About this Issue

This month’s issue digs deep in political theory. To get readers thinking in the right frame of mind, let’s consider two questions.

First, if the government stopped existing tomorrow, would you still own your property? A simple answer might be: You’d hope so. Even if you didn’t have any guarantees of it, you could still make the moral claim, couldn’t you? Or does it really all depend on the state, whose disappearance would throw your ownership claim into confusion?

Second, suppose your neighbors voted by all the appropriate democratic forms to take away your property. Would their claim be stronger than yours, even if you had paid for it and cared for it over the years? Which political claims are sufficient to deprive a person of property? And which are not?

The nature of property rights affects everything around us. But as this month’s lead essay shows, defining property itself can be a contentious act. Do property rights come merely from the state, or are they pre-political? Lead essayist Daniel Klein asserts that much of the modern, social democratic state depends implicitly on overlordship — the idea that the state is the ultimate owner of all property, even if the state is kind enough to assign you certain items for a really, really long time.

Without relying on some kind of overlordship, Klein suggests, social democracy wouldn’t be able to get off the ground. His claim has widespread implications, not just for social democracy, but for social contract theory and for the very idea of government by consent of the governed. To discuss this radical re-casting of the modern state, we have invited political economist Matthias Matthijs of American Universtiy, libertarian theorist David D. Friedman of Santa Clara University, and property law expert Ilya Somin of George Mason University. Each contributor will have a different perspective on Klein’s ideas, and, perhaps with this issue more than most, the room for discussion is vast. Be sure to subscribe via RSS or stop by often as the month progresses.


Lead Essay

Against Overlordship

Libertarians and conservatives say that Obamacare forces you to buy health insurance. Folks of the left are apt to shrug at calling it force. If they engage the matter and object to calling it force, the objection entails something like the following: “No one is forcing you. If you don’t want to buy health insurance, fine, leave the country. No one is stopping you.”[1]

The left may continue: “There are no natural property rights. Property is a set of permissions, a bundle of rights, determined by the government and delegated to you by the government. When a rearrangement of the bundles would be good, that’s what the government should do. ‘Your’ property rights are simply whatever permissions result from the process.”

Let’s enter into that way of thinking, follow through on it, and surface its presuppositions.

Although they may not be fully conscious of it, progressives and social democrats are saying that everything is owned by the state. Or, perhaps, that the substructure upon which topsoil, buildings, and other things sit is owned by the state. Either way, simply by being in the United States, you voluntarily agree to all government rules.

In 1911, the influential British author L.T. Hobhouse explained: “The State is vested with a certain overlordship over property in general and a supervisory power over industry in general.”[2] In 1910, Hobhouse wrote: “[T]he Progressive ‘trend’ is…towards making England the property of the English nation…by the…application of the principle of public overlordship.”[3]

The dictionary defines “overlord” as “a person who is lord over another or over other lords,” as in “to obey the will of one’s sovereign and overlord.”[4]

I believe that President Obama sees himself as the duly appointed officer of the overlord. This overlord is the collectivity called “the people” or “the state.” It is one big voluntary club. Its officers are government officials. Its central apparatus consists of governmental institutions. Its official expression is government law: legislation, regulations, executive orders, and court rulings.

In a commencement address at the University of Michigan in 2010, President Obama explained: “[I]n our democracy, government is us. We, the people … [applause.] We, the people, hold in our hands the power to choose our leaders and change our laws, and shape our own destiny.”[5]

The state’s dominion is the entire polity. As long as you are in the United States, according to the progressives, it is your contractual obligation to abide by the rules. You believe in honoring contracts, don’t you?

At the end of the nineteenth century, a number of factors conspired to debilitate liberalism and thrust collectivism forward. A new generation of writers openly declared state overlordship.

Ernest Belfort Bax, a British writer, wrote in his 1891 book Outlooks from the New Standpoint: “Liberty, in any society, is inseparable from property. Good, but this does not say it is inseparable from private property. … No! liberty may be inseparable from property, but nowadays it is assuredly inseparable from the common holding of property by the community.”[6]

In his 1894 book The Sphere of the State, the American writer Frank Sargent Hoffman explained: “The natural right to property, therefore, is ultimately resolvable into a State right. The people, as an organic brotherhood, are to decide what disposition is to be made of all property. … The supreme ownership of all the natural sources of property is with the State. The land, the water, and the air, and all that they contain are the common possession of the race. They are under the supreme control of the whole people in their organic capacity as a State.”[7]

Coming out of an age when liberal formulations were well established, the collectivists of 1890 had to state bluntly the key precept of their thinking.

In the 1882 book The Coming Democracy, the British author George Harwood put it this way: “As no man gave the land, so no man can be allowed to take it away, for the nation has rights over it which no private titles can ever annul. The Coming Democracy will unflinchingly assert these rights.”[8]

The overlordship scheme makes a kind of sense. Look carefully at the word “lord.” If you rent an apartment, you enter into a contract with the landlord. The apartment is owned fundamentally by him. The contract carves out certain subdominions to you as tenant. Only figuratively is the apartment “yours.”

