A Bleeding Heart History of Libertarianism

Readers of Cato Unbound can probably recite the traditional libertarian philosophical position by heart. That position begins with the axiom that individuals own themselves and their labor. From there, it deduces the right of individuals to acquire property in external resources like land and minerals. These property rights are nearly absolute in their moral weight. Indeed, for the traditional libertarian, respecting property rights is simply all there is to justice.[1] Worries about free speech, discrimination, or the environment are, to the extent that they are legitimate concerns at all, ultimately just issues about property rights. Other purported moral issues—such as questions of social justice—are merely the product of a conceptual confusion.[2] Justice is about respecting individual property rights. To the extent that respect for property leaves some individuals poor and destitute, individuals might be called by a sense of charity and beneficence to respond. But the moral justification of free market institutions is logically independent from any claims about the effects of those institutions on the material holdings of the poor.

This view, or something like it, is often attributed to the giants of twentieth-century libertarianism such as Ludwig von Mises, Ayn Rand, and Murray Rothbard.[3] To be sure, there are other libertarians who do not fit this mold so well. Neither Friedrich Hayek nor Milton Friedman, for example, treats property rights as moral absolutes, and both allow some significant role for the state in the provision of a social safety net. But this, many think, just goes to show that these individuals were not fully libertarian, however great and important their insights into free markets and spontaneous order may have been. Mises, Rand, and Rothbard, it is assumed, are the benchmarks for ideological purity.[4]

By this standard, much contemporary academic libertarian thought seems hardly libertarian at all. “Neoclassical liberals” such as David Schmidtz, Gerald Gaus, Jason Brennan, Charles Griswold, and Jacob Levy reject the claim that justice is reducible to property rights, reject the idea that property rights are a kind of moral absolute, and embrace ideas that are anathema to the traditional libertarian view, such as positive liberty and, even worse, social justice.[5] If Hayek and Friedman represent weak or imperfect versions of traditional libertarian principles, neoclassical liberals seem to positively betray those principles.

There is a productive debate to be had regarding which of these views is more defensible on philosophic and other grounds. Our views on this question are no secret.[6] But this is not the debate we wish to enter into here. Our thesis here, and in a book we are currently writing together, is historical rather than justificatory in nature.[7] We do not argue that traditional libertarianism is wrong. Instead we claim that, from a broader historical perspective, traditional libertarianism is really not so traditional after all. Neoclassical liberalism, as novel (heretical?) as it may seem to some, has a better claim to that title. The postwar libertarianism of Mises, Rand, and Rothbard crystallized many of the insights of the libertarian intellectual tradition into a coherent body of doctrine for perhaps the first time. But in that process of crystallization not only impurities, but genuine insights were expunged. The result was a philosophic system that brilliantly exhibited some of the key elements of libertarian thought, but that simultaneously severed those elements from their original historical and economic context, and therefore presented them in a way that would have been largely unrecognizable to their intellectual forbears.

In the remainder of this essay, we will discuss one particular way that neoclassical liberalism has a better grounding in the libertarian intellectual tradition than the libertarianism of Mises, Rand, and Rothbard. It is not the only contrast, but one of the clearest and most important differences between these two schools of libertarian thought has to do with the proper nature of concern for, and obligation to, the working poor. On this issue, the neoclassical liberal position is that the fate of the class who labor at the lowest end of the pay scale under capitalism is an essential element in the moral justification of that system. And this position, we will argue, has a far more solid grounding in the libertarian intellectual tradition than the justificatory indifference to which the postwar libertarians are committed. Libertarians have long linked the fate of the working poor under capitalism to the justice of capitalism itself. Sometimes this has been done out of a kind of religious conviction; sometimes as part of a pluralistic moral philosophy that takes considerations of need and sufficiency to have significant moral weight; and sometimes out of a more general commitment to institutions that serve the interests of all persons. This last approach, in particular, has been advanced in recent times by neoclassical liberals committed to the principle of public justification, a principle with deep roots in the libertarian intellectual tradition.[8]

