Defining Home 2

Something that has struck me over the course of the global economic crisis is the overlap between groups on the “far- left” best personified internationally by the Occupy Movement, and, at least in the United States, the “far-right” whose libertarian aspirations has been best encapsulated by Republican presidential candidate Ron Paul.

In my view of things, both the Occupy Movement and Ron Paul libertarians share a great many things in common. Both represent a systematic critique of the current economic and political order along with a strong desire to change that order. This sharing of basic assumptions by those on opposite ends of the political spectrum is not entirely new. In the early part of the 20th century the Communists and Nazis both offered systematic critiques of the then current order. What gives me hope today is that both the Occupy Movement and libertarians, unlike the Communist and Nazis, set themselves firmly against the coercive apparatus of the state both in its international and domestic manifestations.

The Occupy Movement is an anti-war movement (and war is now the constant condition in which our society exists)  in that it seeks to shed light upon and undermine the current practice of real politik and the injustice of American empire. The libertarians want, quite literally, to bring all of the boys home, that is to unwind the American empire and its globe straddling military apparatus that has been in existence since the Second World War.  Members of both movements hold deep respect for the dissident Julian Assange, and are deeply troubled by the increase of the state’s powers of covert surveillance and control.

Both movements seek an end to the collusion of finance and governments and the cronyism found in the relationship between the state and corporations. They both hold that the state should have little, if anything to do with the choices of individuals, and oppose use of the coercive powers of the state i.e. imprisonment to punish people for those choices, such as drug use.

The members of both movements, also, tend to be young, no doubt a reflection of the fact that this crisis has been particularly hard on the youngest members of society many of whose aspirations for the future have been clouded or destroyed by the crisis.  However, in this sad fact also lies my hope. For, if these young people, unlike the generation of the 1960s that abandoned their critique of the system for what was largely a return to the status quo, can hold firm to their principles then they might eventually bring to the system deep and truly systematic change.

In that vein, I hope the conversation below between two young and articulate voices from both sides of the political spectrum represents, in its very small way, the beginning of a philosophical discussion that rises above the sophistry of the current regime.

The discussion was sparked by a prior post Defining Home after which I tried to bring these two deep thinking bloggers into discussion (the dialogue below in its original form can be found in the comments section there).  On the surface the two could not be more different. Giulio Amerigo Caperchi is an Italian-American living in Italy who writes the excellent blog Geaneology of Consent  which looks at current events from the perspective of the political theory and represents an excellent window into the types of ideas that underlie the Occupy Movement. Henry Moore is a fervent Ron Paul supporter hailing from Yellowstone country, and a thoughtful voice for the sentiments of libertarians who writes for the blog http://keimh3regpeh2umeg.wordpress.com/.

The discussion below lays out the differing views of the two sides on the nature of and our relationship to the free market. This is the chasm that currently separates the Occupy Movement from libertarians, and, in my understanding only when this chasm is bridged will we really have a real possibility of any systematic reform of the crumbling world of the early 21st century.

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Giulio:

One of the key assumptions running through classical liberalism and neo-liberal theory (from Adam Smith, through Hayek, up to Milton Friedman) is that the market is the only place where true, spontaneous and un-biased information may be witnessed and analysed. The market, for these economists, is a site where individuals freely interact (“trade, truck and barter” as Adam Smith said) unhindered and on a completely voluntary basis. As such it is the only place where “real” human behaviour is expressed: “reality” thus occurs in the marketplace. The market is conceived as a neutral ground devoid of ideology and political influence.

This is a tremendous assumption with far-reaching consequences. And, more importantly, it is a key ideological manoeuvre. What neo-liberals like to claim is that seeing that they derive their social policies from feedback accruing from the “neutral” free market, they are ideologically un-biased. They contrast themselves to “big-government central planning” and socialism which apply one-size-fits-all social policy to intrinsically diverse populations. The crucial point is, however, that basing social policy on the utopian idea of perfectly working, self-regulating and unbiased free markets is itself a sublimely ideological assumption. The neo-liberal free-market is a utopia as much as the communist classless society is. In this respect forcing societies to conform to the rules of the free-market is itself a one-size-fits-all policy.(Joseph Stiglitz is probably the most important economist which shows that markets are VERY imperfect and VERY biased).