If the apartment complex has a no-smoking rule and you have agreed to the terms and conditions of the rental contract, you have not surrendered ownership of your lungs or your cigarettes — you are free to exit the contract and take your lungs and cigarettes elsewhere. But as long as you remain within the envelope of the contract, the lord’s domain, you are contractually bound by those restrictions.

Many religious people feel that the heavens and the earth are the property of God — the Lord. Some conservatives take an illiberal turn by saying that laws against obscenity and drug use, for example, are not violations of liberty, because in those unsavory activities you — a soul – mess with God’s stuff — perhaps the implicit promises or obligations God holds against you while your corporeal person dwells within his domain. For some religions, bans on such ungodly behavior are like bans on murder, theft, or breach of contract.

For social democrats, the state is the overlord and the polity its dominion. By remaining within the polity we voluntarily agree to the governmental laws. Social democrats today spell it out only rarely. Stephen Holmes and Cass Sunstein hold that “Private property [is] a creation of state action,”[9] “laws [enable property holders] to acquire and hold what is ‘theirs.’”[10] Holmes and Sunstein say that we voluntarily enter into the government’s laws, and they liken the matter to entering into the bylaws of a corporation.[11] The title of their first chapter declares, “All Rights Are Positive” — that is, all rights are created by the government and exist only insofar as the government laws recognize them.

In their work on “libertarian paternalism,” Sunstein and Richard Thaler quietly eradicate the distinction between voluntary help, instruction, consideration, and propriety, on the one hand, and coercive government paternalism on the other. Otherwise, in applying “libertarian paternalism,” they would object vehemently to a vast array of long-standing restrictions. To them there is no distinction between voluntary proprieties, default rules, and so on, on the one hand, and laws like drug, sex, and gambling prohibitions, occupational licensing, and the pre-market approval of drugs, on the other. To them, all such rules are enveloped within the people’s club of the polity, which you voluntarily consent to by being within the polity. That’s why, for example, they can view “cooling off” laws as “libertarian.”[12] The underlining presupposition of overlordship — which obliterates libertarianism — is what has made their “libertarian paternalism” so popular in leftist quarters.[13] Holmes and Sunstein say that libertarian ideas of liberty are just “fairy tales.”[14]

Today such candor is rare, but in 1900 it was common. Hobhouse wrote: “The ‘right to work’ and the right to a ‘living wage’ are just as valid as the rights of a person or property.” That statement can make sense only on the view that everything within the polity comes within a contract with the overlord.

The issue all turns on the configuration of ownership. According to Hobhouse and Sunstein, the envelope or groundwork — the substructure – of the political jurisdiction is fundamentally owned by the state. One way to think of that is that the state fundamentally owns all the land within the polity. Another way would be that it owns the substructure within which each plot of earth is situated — you own the soil, perhaps, but the state owns the “flower pot” within which your soil sits. Either way, the social-democratic state claims overlordship.

According to the social democrats, the state is to the polity what the landlord is to the apartment complex, or the owner is to his hotel, or the employer is to his workplace. That is the collectivist configuration of ownership.

But the original liberal configuration was individualistic. It is your land, your house, and your money, just as surely as they are your hands and legs. And you have not entered into a contract with any supposed overlord. David Hume (1711–1776) and Adam Smith (1723–1790) explicitly rejected “social contract” theories of political authority. They held that government has a certain authority, but it is by convention, from necessity and utility, not from overlordship and hence not from any supposed contract with an overlord.[15]

You naturally claim ownership of your own person. The claim springs, at least in part, from the uniquely intimate knowledge and control of your bodily processes; it springs from the constitution of your being.[16] Related principles apply to our inanimate property: Hume wrote of possession, occupation, prescription, accession, succession, and transference by consent.[17]

Today’s ownership of land derives from the lineage of past ownership, all rooted in recognitions based on principles like those that make self-ownership natural. The liberal principles reject the idea that somehow, some time long ago, the king or “the people” established ownership of the entire area that now constitutes a country. The liberal position holds that either there is no envelope, no substructure, or, if there is, such substructure is unowned, like the stratosphere. Hence there is no owner-host saying “Conform to my rules or get off my substructure.”

Sometimes the lineage becomes murky, especially after decades or generations have passed since land was conquered or expropriated. But one of the focal principles of natural ownership is that history eventually forgets, as David Hume discusses.[18]

In civilizations like ours, the liberal principles exist independently of whatever the government’s laws happen to be. We all understand that, according to what Smith called natural jurisprudence,[19] slaves in the antebellum South owned themselves — even though that ownership was privately and institutionally desecrated and trampled. We understand that alcohol prohibition, even while duly enacted, was a trampling of liberty. Your stuff is delineated and socially deemed as yours by what we might call natural focal points and natural conventions. My marijuana is my marijuana, and I have not entered any contract with “the people” or any other overlord not to smoke it.

