PART ONE: AN INTRODUCTION
If we of the progressive Left are to gain the upper hand in the national discourse, they need to take on the superstitious beliefs of laissez-faire individualism. Elements of this mythical doctrine permeate the economic conversation so thoroughly that we often don't even don’t even realize when we have unconsciously accepted the false premises upon which it is based.
This must change.
We must learn more powerful responses – primarily one of which includes developing, as individuals and as a broad movement, the means to expose the mythology upon which laissez-faire is built. No other task is more central in breaking the back of modern movement conservatism. And once that is done, we must establish and then explain a better economic paradigm that will benefit the American people, one based upon FDR’s Second Bill of Rights.
The purpose of this post and others to follow will surface the questionable hypotheses upon which laissez-faire individualism is based. More importantly, these posts will discuss not the obvious importance of exposing the myth of laissez-faire -- but how great liberal thinkers and leaders of the 20th century have much to teach us how to do so in a devastatingly effective manner. To borrow from Isaac Newton, we stand on the shoulders of giants.
We do not win political battles with clever bumper stickers ridiculing the current president or by sharing progressive memes on Facebook; we win with sound ideas.
What is laissez-faire? Simply put, it is a set of beliefs that claim that government should not interfere in the arena of private business and that laissez-faire is the most effective and productive form of capitalism; that the pursuit of individual profit is harmonious with the public good; and that profit is the very definition of liberty. Beyond that, laissez-faire dogma teaches that only governments have the power of economic coercion – ignoring how coercive power is often brutally exercised by private interests. Finally, without any substantial proof this doctrine claims that we are all free to enter into contracts. These claimed are trotted out and ceremoniously explained by movement conservatism as self-evident truths. They are not.
Indeed, as the posts will explain, laissez-faire individualism actually requires government interference in the market -- so much so that government actually has its thumb on the scale in favor of those already economically empowered. It ignores the modern idea that that the law should be concerned with the reciprocal relationship of the rights and duties of property owners. Indeed, laissez-faire is nothing less than the delegation of state power over property into private hands.
The 19th century libertarian Jeremy Bentham noted, "Property and law are born and must die together. Before the laws, there was no property: take away the laws, all property ceases.”
The school of thought known as Legal Realism – a legal school of thought that developed in the late 19th to early 20th century (in no small part due to the recognized unchecked excesses of libertarianism) that the law should be based not upon antiquated legal maxims or dogma but upon public policy that benefits the greater society -- points out that property and the ability to enter into contracts are not natural rights but man-made. Even Catholic economic teaching which does accept the idea of natural rights acknowledges that no such rights are enforceable without government. In other words, it is government that truly creates property ownership and thus allows government a hand in its regulation so as to avoid harm to others.
But these caveats are lost upon today’s Movement Conservatives. They conveniently overlook Bentham’s admonishment “to do no harm” as they do with similar warnings from Adam Smith. Beyond that, they also conveniently overlook Jeremy Bentham’s strong advocacy for substantial inheritance taxes – something that would put them at odds with the old libertarian when it comes to their opposition to so-called “death taxes.”
As John Maynard Keynes observed and his famous essay, The End of Laissez-faire, “The phrase laissez-faire is not to be found in the works of Adam Smith, of Ricardo, or of Malthus. Even the idea is not present in a dogmatic form in any of these authors.” A few lines later the great economist added, “Even his famous passage about 'the invisible hand' reflects the philosophy which we associate with [Rev. William] Paley rather than the economic dogma of laissez-faire.”
Today’s movement conservatives who espouse laissez-faire principles are very careful about the language they use. Libertarian advocates such as Rep. David Brat (R-VA), and U.S. Senators Rand Paul (R-KY) and Ted Cruz (R-TX) never use the term to describe their favored economic paradigm. They are clever enough to understand that the very term conjures up a well-understood period of vulture capitalism. To most Americans, laissez-faire recalls union busting, tragedies such as the Triangle Shirtwaist Factory Fire and The Great Depression. They understand that the term itself smacks of nose-in-the-air elitism. Instead, these advocates of laissez-faire use euphemisms such as “free market,” “the right to choose” further described as “freedom and liberty.” The libertarian members of the U.S. House of Representatives – the modern-day proponents of laissez-faire on Capitol Hill – even go as far as to call themselves “The Freedom Caucus.” The more appropriate term, I submit, would be “The Laissez-Faire Caucus” or better yet, “The Mudsill Caucus.” As Abraham Lincoln reminded us, Mudsill is an economic paradigm whereby “…a blind horse upon a tread-mill, is a perfect illustration of what a laborer should be -- all the better for being blind, that he could not tread out of place, or kick understandingly.”