This is not to say that one should be completely relativist and refuse the idea that there is nowhere that one may garner social feedback with which to inform policy. But the deconstruction of what experts and technicians call “reality”, “truth”, and “natural law” is always necessary to reveal the ideological bias ALWAYS present in any idea, concept or science.

I therefore totally agree (Rick) with your powerfully stated conclusions, namely, that there is the need for constant discussion and deliberation on these “assumptions” which inform our private and public lives. The democratization of these assumptions is critically needed to reveal their ideological underpinnings and their nature as instruments (sometimes) of domination. That is why epistemological sovereignty (mostly at the local level of course) is a key instrument of resistance and a safeguard against the excesses of what experts (be they in Washington, in a university or on Wall Street) call “truth”.

Henry:

Giulio,

To me “neoliberal” is a loaded word. One that I am not ashamed to cast about myself, particularly for “Supply Siders” and other assorted Friedmanites. I do not put myself in that camp, though as an Austrian School lay-enthusiast, I see some common ground, though not as much as I would otherwise like.

I don’t know much about what neo-liberals think in terms of whether “the market is the only place where true spontaneous and un-biased information may be witnessed and analyzed.” I guess it really comes down to how you define “market”. Markets in the purely economic sense? Or markets in the more abstract sense?

If the former, and if your claim is correct, I would say that neo-liberals are quite narrow minded. If the latter, I would tend to agree with the neo-liberals. If this more abstract, conceptual marketplace, essentially an (I am loathe to use the word) aggregation of human action is indeed the only place to witness spontaneous and unbiased information, it is precisely because of how broad an idea it is. This is where the Austrian School often faces the most criticism: the theory that all human action can be deduced using the same (or superficially dissimilar) axioms as purely economic action.

So basically, ALL human action, spontaneous or otherwise is seen as part and parcel of the marketplace (which could, in effect really be an infinite amount of smaller marketplaces). Given this axiom, it is impossible for human action to exist outside of the marketplace, by definition. Based on this, the market would be the only place to witness spontaneous information.

And then there is the question of bias. Bias exists in the market. Whether this is desirable or not depends entirely on the human actors themselves. This includes those acting spontaneously and those acting more deliberately. Those acting deliberately (such as the state, regulators, corporations) are able to cause undesirable bias by distorting the market. They cannot do this without committing, perpetuating, or taking advantage of some form of coercion, explicit or implicit. At which point the FREE part of the Free Market goes out the window.

Under ideal circumstances, which may not even be attainable on a large scale, biases that occur are simply a reflection of the decisions of market actors. I fail to see the problem. If there is good, good. If there is bad, the fault is in the actors, not the system. I don’t think most libertarians believe in the perfectibility of the human condition, which to me is the defining characteristic of a utopian ideology. And certainly most would not suggest that the Free Market alone could accomplish this. Most hold that the Free Market, whether it might be considered to have inherent flaws or not, at least is the best allocator of resources and cause of economic growth. But the main reason some prefer the Free Market has little to do with how effective it is in these areas, but instead the fact that it is the most consistent with what are seen as natural rights. Some, myself included, would still advocate the Free Market even if it was not the “best” system for allocating resources and spurring growth. It is not the practical implications that are our chief concern. It is the ethical ones.

I agree that Markets are not, as you say, “perfectly working, self-regulating and unbiased”. I do hold, however that Markets are the best of all possibilities, but this is not perfection. That markets self-regulate to a point, which happens to be the same point at which the word FREE goes out the window. That bias is not undesirable, per se.

I am sure that you and I agree more than we would disagree on many an issue, this one included. It is not my intent to argue, though I am happy to engage in discussion. I am only here to express another point of view for the benefit of this blog’s readers and to, in someone else’s words, engage in a civil exchange of ideas between bloggers.


