Review 1: The Political Economy of the Minimal State, Edited by Charles K. Rowley (1996)

Sir Samuel Brittan,
The Times Literary Supplement,
September 20, 1996

"One of Gladstone's Chancellors of the Exchequer, Sir William Harcourt, achieved fame with just one remark: We are all socialists now. Little did he realize how many British and American academics would - more than a century later - be claiming instead to be liberals, admittedly with a small l. The label has come to cover a great many different kinds of liberalism, which are hardly on speaking terms with each other. These distinctions emerge all too clearly from these two books. They come from different universes of discourse. The Liberal Political Tradition: Contemporary reappraisals, edited by James Meadowcroft, is a conference volume, with the emphasis on the expanding role of government in securing citizen welfare. Global capitalism is seen by many of the contributors as an enemy of reform. On eof the essays even entertains the idea that the GATT trade agreements are chiefly effective in justifying or sustaining the interest of the privileged nations of the world - overlooking how the emerging countries fought for the latest agreement in the teeth of entrenched Western protectionism. Amid all these fashionable concerns, traditional liberal fears about the tyranny of a majority are brushed aside. The Political Economy of the Minimal State, edited by Charles K. Rowley, self-consciously follows in the wake of John Locke, who believed that governments existed to protect the legitimate rights of life, liberty and property and should be overthrown when they did not do so. The essays are sponsored by an American body known as The Locke Institute, and the series in which they appear is entitled The Shaftesbury Papers, after John Locke's political patron. The book is meant to set out the modern case for a minimal or night-watchman state confined to providing security.

The contributors to Rowley's volume undoubtedly regard themselves as being in the liberal tradition. Norman Barry's contribution is entitled: Classical Liberalism in the Age of Post-Communism. The Shaftesbury authors see the chief threat to liberty as state economic intervention, high public expenditure and the redistributive activities of the welfare state. Although not all of them come entirely clean on the subject, the alleviation of poverty is seen largely as a matter of voluntary insurance or private benevolence, with at most a very minimal state redistribution to those not so covered - and some would regard even this concession as rank heresy.

To avoid becoming bogged down in arguments about words, it might be useful to follow Ralf Dahrendorf's suggestion and call the original liberals of the early nineteenth century classical liberals, the more interventionist ones social liberals and the modern exponents of a limited state as neo-liberals. The latter, of course, regard themselves as the heirs to classical liberalism.

There is a temptation to treat the two books separately as expressions of highly conflicting beliefts, not even emanating from the same academic subject area. But we should pause before doing so. Both books claim to be about liberalism and both make reference to common founding fathers, such as Locke, Hume, Montesquieu, Bentham and Mill. What should one conclude from the chasm between these works? It would be extremely easy to see liberalism as a historical movement whose time has passed. It was conceived as a drive in favour of personal freedom against despotism, censorship and irresponsible government. When public spending was largely either on armies or on the provision of sinecures for favourites all liberals could unite under slogans such as "Peace, Retrenchment and Reform". When the archetypal example of economic intervention was the Corn Laws, which raised the price of bread, there was no difficulty in a Manchester manufacturer and a working class radical making common cause against them.

But now that so much intervention is ostensibly designed to help the poor or to soften the blows sometimes inflicted by economic forces, a split seems unavoidable. Those who worry mainly about preserving economic freedom tend to become a conservative sub-group, while those interested, not only in the condition of the people, but also in causes such as anti-censorship or open government, find themselves on the Left. They then become indistinguishable from social democrats or moderate non-Marxist socialists, once the latter abandon their belief in wholesale nationalization. Indeed, many social liberals would regard Tony Blair's Labour Party as far too friendly to market capitalism.

The linguistic burial of liberalism would thus be an easy road to take. Political labels are a matter of convenience and so not have essential meanings. The case is strengthened by the dwindling of political parties called "Liberal". (The small parties that still retain the name are essentially social-democrat groups and are not taken seriously by any of the rival academic writers.) As Rodney Barker reminds us in his contribution to The Liberal Political Tradition

While the history of conservatism is mapped along contours etched by the work of the Thatcher government in the United Kingdom, and the development of nationalism in the creation of Slovakia, Croatia and the new states of the former Soviet Union, the history of liberalism is market by the publication of John Rawls's A Theory of Justice, Robert Nozick's Anarchy, State and Utopia, or the debates in academic journals.

