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2020 | OriginalPaper | Chapter

Reclaiming Democratic Classical Liberalism

Author : David P. Ellerman

Published in: Reclaiming Liberalism

Publisher: Springer International Publishing

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Abstract

Classical liberalism is skeptical about governmental organizations “doing good” for people. Instead governments should create the conditions so that people individually (Adam Smith) and in associations (Tocqueville) are empowered to do good for themselves. The market implications of classical liberalism are well known, but the implications for organizations are controversial. We will take James Buchanan as our guide (with assists from Mill and Dewey). Unpacking the implications of classical liberalism for the “science of associations” (Tocqueville) requires a tour through the intellectual history of the voluntary slavery contract and the voluntary non-democratic constitution. The argument concludes that the classical liberal endorsement of sovereign individuals acting in the marketplace generalizes to the joint action of individuals as the principals in their own organizations and associations.

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next chapter Democracy, Liberalism, and Discretion: The Political Puzzle of the Administrative State

The phrase “external organization” does not apply to associations where people join together to apply their collective efficacy to address some problems of their own; it applies to organizations, particularly those with a paid staff, tasked to help others. The aim of a helping agency should be to do itself out of a job—which is rather difficult for a professionally staffed organization of any type. See Ellerman (2005) for a development of this theme along with a philosophical analysis of why it is so difficult for such external helping organizations to actually “help people help themselves.”

See Laslett (1960), notes on §24, pp. 325–26.

Locke, Montesquieu, and Blackstone are not arbitrary choices. When discussing Adam Smith’s classical liberalism, Frank Knight noted: “Interestingly enough, the political and legal theory had been stated in a series of classics, well in advance of the formulation of the economic theory by Smith. The leading names are, of course, Locke, Montesquieu, and Blackstone” (Knight 1947, p. 27, fn. 4).

For more of this development, see Ellerman (1992 or 2010).

It is a re-validation since in the decade prior to the Civil War, there was explicit legislation in six states “to permit a free Negro to become a slave voluntarily” (Gray 1958, p. 527; quoted in Philmore 1982, p. 47). For instance in Louisiana, legislation was passed in 1859 “which would enable free persons of color to voluntarily select masters and become slaves for life” (Sterkx 1972, p. 149).

David Boaz (2011) reports that Tom Palmer said that David Schmidtz said at a Cato Institute forum in 2002 that:

Nozick told him that his alleged “apostasy” was mainly about rejecting the idea that to have a right is necessarily to have the right to alienate it, a thesis that he had reconsidered, on the basis of which reconsideration he concluded that some rights had to be inalienable. That represents, not a movement away from libertarianism, but a shift toward the mainstream of libertarian thought.

In his own book on libertarian theory, Palmer traces the “mainstream of libertarian thought” (2009, p. 457) about inalienable rights back to Locke’s treatment.

See, for example, Genovese (1971), Wish (1960), or Fitzhugh (1960).

For a more complete story, see Philmore (1982) or Ellerman (2010).

This may seem an unusual use of “rent” but “hiring a car” in the U. K. and “renting a car” in the U.S. are the same thing. As Paul Samuelson (1915–2009) goes on to explain:

One can even say that wages are the rentals paid for the use of a man’s personal services for a day or a week or a year. This may seem a strange use of terms, but on second thought, one recognizes that every agreement to hire labor is really for some limited period of time. By outright purchase, you might avoid ever renting any kind of land. But in our society, labor is one of the few productive factors that cannot legally be bought outright. Labor can only be rented, and the wage rate is really a rental (1976, p. 569).

Institutes, Lib. I, Tit. II, 6; Quoted in: Corwin (1955, p. 4).

Often the liberal literature just fudges or ignores the alienation-versus-delegation distinction by describing either type of contract as “giving up rights” to the government or as establishing “hierarchy.”

Again, this follows the intellectual pattern set by Locke who had no genuine inalienable rights theory to counter Hobbes so he ignored Hobbes and took Robert Filmer (1588–1653) as his foil since Filmer’s patriarchal theory (1680) did not require the consent of the governed anymore that the father’s governance over his children requires the consent of the children.

This phrase was used without apparent irony in an earlier version of the free cities website. In the current version of the startup cities site, the phrase is “democratizing access to law and governance.” Even though the subjects have no vote, the startup cities nevertheless have “democratic accountability by giving people the ability to raise their voice through the power of exit.”

