The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Part One: the Needless State (chapters 2, 3, 4 Are Not Available Online For Copyright Reasons)
• 1: Who Gave Us Order? On Exclusion, Enforcement, and Its Wherewithal *
• 5: Empirical Evidence *
• Part Two: Redistribution (chapter 7 Is Not Available Online For Copyright Reasons)
• 6: A Stocktaking of Perversities *
• 8: Disjunction, Conjunction *
• Part Three: Justice (chapters 10, 11 Are Not Available Online For Copyright Reasons)
• 9: Justice As Something Else *
• 12: Slicing the Cake Nobody Baked *
• Part Four: Socialism
• 13: Ownership, Agency, Socialism *
• 14: Market Socialism: “this Square Circle” *
• Part Five: Freedom
• 15: Right, Wrong, and Economics *
• 16: The Paretian Liberal, His Liberties and His Contracts *
• 17: The Bitter Medicine of Freedom *
• Works Cited

17

The Bitter Medicine of Freedom*

From the romantic age of political philosophy, many stirring images have come down to us. Some depict a people wrenching its freedom from the clutches of oppressors, native or foreign. Others show the lone individual fighting for his spiritual autonomy and material independence against totalitarian encroachment. Whatever the truth of these images in the past, their relevance for the present is fading. The issue of freedom in our civilization is changing its character. It is not so much despots, dictators, or totalitarian creeds that menace it. In essence, we do.

It is far from evident that democratic control of government is usually conducive to the preservation of liberal practices and values, let alone to their enhancement. Anti-liberal ideologies gain and retain credence inasmuch as they suit our inclinations, legitimize our interests, and warrant our policies. We love the rhetoric of freedom-talk and indulge in it beyond the call of sobriety and good taste, but it is open to serious doubt that we actually like the substantive content of freedom. On the whole we do not act as if we did. I shall presently be arguing that it is an austere substance, not unlike bitter medicine that we do not naturally relish—though it can become an acquired taste for the exceptional individual—but take only when the need presses. My object is to show that contrary to the sweetness-and-light views of freedom, it is this more austere view that best explains why we keep praising it while in our politics we are busily engaged in shrinking its domain.

Taking Freedom Easy and In Vain

Countless notions of greater or lesser woolliness attach to freedom, and a full review of its alternative definitions would be tedious. The very limited sample I choose to look at, however, seems to me representative of the main live political currents of the age. The context of each is non-Robinsonian, in that it deals with a person’s freedom as constituted by the options and constraints of his social life. The subject, in other words, is not the individual facing his Creator, nor the solitary player in the game against Nature, but the person acting with or against other persons. The freedom in question is a property of one’s conduct in relation to the conduct of others, rather than an affirmation of free will, “inner” freedom, or some other proposition about the causation of human actions or the state of men’s minds.

The rudiments of the liberal definition identify a free person as one who faces no man-made obstacles to choosing according to his preferences, provided only that his doing so does not cause a tort to another person. This idea of freedom takes preference and choice conceptually for granted, does not worry about how preference can be recognized unless it is revealed by choice, nor does it seek to make statements about the nature of the self. It is practical political freedom. This, however, means something far more general than conventional “political liberty,” i.e., the freedom of each to affect collective decisions to some albeit minimal extent through a regulated political process, and normally understood to consist of the freedoms of speech, assembly, press, and election. Instead, it is political in the broader sense that it results from the political process, depending as it does on collectively imposed institutional restrictions of greater or lesser stringency on the opportunity set open to choice. As Frank Knight put it, it is coercion and not freedom that needs defining.1

By extension of this view, the corollary of freedom is said to be the reduction of coercion “as much as is possible”2 ; in the same vein, it is independence from the “arbitrary will” of another.3 Giving the matter an ethical dimension, freedom is represented as a state of affairs that permits one to choose any feasible option provided that his doing so does not harm another person.4 Loosely related to the principles of non-coercion, independence, and no-harm is the Kantian principle of “equal liberty.” It appears to refer to a state of affairs where one person’s options are not subjected to a man-made restriction to which those of any other person are not also subjected. This formulation, however, is incomplete. Needless to say, neither Kant nor those, notably Herbert Spencer, who followed him in employing this form of words, meant that the “extent” or “quantity” of freedom in a state of affairs was irrelevant and only its “distribution” needed to be of a certain kind—i.e., “equal.” If such a distribution were the sole criterion, it would not matter how much or how little there was to be had, as long as everybody had as much or as little as everybody else. That freedom demanded to be both “maximized” and “distributed equally” was made explicit by Rawls in his adaptation of Kant’s principle.5

In these versions, freedom appears as a unitary concept. It may or may not be capable of variation by degrees. Hayek suggests more than once that it is indivisible; it is either present or absent; we either have it or we do not; we either choose freely or we are coerced. The “size” of the feasible, uncoerced opportunity set does not affect the issue, nor does coercion vary in extent or intensity.6

Liberals of the orthodox tradition, for whom it is a property of the relation between individual preference and choice—a relation devoid of obstacles erected by politics except where such obstacles serve to shelter the freedom of others—do not as a rule recognize a plurality of freedoms. The plural usage, on the other hand, is fairly typical of heterodox, “redistributor” liberals who deal in numerous freedoms to accede to desirable states or activities, designated as “positive,” as well as in “freedom from” hunger, want, insecurity, and other undesirable conditions. Dewey’s freedom as “power to do” also belongs to this category, where diverse “freedoms” represent power to do diverse things. It is not hard to appreciate that these heterodox freedom concepts are in essence rhetorical proxies standing for diverse goods, some tangible and others intangible, that are perfectly recognizable under their everyday names and need not be described indirectly in the guise of “freedoms.” Freedom from hunger is an oblique statement about food being a good, and about a condition in which one is not deprived of it; it can be turned into a general norm under which none must be deprived of it. Similarly, freedom of worship conveys, positively, that it is good for each to be able to profess his own faith, and normatively that none must be deprived of access to this good. Employing freedom-speak in discussing various goods can at best underline the importance we attach to them; at worst, it confuses issues of autonomy and coercion with issues of wealth and welfare. The term freedom in the classical sense seeks to express—whether successfully or not—the unhindered transformation of preference into action, the ability of each to do as he sees fit. “Freedom to” and “freedom from,” on the other hand, seem to refer to the extent to which options to act are available to satisfy individual or even “social” preferences.

