The biggest problem with Stanford's curriculum is the widespread casual acceptance of communist error. If only it were a glaring problem, but it is largely invisible. Worthy publications like The Stanford Review protest "liberal bias." Once in a while someone like Dinesh D'Souza notes that what gets called "liberal" in popular parlance is actually illiberal. No one is using the "C" word, either at stanford or in public discussion generally.
We should be. Oh for the pre-New-Deal days when the socialization of retirement was scorned in Congress as exactly what it is: an increment of communism. Now we have the largest and most regressive tax ever conceived by man, transferring 13% of every paycheck to the wealthiest cohort of Americans and we call it apple pie. Economist Martin Feldstein estimates that to receive today's level of Social Security retirement benefits, young workers would only have to put 2.5% of income into funded retirement accounts, instead of the 18% that Social Security will require (The Public Interest, Winter '98). Incredibly, President Clinton can still get a standing ovation for making Social Security the centerpiece of his State of the Union address!
This magnitude of inefficiency is why Soviet communism collapsed, yet our own society is riddled with the same error and no one labels it. Part of the reason is the tragic story of how American communists and their sympathizers were able to turn the tables on anti-communism, parlaying the excesses of McCarthyism into a protected status for communist ideology while successfully casting anti-communism as the un-American ideology.
More fundamentally, though, increments of communism have escaped the communist label because there has been a failure to identify the essential communist error. This is not entirely for lack of trying. There is a genuine conceptual difficulty that arises. We can't just call all socialism communism. There are large areas of desirable cooperation that cannot be coordinated by private agreement. We need social decision-making (government) to manage a variety of important tasks. That is, we need a certain amount of socialism. The issue becomes one of how much government -- a little more, a little less -- but if it is all a matter of degree, the distinction between ideologies no longer seems so stark.
Economics can go a long way toward restoring clarity by identifying those circumstances under which agreement between private parties (the market system) is not able to efficiently coordinate behavior. When such "market failure" occurs, we can look for ways that government might be able to do better. Where it can, that suggests a proper role for government.
The limitation of this approach is that it does not say anything about where value comes from. Efficiency is just stated with respect to whatever objectives people happen to have, thus it is subject to all the contempt that elitists always have for other people's purposes.
To give substance to the economic analysis, we need to account the role and importance of liberty. Liberty is the great engine of value in the world. It is what allows people to pursue their discoveries of value. Take away people's liberty and they cannot be productive. They cannot create their lives or make their contributions. Only with liberty can people make progress in the discovery and pursuit of valued ends. That makes liberty the necessary foundation for valuing peoples choices, which establishes the priority of liberty as a fundamental principle.
This understanding is deep and broad in Western thought. Conservative thought is generally framed in terms of individual liberty and responsibility (with emphasis on responsibility perhaps, but as the corollary of liberty). Even most "social conservatism" is of this sort. Only a small fraction of conservatives have serious conflicts with liberty, and only then with sex and drugs and abortion. On the other side, among egalitarian liberals, the dominant figure is my father, who asserts the priority of liberty as his first principle of justice, lexically superior to any and all distributional concerns.
This goes back, on both sides, to the classical liberalism of Locke and Mill. Without liberty, choices have no sanction. Whether the ultimate source of value be religious or mundane, it is only meaningful if embraced through liberty of conscience, and can only be empowered by liberty of action. This is universal in the moral understanding of the West, except amongst communists, who have no moral understanding.
Communism, as the conceptual opposite of liberty at every level, is the ultimate anti-Americanism. It believes that economic liberty (capitalism) is inherently evil and only becomes a force for good to the extent that it is channeled and constrained and directed by the force of government. Government is seen as the one inherently good force -- the voice of social conscience -- in a world of hateful, bigoted, or merely selfish private interests.
The United States Constitution is premised on the opposite belief: that individual liberty and agreement are the source of all good and government is the necessary evil that must be constrained at every turn. Government is the embodiment of force and the opposite of agreement. It can and must be subordinated to agreement through the system of democracy, but its essential nature as force can never be transformed. Thus it is to be empowered only where necessary. In contrast, liberty is to be constrained only where necessary. This is the form that the priority of liberty ends up taking: it imposes a necessity test on every limitation of liberty.
We understand in the large that liberty and communism are opposites. We need to recognize this in the small, and the priority of liberty gives us a tool for doing this -- for distinguishing necessary socialism (the proper roles of government) from communism. Stated simply: EVERY VIOLATION OF THE PRIORITY OF LIBERTY IS AN INCREMENT OF COMMUNISM.
Karl Marx, the founder of Communism, tried to de-humanize the market system by calling it "capitalism." A more accurate name would be "the economic system of economic liberty," since it is is the product of agreements between individuals. This is a characterization which, inexcusably, students are unlikely to hear even in an economics class at Stanford. Yet it is critical because it provides the necessary backbone for giving decisive weight to the economist's analysis of the proper role of government.
When confronted with a possible case of market failure, the proper role of government is to make liberty work, not supplant liberty, otherwise an increment of communist government is manifest. What government should certainly do is supply those remedies that can eliminate market imperfections: externalities can be internalized, transactions costs reduced, force and fraud and anti-trust attacked. (Note that anti-trust "makes liberty work" by curtailing some economic liberty, so it must be pursued judiciously. Attacking market power generally would kill the patient. The Hippocratic Oath applies.)
Where markets cannot be made to work, as with genuine cases of public goods, government should try to properly account shadow prices between the wider economy and the good in question, to mimic what economic liberty would achieve in the absence of market failure. It should collect the information that markets would collect and compile and use this information as an efficient market would use it. Throughout, government should only do what is necessary to mimic liberty while doing the least possible harm to liberty itself.
A caveat is that, at some point, need compromises basic liberty, so that people's choices in a market economy cannot be assumed to be expressions of liberty. You can always tell a communist because they make broad assertions about markets (economic liberty) not reflecting liberty and use that as an excuse for supplanting economic liberty with socialism. They pretend that the way to pursue value is to move away from the system of liberty instead of to make it work. The communist tries to interpret every difficulty in achieving liberty as an invalidation of liberty as a criterion, which is of course a non sequitur. But this is typical of violations of the priority of liberty. They all stem at bottom from a failure or refusal to understand that liberty is the source of all value. (Even religiously concieved value can only flow via liberty of conscience -- read Locke's letters on toleration). Instead of making a commitment to liberty, and seeking to enable it, the communist sees liberty as an obstacle to his own impositions.
The proper way to make liberty work, when questions of need arise, is to answer claims of need via safety nets, constructed on market principles, that offer basic aid and, to keep the books straight, bill it to the account of the recipient, to be paid back according to ability to pay over the recipient's life. Such a system affords all necessary aid while preserving incentives not to take aid that is not truly needed.
Increments of communism are the great enemy today, both in policy and in the academic curriculum (I knew I'd get back to the curriculum before I was done). The priority of liberty affords a bright Excalibur for pursuing the infestation of communism into every niche where it is ensconced and cutting away the communist error.
(Alec Rawls is pursuing a Ph.D. in economics)
Next article in Liberty volume of Moral Science: Monopoly Capital
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