carnes@gargoyle.UChicago.UUCP (Richard Carnes) (01/22/85)
There has been a good deal of discussion recently in net.politics on the subject of freedom and its relation to free-market systems, with libertarians and their allies generally taking the position that the market supports and is necessary for freedom. The best discussion of this question that I am aware of is in Charles E. Lindblom, *Politics and Markets: The World's Political-Economic Systems*, a book I highly recommend to anyone with an interest in the title subject. I hope it is obvious that in quoting from Lindblom I am not quoting an "authority" to silence opposition, but rather I am presenting his arguments for your consideration in hopes of promoting a more informed and intelligent discussion of this topic. It would be a pointless waste of labor to paraphrase Lindblom, so I will simply lift whole paragraphs from his chapter entitled "Exchange and Markets." _________________ The classical liberal case for market systems declares: Liberty through the market; no liberty without. True? No one understands market systems until he appreciates how many good, though conflicting, answers can be given to that simple question. Beginning with parental control in infancy, no one ever escapes social control. "Freedom" and "liberty" denote situations in which controls are not absent but are in some sense acceptable. Whether, then, the market supports freedom raises questions about its characteristic forms of control. According to the [classical] liberal argument in the tradition of Locke, Smith, the Mills, Spencer, and Dicey, in a market system one responds--for example, takes a particular job--only if the proffered benefits are attractive, hence only if one voluntarily chooses to do so. In an authority system one is required to work where assigned and obey any other command regardless of benefit. As some people see it, no more needs to be said to prove men freer in markets than in authority systems. An immediate objection to that line of argument is that it simply ignores the effect of a transaction on persons not a party to it--those who must endure the smell of a new factory in the area, the noise of motorcycles breaking the quiet of their neighborhood, or the risk of accident in a nuclear power plant. In a market system, they make no free choice; these effects are imposed upon them. Third-party or external effects aside, the argument does not hold even for the parties immediate to the transaction, who are regarded as voluntarily entering into exchange with each other. Let us see why. PROPERTY. How much I can accomplish and how effectively I can protect myself through exchange depends in large part on what I own and can offer in exchange. A hidden assumption in the conventional argument is that private property, on which exchange rests, does not itself constitute a barrier to freedom and is, in addition, noncoercively established and perpetuated. If one imagines a small society sharing assets collectively which is then transformed, by assignment of every asset to some one individual, into a society practicing exchange among owners of private property--and with grossly unequal distribution of the assets to individuals--it is not at all obvious that free exchange makes (or leaves) the less propertied members of that society free. And if the move from collective to private ownership is imposed by strong men who forcibly take the lion's share of the assets, clearly no simple argument leads to the conclusion that subsequent exchanges among them, however free, make those who have little property free. Nor if we are all born into a world in which property rights are already assigned, as indeed they are, does it follow that exchange supports our freedom unless we own a great deal. This objection to the liberal argument does not depend on how in actual fact private property was historically established, how it is in fact maintained, or whether it is a good institution. The objection rests on logic. The traditional liberal argument is incomplete unless it defends private property as itself consistent with freedom, a point on which it is silent. [Author's footnote: In both Friedman, *Capitalism and Freedom*, and Hayek, *Road to Serfdom*, the possible coerciveness of the distribution of property is not discussed. Frank H. Knight argues that the history of the distribution of property undermines the claim that freedom leads to desirable results, but he does not consider the possibility that it may itself undercut the claim that market relations are free (in *Freedom and Reform*).] It [the traditional liberal argument] is simply blind to the implications for freedom of Proudhon's "Property is theft!" as well as to implications of less extreme interpretations of how property is established and maintained. [Author's footnote: Formally, the same objection can be brought against the liberal position that, leaving property aside, exchange of services makes men free because they will respond through exchange of services only when they voluntarily choose to do so. Some distribution of skills among persons would make some men greatly dependent on others--for an extreme example, if only a few persons could fight and thus defend themselves and others. The favored persons could extract, as a price for their services, concessions from the others inconsistent with their freedom, however freedom is defined. Again, whether historically this is or is not the case, the liberal argument simply fails to examine the implications for freedom of distribution of skills.] Another way to put the point is this. In liberal thought a world of exchange is conflict-free. Everyone does what he wishes. When all social coordination is through voluntary exchange, no one imposes his will on anyone else. But how, we ask, can such a happy state be possible? It is possible only because the conflicts over who gets what have already been settled through a distribution of property rights in the society. Was that distribution conflict-free? Obviously not. Was it noncoercively achieved? Obviously not. The distribution of wealth in contemporary England, for example, is a consequence of centuries of conflict, including Viking raids, the Norman Conquest, the early authority of Crown and nobility, two waves of dispossession of agricultural labor from the land, and the law of inheritance. --Charles E. Lindblom [To be continued] Richard Carnes, ihnp4!gargoyle!carnes
gam@amdahl.UUCP (gam) (01/24/85)