In a spectacular logical leap which speaks well of his insight if not of his talents of lucid explanation, Marx “unmasks” the liberal foundation of freedom: “The practical application of the right of man to freedom is the right of man to private property.”7

Antagonistic to liberal inspiration, he turns to wholly different categories to construct a concept of freedom. The Marxist concept has nothing—or nothing explicit—to do with the passage, unobstructed or not, from individual preference to chosen action, a passage of which private property is the privileged vehicle. The corollary of Marxist freedom is not the absence of coercion of the individual by his fellow men through the political authority, but escape from the realm of material necessity, from the tyranny of things.8 Its subject is not the individual, but mankind.9 Self-realization—“rehumanization”—of the latter from the “reified” social relations of “commodity production” is the state of freedom.

To the extent that this thickly metaphoric language is intelligible, it seems to mean that humanity is free when, no longer subjected to the unconscious and impersonal force of things, which is Marx’s code name for the automatism of a market economy, it collectively masters its own fate by deliberate, rational planning. The passage from the realm of necessity to that of freedom is both the cause of, and is caused by, the passage from the realm of scarcity to that of plenty.

Vacuity and Moral Truism

One common feature shines luminously through these various concepts, definitions, and normative principles of freedom. Each as it stands is a moral truism, impossible to dispute or reject because each is defined, if at all, in terms of indisputable superiority. Each, moreover, is defined in terms of conditions whose fulfillment cannot be empirically ascertained—when is coercion at its “possible minimum”?—when is man not subject to the “tyranny of things”? The proposition that a state of affairs is free is rendered “irrefutable,” “unfalsifiable.” Each, finally, expresses a condition which, if it prevails, one can enjoy without incurring any costs in exchange. Consequently, the question of trade-offs does not arise and it would be lunatic to say, with regard to any one of the rival concepts, that on balance one would rather not have it. Renunciation of freedom, so defined, would not bring any compensating benefit either to the self or to others, nor reduce any attendant sacrifice or disadvantage. Unlike values we buy by giving up some comparable value, it is always better to get and keep such freedom than to give it up.

No great analytical effort is needed to see that freedom concepts have this apple-pie-and-motherhood feature when they are vacuous, their stated conditions being impossible either to violate or to fulfill. They make no identifiable demand on anyone and lack any content one could disagree with. That coercion should be reduced “as much as possible” is, pace Hayek, a vacuous precept unless integrated into a stringent and clear doctrine of “necessary coercion.”10 Only then would the precept get any definite meaning, for only then would it be referring to some recognizable standard or measure of how far it is “possible” to reduce coercion, and only then could it identify the actual level of coercion as higher than necessary. Otherwise, any level could be as compatible with freedom as any other, and the most shamelessly intrusive dictators of this world would all be recognized as libertarians doing the best they could to avoid unnecessary coercion.

Immunity from the “arbitrary will” of another is similarly empty, for the will of another is judged arbitrary or not, according to the reasons the judge imputes to it. If another’s decision rests on identifiable reasons, it may be unwelcome to me because it restricts my ability to act as I would, but I can only have a good claim to immunity from it in the name of my freedom if I have a valid argument to rule out those reasons. Bad reasons leave the decision unjustified, and absence of reasons makes it arbitrary—surely a relatively rare case. Manifestly, however, the crux of the problem is that the claim to immunity from the will of another stands or falls with somebody’s judgement of the reasons for the latter; and lest his judgement itself be arbitrary, it must be guided by an independent system of laws, customs, moral principles, and whatever else goes into the determination of a person’s liberties in his dealings with others. Immunity from the “arbitrary” will of another seems to mean no more than that one’s liberties must be respected; its use to define freedom is simply a recourse to a tautologous identity between it and the non-violation of liberties—whatever they are—whereas a meaningful definition should be capable to serve as a determinant, or more loosely as an argument about what those liberties ought to be. However, the rule that in a state of freedom nobody should be subject to the arbitrary will of another, does not commit anybody to anything beyond respecting well-defined rules of tort. It may in fact be that the immunity concept of freedom and the normative rule it provides is even more trivial than that, for it could be held that in these matters liberties are well-defined only if they are codified, and the rule then boils down to the banality that in a state of freedom nobody should break the law.

The harm principle turns out, on inspection, to lack specific content for much the same reason as the immunity principle. Under it, the political authority in a state of freedom does not prevent—or “artificially” raise the cost of—acts that are harmless to others; it does not allow anyone to interfere with the harmless acts of others; and prevents and sanctions harmful acts. However, there is no very evident binary division of acts into a harmful and a harmless class.11 Some of our acts may possibly be beneficial or at worse indifferent to everybody else, though it would no doubt be hard to make sure that this was the case. As regards these acts, there is a clear enough reason why we should be left free to commit them. But this does not take liberty very far. For there is a vast number of other acts that are harmful to somebody to some degree, having as they do some unwelcome effect on somebody’s interests, ranging in a continuous spectrum from the merely annoying to the gravely prejudicial.