Yes, there are conflicts between competing sets of focal points, but the Smithian view of things remains and stands firm. Decades prior to the abolition of the slave trade in the British Empire in 1807, and the abolition of slavery in 1833, Smith described slave traders as “wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.”[20]

These natural conventions inhere in the idea of individual liberty. The contours of liberty were, for Hume and Smith, pretty much like the contours for a modern day libertarian.

For Hume and Smith, however, conventions arising from necessity and utility also recommend a degree of acquiescence to government and concede a sort of authority to government. The general rule is that we do not tolerate coercion, but a further convention is that we make one special exception: the government.

Thus we find a difference between Hume and Smith, on the one hand, and some libertarians, on the other. For Hume and Smith, the ethical claims for liberty were less definite, less categorical. For them it is a maxim: it allows of exceptions and it carries only a presumption. In contrast, some libertarians, for example in the tradition of Murray Rothbard, make their claims for the liberty principle more categorical, more axiomatic.[21] Here I prefer Hume and Smith.

And now the important point: Such exceptions to the general rule, such concessions to government, do not make the government overlord of the polity. The liberty principle is a natural principle, antecedent to and independent of government rules. We are, individually, lords of our stuff, and that understanding was conveyed in liberal language.

When the government institutionalizes the taking of our stuff, even if we do not call it “extortion,” we nonetheless will not call it contract or voluntary agreement. We call it taxation. The liberal semantics make a category special to such governmental affairs, including also restrictions and interventions, recognizing them as neither criminal nor consensual. Taxation and intervention are not criminal, but they are coercive and they should bear the burden of proof.

The formulations of Hume and Smith and others developed in the words of liberalism. The semantics recognized one’s claim to being left alone; they carried a presumption of liberty.

From The Theory of Moral Sentiments in 1759, Adam Smith was celebrated and paramount within his cultural setting — a setting that was itself a cultural peak within Europe. And The Wealth of Nations in 1776 ensured him a large influence. The American founders took his works as reaffirmation of their basic tenets, and the new nation’s liberal ethos was greatly influenced by his work.[22]

But the liberalism of Hume and Smith was subverted, particularly after 1880. In came a tide of collectivism, of progressivism, of socialism and social democracy. The words liberal, liberty, freedom, justice, contract, property, rights, equality, and equity were defiled and hijacked. Those words have fallen to social-democratic meanings, or just confusion.

All of the changes in meanings come down to the one linchpin: the shift from the individualist to the collectivist configuration of ownership.

Suddenly, before people knew what hit them, it was the age of overlordship. In examining the shift in semantics, Friedrich Hayek aptly quoted Confucius: “When words lose their meaning, people will lose their liberty.”[23]

By the end of the 1930s, the old liberals were devastated. The shift was generational, the youngsters thinking differently than the seniors. The social-democratic tide still engulfs us. For 100 years the elites have worked primarily in the social-democratic semantics.

Is it too late to throw off the idea of overlordship? Is it too late to restore the individualist configuration of ownership?

This brings us to an irony. If conservatism is about conserving something precious, that something is not the array of institutions of the past, which included slavery, the denial of women’s individual rights, the trampling of Native American rights, and the U.S. postal monopoly. If conservatism is about conserving something precious, it is a system of language and discourse, a system rooted in the individualist configuration of ownership. The irony is that within that system of language, the philosophy that opposes overlordship is called liberalism. If conservatism is serious about the individualist configuration of ownership — a big if, to be sure — then its aspiration is to restore its identity as liberalism.

History teaches that great ideological change must be generational. What happens next depends mainly on the rising generations.


[1]Acknowledgements: For invaluable help in gathering material used here, I thank Ryan Daza. For inspiration I thank Don Boudreaux. For valuable comments I thank David Henderson and Niclas Berggren. For support for research on the themes of this essay, I thank the Mercatus Center at George Mason University.

[2]Hobhouse (1911, 209-210), italics added.

[3]Hobhouse (1910, 359), italics added.

[4] This definition of overlord is found at dictionary.com (accessed 2 September 2010), and the citation there is to Random House Dictionary, Random House, 2010.

[5] Obama 2010.

[6] Bax (1891, 81).

[7] Hoffman (1894, 56-57).

[8] Harwood (1882, 171-72); italics added.

[9] Holmes and Sunstein (1999, 66).

[10] Holmes and Sunstein (1999, 230).

[11] Holmes and Sunstein (1999, 210, 217).

[12] Thaler and Sunstein (2008, 250-51).

[13] Thaler and Sunstein (2008). For an exchange on “libertarian paternalism” that focuses on the underlying semantic issue see Klein (2004a, 2004b) and Sunstein (2004).

[14] Holmes and Sunstein (1999, 216).