> = [ from "Politics and Markets: The World's Political-Economic System", > by Charles E. Lindblom ] Throughout your excerpt, Lindblom's arguments are rather abstract. He explains how things "ought to work" by "logic", but he is so wrapped up in his hypotheses he never bothers to look at how the real world works. The best he can do is vague reference to the real world in the case of England, and even then doesn't examine it much. What Lindblom is ignoring is that people *create* wealth, they don't just inherit it. But we'll get to that. He also tends to view situations as static rather than dynamic. Thinks are *instantaneously* bad, so the free market is a failure. Here is an example: > An immediate objection to [free transactions] is that it simply ignores > the effect of a transaction on persons not a party to it--those who must > endure the smell of a new factory in the area, the noise of motorcycles > breaking the quiet of their neighborhood, or the risk of accident in a > nuclear power plant. In a market system, they make no free choice; these > effects are imposed upon them. If people don't like the neighborhood, they leave. When people leave they take their property with them. This produces a decline of wealth for the area. It is not in the interests of people wanting to maintain a lively economy to encourage the native wealth to leave. People are also less likely to move *into* undesirable areas, so the influx of wealth is cut off. Lindblom makes his hypothesis (which sounds good) but fails to follow thru with the *REAL* consequences of ignoring the effects on "persons not a party to it". Let's face it -- do *you* want to move to Gary, Indiana? > ...How much I can accomplish and how effectively I can protect > myself through exchange depends in large part on what I own and can offer in > exchange.... So far so good. > ...A hidden assumption in the conventional argument is that private > property, on which exchange rests, does not itself constitute a barrier to > freedom ... This is a set-up. Lindblom says that the "exchange" is of "private property"! He has decided to ignore that individuals can make money by WORK without even owning private property. Remember WWII, when the Japanese on the West Coast had all their property taken away and they were incarcerated? (Even then they were as a group successful and propertied, which some believe was part of the motivation for their incarcertion). So, they come out after the war with nothing. What happens? By 1969, Japanese-Americans as a group had family incomes of 132% of the national average! (Anglo-Saxons were at 105%). Many now own *their own businesses*! Why did this happen? They *worked*! They exchanged their skills for money, they did a good job and were reliable. They're property owners again! Amazing, isn't it? But Lindblom goes right on abstracting .... > If > one imagines a small society sharing assets collectively which is then > transformed, by assignment of every asset to some one individual, into a > society practicing exchange among owners of private property--and with > grossly unequal distribution of the assets to individuals--it is not at all > obvious that free exchange makes (or leaves) the less propertied members of > that society free. Looks pretty foolish, now, doesn't it? Again, he ignores the value of work (human capital) completely. I suppose I've made my point but I want to poke at Lindblom a bit more: > This objection to the liberal argument does not depend on how in actual fact > private property was historically established, how it is in fact maintained, > or whether it is a good institution. The objection rests on logic. Nice technique, eh? "If you disagree with this you are being illogical. Besides, I have a PhD." > The > traditional liberal argument is incomplete unless it defends private > property as itself consistent with freedom, a point on which it is silent. Private property *IS* consistent with freedom, but Lindblom just can't see that *human capital* creates wealth that can *buy* property! But here is a token argument against even that principle: > Some distribution of > skills among persons would make some men greatly dependent on others- Isn't that why we are social creatures to begin with? (*sheesh!*) > for an > extreme example, if only a few persons could fight and thus defend > themselves and others. The favored persons could extract, as a price for > their services, concessions from the others inconsistent with their freedom, > however freedom is defined. (Right, like, I'd like to get my food for free, but those fascist store owners are making me *pay* for it! Can you imagine?! I'm calling the ACLU!) Then fighters would be highly paid -- for a while. Then others would train themselves to fight as well ("it's a high-paying, rewarding career!"). But then there are more fighters. The Incredible Hulk is charging $50 an hour, but Hercules will fight off barbarians for only $45 an hour. Economic competition ensues. Prices drop. The free market solves yet another problem. Say, isn't Computer Science a hot major in college these days .... ? If all products and services were "free", how would you propose to allocate them? By lots? By perceived need? By "want"? By nepotism...? "Politics offers 'free' benefits for people to fight over. Markets put prices on benefits, forcing each group to limit its own use of them, thereby in effect sharing with others. A society with both Buddhist and Islamic citizens must somehow allocate its available building materials in such a way as to have these materials share in the building of temples and mosques. If the building materials are shared through economic processes, each set of religious followers weighs the cost agains benefits and limits its demand accordingly. But if these same building materials are provided free or otherwise shared through political processes, each group has the incentive to demand the lion's share -- or all -- of the materials for building its own place of worship, which is always more urgently needed, in more grandious proportions, than the other." [ Thomas Sowell, "The Economics and Politics of Race" ] -- Gordon A. Moffett ...!{ihnp4,hplabs,sun}!amdahl!gam
josh@topaz.ARPA (J Storrs Hall) (01/25/85)
> This objection to the liberal argument does not depend on how in actual fact > private property was historically established, how it is in fact maintained, > or whether it is a good institution. The objection rests on logic. ... > Another way to put the point is this. In liberal thought a world of > exchange is conflict-free. Everyone does what he wishes. When all social > coordination is through voluntary exchange, no one imposes his will on > anyone else. But how, we ask, can such a happy state be possible? It is > possible only because the conflicts over who gets what have already been > settled through a distribution of property rights in the society. Was that > distribution conflict-free? Obviously not. Was it noncoercively achieved? > Obviously not. The distribution of wealth in contemporary England, for > example, is a consequence of centuries of conflict, including Viking raids, > the Norman Conquest, the early authority of Crown and nobility, two waves of > dispossession of agricultural labor from the land, and the law of > inheritance. --Charles E. Lindblom > > Richard Carnes, ihnp4!gargoyle!carnes Do I detect the slightest hint of a self-contradiction here? I (and one assumes most of the propertarians reading this) am well aware of the limitations on one's freedom which occur because most of the world is owned by other people. However, you (and lindblom) are making the implicit comparison to someone who owns everything, and thus coming to the conclusion that a scantily-propertied person is unfree. If we compare it instead to the Socialist ideal wherein the person owns nothing, you will see that even a pauper in a capitalist state is better off than a hero of labor in a socialist one. The basic question which the collectivist must answer is whether there is any way of a group owning something as a group. You are well aware, I'm sure, of the various political power structures which actually own everything in the cases where it is supposedly owned by "the people". I submit that the actual ownership of all property by a small power group is MORE inequitable than the statistically skewed distribution which occurs under capitalism. --JoSH