See also: http://bleedingheartlibertarians.com/2014/03/vote-markets/. As James Tobin grudgingly noted: “Any good second year graduate student in economics could write a short examination paper proving that voluntary transactions in votes would increase the welfare of the sellers as well as the buyers” (Tobin 1970, p. 269; quoted in: Ellerman 1992, p. 100).

This has generated a minor industry of thinkers who develop ad hoc arguments against the perpetual service contract (e.g., the rule against perpetuities supposedly rules out all “till death do us part” contracts) but not against the time-limited person rental contract. These arguments are dealt with from a Nozickian perspective by J. Philmore who concludes with what libertarians would take as a reductio ad absurdum: “Any thorough and decisive critique of voluntary slavery or constitutional non-democratic government would carry over to the employment contract—which is the voluntary contractual basis for the free market free enterprise system” (1982, p. 55).

The fact that the inalienability of conscience was rooted in the aspects of personhood that do not change with consent or contract was expressed with great clarity by the New Light minister Elisha Williams in 1744:

No action is a religious action without understanding and choice in the agent. Whence it follows, the rights of conscience are sacred and equal in all, and strictly speaking unalienable. This right of judging every one for himself in matters of religion result from the nature of man, and is so inseperably connected therewith, that a man can no more part with it than he can with his power of thinking: and it is equally reasonable for him to attempt to strip himself of the power of reasoning, as to attempt the vesting of another with this right. And whoever invades this right of another, be he pope or Caesar, may with equal reason assume the other’s power of thinking, and so level him with the brutal creation. A man may alienate some branches of his property and give up his right in them to others; but he cannot transfer the right of conscience, unless he could destroy his rational and moral powers (Williams 1998, p. 62).

See also Smith (2013, pp. 88–94) on inalienability which includes references to Williams.

These and related “forgotten” ideas are developed at book length with a focus on economic theory in Ellerman (1992) which was published in a series co-edited by the late neo-Austrian economist, Don Lavoie, who described the theory in his acceptance letter as follows:

The book’s radical re-interpretation of property and contract is, I think, among the most powerful critiques of mainstream economics ever developed. It undermines the neoclassical way of thinking about property by articulating a theory of inalienable rights, and constructs out of this perspective a ‘labor theory of property’ which is as different from Marx’s labor theory of value as it is from neoclassicism. It traces roots of such ideas in some fascinating and largely forgotten strands of the history of economics. It draws attention to the question of ‘responsibility’ which neoclassicism has utterly lost sight of. …It constitutes a better case for its economic democracy viewpoint than anything else in the literature (Lavoie 1991, pp. 1–2).

Cornuelle (1991) is a welcome exception to the rule.

The older name of the relation was the “master-servant” relation but, aside from a few law books on agency law that use the “master-servant” language as technical terms (e.g., Batt 1967), that usage was slowly replaced in the late nineteenth century and early twentieth century with the Newspeak terms of “employer” and “employee.”

Kant considered working for a master in the master-servant relation as being so subordinating as to disqualify one for a civic personality.

Apprentices to merchants or tradesmen, servants who are not employed by the state, minors (naturaliter vel civiliter), women in general and all those who are obligated to depend for their living (i.e., food and protection) on the offices of others (excluding the state)—all of these people have no civil personality,…. (Kant 1991 (1797), p. 126, Section 46).

Note how the implications of Buchanan’s principals principle gives essentially the same results as Dewey’s democratic “principle (that) holds as much of one form of association, say in industry and commerce, as it does in government.”

This is much like Jefferson and the Founding Fathers who enunciated the principle of inalienable rights, but did not apply it to the peculiar institution of their time.

As was noted long ago (for example, Scitovsky 1951), there is no reason for the entrepreneur or family firm to take profits as the sole maximizing goal (although costs, of course, have to be covered for long-term sustainability). But with scattered absentee owners, profit seems to be the only thing that they can agree on in general. Hence profit maximization has been canonized as “the goal” of the firm when in fact it is only an artifact of a particular organizational form.

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Title: Reclaiming Democratic Classical Liberalism
Author: David P. Ellerman
Publisher: Springer International Publishing
Book: Reclaiming Liberalism
Print ISBN: 978-3-030-28759-7

Electronic ISBN: 978-3-030-28760-3

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-28760-3_1