This must be so for a variety of reasons, the simplest one being that in any realm of scarcity—scarce goods, crowded Lebensraum, limited markets, competitive examinations, rival careers, exclusive friendship, possessive love—one person’s chosen course of action preempts and prejudges the choices of others, sometimes helpfully but mostly adversely. The place and the prize one gets is not available to runners-up, no matter how badly they want or “need” it. Where does “harm” to them begin? Common sense tells us that, depending on circumstances, there are acts you must be free to engage in even though they harm my interests, hurt my feelings, or expose me to risk. How to tell these acts from those which are to be prevented? Define them, and you have defined the rights that may be exercised—“positive” freedom—and must not be violated—“negative” freedom—the two kinds appearing as two perspectives of one and the same system of “rights.” The harm principle is vacuous prior to a system of liberties and rights, while posterior to it all it does say is that the holders of liberties and rights are not to be deprived of them either by the state or by anybody else. Concisely, the harm principle affirms no more than that liberties are liberties and rights are rights.

The Kantian equal liberty, whether or not equipped with a maximizing clause, is baffling in its lack of guidance about what exactly is, or ought to be made, equal—and subject to equality, maximal. It appears, at first blush, to have to do with the distribution among individuals of something finite, quantifiable, and variable, analogous to a stretch devoid of obstacles, a level surface, a private space, a protected sphere. If this were a possible interpretation and freedom were a quantifiable dimension—or dimensions—of states of affairs, it would make perfect sense to say that one person disposed of more of it than another—a test of equality—or could have more if another had less—a test that problems of distribution are technically soluble—and that if there were more of it altogether, at least some—and subject to solving problems of distribution, all—could have more, which may also mean that by giving some more of it, it can be maximized—a test that maximization is a practical objective. The difficulty is that the analogy between unobstructed length, surface, or space, and freedom, is just that, an analogy and no more. There seems to be no apparent way in which freedom could be quantified. I suggest that the statement that two persons are “equally free” has the same cognitive status as that they are “equally happy” or “equally handsome”; these are statements of somebody’s judgment from the evidence, but the same evidence could have induced somebody else to pass a different judgment, and it is impossible conclusively to settle, from the evidence alone, which of two contradictory judgments is more nearly right. There is no agreed arbitrator, nor is a last-resort test built into the practice of these subjective comparisons for settling contrary judgments and perceptions. On the view that interpersonal comparisons of such states of mind conditions as utility, happiness, or satisfaction are a category-mistake to begin with, and that the freedom of one person, being as it is bound up with subjective perceptions, is similarly incomparable to the freedom of another, the whole practice of seeking their levels or the extent of differences between them may be logically suspect anyway. In its normative version, “equal freedom” is no more stringent than Dworkin’s “equal concern and respect,” the central plank in his democratic ethics, rightly dismissed by Raz with the deadpan finding that it “seems to mean that everyone has a right to concern and respect.”12 Like “equal respect,” the norm of “equal freedom” is unexceptionable, due in no small measure to its non-committal vagueness: practically any feasible state of affairs can be claimed, without fear of rebuttal, to be satisfying such norms.13

If it is reasonable to read the Marxist concept of freedom as emancipation from the regime of “reified relations” and mastery over one’s material destiny, and then to translate this into less exalted English as the abolition of commodity and labor markets, the concept is extravagant but not vacuous. “Abolition of the market” and “resource allocation by the political authority” have sufficiently precise factual content that can be empirically recognized as being or not being the case. Unlike “arbitrary will,” “minimum necessary coercion,” or “equal liberty,” they are ascertainable features of a given social state of affairs: they either obtain or they do not. A Ministry of Planning and Rationing cannot very well be “deconstructed” and shown to be “really” a market in thin disguise. Where Marxist freedom nevertheless convicts itself of vacuousness and moral truism is in tirelessly transforming and qualifying descriptive statements, till they cease to describe anything that is ascertainable. “Servitude” is not to the conditions of the market, but to its “blind caprice,” its “irrationality”; absence of central resource allocation is a “chaotic, self-destructive” system; “the product is master of the producer”; “man, too, may be a commodity” and as such becomes “a plaything of chance.”14 Production under socialist planning is not in obedience to the instructions of the political authority—a testable statement—but “according to need”—an irrefutable vacuity. Any situation, whatever its characteristic empirical data, can be qualified as harmonious or a tooth-and-claw jungle war; any resource allocation can safely be called socially optimal or condemned as “bureaucratic,” hence failing to produce “according to needs.” There is the compulsion to agree to the moral truism that rational, conscious social deliberation is more conducive to the freedom of mankind than irrational, unconscious thrashing about in the dark; but as we can never tell which is which, the agreement is easy; freedom’s name is taken in vain and does not commit anyone to anything.

The Freedom That Hurts

The rough underside of freedom is responsibility for oneself. The fewer the institutional obstacles an individual faces in choosing acts to fit his preferences, the more his life is what he makes it, and the less excuse he has for what he has made of it. The looser the man-made constraints upon him, the less he can count on others being constrained to spare his interests and help him in need. The corollary of an individual’s discretion to contribute to or coldly ignore the purposes of the community is that he has no good claims upon it to advance his purposes. It may be that immunity from the “arbitrary will” of others is coextensive with freedom, but so is dependence on one’s own talents, efforts, and luck. As Toynbee put it, the “road from slavery to freedom is also the road from security to insecurity of maintenance.”

The agreeable corollary of my right is the duty of others to respect it; less agreeably, their right entails my duty. Freedom, if it has ascertainable content, turns out to have attendant costs, and, if freedom has degrees, the greater it is, probably the higher is its opportunity cost. Trade-offs between freedom and other goods are manifest facts of social life, though it may be embarrassing to admit to our better selves how often we take advantage of them. By no means is it evident that men want all the freedom that tyrannical or “bureaucratic” political systems deny them.

The less nebulous and the more matter-of-fact is the content of freedom, the more obtrusive become its costs. Nowhere is this so clear as in the matter of the most contested safeguard of freely chosen individual action, that is private property. Freedom of contract, privacy, and private property rights are mutually entailed. Complete respect for either member of the triad would exclude taxation. Even when it has no deliberate redistributive function, taxation simultaneously violates privacy, property rights, and the freedom of contract as the taxpayer loses the faculty to dispose of part of his resources by voluntary contract, and must permit the political authority to dispose of it by command. A reconciliation between the freedom of contract—and by implication, private property and taxation—is offered by social contract theory, whose assumptions lead to taxation, as well as political obedience in general, being recognized as if it were voluntarily undertaken.