John Locke (1632–1704) is today widely regarded as the father of natural rights libertarianism, a direct inspiration to the likes of Rand and Rothbard. But Locke’s work stresses both the idea of public justification and concern for the poor in a way that is largely absent in these later figures. A fundamental premise of Locke’s political thought was the essential freedom and equality of human beings. There is no natural authority or subordination among men. As a result, any authority or subordination that emerges—including the kinds involved in enforcing a system of property rights—must be justifiable to each man by his own lights. Thus while Locke famously defended the right of private property, that defense was contingent upon the satisfaction of the so-called “Lockean Proviso” which required that appropriators leave “enough and as good” for others.[9] The point of this proviso, in Locke’s own words, was to ensure that property was not appropriated in a way that caused “any prejudice to any other man.” For Locke, it was an essential element in the justification of a system of private property that even the poorest would do well in it. Thus, “a day labourer in England,” Locke tells us, “feeds, lodges and is clad” better than a king in America—that is, a (naturally bountiful) place where this system is not in place.[10]

Adam Smith’s (1723–1790) concern for the laboring poor was central to his attack on mercantilism, a system that Smith thought exploited the poor and prevented social mobility. Arguing for his system of natural liberty, Smith defines the “opulence” of a nation in terms of its ability to provide real opportunities for citizens of every class. “It is but equity, besides, that those who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.”[11] Indeed, Smith was so concerned to demonstrate the positive material effects of commercial society upon the poor that contemporaries such as Robert Malthus criticized him for insufficiently differentiating between the wealth of nations and “the health and happiness of the lower orders of society.” In other words, Smith’s problem was that he cared too much about the poor.

If classical liberal luminaries such as Locke and Smith defended market society by referring to the material benefits of this system to the poor, why does this tradition still get such a bad rap for neglecting the less fortunate? If we are looking for someone to blame, there is probably no easier target than Herbert Spencer (1820–1903). In colorful, attention-grabbing language, Spencer sometimes expressed contempt for the dissolute and dishonest elements within the lower socioeconomic classes, elements for whose lot there could be only one remedy. “If they are sufficiently complete to live, they do live, and it is well they should live. If they are not sufficiently complete to live, they die, and it is best they should die.”[12]

But even for Spencer, libertarian political institutions were justified on the basis of their ability to serve the common interests of all classes, not just the wealthy. In a fascinating exchange with the socialist H.M. Hyndman, for example, Spencer conceded that their disagreements were largely about means, not ends.[13] And even regarding means, Spencer was more willing than is generally recognized to call for acts of positive beneficence and concern for the poor when doing so was necessary to prevent unnecessary suffering—that is, suffering that served no educative or other salutary purpose. Men who suffer as a result of “accidents” and “unforeseen events, men who have failed for want of knowledge inaccessible to them, men ruined by the dishonesty of others, and men in whom hope long delayed has made the heart sick” ought to be helped. And “even the prodigal, after severe hardship has branded his memory with the unbending conditions of social life to which he must submit, may properly have another trial afforded him.”[14] Those misled by the popular description of Spencer as a “Social Darwinist” are likely to miss the key fact that, for Spencer, the overriding moral goal was to facilitate the evolution of society to a point where the interests of all persons are harmonized. Capitalism is not about the triumph of the strong over the weak; it is about the triumph of all over a state of society in which the interests of some are advanced by predation against others.

But then what about the archetypes of libertarianism themselves—Mises, Rothbard, and Rand? Just how far did they deviate from the principles and concerns of their intellectual predecessors?

During the Progressive era, Mises complained that advocates of the New Liberalism “arrogate to themselves the exclusive right to call their own program the program of welfare.” Mises regarded this as “a cheap logical trick.” The fact that classical liberals do not rely upon direct, state-based programs to distribute benefits does not mean that they are any less concerned for the poor.[15] Defending his preferred system of economic liberty, Mises wrote: “Any increase in total capital raises the income of capitalists and landowners absolutely and that of workers both absolutely and relatively… The interests of entrepreneurs can never diverge from those of consumers.”[16] If capitalism benefits the poor not just in real terms but also relatively to the wealthy, then capitalism is especially beneficial to the poor.

