January 18, 2011

Classical Liberalism: The Best Antidote to Incivility

In the partisan aftermath to Tucson, let’s remember that we have better political alternatives than Krugman’s caricature of capitalism.

The tragic killings last week in Tucson have given rise not only to extended debates over the desirability of gun control laws and our commitment to civility, but they have also ushered in a new struggle over the political soul of the United States. In dealing with this issue, President Obama’s moving address in Tucson sought to restore some degree of civility to the public debate by stressing the need for a nation to come together in its moment of crisis.

But the New York Times’ Paul Krugman doesn’t see it that way. In his recent column “A Tale of Two Moralities,” Krugman wrote that when it comes to the welfare state and ideas of what constitutes justice, “We are a deeply divided nation and are likely to remain one for a long time.” For Krugman, the welfare state is an antidote to what he sees as Darwinian capitalism. In the aftermath of Tucson, we must consider the implications of this rhetoric as it relates to the long-term political regime under which a nation wishes to live. The dichotomy Krugman sets up between social Darwinism and the New Deal’s welfare state presents a false choice. There is another better alternative to both: classical liberalism.

Epstein
Illustration by Barbara Kelley

Krugman writes that this nation must emphatically reject “the capitalism red in tooth and claw we had before the New Deal,” in favor of a system in which “society’s winners are taxed to pay for a social safety net” that Krugman, among others, are only too happy to devise. If our choice in this morality play pits greedy individuals against compassionate ones, the man has a point: of course we should ditch the former and embrace the latter, every time.

Yet, unfortunately, this peculiar caricature of pre-New Deal policies just confuses the relevant choices. The phrase “red in tooth and claw” is an explicit throwback to social Darwinism. But social Darwinism never had much of a foothold in American political philosophy or constitutional law.  Indeed, the social Darwinist stood miles away from the classical liberal whose views dominated the pre-New Deal outlook in America. 

Here are some of the salient differences.  Branding competition as a fight to the death, as social Darwinism does, makes it appear like all economic winners achieve their gains at the expense of the less fortunate.  Market exchanges are parodied as a kind of predator-prey relationship whereby the members of the dominant class—employers, merchants, and landlords—routinely exploit their hapless employees, consumers, and tenants.  That false rhetoric glosses over the mindboggling differences between an evolutionary struggle and a market economy.  In nature, the prey is eaten without its consent and against its will.  The employees, consumers, and tenants in a market can—and often do—just say no to any offer they do not like. 

To classical liberals, charitable undertakings were a key component of a just society.

Note this enormous gap.  At root, the social Darwinist model is subjection through conquest.  In contrast, the classical liberal model champions mutual gains through cooperation.  It postulates that in the routine transaction, employees, consumers, and tenants gain, along with their employers, merchants, and landlords.  The higher the velocity of voluntary transactions is, the greater the gains there are to share.  To be sure, in some situations, some sellers (but virtually no employers or landlords) can gain a dominant or monopoly position. But as to those arrangements, the classical liberals were prepared to allow either common carrier regulations (as on the railroads) or antitrust regulations (as against the sugar cartels) offset any use of monopoly power.  The maintenance of competition, not the exploitation of the poor, was its cardinal virtue.

Systems of markets produce mutual gains, but they offer no comfort to those who are unable to participate in them.  Social Darwinists were opposed to charitable intervention: only the fittest survived. But classical liberals insisted that charitable undertakings were a key component of a just society.  Such notables as Justice William Story insisted that all individuals of good fortune had an “imperfect obligation” to provide support for the needy out of their winnings. These obligations were enforced by an uneasy combination of personal conscience, social sanctions, and religious obligation—but generally not state power. 

The cynic might say that these are just fancy words to shield individuals from the force of state taxation.  But in practice, these soft sanctions led to a remarkable profusion of charitable institutions and activities that resulted (as they still do) in major contributions not only to the arts, education, religion, and science, but also to the direct care of the needy.  Indeed, on this view, one of the great demerits of the New Deal is that its system of state-run support killed off the voluntary measures that, dollar for dollar, were far more efficient than the modern welfare apparatus in helping the poor.

Social Darwinism provides no useful solutions. But neither does the New Deal model whose bitter fruits we now harvest.

If folks like Krugman are far too harsh on classical liberalism, they are far too kind to the New Deal.  It is always dangerous to judge any program by its lofty rhetoric.  It is absolutely critical to examine a program by its performance, both negative and positive on the ground.  On that score, there is much to criticize in the New Deal legacy.  On the production side, the major achievement of the New Deal was to create and perpetuate a variety of cartel-like arrangements that stifled productivity in agriculture, labor, and land use—and that’s just for starters. 

A countless number of senseless restrictions have also stifled efforts to form new businesses that could create opportunities up and down the economic line. Efforts to give safety nets to working people have strangled opportunities for potential employees to benefit themselves through hard labor.  Too often, partisan devices are paraded as public interest measures.  For example, recent increases in minimum wage laws did not help those teenagers that were kept out of labor markets.  They gave a leg up to union workers who are part of the Democratic power coalition. 

It is, of course, fine for the President to speak of the need for empathy and civility.  But it is not so fine to adopt agriculture, labor, and trade policies that only protect entrenched interests.  It is equally scandalous for the Obama administration to throttle the development of for-profit institutions of higher education that could relieve some of the pressure on community college programs that have been gutted by the need to divert state funds to a set of extravagant public union benefits and benefit programs.  There is, in short, nothing that is noble or generous in much of the progressive program. 

The choices we face are not just those that require us to ignore or eat each other, on the one hand, or move headlong into the modern administrative state, on the other.  Social Darwinism provides no useful solutions. But neither does the New Deal model whose bitter fruits we now harvest.  What we need on both sides of the political aisle is to return to classical liberal principles, and to do so now.


Richard A. Epstein, Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, Laurence A. Tisch Professor of Law at New York University, and senior lecturer at the University of Chicago, researches and writes on a broad range of constitutional, economic, historical, and philosophical subjects. He has taught administrative law, antitrust law, communications law, constitutional law, corporate law, criminal law, employment discrimination law, environmental law, food and drug law, health law, labor law, Roman law, real estate development and finance, and individual and corporate taxation. His publications cover an equally broad range of topics. His most recent book, published in 2013, is The Classical Liberal Constitution: The Uncertain Quest for Limited Government (2013). He is a past editor of the Journal of Legal Studies (1981–91) and the Journal of Law and Economics (1991–2001).


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