[15] See Hume (1740, 484-569, esp. 490, 548, 567), and in Hume 1987 the essays “Of the Original Contract” and “Of Passive Obedience”; Smith 1978, 315-319, 321,401-404; 1790, 80, 159-66, 252-253, 318, 340-42; 1976, 416-17, 710-714.

[16] See Hume (1740, 522-567); Friedman (1994).

[17] Hume (1740, 501-516).

[18] See Hume (1740, 507ff).

[19]Smith (1790, 218, 340, 341).

[20] Smith (1790, 206-207).

[21] See Rothbard (1982). Although I reject Rothbard’s categorical claims for liberty, I generally embrace his definition of liberty, as represented by the various explorations and characterizations given in Rothbard (1982).

[22] See Appleby (1992, 3, 4, 9, 323).

[23] Hayek (1988, 106).


Appleby, Joyce O. 1992. Liberalism and Republicanism in the Historical Imagination. Cambridge: Harvard University Press.

Bax, Ernest Belfort. 1891. Outlooks from the New Standpoint. London: Swan Sonnenschein and Co.

Friedman, David D. 1994. “A Positive Account of Property Rights.” Social Philosophy and Policy 11(2): 1-16.

Harwood, George. 1882. The Coming Democracy. London: Macmillan and Co.

Hayek, Friedrich A. 1988. The Fatal Conceit: The Errors of Socialism. Chicago: University of Chicago Press.

Hobhouse, L.T., “Contending Forces,” English Review VI (1910): 359-71.

Hobhouse, Leonard T. [1911] 1994. Liberalism and other Essays. Cambridge, MA: Cambridge University Press.

Hoffman, Frank Sargent. 1894. The Sphere of the State. New York: G. P. Putnam’s Sons.

Holmes, Stephen and Cass R. Sunstein. 1999. The Cost of Rights: Why Liberty Depends on Taxes. New York: Norton.

Hume, David. 1740. A Treatise of Human Nature. Ed. LA. Selby-Bigge, with text revised by P.H. Nidditch, second edition. Oxford: Clarendon Press, 1978.

Hume, David. 1987. Essays: Moral, Political, and Literary. Ed. E.F. Miller. Indianapolis: Liberty Fund.

Klein, Daniel B. 2004a. Statist Quo Bias. Econ Journal Watch 1(2): 260-271.

Klein, Daniel B. 2004b. Reply to Sunstein. Econ Journal Watch 1(2): 274-276.

Obama, Barack. 2010. Remarks by the President at University of Michigan Spring Commencement. May 1.

Rothbard, Murray N. 1982. The Ethics of Liberty. Atlantic Highlands, NJ: Humanities Press.

Smith, Adam. 1790. The Theory of Moral Sentiments. Edited by D.D. Raphael and A.L. Macfie Indianapolis: Liberty Fund, 1982.

Smith, Adam. 1976 [1776]. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by R.H. Campbell and A.S. Skinner. Oxford: Oxford University Press. Indianapolis: Liberty Fund, 1981.

Smith, Adam. 1978. Lectures on Jurisprudence. Edited by R. L. Meek, D. D. Raphael and P.G. Stein. New York: Oxford University Press.

Sunstein, Cass R. 2004. Response to Klein. Econ Journal Watch 1(2): 272-273.

Thaler, Richard H. and Cass R. Sunstein. 2008. Nudge: Improving Decisions About Health, Wealth, and Happiness. New Haven: Yale University Press.

Response Essays

In Defense of Reason and a More Balanced Free Society

On what planet has the author of this month’s lead essay of Cato Unbound been living these past thirty years?[1] That is what any social democrat should first wonder after reading “Against Overlordship” by Daniel Klein. Klein would have us believe that Barack Obama is the latest incarnation of an ever-onward marching collectivism thrust on a naive American public by an all-powerful U.S. government controlled by liberal elitists. This sort of polemic is as ideological as it is misleading, which is ironic given that it is just such thinking to which Klein accuses social democrats of engaging.

A social democrat’s second wonderment would be rhetorical: did Ronald Reagan never exist? Reagan changed the terms of the political and economic debate in the early 1980s away from collectivism towards individualism, for good, one could argue. Klein, like most libertarians, casually overlooks the fact that it is his own dogmatic libertarian thinking — centered on lower taxes, deregulation, absolute private property rights, and smaller government — that has led to the biggest economic disaster since the Great Depression; the very financial mess we are in right now. In fact, in a testament to how non-collectivist the Obama administration is, the Administration itself largely seems to buy Klein’s own ‘straw-man’ argument that it is government that is a big part of the problem of the current crisis. Moreover, for the first time in the history of the United States, reasonable people are bypassing the libertarian versus social democrat debate and starting to question the virtues of free market capitalism itself.