Mises’s critics (and some of his defenders) read Mises as whitewashing an uncompromising system of economic liberty with the idle hope that such a system maximizes productivity. On this reading, it is overall productivity that Mises cared about, and the distributional pattern that results is something about which Mises cared not one jot. However, notice what Mises did not say. He did not say: “The institutions of commercial society generate the greatest aggregate wealth and so, even though such institutions predictably deposit 20 percent of the population in a position of hereditary inferiority, this is A-OK.” Instead, Mises thought capitalist institutions justified, at least in part, because he believed a society-wide system of voluntary exchange will be materially beneficial for all citizens. Inequalities are justified, Mises seems to have argued, at least in part because they work to the material benefit of the least well off.

Indeed, Mises was explicit about the normative role he saw such claims playing within his defense of the free society. Thus: “In seeking to demonstrate the social function and necessity of private ownership of the means of production and of the concomitant inequality in the distribution of income and wealth, we are at the same time providing proof of the moral justification for private property and for the capitalist social order based upon it.”[17] The social function of inequalities—the benefits they provide to all, especially the poor—is an essential element in their moral justification.

It is no surprise, therefore, that when describing man’s role as a member of a (properly) liberal social order, Mises declared that each person “must adjust his conduct to the requirements of social cooperation and look upon his fellow men’s success as an indispensable condition of his own.”[18] Society, according to Mises, is a cooperative venture for mutual gain. In a good and just social order, people look upon the special talents of the fellow citizens not as weapons to be feared but as in some sense a common bounty. Economic competition is a morally praiseworthy form of social cooperation at least in part because it channels the talents of each towards the production of benefits for all.

Rothbard’s moral appraisal of capitalism was far more philosophical than that of his mentor, Mises. And Rothbard was sometimes insistent on the point that concerns about the welfare of the poor played no formal role in the moral justification of a free market. The fact that respect for natural rights yields economic prosperity that benefits all is a “fortunate…result.” But even if some other system could be shown to be more productive, the libertarian would still defend capitalism as the only moral economic system.[19] And what if libertarianism were not only less productive than rival economic systems, but actually led to the results sometimes forecast by Mises’ intellectual opponents? What if it led to the immiseration and exploitation of the working classes? Rothbard did not address this possibility explicitly, but the logic of his position suggests that this too would be irrelevant.

Of course, Rothbard did not actually think that free markets were bad for the poor. Quite the opposite. “The advent of liberty,” he wrote, “will immeasurably benefit most Americans.” If the government would get out of the way, the productive energies of citizens of every economic stratum would be unleashed. According to Rothbard, “the result will be an enormous increase in the welfare and the standard of living of everyone, and most particularly of the poor who are the ones supposedly helped by the miscalled ‘welfare state.’” A reduction in taxation, Rothbard emphasized, “would benefit the lower income groups more than anyone else.”[20] The only ones who would lose would be the politicians and crony capitalists who had been feeding at the public trough.

As for Ayn Rand, few would accuse her of being a bleeding heart libertarian. And yet, even here, and especially in her novels, we find something like a commitment to the norms of public justification and concern for the poor.[21] In Atlas Shrugged, Rand’s hero John Galt leads the productive and talented members of society to go on strike as a protest against the politics of increasing socialism and the morality of altruism that, in her view, underlies it. But nowhere in this novel do we find the suggestion that socialism is actually good for the poor. Instead, Rand presented us with a world where socialist economies are independently collapsing of their own weight. John Galt’s strike in the United States merely hastens the inevitable. And who suffers from these collapses? Not the talented. Precisely because of their productivity, they are able to build happy lives for themselves in the political isolation of Galt’s Gulch. The person who suffers is Eddie Willers—the average man of no exceptional talent. Willers suffers most from the collapse of society in Rand’s novel precisely because he is dependent on the productive for his survival and flourishing. More precisely, we might say, the average man depends on a social system that draws forth the productive energies of the talented in a way that benefits him and society at large.