There is a tendency, cutting across the political spectrum from left to right, to see private property as divisible into several distinct and independent rights.15 While this position is certainly tenable, its consequence is to encourage the view that restrictions on transfers of ownership, rent, dividend and price controls, the regulation of corporate control, etc., are consistent with the integrity of private property. If the latter is to be regarded as a “bundle” consisting of a number of separable rights, any one of these measures leaves all other rights within the bundle inviolate; yet any one of them is a violation of the freedom of contract. No ambiguity about their mutual entailment arises when property is conceived as an integral, indivisible right.

Adherence to any maximizing principle of freedom16prima facie implies non-violation of the freedom of contract, for it would be extravagant to maintain that its restriction, whatever its purportedly beneficial effects on, say, efficiency or income distribution, somehow leaves intact, let alone contributes to maximize, freedom in general. Moreover, if freedom is really about the unobstructed faculty of every sane adult person to be the judge of his own interest, acting as he sees fit and “doing what he desires,”17 freedom of contract must be its irreducible hard core. To argue in the same breath for maximized (and “equal”) freedom in general and restricted freedom of contract, seems to me to presuppose that we judge unilateral and potentially “Pareto-inferior” acts not requiring the consent of a contracting party by a liberal standard, bilateral and presumably “Pareto-superior” ones, depending on willing reciprocity of two or more parties, by a more severe one. Yet this is surely applying the standards the wrong way round. If a double standard were admissible, and necessary to sort out actions that should from those that should not be interfered with, the easier one should be applied to contracts since, unlike unilateral acts, they have passed a prior test of mutual consent by the parties most directly concerned. The chosen action of one person that is not contingent on the agreed cooperation of another and may leave the latter worse off, can hardly have a better claim to the social laissez passer of freedom from legalized obstruction, than the proposed action that must, for its realization, first obtain the agreement and fit in with the matching proposed action of a potential contracting party.

Insistence on freedom of contract and on its corollaries, property and privacy, is a hard position that attracts only a minority constituency of doctrinaires on the one hand, old-fogey-nostalgics of a better past that never really was, on the other. Such a constituency is naturally suspect. Its stand offends the moral reflexes of a broad public; for it is yet another moral truism that fair prices, fair rents, fair wages and conditions of employment, fair trade, fair competition are incontrovertibly better and worthier of approval than prices, rents, wages, etc., that have merely been agreed in a bargain without being necessarily fair. Anyone who contests this may be putting an ulterior motive above justice, and the onus of proving the contrary is on him.

A somewhat more clever argument that does not directly beg the question of fairness holds that even if a bargain between willing parties at some point on their contract curve is “in itself” better than failing to agree and staying off the curve, some points are nevertheless better than others for one party, worse for the other. In two-person or two-group face-to-face dealings, the actual point they agree on is partly a matter of their relative bargaining power, which must in turn depend on the distribution of wealth, will, skill, and so forth. Untrammelled freedom of contract subject only to no force and fraud thus gives “a moral blessing to the inequalities of wealth,”18 and, for that matter, of abilities and other advantages. Commitment to it is a commitment both to a maximizing principle of freedom and to non-interference with a given distribution of natural and acquired assets.

An attempt to escape from this commitment, with which many feel ill at ease and vulnerable, is to promote the idea that there could be an initial distribution of advantages that would act as a “level playing field.” Once this special distribution is achieved—by redistribution of acquired and transferable assets, such as wealth, and by compensatory measures of “positive discrimination” in education to offset natural and non-transferable advantages, such as talent and intelligence—freedom of contract becomes not only compatible with justice but is the very means to it. It produces “pure procedural justice,” in the same way as a game played by the rules on a level playing field by definition produces a just result. This particular distribution-cum-compensatory-discrimination amounts to a state of equal opportunity for all. Under equality of opportunity, freedom of contract gives rise to outcomes that need not be overridden in the interest of justice. Equality of opportunity, freedom of contract, and just outcomes constitute a triadic relation such that any two entail the third. In terms of causation, the first two jointly constitute the procedure whose outcome is distributive justice.

This attempt at squaring freedom with justice must clear two hurdles, the first substantive, the second analytical. The substantive hurdle concerns the practical possibility of levelling the playing-field, instead of perversely making it more uneven in the attempt. I do not intend to discuss this problem (except to note that it is a genuine one), and could not resolve it if I did. The second hurdle consists in the argument for procedural justice proving to depend on self-contradictory reasoning. A distribution of resources and advantages is both an end-state and a starting position leading to a new distribution. The object of a particular initial distribution D, offering equal opportunities, is to have the freedom of contract to produce just outcomes. However, whatever outcome D’ it did produce will differ from the initial equal-opportunity distribution D; some people will have gotten ahead of the position—in terms of wealth, skills, reputation, place in the social network—assigned to them in the equal-opportunity distribution, others will have lagged behind it. (Countless handicap races have been run on the world’s race courses but despite the best efforts of expert handicappers, there is to my knowledge no record of a single race ever producing a dead heat of all the runners.) We need not decide whether this is an empirical law or a logical necessity. Such will be the just outcome of the first round; however, this just end-state represents a new distribution D’ of assets and advantages that, unlike the initial D, no longer offers equal opportunities for the second round. Equality of opportunity must be restored by redistribution, positive discrimination, and so forth. The just end-state D’ generated by equal opportunities and freedom of contract in the first round offers the participants unequal opportunities for the second round, and must be overridden to secure the justice of the end-state to be generated in it, and so on to the third and all subsequent rounds to the end of time.