If libertarians wanted any more proof that President Obama is not a social democrat, eager to transform the United States into a European socialist paradise, they need only look to this week’s twin economic policy decisions. Obama announced a pay freeze for federal government workers — a measure which will cut the $1.4 trillion federal deficit by a scant $5 billion over the next two years, as Paul Krugman noted in the New York Times.[2] The second anti-collectivist measure was Obama’s refusal to address the real issue on the table — whether or not to extend the Bush tax cuts for the 2 percent of wealthiest Americans – a measure which could actually bring in enough cash to save Social Security. Forty “patriotic” millionaires from around the country sent the president a letter urging him to let the Bush tax cuts expire, but to no avail. Obama is allowing all tax cuts to be extended, at a total price tag of $800 billion. If Obama actually were a social democrat, there is no way he would have lost this historic opportunity to correct the overt inequality which has developed as a result of a libertarian laissez-faire approach, an approach that was initially justified by a fast-growing economic system that has now run out of control and sowed the seeds for a complete collapse of social order in the long run. To anyone who lamented the lack of progressive policies in the 1990s, Obama over the past two years has managed to make Bill Clinton look like a tough and principled man of the left.

Leaving aside the factual inaccuracies of Klein’s polemical accusations lamenting the onward march of collectivism in the United States, on actual substance, libertarians — like Klein — are still off base. Libertarians and social democrats disagree on three fundamentals. The first is the relative efficiency of government. The second centers on the definition of freedom and whether it is an absolute; is it defined by the retreat of government from our lives? Or is there a distinction between negative and positive freedoms? The last is whether or not private property is a non-negotiable “natural” right, the answer to which determines one’s position on the rationale for government regulation of private property. On all three questions it is the social democrats that prefer reason and empirical facts to dogma. Let me explore these three disagreements in relation to the present day.

Firstly, with regard to government efficiency, it is simply not true that private sector performance is inherently superior to what the public sector can do in terms of service delivery. A case in point is healthcare. The U.S. government covers 45% of healthcare costs, while the governments of France and the United Kingdom pay 79% and 82%, respectively. The United States spends an average of $7,538 per person on healthcare (a whopping 16% of overall GDP). France and the UK spend much less per person: $3,696 (11.2% of GDP) and $3,129 (8.7% of GDP) respectively. However, American life expectancy at birth is 79.6, and the United States has an average of 2.4 physicians per thousand citizens. Life expectancy at birth is 81.6 in France and 79.8 in the UK, and they have 3.4 and 2.6 physicians per thousand citizens.[3] So while France ranks 10th and the UK 20th in the United Nations life expectancy ranking, the United States ranks at 38th, just below communist Cuba.[4] Yet, up until today, many Americans remain convinced that they have the best healthcare system in the world, far superior to the much reviled European system of socialized medicine. Libertarians seem to suffer here from the habitual social scientist’s disease, i.e. how can we get the data to fit our theory?

Secondly, libertarians hold that freedom is defined as the absence of restraint or any impediment to our actions; it is framed in a negative light. However, we are all born unequal — some to well-off families, but most are not — and by being unequal we have unequal opportunities: to healthcare, education, and wealth. Hence, social democrats perceive many people to be inherently – “naturally” if you want — constrained in their freedoms. It is for this reason that they view the state as an actual means to enhance the freedom of many, rather than an impediment as libertarians argue, whether through universal healthcare and education, or a basic social safety net that protects people against misfortune. It was Isaiah Berlin who first explicitly drew this distinction between positive and negative liberty in his inaugural lecture delivered before the University of Oxford in 1958.[5] In addition to the absence of constraint (negative freedom), genuine freedom must provide full opportunity beyond the mere non-interference of the state or of other people (positive freedom). In other words, social democrats believe that to be truly free one must have what is required for the satisfaction of worthwhile wants, including minimum wealth, physical health, talent and knowledge.[6] The more we can enable individuals to do the things they wish to pursue, the freer we will be, and the better and more complete a free society we will live in. Were libertarians to have their way, we would have a society where individuals — weak and strong, rich and poor — are left to fend for themselves, never mind the injustices of birth and the commensurate cycles we inherit.

Thirdly, libertarians think of property rights as a “natural right” which needs to be protected by the government at all costs. They usually cite Locke and Smith in their defense. However, it was the same Adam Smith who, in his celebrated Wealth of Nations in 1776, had the following to say on this issue: “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”[7] As Karl Polanyi pointed out in 1944, there is nothing “natural” either about laissez-faire capitalism or private property rights; they were both enforced by the state in the first place. For Polanyi, “laissez-faire was planned; planning was not.”[8] At a basic level, property rights originate from power and the capacity to compel; there is nothing “natural” or “god-given” about them. So, if private property rights can only exist if the state guarantees those rights, then they fall within the scope of state regulation, a role which is carried out in contract with the powerful people who live within that state. There is circularity in the libertarian argument that is problematic: they want the state to protect what they call natural — that which is not natural — but why would the state need to protect something that — as natural — is completely outside the jurisdiction of the state in the first place?

