by, say, invidious discrimination shrinks. ("Money talks.") Thus the maximum degree of individual autonomy is fully compatible with life in the marketplace, especially as the extent of the market expands. (Of course this is not to suggest that all of life is lived in the marketplace.)

The market is not only compatible with autonomy, it also essential to it. In contrast to the market, Wolfe's alternative, the state, uses force (or the threat thereof) to work its will. If you don't like what one set of politicians decrees, you can't simply select another. And there's no opting out. There is an inequality of authority.

Wolfe is grossly naive about the democratic state. Because they lack both the requisite knowledge and incentives, government officials are not responsive to average people beyond the superficial gestures politicians have to make to get obtain and retain power. No one vote counts, and the governmental apparatus is inevitably captured by well-organized interest groups, predominantly associated with big business, that have the time, wealth, and motivation to have the system rigged to their advantage through exploitative, anticompetitive interventions. (Majority rule would be no better.) Any "welfare" for low-income people is more in the nature of hush money to prevent civil strife. Wolfe's belief that the State can be the protector of the autonomy and equality of regular people is puzzling because government action–rooted in coercion—by its very nature undermines autonomy and fosters dependency.

Capitalism versus the Freed Market

Wolfe is right to be concerned about "the highly organized and concentrated forms taken by capitalism in the contemporary world." That system does indeed undermine autonomy and equality. Where he goes wrong is in equating the "capitalist" economy with the free market. Thus he is guilty of what Kevin Carson calls "vulgar liberalism" and Roderick Long calls "left-conflationism": attributing the evils of corporatism to its antithesis, the freed market. (It's the mirror image of the view that defends business conduct in the corporate state on the grounds that the free market wouldn't permit such conduct if it did not efficiently serve consumers.)

Contrary to Wolfe, fully "removing government from the marketplace"—that is, abolishing privileges as well as regulations—would not foster dependency. Rather, it would eliminate the myriad government-maintained barriers to competition from worker-managed firms, partnerships, and self-employment. Those barriers increase people's dependency on the arbitrary will of others. Freeing the market would end the monetary manipulation and bailout authority that encourage banks and other firms to take undue risks that subject workers to business cycles and prolonged unemployment. In sum, a freed market would mean the end to all the privileges that produce the evils to which Wolfe rightly objects but misattributes to market forces.

"Man in any complex society," F. A. Hayek wrote in "Individualism: True and False," "can have no choice but between adjusting himself to what to him must seem the blind forces of the social process and obeying the orders of a superior. So long as he knows only the hard discipline of the market, he may well think the direction by some other intelligent human brain preferable; but, when he tries it, he soon discovers that the former still leaves him at least some choice, while the latter leaves him none, and that it is better to have a choice between unpleasant alternatives than being coerced into one."

If the alternative we face is between grappling with market forces and trusting a ruling elite to orchestrate just social outcomes, anyone concerned with autonomy and equality should choose the market. A benevolent, peaceful state is not on the menu.

This article originally appeared at The Freeman.