The contradiction in the reasoning of many liberals who want to embrace a plurality of values, seek the reconciliation of freedom and justice, and find in equality of opportunity combined with freedom of contract the joint necessary and sufficient conditions of a procedural type of social justice, resides in this: 1) a particular end-state distribution D, and only D, is consistent with equality of opportunity, 2) equality of opportunity combined with freedom of contract engenders non-D, and only non-D, 3) D is not compatible with procedural distributive justice, 4) therefore equality of opportunity, freedom of contract, and procedural distributive justice are not mutually compatible.

The reader will remark that if equality of opportunity is not itself a final value, but has only instrumental value in bringing about a certain valuable end-state, yet that kind of end-state must continually be overridden because it is inconsistent with the maintenance of equality of opportunity, the instrumental value of the latter is fleeting and self-destructive. If it is to be commended, it must be on its own merits as a final value, and not for its instrumental capacity to bring about procedural justice in distribution. If no equivalent procedure suggests itself, the attempt at procedural distributive justice must be considered a failure, the justice or otherwise of a distribution must be ascertained in some other manner, such as by listening to the moral consensus of public opinion, and the just distribution either given up as too costly and awkward to achieve, or enforced by direct measures that ipso facto violate the freedom of contract and the corollary rights of property and privacy.

Twist it as we may, the dilemma will not go away. The hard sort of freedom that is more than moral truism and non-committal, costless piety, forbids the exercise of social choice over questions of “who gets what.” Yet that is the crucial domain over which voters, groups, classes, and their coalitions generally aspire, and often succeed, to turn the power of the political authority to their advantage. More freedom is less scope for collective choice and vice versa; there is a trade-off which democratic society has used these past hundred years or so to whittle down freedom sometimes overtly, sometimes surreptitiously, and the most often fairly unconsciously. The process of whittling down has been promoted and justified by a more plausible and seductive ideology than anything classical liberals could muster.

No Hard Choices

The ideology of the expanding domain of social choice used to have, and probably has not lost, the ambition of showing how this is compatible with the avoidance of hard choices, notably the preservation of freedom. Two key theses serve as its twin pillars.

The first, put briefly, concerns the reliance on reason. It seems to affirm that, whether embodied in the knowledge of a technocratic elite or in the consensual wisdom born of democratic debate, reason is the only guide we should follow, and, in a more exacting and activist version, we should never fail to follow. Reason is in most circumstances able to detect faults in the functioning of economic and social arrangements, and can prescribe the likely remedy. This thesis is common to doctrines as disparate as Benthamite utilitarianism, Saint Simonian, Marxist or just ad hoc socialism, Fabian compromise, “constructivist” system-building, and Popperite trial-and-error social engineering. They are consequentialist doctrines, willing the means if they will the end: they fear no taboos and stop at no barriers of a non-reasoned and metaphysical nature.

All hold, albeit implicitly, that government whose vocation it is to elicit and execute social choices, is a uniquely potent tool which it is wasteful and inefficient not to employ to capacity for bringing about feasible improvements. Government, and it alone, can correct the deformities of markets. It can deal with unwanted externalities and regulate the conduct of private enterprise when the divergence of private and social costs and returns misguides it by false signals. Forgoing society’s political power to improve results in these respects, and indeed in any others, is irrational and obscurantist.

Without actually being a series of truisms, the easy plausibility of this thesis makes it near-invincible in public debate. Counter-arguments, if directed against “excessive interference” and “bureaucratic busybodyness,” are irrefutable but ineffective, since meliorist measures dictated by reason are never meant to be excessive or bureaucratic. A general plea to leave well alone is, to all intents and purposes, a defeatist or uncaring stance against trying to do better. Each policy, each measure is defended piecemeal by reason, on its separate merits. The perhaps unintended sum of winning piecemeal arguments for doing this and that, is a win for government intervention as a general practice. The twin of the thesis about reason is about justice. The former aims at allocative efficiency, the latter at the right distribution of the product. The dual structure of the domain of social choice suggested by this division of aims implies that logically and temporally production comes first, distribution follows second. Things are produced, as Mill believed, according to “the laws of economics,” and once they are there, become available for distribution according to some other law or precept. Such has been the position of Christian Socialists since high medieval times, and such is that of redistributor liberals from Mill and T. H. Green to Rawls. Distributions caused by the hazard of heredity, heritage, and history may be freely altered, subject only to limits set by expediency, by social choice which is sovereign over the matter. They ought to be altered, to conform to some moral standard, because they are morally arbitrary.

The charge of moral arbitrariness, if it is upheld, means no more than it says, namely that rewards are not, or not wholly, determined by the moral features of a social state of affairs: the morally arbitrary distribution fails to fulfill the positive prediction that people’s incomes, etc., depend on their deserts, as well as the normative postulate that they ought to depend on them. However, a cognitive diagnosis of arbitrariness might be applied to a distribution not only from the moral, but also from the economic, legal, social, or historical points of view. A morally arbitrary distribution fails to conform to a moral theory; arbitrariness, however, may also obtain with respect to economic, legal, or historical theories of distribution as well. If the actual distribution is partly determined by genetic endowments and their development, character, education, wealth, and chance, which seems to me a sensible hypothesis, it has, from the point of view of any theory which does not properly account for these factors, an ineradicable property of un-caused randomness, or to use the value-loaded synonym, “arbitrariness.” Thus, we can say that, in terms of the marginal productivity theory of factor rewards, the distribution of factor incomes in the Soviet Union is arbitrary. That, however, does not in itself condemn it. Arbitrariness is an obstacle to explaining or predicting, and it is also the absence of reasons for upholding or commending a particular distribution, but it is not a reason for changing it.19 Some further, positive argument is needed to make the case that an arbitrary distribution ought to be purged of its random features and transformed into one that fully obeys some ordering principle drawn from a moral (or some other) theory.

It would be too easy if the ideology which, for its completeness, needed a theory of distributive justice, could validate the latter by the mere claim, however well founded, that the actual distribution was arbitrary. The theory needs the support of axioms that must be independent, difficult to reject, and adequate. However, what axioms will bear the weight of a theory that must justify the subjection of who-gets-what questions to the political authority? Neither moral desert20 nor the various versions of egalitarianism are difficult enough to reject.