It is useful to remind libertarians that the choice is not always between good and evil, but between what is preferable and what is detestable, as the anti-Marxist French liberal Raymond Aron once observed about politics.[9] The late historian and social democrat Tony Judt pointed out that the detestable “is always characterized by its attraction to one big theory, one big view of how things are, how they work and how they should work, and is always very sure of itself.” Over that, social democrats will usually choose what is preferable, and try to forge a compromise between the lessons of history and the distractions of prosperity.[10] And like all compromises, there will be flaws and inherent contradictions in social democrats’ teachings. But given what we know history has taught us, it offers a better chance for a world that is truly free.


[1] I want to thank Mark Blyth, Sheri Berman, Bruce Parrott, Gabriel Goodliffe, Greg Fuller, and Alysson Oakley for their help and inspiration in writing this response piece. The main argument and all mistakes or inconsistencies are, and remain, solely my own.

[2] Paul Krugman, “Freezing Out Hope,” New York Times, 2 December 2010.

[3] Data are taken from OECD, Health Data 2010: Statistics and Indicators (Paris, 2010).

[4] United Nations Development Program, Human Development Report 2010 – 20th Anniversary (New York, 2010).

[5] See Henry Hardy (ed.), Isaiah Berlin: Liberty (New York: Oxford University Press, 2002), 2nd edition.

[6] See the Routledge Encyclopedia of Philosophy, entry on “Freedom and Liberty” (London: Routledge, 2010).

[7] Adam Smith, Wealth of Nations, Book V, chapter I, Part II.

[8] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, reprinted 2001), p. 147.

[9] J. Jennings, “Introduction: Raymond Aron and the Fate of French Liberalism,” European Journal of Political Theory 2 (4), 2003, p. 369.

[10] As quoted in Matthias Matthijs, Ideas and Economic Crises in Britain from Attlee to Blair (1945-2005) (London: Routledge), p. 198.

A Positive Account of Rights

Daniel Klein’s essay contrasts positive rights to negative rights. Mine deals with a different contrast, that between positive rights, normative rights, and legal rights. The label—“positive”—is the same, the meaning different, since rights in any of my categories might be either positive or negative in Klein’s sense.

If I have a normative right not to be killed, that means that if you kill me you have acted badly, are a bad person, and ought to feel guilty. If I have a legal right, that means that killing me is against the law. If I have a positive right not to be killed, that means that the consequences to you of killing me are such that you probably won’t. Normative rights are moral claims. Positive rights, as I use the term, are descriptions of behavior.

A positive right could, of course, be the consequence of belief in a normative right. If enough people think that killing me is bad and are unwilling to do bad things, I am unlikely to be killed. Alternatively, a positive right could be the result of a legal right—people don’t kill me because if they believe that if they do they will be arrested, tried, convicted, and hanged.

In their recent book The Cost of Rights, Stephen Holmes and Cass Sunstein describe a positive rather than a moral account of rights. They assert that “Within this framework, an interest qualifies as a right when an effective legal system treats it as such by using collective resources to defend it.”[1] This view, that a positive right must come from a legal system, is widely held and demonstrably false. The simplest evidence that it is false is the fact that positive rights, in the form of territorial behavior, predate not merely human government but the human species. Since birds and fish do not have governments or legal systems, those cannot be the source of that behavior or of the associated right.

The logic of territorial behavior is simple and relevant. An individual of a territorial species claims a territory by marking it in a way recognizable to other members of that species. Other members of the species, as a rule, either do not trespass or retreat when confronted by the owner. What enforces this pattern of behavior is a commitment strategy. The claimant has somehow committed himself to fight a trespasser more and more desperately the farther the trespasser penetrates into the territory. Unless one of the two combatants is much more formidable than the other, a fight to the death is a loss for the winner as well as the loser. Hence the trespasser, perceiving the commitment strategy, realizes that continued trespass is a mistake and retreats. The result is a positive property right in the sense in which I have just defined it.

Its source is not a legal right. Could it be a normative right? One cannot dismiss out of hand the possibility that species other than ours feel moral obligations, although it is unlikely that they have moral philosophers to analyze them. But in the case of territorial behavior, it seems natural to interpret any moral feelings involved—guilt felt by the trespasser, shame felt by a proprietor who fails to enforce his claim—as consequence rather than cause. Given the logic of the commitment strategy, a potential trespasser who is unwilling to trespass will be more likely to survive and reproduce than one who does not. Given that potential trespassers recognize commitment strategies and their strength, the potential proprietor whose strategy is supported by what in a human would be considered moral considerations is more believable, hence less likely to have to either make good his commitment to defense or to his territory, and —quite possibly—his opportunity to reproduce. So it may make sense to think of some moral feelings in animals as patterns of behavior produced by Darwinian evolution in the context of territorial behavior—and perhaps of other moral feelings, including those of humans, as produced in a similar way in other contexts.