Laissez- faire permeates just about all the major domestic policy issues of the day. Health care is perhaps the best example where Congressional Republicans urge Americans to put their faith in the free market while simultaneously viewing any significant government involvement with health care delivery as violating their strict libertarian principles. The fact that until the Affordable Care Act of 2010 people with pre-existing medical conditions were often denied health insurance is an uncomfortable truth from which they distract and avoid at all costs.
When it comes to the regulation of finance or industry, this very same cast of characters will protest about “government intrusion” into the market. Both The Great Depression and The Financial Crisis of 2008 refute the idea that an unregulated marketplace can act effectively, responsibly, and for the public good.
When it comes to the struggle between labor and capital, again, this group, along with their cable news pundit supporters, will rail against labor by citing laissez-faire principles that truly make a mockery of just notions of the freedom to enter into contracts. With history again as our guide, the plight of Okies of the 1930s and the current state of many migrant farm workers exposed that fallacy.
We must hang the term laissez-faire around the necks of libertarian conservatives and make them wear it wherever they go. And when we do, we must shine a spotlight on the Dickensian realities of our time for all the world to see.
And yet while present-day Movement Conservatives spout laissez-faire dogma, most progressive opponents of this doctrine – liberals, social democrats and Democrats of all stripes, ranging from DLC (Democratic Leadership Council) types to New Deal-style liberals and democratic socialists – often fail to articulate a sound response. While we usually respond to the harshness and unfairness of laissez-faire doctrine, we almost always fail to offer an alternative that contains the necessary intellectual heft to carry the day.
When economics and health care are debated on cable news shows, liberals and other progressives almost always fail to rely on the fundamentals of our values. It is not enough to say that laissez-faire economics is bad; we must explain why it is bad.
Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) often come close, but they just as often stop short of making a positive case for a progressive market economic paradigm.
We do not need to reinvent the wheel. We have some powerful sources from the last century on which to draw, such as John Maynard Keynes, Robert Lee Hale, Morris R. Cohen, Richard Ely, Monsignor John A. Ryan, and Thorstein Veblen.
Reconnecting with the giants of the liberal tradition could be just the kind of intellectual juice that has been so lacking in the politics of our time. We might have much to learn from the way the architects of the New Deal took apart the avatars of laissez-faire of their era.
There was a time in the 20th century when liberals from FDR to Lyndon Johnson and Bobby Kennedy ran against such balderdash and regularly won elections. Indeed, many Republicans (Gerald Ford, Nelson Rockefeller, Jacob Javits) understood the silliness of such “free market” claims. It is not that these leaders were against capitalism or market economics – truly they were not – they just believed in a more evolved and dignified form of capitalism. They understood that the great wealth generated by this country had to be more fairly distributed. More importantly, they all understood the legal justification for doing so.
Over the past several years I have been working on a book about the state of American liberalism. One issue to which I keep returning is our inability to dominate the economics narrative. My research has led me to study the mindset of the great liberal figures of the past. And I have come to one conclusion: they all were able to make the fundamental case against laissez-faire.
They did not just characterize laissez-faire as “mean” and unjust; they articulated precisely why that was the case. It is no accident that our political leaders were familiar with the arguments put forth by great liberal economic thinkers.
They were able to take their education and rhetorical skills to explain the wonkiest ideas of these deep thinkers so that the average Americans could see for themsevles the fallacy of laissez-faire doctrine.
While that was the widely accepted argument in the mid-twentieth century, today many movement conservatives will jump up and down and will inaccurately call that “socialism.” In doing so, their shortsightedness lacks a clear understanding of being able to preserve a sturdy form of capitalism.
If liberals are to again on a regular basis win elections, we need to take away fresh lessons from the great liberal thinkers and politicians to whom we owe the foundation of our contemporary politics and the best of the policies they engendered. We clearly also need to relearn what they knew about how to effectively refute laissez-faire.
Here is a good example from Keynes.
Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive 'natural liberty' in their economic activities. There is no 'compact' conferring perpetual rights on those who have or on those who acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.
Another good example comes from Legal Realist Robert Lee Hale in 1922: “Laissez-faire is a utopian dream which never has been and never can be realized.”
In the second post in this series, we will look more deeply into the first fallacy of laissez-faire: individualism – that the public good is best served by the pursuit of individual self-interest.
Stay tuned.