Moral desert lacks independence, in that what is judged as morally deserved, obviously depends on an (at least implicit) moral theory guiding such judgments. Only prior agreement on such a theory, and notably on its implications for distributive justice, can secure agreed judgments of moral desert. They are indeterminate without the support of the theory, hence cannot serve as its antecedents.

Unlike moral desert, egalitarianism is at least not circular, and can be, though it rarely is, non-vacuous, i.e., its necessary conditions can be so defined that whether they are fulfilled or not becomes an empirical question. However, little else is left to be said for it. As an instrumental value, it used to be bolstered by consequentialist arguments, e.g., maximization of utility from a given total income, better satisfaction of “real needs,” or reduced pain of envy, that no longer enjoy much intellectual credit. As an ultimate, non-instrumental value that need not be argued for, it retains the emotional appeal it always had and probably always will have; paradoxically, however, the clearer it becomes that the appeal is essentially emotional, the more its effect fades.

On the whole, like certain seductive mining prospects that have been sadly spoiled by the drilling of core samples, distributive justice loses some of its glitter in analysis. “A distribution ought to be just” is a plausible requirement. “A just distribution ought to correspond to moral deserts,” or “a just distribution ought to be equal” are a good deal easier to contradict. Moreover, attempts to put such norms into practice have not helped either, ranging as they did from the disappointing when they were ineffective, to the disastrous when they were effective. Sir Stafford Cripps, Olaf Palme, and Willy Brandt have done much to make redistributive compromises unappealing. Pol Pot and Nicolae Ceauscescu have done as much for the uncompromising variety.

A more ingenious strategy proceeds by revising the order of the arguments. The usual sequence is to propose that, 1) the existing distribution is arbitrary, 2) only non-arbitrary distributions can be just, 3) a just distribution conforms to an appropriate ordering principle, 4) social choice legitimately mandates the government to realize this conformity. Instead of this roundabout route to the sovereignty of social choice over distribution, it is more efficient directly to propose that the assets, endowments, and other advantages that make the existing distribution what it is, are not rightfully owned by the persons to whom they are in various ways attached, but are the property of their community,21 and it is up to the community to decide the disposal of the fruits of its property. Genetic qualities, wealth, acquired knowledge, and organization all belong to society as a whole and are eo ipso subject to social choice, without any need for a legitimation drawn from controversial requirements of justice, and a debatable mandate for actually imposing them.

Distributions “chosen by society” may or may not be just. They are ipso facto just only in case the moral axioms that are used to define the justice or otherwise of a distribution, are taken to be the same as those that help, by fixing the choice rule, to identify an alternative as the “socially chosen” one. This means, broadly speaking, that if in a given political society the “chosen” alternative is some resultant of the wishes of its members, if every member’s wish “counts for one and no more than one,” and the majority wish prevails, then the “just” distribution is identified by the same rule in the same way. “Just” then means “chosen by society,” found to be such by a democratic process of search and consultation, or, more loosely, conforming to the moral consensus. It is just that a person should be allowed to keep what he has if, and only if, more people than not think that he should. This is perhaps a brutal and unsympathetic statement of what the sovereignty of social choice implies, but it is by no means a caricature of it.

The real difference between the two ideological strategies for extending the domain of social choice consists in this: if assets, in the broad sense which includes wealth, skill, and character, belong to individuals in a “capitalist free-for-all,” there is a prima facie implication that it is their right to dispose of the resulting income, both “earned” and “unearned.” Society, however, speaking by the medium of the “social choice rule” might declare such an income distribution unjust, refuse to countenance it, and proceed to its redistribution. In doing so, it would contradict itself, for it could not in the same breath both respect and violate a given set of property rights with the attendant freedom of contract. Its solution, adopted, as Hayek called them in the Road to Serfdom, by “socialists of all parties” except the genuine ones, is to chop up property rights into a variety of separate rights, recognize and attach some to certain classes of asset or asset-holder, and detach others, depending on the origin, type, or size of the asset or advantage in question, finally declaring its unshaken respect for the resulting mishmash. Ownership of property and the right to use, sell, bequeath, rent, or consume it thus become disjointed, fitting together as ad hoc “social choices” decree. In conjunction with this solution, society or its government can affirm allegiance to any innocuous notion of freedom, and for good measure even give it “lexicographic priority,” that requires the non-violation of rights in general without committing itself to specific and potentially inconvenient rights, and to the freedom of contract in particular.

Genuine socialists, probably no longer a very numerous or happy class, face no such contradiction between private rights and the ambition for social choice to override them, and need not have recourse to the ambiguities of redistributor liberals. With property vested in society, it is “social choice” that by rights distributes incomes, positions, and ranks in the first place; it does not need to redistribute what it has distributed, hence it does not come into conflict with any right it may have recognized to begin with; the problem of the freedom of contract does not even arise.

One way or the other, as long as freedom is allowed to be “soft,” nebulous, innocuous, costless, and as long as the claim that it is being respected and its conditions are fulfilled, remains “unfalsifiable” because the conditions are vacuous and commit to little, there are no hard choices. Allocative efficiency and social justice can be pursued in conjunction with the “greatest possible” and most “equal” freedom. We can have it all. By contrast, the painful trade-offs imposed by laying down “hard,” specific, falsifiable conditions of freedom can be made to stand out clearly. Privacy, private property, and freedom of contract strike at the heart of “social choice,” removing as they do from its domain many of the most valuable opportunities any decisive subset of society would use for imposing on the superset the choices and solutions it prefers, considers right or just, or expects to profit from.