Giulio:

Hi Henry,

Thank you for your wonderful and very articulate response. You are indeed right, we do agree on many respects.

Essentially, what I am arguing for, and the chief reason I criticize utopian strands of free-market ideology, is for the separation of the the political sphere from the economic, and the refusal of subsuming politics and the public sphere to economic imperatives.

I do not agree with the fundamental neoliberal axiom that all human action may be explained in terms of rational individuals freely pursuing their interests. Coming from a more communitarian perspective (think Michael Sandel for example), there are certain types of behaviour that cannot be rationalized through market motivations. Patriotism and sacrifice, for example, elude the idea of rational interest-motivated behaviour. The virtues informing classical citizenship, also, are not informed by market behaviour but by respect and allegiance to the public sphere and to the common good of the “demos”.

More importantly, something like the social contract and the erection of democratic a order are not a spontaneous acts arising from the state of nature (as some neo-liberals and libertarians have it -think Nozick), but a conscious political effort of collective human agency.

On the question of bias, we thoroughly agree: very few believe in the infallibility of human behaviour and that there won’t always be bias/asymmetries/coercion in our societies. I also agree that it is not inherently the fault of the free market. However, I do think that a society informed by the rationale of laissez faire is more inclined to exacerbate such power imbalances that we naturally find in the human condition.

Finally, I am not arguing against the free market per se. But I am arguing that in CERTAIN domains the free market is NOT best suited to allocate resources or inform behaviour. For example (and here comes my European bias) healthcare, basic public transportation, the military, certain infrastructure, water provision, education, and the right to food are services and issues so essential to the unity and stability of the modern nation state that they cannot be exposed to the imbalances/biases/asymmetries inherent in the free market. In addition, I do not think that the free market is always most consistent with regimes ensuring natural rights. The ethical implications of natural rights, for me, do not arise spontaneously from a system of free-markets but from a united and concerted discussion within democracies on which ethical paradigm(s) best applies to particular contexts.

 

In conclusion, I agree with your final remarks saying that markets are not perfect but that they are better than many other catastrophic politico-economic systems witnessed throughout history. But we cannot remain blind to the economic and financial catastrophe caused by unbridled and corrupt free markets (with governments thoroughly compliant of course) unfolding before our very eyes. Yes to free markets – but constant vigilance of its inherent excesses (as in all things).

I therefore think that we must have a public discussion on WHERE markets are best suited to allocate resources and promote growth/innovation/creativity, and where they are not. While I am not a fan of government regulation (and this is my libertarian side coming out), prudential limits and legislative boundaries are essential to our stability as a nation and as a united people. Therefore, as Rick says in his post, we should have a public discussion on whether the neoliberal axiom we have discussed earlier should in fact inform societal and governmental behaviour.

Many thanks for taking the time to answer my points and engage in this fruitful discussion. Indeed this is what democratic deliberation is all about. I really do think we don’t disagree that much and that we both favour a democracy and an economic order where liberty is indeed maximised.

 

Rick:

Henry,

What I am curious about is this: I know from reading your blog that you are strongly anti-interventionist in terms of the government trying to manage the economy, and hold that many of the large-scale economic crises we have experienced were brought about by government interference in the market.

But do you think this always the case? Are markets, in your view, not so much perfect as impervious to catastrophic failure insofar as they are not subject to government distortions? Has the government no or only a minimum role in cushioning the public from such crises in your understanding?

Some further questions: Do you not hold the view that what are termed neo-liberal policies have the consequence of exacerbating sharp economic inequality? If you do believe neo-liberal policies can result in rising inequality why is this inequality not a danger to the survival of the market based society you wish to promote? At some point, it seems to me, some level of equality is necessary for the survival of the market itself. Isn’t it in a sense true that this is what natural property rights are meant to protect? Wouldn’t the right to hold property contradict itself in a society where only a tiny minority actually held property?


