Classical Liberal “Liberty” and the Dangers of Indeterminacy

Liam once again raises the proposition that libertarians and classical liberals do not have any special claim to the use of the term “liberty,” but only can claim use of one peculiar sense of the term, which then has to do battle with others. I disagree with that position. The proposition that each person is entitled to have the maximum liberty consistent with the like liberty of others is a position that only makes sense within the framework of the classical liberal system. The moment that increases in wealth through state transfers count as increases in liberty, then there is no way to preserve the like liberty between persons. The newer definition of liberty is one which lets one side be better off and the other worse off, which is, after all, what transfer systems are supposed to do.

And the difference does make a difference. The principle of freedom of contract is not idle because we believe that it can be abridged with the use of rules that improve both sides to the transaction in proportionate degree, as is often the case with formality. Nor does it become otiose if we assume that certain contracts, such as horizontal restraints on trade, should not be enforced universally because their negative effects outweigh their positive ones. The initial baseline that joint gains from contracts count as a social good is morally defensible and socially wise. No other baseline can have that result.

So much I think follows from Murphy’s last sentence, where he says, “It all comes down to the question of whether a minimum wage makes poor workers better off, and whether we care about that.” That is not the correct formulation of the problem, for it ignores the possibility that the improvement of (some) poor workers is a justification for a program that produces widespread social losses, both to other workers, some of whom are also poor, and to firms and their shareholders, and to customers and suppliers of the firms in question. The danger of Murphy’s excessive nominalism is that it now directs us to the wrong social inquiry by allowing gains to some preferred clientele to offset far greater losses to another group of individuals. Anyone who starts with a presumption in favor of freedom of contract will not make that mistake, which should be reason enough to avoid the dangerous claims of “indeterminacy” which all too often cloud social theory.

Also from This Issue

Lead Essay

  • Economics and the Distinction between Voluntary and Coercive Action by Daniel B. Klein

    George Mason University’s Daniel Klein begins this month’s lead essay by presenting evidence from a poll of economists showing that more than half of those who are in favor of a minimum wage generally don’t think it is coercive, suggesting that judgments about what is coercive or voluntary underpin professional opinion about economic policy. If so, Klein asks, shouldn’t economists address the question of coercion more directly? Klein argues that we should treat non-coercion as a maxim to be followed “ninety-something percent of the time,” which allows for the legitimacy of coercion under certain conditions. Economists may then ask: “When should we endorse the liberty maxim and when not?” in a principled way. Klein draws on ideas from F.A. Hayek and Adam Smith to argue for the centrality of the distinction between voluntary and coercive action in the ordinary practice of economic inquiry, and to urge a renewed emphasis on the role of liberty in economic theory.

Response Essays

  • Coercion as a Political Concept by Liam Murphy

    NYU philosopher and legal theorist Liam Murphy responds to Daniel Klein’s lead essay by questioning the relevance of the general concept of coercion to the defense of market institutions and disputing Klein’s particular characterization of coercion. Murphy observes that arguments in defense of markets generally appeal to pre-institutional rights or a conception of good consequences. In neither case does the idea of coercion play a key role. Further, Murphy suggests that Klein’s particular account of coercion is loaded with contestable moral baggage. But, Murphy writes, “The concept of coercion … is deeply indeterminate, with disagreement about correct usage tracking exactly the fault lines that have political significance; so there is simply no right answer to such questions as whether a labor contract for below a minimum wage, or its prohibition, is coercive.”

  • Coercive Regulation and the Balance of Freedom by Edward Glaeser

    Harvard economist Edward Glaeser agrees with Dan Klein that economic regulations, such as minimum wage laws, are coercive, and that this ought to give us pause. “For millenia, governments have abused their control over the tools of violence,” Glaeser writes. “The historical track record insists that we treat any governmental intervention warily.” However, that does not rule out coercion. “The ultimate job of the state is to increase the range of options available to its citizens,” Glaeser maintains, and well-targeted coercion can increase total freedom in this sense. “Certainly, redistribution reduces the freedom of the taxpayer but it increases the options of the recipient of governmental largesse,” Glaeser says. He goes on to argue that laws that restrict the liberty to contract, such as the minimum wage, generally are not freedom-enhancing overall and tempt government abuse.

  • Voluntary and Coercive Action: A Key Distinction in the Overall System of Liberty by Richard A. Epstein

    In his reply, University of Chicago law and economics guru Richard A. Epstein attempts to lay out an account of “justified coercion.” Taking the minimum wage as an example, Epstein sets forth and then rejects several grounds on which the minimum wage may be seen as non-coercive. He then sets forth and rejects several arguments that might justify the coercion in economic regulations such as the minimum wage. According to Espstein, state coercion in support of market institutions “is justified because it expands the envelope for gains from trade through voluntary exchange.” In general, coercion may be justified when “it is to the long-term advantage of all,” but detailed and systematic analysis of particular institutions – such as the one Epstein provides for the minimum wage – is required to establish when this is, and is not, the case.

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