Territorial behavior in animals is a particularly clear case, but humans provide lots of examples of positive rights enforced by non-legal means, often involving commitment strategies. Consider a feud society such as saga-period Iceland,[2] pre-Islamic Bedouin society, or modern-day Romanichal Gypsies.[3] What enforces my right not to be robbed is that potential robbers know that I will go to a good deal of trouble to revenge myself against them. What enforces my right not to be killed is the knowledge that anyone who kills me will either have to make a large damage payment (wergild in the Icelandic system) to my kin or risk their killing him, or possibly his kin, in retaliation. In the Icelandic case the commitment strategies were filtered through a legal system—if I brought my claim against you to court and lost the case, I might no longer feel obligated to enforce it. But the court system provided no enforcement mechanism—there was nothing corresponding to an executive branch of government. What enforced the court’s judgment was the plaintiff’s commitment to do so, supported by the commitments of his kin and allies.

Rights in human societies, including modern ones, are based on the same pattern of behavior as territorial behavior in animals or enforcement via feud and the threat of feud, even if less obviously so. Each individual has a view of his entitlements and is willing to bear unreasonably large costs in defense of them. As long as those views are mutually consistent, as long as it is uncommon for two people to believe they own, and be willing to fight for, the same object, we have a reasonably peaceful and orderly society. The form of fighting varies from case to case, society to society—one form of combat in our society is to sue someone, knowing that both parties will bear sizable legal costs as a result. But the underlying logic of the structure is the same.

The view of positive rights as entirely dependent on legal enforcement is not only demonstrably false it is also arguably incoherent. On that view, my property is mine because the police will arrest anyone who takes it. But what enforces my right to have the police act that way? Whatever the answer, what enforces that? What maintains the whole structure of orderly and predictable behavior that distinguishes a civil society from a Hobbesian anarchy?

My answer[4] is that civil order is maintained by an elaborate Schelling point,[5] a set of imaginary lines defining what each of us believes he is entitled to and is willing to bear large costs to defend. Where that order clashes with the order that the legal rules purport to maintain, the informal order not uncommonly prevails. The process has been documented by Robert Ellickson in the context of the privately enforced norms of present-day Shasta County (and modern academics)[6] and routinely observed in the unsuccessful attempts to enforce, without individual support, laws that prohibit activities many individuals want to engage in, such as alcohol and marijuana use.

The same pattern can be observed on a larger and cruder scale in international relations. The United Kingdom was willing to bear very large costs in order to defend a few sparsely inhabited islands near the South Pole because those islands were theirs. That was the result of a rational commitment strategy; its absence would put other and more valuable territories at risk, resulting in either losing them or having to bear more and larger costs in their defense.

What does all of this have to do with Klein’s issue of positive versus negative rights? It implies that not all patterns of rights are equally workable. Negative rights are, for the most part, rights that can be defended by individual commitment strategies with only a small risk of clashes due to inconsistent claims. Positive rights—in his sense—are open-ended claims against the world, hence almost inevitably inconsistent with each other. My right to control my body is relatively easy to enforce, since it takes substantial effort to violate it. A right by me to control your body in order to provide me with an outcome I claim a right to would be much harder to enforce. The whole structure of rights is built on two interrelated technologies—one determining what claims humans can commit themselves to defend and one determining the costs of defending, or violating, such claims.

[1] Holmes, Stephen and Cass R. Sunstein. 1999. The Cost of Rights: Why Liberty Depends on Taxes. New York: Norton, p. 17.

[2] Friedman, David. 1979. “Private Creation and Enforcement of Law — A Historical Case.” Journal of Legal Studies, March, pp. 399-415, webbed here.

[3] Walter O. Weyrauch ed. 2001.
Gypsy Law: Romani Legal Traditions and Culture. University of California Press, Chapter 3.

[4] Friedman, David. 1994. “A Positive Account of Property Rights,” Social Philosophy and Policy 11 No. 2, Summer. pp. 1-16, webbed here.

[5] Schelling, Thomas C. 1960. The Strategy of Conflict. Oxford: Oxford University Press, Ch. 3.

[6] Ellickson, Robert. 1994. Order Without Law: How Neighbors Settle Disputes, Harvard University Press.

Creation, Consent, and Government Power over Property Rights

Daniel Klein’s essay effectively criticizes a longstanding argument in favor of government control of the economy and society: the idea that the state is entitled to broad power to redistribute property rights because it “created” them to begin with. As Matthias Matthijs describes it in his response essay, the argument holds that “there is nothing ‘natural’ either about laissez-faire capitalism or private property rights; they were both enforced by the state in the first place.”

In my response, I will add some points to Klein’s critique of this claim. I also consider a closely related justification for government power over the property rights that Klein also mentions: the assertion that wide-ranging state control is justified because the people have “consented” to it, either by voting in elections or merely by choosing to live in the area controlled by the state. Both arguments are seriously flawed. However, consequentialist justifications for activist government are not so easily dismissed.