Is this a part of the justification of capitalism for Rand? Not in her explicit philosophical writings. In those writings, Rand, like Rothbard, seems to have taken the view that the sole justification of laissez-faire is its respect for the natural rights of man. The fact that capitalism benefits the least well-off is just a happy coincidence. It’s a nice thing, perhaps, that we live in a world where the interests of the poor are not in conflict with the demands of morality. But the fact that capitalism serves the interests of the poor plays no role whatsoever in its moral justification.

What distinguishes the postwar libertarians in our view, what makes them in many ways the paradigms of libertarianism, is their enthusiasm for synthesis and systematization. But system-building has its costs. One of the costs is that insights that do not fit neatly into one’s axiomatic worldview are discarded. The history of prewar free market thinking, we contend, contains moral resources that are worth recovering—even at the cost of conceptual simplicity. The classical liberal tradition of Locke, Smith, and Spencer, for example, gave great weight to property rights in a way that checked governmental power. But none of the early liberal thinkers treated property rights as moral absolutes, and thus none of them was forced by axiom to deny that concern for the poor was a legitimate consideration in institutional design. We believe that classical liberalism, not axiomatic libertarianism, is the true heir of the liberal tradition.

Our impatience with axiomatic deductions does not require a rejection of principled argument, of course. It does not require that we discard the ideas of rights and duties and desert in favor of an anemic consequentialism. Hayek and Friedman themselves, perhaps, too often waved their hands at a naïve form of consequentialism when sophisticated moral analysis was called for. And their arguments often contained loose ends, not fully explaining why they allowed some market interventions but not others and thus lending an ad hoc air to their libertarian positions. But none of this shows that a sophisticated and principled philosophical analysis cannot be provided, only that Friedman and Hayek didn’t do it (and who can blame them?). And recent work in neoclassical liberalism illustrates the varied forms that principled analysis of this sort might take.[22]

Likewise, free marketers should not be afraid to express a principled concern for the poor, or even to commit themselves to an ideal of social or distributive justice. First, in its philosophically most sophisticated formulations, such as that of left liberal paragon John Rawls, social justice concerns the material condition of the lowest paid workers—not that of idle surfers, coffeehouse Marxists, the unemployable, or even the temporarily unemployed. Second, social justice is not a property of the particular distributions that emerge in a society but of social and economic institutions viewed as integrated wholes. Thus a commitment to social justice in no way commits one to advocating liberty-limiting “corrections” of emergent distributions on an ongoing basis.

We believe that Robert Nozick’s critique of “patterned” conceptions of justice obscured this point. But this is the feature of social justice that led Hayek, in our view correctly, to state that his differences with Rawls about social justice were “more verbal than substantive”.[23] Third, and as a consequence, a commitment to social justice does not require that one advocate “big state” welfare programs or anything even close. A set of institutions might well satisfy the requirements of social justice without including any state-based “redistributive” apparatus whatsoever.[24] After all, what are these requirements of social justice? According to Rawls, social justice allows for material inequalities, even extremely large and growing inequalities, provided only that the overall system works in a way that is beneficial to the lowest paid workers (that is, if the lowest paid workers in capitalist societies, over time, tend to earn more than the lowest paid workers in any noncapitalist alternative, then capitalist societies are better from the perspective of social justice).

This, then, is the gold standard of contemporary theorizing about social justice. The great historical defenders of commercial society such as Locke and Smith were all writing before social justice had been adequately defined. But seeing the theory of social justice now at hand, Locke and Smith would not hesitate to send out their free market institutions to battle the socialists and welfare statists for that crown. Inspired by their example, today’s bleeding heart libertarians stand ready to pick up their historical standard, and to carry it forth. Property rights, limited government, and social justice. Why not?

Notes