Non-violation of privacy, private property, and freedom of contract involves massive self-denial. It demands a large measure of renunciation of the use of political processes for advancing certain interests in conflict with others. Instead of getting their way, majorities may have to bargain and buy it by contractual means. It also involves negation of plausible and well-developed ideologies that would justify the use of political power to promote one’s selfish or unselfish ends in the name of allocative efficiency or social justice.22 Small wonder, then, that these principles of freedom are systematically violated or talked out of existence. The contrary would be surprising in a civilization with a good deal of political sophistication, skills of adversarial argument, and no inconvenient taboos; a civilization like our own.

Undeserved Luck

The problem is not how to explain why enlightened men do not noticeably like the more-than-rhetorical freedom that imposes upon them self-denial, renunciation, responsibility, and duty. It is to account for the far stranger fact that, perhaps for the first time in a hundred-odd years, this freedom most of us do not really like is nevertheless holding its own. It seems actually to have gained in some important countries of the political West, and has ceased to retreat in most others. From an abysmal starting level, it is clearly in the ascendant in the societies of the political “East,” that had set out really to build socialism and have found that they have inadvertently joined the Third World in the process. Why should the relentless expansion of the domain of collective choice, which has all the logic of political power behind it, now be checked and reversed in so many different places?

Each of these societies has its particular case history; each is no doubt rich in particular lessons. This is not the occasion to survey their more bizarre episodes and their high and low moments. As always, however, each case history has much in common with every other. The chief common feature, to my mind, is that the cumulative imposition by “social choice” of reasoned solutions to an infinity of problems in production and distribution, efficiency and justice, has gradually built up perverse effects, whose total weight finally sufficed to convert the afflicted society to the bitter medicine of freedom.

It is important to admit and indeed to underline that the attempted solutions were reasoned. The caprice of the tyrant played little part in modern attempts at social problem-solving. In each instance, some sort of rational case could be constructed for them. Nothing is easier than to state with hindsight that the case for solution A was “obviously” false and owed its adoption to the stupidity or wickedness of politicians. Nothing is more dangerous than to follow up this train of thought with the all too frequent suggestion that because A was so obviously wrong, B ought to have been chosen. This is the sort of argument that would always justify one more try23 and would give rise to an endless chain of measures, instead of to the decisive abandonment of tinkering. Often we reason as if alternative measures and policies came with labels describing the likely effects of each, and perhaps also the “objective” probability that a particular effect will manifest itself. If this were so, the social choice of policies would be a choice between sets of specified consequences, or their probability distributions. Better policies would therefore on the whole tend to be chosen in preference to worse ones. Logically the power of the political authority to put chosen policies into practice would be beneficial at least in the long run, over large numbers of measures; collective choice equipped with such coercive power would have a good chance of yielding better results than the sum of individual choices that has lacked such power; and the enlargement of the collective domain at the expense of “hard” freedom would augment the scope for better results. Power, chance, and scope would jointly work for progress, and speed us towards the meliorist ideal.

In reality, the labels the policies carry specify only the narrow band of their effects that have reasonably good visibility. Only hindsight shows that there always is, in addition, a broader and fuzzier band of consequences whose ex ante predictability must have been very low, very conjectural, or simply non-existent. Whether this is so because our knowledge about these matters is inadequate though capable of improvement, or because they are inherently unknowable, is perhaps immaterial at any period in time for the consequentialist evaluation of a policy. There may, in addition, be effects that are reasonably predictable but so slow to mature that they get heavily discounted at the inception of a measure—discounting, of course, is a legitimate and indeed a mandatory operation in the rational calculus—and only begin seriously to hurt when the measure that has caused them is as good as forgotten together with the men who had chosen it.

I propose to call unwelcome consequences “perverse” in a broad sense, not only when they are the direct opposite of the main aim of a policy (e.g., a redistributive measure intended to decrease inequality which in fact increases it; a policy of import substitution which makes exports shrink more than imports; government sponsorship of research that actually retards technological progress; and so forth) but also when, acting over a more diffuse area, indirectly or in unexpected directions, they impose costs and reduce benefits so as to leave society worse off than if a given policy had not been adopted. I am aware that condemning a measure on this ground may be question-begging for two reasons. First, the imputation to it of particular unwelcome effects may be too conjectural when the supposed causation is indirect. It may be that lavish spending on arms over the last decade has for roundabout reasons weakened the war-making ability and fighting prowess of both the great powers, but how can the diagnosis of cause and effect be made conclusive? Second, a judgment that society is on balance worse off when certain things, say inflation or child delinquency, have gone wrong but others, say care for the old or water pollution, have gone right, is forever fated to depend on how homogenous weights are to be assigned to heterogenous variables; give greater weight to the ones which have gone right, and you find society better off.

Nevertheless, there are well within our memory unmitigated disasters, utter failures, and glaring disproportions between outlay and return, where a distinct policy is so clearly the prime suspect in producing perverse effects that it is bad faith or intellectual preciosity to argue the incompleteness of the proof. The collectivization of land and the attendant pursuit of “economies of scale” in agriculture and, for that matter, in manufacturing too, is now almost unanimously recognized as an act of self-mutilation that has done irreparable damage to the Soviet Union. Strengthening the powers, disciplinary cohesion, and legal immunities of trade unions, and taking them into the corporatist conspiracy of the Macmillan, Wilson, and Heath years is now, albeit less unanimously, seen as a major cause of the “English disease.” The policy of forcibly diverting investment from the rest of Italy to its Mezzogiorno has not only cost the country dear in direct and indirect ways—that transferring benefits from one part of society to another is not costless is after all quite consistent with the fond supposition that the exercise nevertheless has a “positive sum”—but may not even have been of real net benefit to the Mezzogiorno.