Nevertheless, the separation of the two kinds of liberalism in the world of politics impoverishes them both; and so even does their separation in the world of academic disputation. It is therefore still worth looking for ideas which both sides ought to be able to share. Social liberalism is impoverished when its adherents fail to see that freedom to spend one's own income in one's own way - above all in sensitive areas such as health and education - is an essential part of liberty. So too is freedom to start a business or to move money across frontiers. But neo-liberal practice and thought are impoverished when there is too great a concentration on ownership, earning and spending, and when matters such as open government or the rights of suspects against the police are overlooked. The distortion reaches ridiculous levels when neo-liberal economists publish league tables of so-called economic freedom in which South-East Asian dictatorships come out on top, high above the more tolerant societies of Western Europe.

Thus some neo-liberals leave themselves wide open to Anthony Arblaster's charge in the Meadowcroft book that: While much Western advice and support has been made available to assist and speed up the conversion of the state socialist economies into full blown capitalist ones ... nothing like the same effort has been put into facilitating the transition from authoritarianism to democracy ... Imagine the chorus of condemnation that would have greeted Boris Yeltsin's ruthless suppression of parliamentary resistance in Moscow in 1993 or his cruel war against Chechenya in 1994-95 if he had happened to be a Communist president of the Soviet Union rather than the ex-Communist president of post-Communist Russia.

Any reunification of liberalism today would have to be primarily in the world of ideas. The task is not made easier by the desire of the two kinds of writers to remain as far apart as possible. Several writers in The Liberal Political Tradition endeavour to expel from modern liberalism neo-liberal economists such as Hayek and Friedman. It does not, incidentally, occur to them that there are other neo-liberal economists who work is worth exploring, such as James Buchanan, who is the real inspirer of the Shaftesbury Papers.

Norman Barry, a neo-liberal, contributes to both volumes. But so far from wanting to break down barriers, he is concerned to reinforce them. His main point is that today's neo-liberals, who start from the basis of academic economics, are thoroughly suspicious of any sort of politics. Indeed, they debate among themselves the relative virtues of some form of anarcho-capitalism versus the minimal State.

It is instructive to look back at the Liberal statesman who dominated British politics for several decades, W.E. Gladstone. It did not occur to him to debate the existence of the State or to denigrate the role of politics. He was far too busy with matters such as a free-trade treaty with France, the rights of Jews to take their seat in Parliament or the redress of Irish grievances. In practice, he believed in a highly limited sphere for political activity, which was more useful than a vain attempt to get rid of it altogether.

Yet despite their unashamedly ivory-tower orientation, the Shaftesbury writers are a good deal more interesting than the Meadowcroft ones. They are engaged in an attempt to work out rigorously the purposes for which rational human beings deliberating together would surrender some of their rights to government, and how government can then be prevented from exceeding its proper remit. One root of their thinking lies in the fathers of the American Constitution such as Jefferson, Hamilton and, above all, Madison, whose deliberations were published in the Federalist Papers. Another root lies in modern welfare economics. The Shaftesbury authors are unwilling to trade the reduction of one person's welfare against an improvement in another's. They differ from the best-known exponent of contractarian reasoning, the philosopher John Rawls, in insisting that they should start from endowments that people actually have, rather than from hypothetical endowments that they would grant each other in a state of ignorance.

Their problem, however, is the lack of a classical-liberal theory of legitimate property rights. John Locke's idea that they derived from something in which a person had mixed his labour was inadequate even in the seventeenth century. Moreover, in Locke's original position it was also important that after people had appropriated property (in practice, land) there should be good and enough left over - a qualification which neither he nor his successors ever fully developed. Barry, to his credit, is aware of this lacuna.

As a result, today's neo-liberals are apt to clutch at any straw, such as Kirzner's idea that the rewards of entrepreneurship legitimately belong to the entrepreneur. Maybe. But such rewards fail to account for a very large proportion of today's property holdings. There is no escape from some hypothetical contract among disinterested people - of which the results may be a good deal less egalitarian than Rawls would like.

If one looks hard enough, there are a few pointers in these two books to some potential common ground between the two liberalisms. Barry sees some hope in the ideas of civic society, dear to the heart of Czech President Vaclav Havel, which emphasizes voluntary groups that are neither state organs nor profit-making businesses. De Jasay, in his contribution to the Shaftesbury Papers (but unfortunately only in a footnote), denounces the strain of vulgarized anti-collectivist discourse which over-looks that civil society can function in many spheres as well as in and through the market. There are perplexities in the civic route. Many of the most highly valued communal groups have their oppressive conformist side, a paradox never better explored in Wagner's Die Meistersinger von Nurnberg. Moreover, whatever their other virtues, highly developed social and professional networks provide a fertile soil for the interest-group influences which so pervert the modern State and, incidentally, reduce their growth potential.

