Rethinking Economic Liberty, pt. 2 – Positive Liberty

In Democratic Governance, Economic Planning, Economics, History and Politics, Inequality, Liberalism, Political Ideology, Politics, Politics of Policy, Progressivism, Social Democracy on August 21, 2010 at 10:47 pm

Introduction:

In “Economic Liberty vs. Industrial Democracy,” I raised the issue that the progressive sense of “economic liberty” is actually broader in scope than that of libertarians. However, that piece mostly focused on the progressive conception of negative economic liberty – i.e, freedom from private coercion, especially in the case of the worker-boss relationship.

In this piece, I’m going to return to the idea of economic liberty – but this time on grounds more frequently explored by progressives in the past, namely the conception of positive economic liberty.

Theory:

Isaiah Berlin may have introduced the term “positive liberty” in 1958, referring to possessing both the capacity (in the sense of resources and training) and opportunity for self-direction and improvement in the individual case and self-government in the collective case, but the idea had been around since the 1840s when the Industrial Revolution began to spread outside of Britain.

In the agrarian society that liberal philosophy had sprung from, the only positive liberty that was required to produce the independence necessary for republican virtue was the ownership of land – a stance widely accepted by classical liberal thinkers like Locke, Rousseau, Jefferson, and so forth. And in the liberal revolutions of the 18th century, land was a common site of acceptable government intervention, whether it be the distribution of the lands of the Church or the nobility through the sale of the biens nationeaux during the (pre-Jacobin no less) French Revolution, or the new American republic’s land grants and subsidized sales of the new western territories.¬† The concept of positive liberty – that giving land would enable independence and diminish reliance on the state – served to render acceptable what might otherwise have been seen as a drastic departure from liberal regimes.

The Industrial Revolution changed the nature of society as much as it did the nature of the economy. Increasingly, formerly self-employed artisans who had possessed their own tools and often their own workshops were becoming life-long wage laborers, where previously wage labor was entirely associated with servitude and thus a lack of true independence. The wide distribution of farmland was less relevant in a society that was becoming more urban than rural. Even farmers were increasingly  producing for, consuming from, and thus increasingly vulnerable to a national and global market. Most importantly, the market itself changed from one characterized by many small producer-consumers (which partially did resemble the self-adjusting model of Adam Smith) into one dominated by large, powerful corporate entities who had the capital to both dictate to the market and to corrupt the body politic.

These changes posed a real threat to traditional understandings of liberty – and arguably formed the basis behind the split within the liberal movement that led to the formation of modern progressive and conservative movements. Either the reaction was one of denial – to argue that relations between workers and bosses were actually on a level of perfect equality, or that market relations between suppliers, retailers, consumers and monopolists were on even terms, and that adherence to property rights and individual striving was the only way to go forward – or to recognize that a democratic government had to step forward and guarantee positive economic liberty.

In earlier years, we could see this logic – state action on behalf of economic liberty – in many progressive movements. The Farmer’s Alliance that served as the nucleus of the Populist Party adapted traditional liberal thought to a reality in which farmers’ independence was being threatened by railroad companies (that monopolized access to markets and often charged more for haulage than a farmer’s crops were worth) and banking monopolies (that artificially raised the price of capital, overcharged farmers for the yearly purchases that had to be made long before the harvest, and had shoved many farmers into a crooked lien system that was the sub-prime market of the 19th century). Their solution was to turn to the government that they felt belonged to the “producing classes,” and establish “agricultural sub-treasury” which could provide the farmers a source of credit outside of the “money trust,” a way to counter-act the blind forces of the market that forced the farmer to produce as much as possible to service his debts even when this lead to ruinous gluts, and thus a means to economic independence once more.

Similarly, during the Progressive Era, what the Glen Beck crowd doesn’t understand is that the new forms of government intervention were entirely directed at restoring the promise of the American Revolution. In Roosevelt’s eyes, the existence of new economic forces that robbed American workers of the independence that the Enlightenment had deemed necessary for citizenship and created powerful new industrial monopolies who could buy and sell governments required industrial regulation with the threat of nationalization, a social insurance system, and the legalization of unions – in order to ensure that the sovereign republic was still the most powerful institution in American life. Similarly, Woodrow Wilson advocated the passage of the Clayton Anti-Trust Act and the creation of the Federal Trade Commission in order to maintain opportunity “for the man on the make” to strive for individual success.

In the modern era, we can start with two propositions of positive economic liberty: the first is that independence is expanded when economic security is based on rights rather than as a contingent grant, and the second is that public provision of economic security empowers individuals to seek new opportunities.

The first proposition applies equally to the public or private sectors. Rather than creating dependence, benefits based on rights in fact create independence – individual citizens are given legal and moral grounds for challenging authority, both public and private, through recourse to the judicial system, the democratic process, and popular protest. Social Security recipients do not act in a dependent fashion towards the state – rather, they form powerful pressure groups, threaten political action against legislators they feel are acting against them, and stage massive protests. Similarly, in the private sector, a worker who is guaranteed economic security through social insurance acts less submissively towards their employer. Through public action, the state of equality presumed in the liberal theory of free contract is restored, since opposition no longer means destitution.

The second proposition notes that the provision of social benefits can actually expand the potential for independent, entrepreneurial action – call it the J.K Rowling theory of economic
liberty. If freedom from restraint is a necessary condition of economic liberty, it is not a sufficient one – human beings are naturally risk-averse, especially in a liberalized economic system where the traditional structures that guard against total destitution are no longer present. It is only when the freedom to succeed is thus combined with freedom from the worst consequences of failure that people will give free rein to their ambitions and aspirations. Evidence of this proposition isn’t hard to find – the G.I Bill generation, who were provided a genuine full suite of public social protection (free education, single-payer health care, substantial financial assistance in the form of a cash payout, extra UI, and pensions, subsidized housing) was one of the most successful, entrepreneurial, and actively-civic generations in American history.

Two Visions of Liberty:

To sum up, the libertarian vision offers a cramped, narrow, and solely negative view of economic liberty. In their worldview, economic liberty is understood as solely belonging to property-owning entrepreneurs, which means that the 142 million of us who work for someone else are out of luck. At the same time, economic liberty is only understood as a negative liberty – protection from interference solely from the state. So, as I argued in part 1, those of us who experience private threats to our economic liberty – whether we’re talking about small business-owners run out of business by multinational corporations like Wal-Mart or workers who object to having their employers violate their privacy by running credit checks on employees and job applicants – are, in the eyes of major libertarian scholars, completely free.

In contrast, the progressive vision of economic liberty recognizes both negative and positive elements have to be protected. As Lyndon Johnson famously pointed out in his Howard University speech, merely removing the outward constraints against individual autonomy does not by itself ensure that people will actually be able to live freely – as the classic republican thinkers of the 18th and 19th century would have agreed, you need to give people both the training and tools for “republican virtue.” In otherwise, economic security is economic independence, and once that’s universal, citizens in a modern economy can be truly free.

Progress and Policy:

In the end, the highest legacy of the progressive vision of economic liberty is the understanding that there are, in fact, some win-win choices in politics. Public policy is in fact capable of enhancing both economic security and economic liberty – and the two in fact go hand in hand. And that possibility itself is a form of economic freedom; freedom in this case defined as self-government in the face of concentrated economic power. As Theodore Roosevelt recognized a hundred years ago, “the citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being” if we are to remain free.

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