There are less localized examples of once respected policies that are now highly suspect of perverse effects. Progressive taxation is one: even its natural advocates have learnt to say that it must not be “too” progressive. Free, universal, nonselective formal education, no “streaming,” no elitism, diplomas for all, open access for all to universities crowned by the principle of one man-one Ph.D., is another. We are discovering that it hinders the education of those who could profit from it and wastes the time of the rest, breeds student unrest and disappointment, and buys these personal and social blessings at a near-crippling cost to the community’s finances. Public policies of welfare and public guarantees (including compulsory insurance) against risks and wants of various kinds in both “mixed” and avowedly “socialist” economies, are coming to be suspected of generating unwelcome behavioral changes: sluggishness to respond to incentives and opportunities, poor resistance to adverse conditions, a weakening of the “work ethic,” free riding, irresponsibility for oneself and one’s offspring, a falling personal propensity to save, over-consumption and waste of freely provided public goods; these costs, and the long-run damage they do to society’s capacity to function, and to the character and virtue of its members, are beginning to weigh heavily against the putative gain in welfare and social justice of which they are dimly perceived to be a by-product.

Not that disillusion, suspicion, and an “agonizing reappraisal” of their costs and benefits is actually leading to the wholesale rolling back of these policies. But their easy expansion has by and large been checked, and in some areas collective choice seems to be restraining itself to give way to the operation of “hard,” non-vacuous freedom principles. Its remaining champions, by way of last-ditch defense, design fall-back positions holding out the same old promise that we can, after all, have it both ways. Though they have mostly given up talk about the Yugoslav Road, the Third Way, Indicative Planning, and Social Justice in a Free Society, and though such magic passwords to coercion as “prisoners’ dilemma,” “externality,” and “community preference ordering” may with luck soon go the way of “the diminishing marginal utility of money” and “pump-priming for full employment,” the intellectual advocacy of using the power of collective decisions to make a better world will never cease. There are still so many good ideas left! Assuredly, we have not heard the last of the prize inanity, market socialism.

When and where societies, and the decision-making coalitions of interests within them, renounce to use their force for allocating resources and rewards, and take the bitter medicine of freedom instead, they do so because their meliorist solutions that would violate freedom are proving too costly in perverse effects. Contrast this with the diametrically opposite position of actually liking freedom, even if it proved costly in material sacrifice. As Roepke24 has movingly put it:

It is undeserved luck indeed. Where would we be now if socialism were affordable and whittling freedom down were not as expensive as we are finding it to be?

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[* ]Reprinted with permission from The Balance of Freedom: Political Economy, Law, and Learning, edited by Roger Michener (St. Paul, Minn.: Professors World Peace Academy, 1995), 31–60.

[1. ]F. H. Knight 1943, 75.

[2. ]F. A. Hayek 1960, 11, 21.

[3. ]Hayek, op. cit., 11.

[4. ]Cf. the 1791 Declaration of the Rights of Man; also J. S. Mill 1848, Ch. 2.

[5. ]“The most extensive basic liberty compatible with a similar liberty for others,” Rawls 1972, 60. Liberty, then, is to be increased as long as its further increase does not require some to have less of it than others; equality of freedom is a constraint on its maximization. This is implicit in the formula but is not spelled out by Rawls.

[6. ]Hayek, op. cit., 13.

[7. ]Marx 1843, 1975, 229.

[8. ]Marx 1844, 1975, passim.

[9. ]More precisely, the species, the Gattungswesen.

[10. ]Whether there is any satisfactory doctrine of necessary coercion is a vast, open question, which I have tried to address at length elsewhere. Hayek, at all events, has not provided one; the coercion he considers justified because necessary to raise the means for providing useful public goods and services, including a social “safety net,” is completely open-ended. It excludes as unnecessary the coercion involved in raising the means for useless public goods and services, or those that, though useful, could better be provided by private enterprise. This leaves a quasi-infinity of occasions for necessary coercion, or at least for coercion that can never be proven unnecessary by the loose Hayek criteria.

[11. ]Cf., however, the approach adopted by Feinberg 1984.

[12. ]Raz 1986, 220.

[13. ]One of Rawls’s two versions of equal liberty, that consisting of an integrated, coherent “system . . . defining rights and duties” (op. cit., 202) seems to me clearly open to this charge. In the other version, the system is said to consist of a number of distinct “basic liberties” (op. cit., 302) of “equal citizenship.” They are the conventional political freedoms ensuring democratic representation and equality before the law, and they are not vacuous. They seem to me, however, too confined in their effects and therefore inadequate to pass for a “principle of liberty.” For one, they offer too few safeguards to minorities against the will of the majority. For another, they provide no defense of property, nor of privacy. Such “basic liberties” leave the respective domains of individual and collective choice wholly indeterminate.

[14. ]F. Engels 1891, 1968, 680–81.

[15. ]Cf. Alchian and Demsetz 1973, 18.

[16. ]“. . . an equal right to the most extensive total system of equal basic liberties”; Rawls, op. cit., 302.

[17. ]J. S. Mill 1848, Ch. 5.

[18. ]Atiyah 1979, 337.

[19. ]For a different argument about moral arbitrariness, cf. Nozick 1974, 213–26.

[20. ]There can, in any case, be no differential moral desert if all differential performance is due to some differential advantage (talent, education, character, etc.), and all such advantages are themselves undeserved. Cf. Sandels 1982, 88. Moral desert then collapses into equality, and becomes redundant.

[21. ]G. A. Cohen in Paul, Miller, Paul, and Ahrens 1986.

[22. ]Since “talk is cheap” and language will adapt to anything, one can override principles of freedom to advance one’s interest in the name of freedom. When in 1776, in one of the failed attempts of the century to make French society more efficient and mobile, Turgot tried to put through a program of fairly extensive deregulation, the “duly constituted” corporations defended and saved regulation as a system of “real freedom,” necessary for the public good.

[23. ]In a large flock of geese, the most precious ones started to languish and die one by one. The wise rabbi was asked to find a remedy. As each of his suggestions was put into practice, more geese died. When the wretched gooseherd finally reported the demise of his last bird, the rabbi, much annoyed, exclaimed: “What a shame, I had so many good ideas left!”

[24. ]Roepke 1959, 232.