There are firmer areas of common ground. If one tries to demarcate a body of belief, it is often useful to ask what its adherents are against. Two traditional liberal beliefs which should surely be common threads among their present day successors are suspicion of nationalism and the slogan "democracy is not enough". To any kind of liberal, a mere majority vote (let alone a plurality) does not make oppressive conduct permissible. Democracy is a convenient decision rule for changing governments without the use of force and for voting in assemblies. But it cannot justify an unjust war or the infliction of cruel and unusual punishments. Nor can it excuse the expropriation of people's property or the rolling back of those social services which people have come to take for granted and seen as property rights.

Indeed, the best reasons for neo-liberals to keep their distance from conservatism can be found in Hayek's Constitution of Liberty, which appeared in 1960, in the Appendix entitled " Why I Am Not a Conservative". One of his reasons - that the Macmillan Conservatives of the time accepted too much of the over-extended State - would be hastily dismissed by social liberals as mere reaction. But his other reasons could not be so treated.

The conservative, he remarks, does not object to "to coercion or arbitrary power so long as it is used for what he regards as the right purposes … If the government is in the hands of decent men it ought not to be too much restricted by rigid rules … The typical conservative is indeed usually a man of very strong moral convictions … but he has no political principles which enable him to work with people whose moral values differ from his own". (These remarks apply as freshly as ever to recent House of Lords pontifications on the moral state of the nation.)

Hayek also remarks that the conservative's "distrust of the new and strange" is clearly connected with his "proneness to strident nationalism". But for a liberal, "it is not a real argument to say that an idea is un-American, un-British or un-German." Moreover, the nationalistic bias provides a " bridge to collectivism". To think of " our industry and resources" is "only a short way from demanding that they be directed in the national interest."

Nothing is gong to make a social liberal love capitalism or a present-day follower of John Locke dance a jig at the foot of the Welfare State. But a realization that they can agree on some human rights and on the limitations of both democracy and nationalism might just make them see that the beliefs that they ought to have in common are at least as important as those that divide them. For if liberals do not come together, the grim picture we have ahead of us is of politicians still tacitly encouraging the yobs who use everything from football matches to minor agricultural disputes to stir up hatred against fellow human beings in neighbouring countries.

A book which I often use to cheer myself up is The Liberal Tradition from Fox to Keynes, edited by Alan Bullock and Maurice Shock, published in 1956, which consists of extracts from classic liberal texts. The critic can have some fun contrasting the part near the end entitled "The End of Laissez Faire", consisting of passages from Keynes and Beveridge, with earlier sections by the classical political economists commending economic individualism. But much the greater part of the book is taken up with matters on which both sorts of liberals should be able to agree.

There are eloquent addresses on civil liberties by Charles James Fox and also his classic speeches in opposition to the war against Revolutionary France. There is Byron on freedom as well as Adam Smith on free trade, together with John Stuart Mill on representative government. There are sections on popular education, religious liberty, Irish freedom and, above all, Mill's classic statement of the case for personal freedom in actions where others are not adversely affected.

But perhaps the litmus test of whether the reader is in any sense a liberal or not is Gladstone's foreign-policy speeches. As early as 1850, when he had not yet completed his journey from Peelite Toryism, Gladstone intervened in the Don Pacifico debate to denounce the idea that a foreign secretary should be mainly concerned with British aggrandizement, and proclaimed that his main business was to be a force for peace in the concert of Europe. "I think it to be the very first of all his duties studiously to observe, and to exalt in honour among mankind, that great code of principles which is termed the law of nations."

In a much later passage, taken from the late 1870s around the time of the Midlothian campaign, he reminded his listeners that "the sanctity of life in the hill villages of Afghanistan among the winter snows, is as inviolable in the eye of the almighty God as can be your own … that the law of mutual love is not limited by the shores of this island, is not limited by the boundaries of Christian civilization; that it passes over the whole surface of the earth, and embraces the meanest along with the greatest in its unmeasured scope". By all means smile at the oratory. But anyone who sneers at the underlying message is not a liberal in any sense of the word worth preserving."