Henry:

Rick,

Please understand that I approach Free Markets from a Libertarian position, rather than an Egalitarian one. That is, from a love of liberty (which is simply the result of others’ duty to not aggress), regardless of its consequences, rather than a love of equality (which has many forms, some of which seem not to be compatible with others, and some which may be incompatible with liberty). Having said that, libertarianism and egalitarianism are not mutually exclusive. In fact, there is a “leftist” school of thought that emphasizes both. The left-libertarians, particularly Market Anarchists argue, pragmatically, that markets are best because they lead to equality and social justice, that monopolies rarely come into existence, and that when they do, it really is because they are the best and most efficient at what they do, rather than because their cronies did them a favor. To them, it is regulations that truly cause monopolies, rather than protect against them.

More right-leaning anarchists and libertarians (such as myself) would tend to agree, but with the caveat that even if markets did lead to inequality they are still better because they do not violate the non-aggression axiom. However, my heart does bleed more than others I could name.

Wikipedia says, “Neoliberalism is an ideology based on the advocacy of economic liberalizations, free trade, and open markets. Neoliberalism supports privatization of state-owned enterprises, deregulation of markets, and promotion of the private sector’s role in society. In the 1980s, much of neoliberal theory was incorporated into mainstream economics.”

Looking at the first sentence, it would seem that the libertarian groups I mentioned above all fit neatly into this camp. But neoliberalism, especially as it has been incorporated into mainstream economics does not seem to have much common ground, apart from a few general principles, with the more fringe (anarchists, deontological minarchists) elements of Free Market advocates.

First, Neoliberalism tends to accept things the way they are, even while advocating for a change of hands, from the public sector to the private sector. If there is already a monopoly, regardless of how it got there, so long as it is not a public entity (on paper), all is well. That is their take on economic liberalization. Rather than lead to inequality, this enshrines inequality that already exists.

Second, free trade to a Neoliberal, is not free at all, it is managed, often heavily-managed trade and consistent with the ideas of a state-corporate partnership that resembles a “benign” fascism, i.e., crony capitalism, and entangling alliances. That is not to say that one form of managed trade isn’t better than another form, but to call either free trade is a mockery.


Third, the concept of an open market is not the same as that of a free market. A free market is an open market that is always subject to market forces, and in that sense they are the same.

But an open market could in theory be a part of any economic system so long as none (perhaps meeting certain requirements like competency, liquidity, and/or competitiveness, perhaps not) are denied the right to enter that market as a merchant. Also, the otherwise laudable idea that all markets should be open markets leads to the more contemptible idea that “closed” markets should be forced open. This can amount to forced trade, or at the very least trade that favors one party over the other. Another variant of legal plunder.

Fourth, privatization of state-owned enterprises, may be all well and good for things such as railroads and communications and resources, but in the case of an entity that should not exist in the first place (Federal Reserve System, Federal National Mortgage Association, Federal Home Loan Mortgage Association, to name a few), privatization is just another road of economic fascism.

And finally, deregulation can mean any number of things. It can mean deregulation of certain entities or industries and not others, which is picking winners and losers. It can also mean the removal of regulations that were in place to paper over the problems caused by other regulations, or to remove the original regulations and leave the ones that only came about as a result of the original ones, when this may be a considerably worse thing to do than to just leave them all or remove them all. This sort of occurrence is fodder for the mainstream media which can then claim that deregulation is causing economic mischief and miscalculation.

So Neoliberalism, as practiced, does seem to promote inequality. Not a gradual inequality emanating from true competition and market forces, but an already present inequality solidified and then worsened in the process of so called “liberalization.”

Inequality such as this is indeed a danger. Partly because the sheer scope of it may squeeze out competition, thus harming potential competitors and consumers, and partly because it was brought about through coercion.

Some level of equality (though I am not sure how one would measure it) may be necessary to the progression of a market based system. If different players do not at least have similar chances, the one with the best chances will necessarily end up on the top. By the same token, if their chances are roughly equal, they can compete and keep the others from crowding them out. Even so, it is very hard to maintain front runner status, even with a huge head start (in terms of resources or capital), without being artificially propped up. There will always be those smaller (unequal) entities that are just able to do things more efficiently, provided the larger entity does not have some regulatory body fixing prices in its favor, which is just one example of being artificially propped up.

Can markets have serious downturns or crashes without large scale government intervention? The answer is yes. But something (the market, to me, is not a “something”, but rather the absence of “something”, it is negative, not positive) still must be the cause. Put in place of government intervention either wide-scale fraud or groupthink. I see no reason why these wouldn’t cause problems. But there are several differences between these things and government intervention.

Whereas the failures of government intervention can be used to excuse even more of it, when fraud or groupthink occur, because they are not thought to have the same irreproachable nature as the state, they are more readily dealt with. A downturn caused by government just leads to more such intervention and more problems. Look at the dot-com boom and bust. The government’s and the Fed’s policies resulting from it led to our current housing boom-bust, and those same policies in reaction to that are now leading to a sovereign debt boom and soon to be bust. But con artists and highly speculative fads, because they do not have power over whole jurisdictions simply cannot create as big of problems. And because they are not quite so sacrosanct as the state, they will be discovered, understood, and dealt with, and will have no chance of using their own blunders to save or perpetuate themselves.

In the case of fraud, there should be laws protecting against it, but they should be defensive in nature rather than aggressive. They should not forbid every single action that could, in theory become fraudulent, as they would tend to weed out perfectly safe and moral economic actions. And in the case of irrational or risky manias, no law can protect against these. There are too many variables. Should the Dutch government have banned tulips or the cultivation of tulips or any activity related to tulips even if it had known tulipomania would lead to a bust? But even in that example, the monetary environment was distorted by debasement of the currency. Crooks and speculators (who, unlike the former, serve a valuable purpose in the market) will always exist and always be problematic, but when they are enabled with regulations protecting them from bankruptcy and granting them monopolistic privilege; or with an elastic currency encouraging their risk-taking and misallocation of resources, then doesn’t the blame fall on the enablers as well?

That the government should cushion the blows of its own making is just another way it can get its foot in the door and create more distortions. I do not think the government should have the role in bailing out industries, especially when the time is coming when the government will be the one that is in need of a handout. I am a little less inclined to criticize welfare programs for their economic effects (which, as with a bailout or stimulus, are negative), as much as for their lack of necessity. I don’t see why charity and initiative (as opposed to just one, which may be insufficient) can’t more than replace welfare programs, especially in relatively normal economic times. During a crisis, drastic measures may be more necessary, but only because of how dependent some have become during more stable conditions.

I apologize for being so long- winded in answering your questions. When I really thought about them, they were much harder to answer than I thought they would be. To be honest, I wish I could say even more, but for both our sake I will leave things as they are. I also apologize for not answering things in the order you asked them and for stringing out some of my sentences.

Rick:

Giulio,

What I am curious about is this:

I know from reading your blog that you are especially interested in finding alternatives to the current economic and social order which you find to be dominated by corporate interests which use the tools of the state for their own ends and suppress what might be called “forms of living” that emerge spontaneously and organically from the people. I am thinking here of things like peasant movements and organic farming. Knowledge, in your view, is often an instrument of power.

My questions are, though you reject the idea Henry promotes that property rights are the basis of natural rights: Is there any natural limit to the power of the state acting as an instrument of the people to demand use or regulation of the property held by individuals? If yes, what limits do you think these might be? If no, is how is this not a kind of tyranny of the public, and why will it not give rise to the same sorts of injustices and epistemological imperialism you see now originating from the free market only now from a different set of players- bureaucrats, democratic factions, ethnic groups etc?


Giulio:

I thoroughly believe that there is absolutely no natural limit to what the state’s power can be used for. Be it guided by private, ethnic, religious or public interests, the modern state remains fundamentally a coercive apparatus with absolute sovereignty over its territory and citizens (in its classical Weberian definition). If an egalitarian-minded political movement claiming to represent “the people” were to take power tomorrow morning, there would be no internal or “natural” principle limiting its power: it would most probably coercively redistribute the hard-earned property of the well-off and may very well impose its own epistemological imperialism. History is rife with such occurrences.

My central point, however, is that principles of limitation of public and private power do in fact exist. The Declaration of the Rights of Man, the Declaration of Independence, the US Constitution, along with most of modern legal orders clearly limit the power first and foremost of the state (these were, after all, documents enshrining principles defending the private citizen from arbitrary power of centralized monarchies). In addition, most of the greatest minds of the enlightenment (both liberal and egalitarian) such as Montesquieu, Locke, Rousseau, along with practically all of the American Founding Fathers saw the separation of government’s powers as central to the architecture of any democratic nation.

So the first effective limits to state power come into existence with the birth of the modern democracy. We may safely state that the aforementioned “fathers” of liberal democracies were primarily concerned with the state NOT falling into corrupt hands (be them egalitarian or private-minded). Madison’s famous essays in the Federalist Papers are a prime example of this.

The limitations to state power are therefore, in my personal opinion, not “natural” limits based on axioms of non-aggression or conceptualizations of personal and property rights as libertarians have it. Rather, they are principles born out of historical struggle and resistance against various forms of oppression (in the enlightenment it was against absolutism and aristocracy). These principles may be “self-evident” and “universal”, but they do not exist in a void: if government were to retreat to nothingness tomorrow morning we would not in fact be left with our inviolable personal liberty. Liberty, as French philosopher Foucault once said, is relational: it exists solely in virtue of its mutual recognition.

This act of recognition is thoroughly a positive act, as it is born out of political struggle and out of democratic deliberation. Indeed, the recognition of rights to one another is the basis of a democratic society, of the social contract and is the very “stuff” of democracy. Thus, any limitation to the power of the state, for me, is not based on “negative” rights but on positive democratic deliberation over what those limitations should be. Which brings me to why I do not agree with libertarian tenets. Even though I agree with libertarians in asserting that government is essentially a coercive apparatus, I don’t believe that its simple retreat will leave us with more liberty. It is not a zero sum game of: more government = less liberty; or, less government = more liberty.

In this conceptualization, when government retreats out of the individual’s life we are left with the free market. But the free market is not a “negative” domain devoid of interests, morals and values; rather, it comes laden with specifically free-market ethics and morals (or lack thereof). For example, in the domain of free markets liberty is not primarily understood as the relationship between free and equal citizens in the public sphere, but is rather defined by, and exercised through, the exchanges between rationally motivated individuals pursuing their self interest. This is a momentous change in the very conceptualization of the citizen and her/his relationship within society.

In conclusion, I therefore argue for increased democratization of the spaces in which individuals interact: be it government or free market. The principles limiting the domains and extents of the public and the private are never given but always negotiated, fought over and forged through political contention. Let us use our democratic instruments to participate in the definition of our public and private life and not retreat to what some consider a “natural” form of human existence. What some deem “natural” (as some proponents of free markets do) is, in my personal opinion, an ideological paradigm no different from the ones we are familiar with today. For me, it is better to define our nature collectively through democratic means in positive political acts rather than allowing “natural” forces -such as inequality- strip us of our personal liberty and collective self-determination.


I thank you again Rick for allowing me to be part of this enlightened discussion, and please excuse me again for this late response. And Hank, thank you for clearly stating and elegantly expounding many of the key points of libertarianism, as well as helping me understand some of its areas which I had previously not been acquainted with. Although I do not agree with all libertarian tenets, I do remain fascinated by it and will now study it in a different light.

Henry:

You guys have been great and this has been a very informative discussion.

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It is my belief that these are precisely the kinds of conversations we should be having, and I would like to make it a permanent feature of this blog to do so. If readers are interested in these types of conversations both through text, and perhaps actual discussions via SKYPE or some other medium, shoot me email: rsearle.searle@gmail.com. I hope to make this feature available on Utopia or Dystopia starting sometime this fall.


Rick Searle