I. Government did not “Create” Property Rights

Scholars such as Robert Ellickson, Harold Demsetz, Elinor Ostrom, and Hernando de Soto have documented how private property rights often emerge even in the absence of government enforcement.[1] The claim that such rights are necessarily “created” by the state is simply empirically false. The institution of private property long predates the existence of the modern state, or indeed states of any kind.[2]

Obviously, states do often enforce property rights, and that state enforcement is sometimes more efficient than private sector alternatives would be. But the mere fact that government enforces property rights does not give it the right to redistribute them in any way it sees fit.

The circumstance that the state enforces a right does not prove either that the right could not exist at all without the state or that its moral legitimacy flows solely from the state’s recognition. If it did, the same argument would apply to other rights protected by the state. For example, most governments enact laws forbidding murder, rape, violations of freedom of speech, and slavery. Without these laws, our lives and liberties would be more at risk. In that sense, government has “created” our rights to life, speech, sexual autonomy, and free labor in exactly the same way as it “created” property rights. In the terminology of Stephen Holmes and Cass Sunstein, these rights are all “creation[s] of state action,” because “laws [enable us] to acquire and hold” them.[3] Yet no one argues that the state therefore has the right to kill, censor, rape, and enslave its citizens at will.[4] With property, as with life, liberty, and speech, the fact that the government helps protect a right does not mean that it “created” it or that it may dispose of it as it pleases.

II. Property, State Power, and Consent

Klein’s essay also briefly discusses the claim that government may reallocate property rights as it sees fit because we have consented to its authority to do so merely by living within the territory over which it claims sovereignty. Even if the government did not create property rights, perhaps citizens are bound to submit their property to its dictates because they implicitly consented to it.

This argument has a venerable history, dating back at least to Plato’s Crito.[5] But it is ultimately unsound. The key flaw is that the argument assumes the validity of the very point that it is meant to prove: that government has the right to enact laws of a particular type in the first place. If mere physical or political control of a given territory gives the state the power to regulate property within that area as it wishes, then of course residents are required to follow those laws. But the existence of such a right is in no way demonstrated merely because individuals have chosen to live in the area.

Consider the case of an organized crime boss who has established a “territory” and has the physical power to punish area residents who disobey his decrees. Do residents have a moral obligation to pay him protection money or turn over property to him whenever he demands it? Obviously not, since the boss never had a moral right to issue such commands in the first place. The fact that people choose to live in the territory he claims does not establish that they have consented to obey him in any morally significant sense. What is true for organized crime bosses is also true for governments: the mere fact that a government establishes control over a territory and at least some residents do not choose to leave does not prove that they are required to obey the government’s dictates with respect to their property rights.[6]

Perhaps the consent argument for state control of property rights becomes stronger if the government in question is democratic. Even if mere residency is not enough to prove consent, perhaps participation in democratic elections is. This narrower version of consent theory is more appealing than one that would give carte blanche to authoritarian rulers as well as democratic ones. But it still suffers from the same flaws as its more sweeping cousin.[7] It too assumes the validity of the point it is intended to prove. The fact that a majority of residents have voted for a government that enacts a particular restriction on property rights does not prove that either the majority or its representatives were morally entitled to dispose of those rights in the first place.

This is particularly true if at least some of the residents never agreed to be ruled by the winners of the election, and never had a chance to vote on the logically prior question of whether they accept the underlying structure of the electoral system. Consenting to take part in an already established electoral process does not mean that the voter consented to allow the winners of the election to control his or her property rights. Once a political system is established, one can rationally choose to vote for the “lesser evil” among the available candidates even if one would prefer that the relevant government not exist at all or have much more limited powers. Any “consent” entailed by choosing to vote is further undercut if the winners of the election exercise authority over nonvoting residents as well as those who chose to participate.

Consider the following modification to my crime boss example. Imagine that the Corleone and Barzini Mafia families of Godfather fame each claimed to control a “territory” somewhere in New York City, but agreed among themselves that the right to reallocate property rights in the area would accrue to whichever of the two crime families won a majority of the residents’ votes in a referendum.[8] Let’s say they allow a new referendum to take place every four years. Maybe they even permit other Mafia families to compete in their elections so long as they follow the electoral rules initially established by the Barzinis and Corleones. Few would contend that the Barzini–Corleone cartel is justified merely because their willingness to hold occasional elections proves that the residents have consented to let them tax and regulate property at will.

As with the broad version of the consent argument, the “democratic” version also applies far beyond the area of property rights. If the mere opportunity to vote in elections implies that residents have consented to government control over their property, why not also over their lives, sexual autonomy, speech, right to be free of slavery, and so forth?

Democracy is a useful tool for imposing accountability on government. The democratic Mafia cartel I envision is likely to be less oppressive than the more authoritarian system described earlier. But democracy does not by itself justify untrammeled government control of either property rights or any other rights enjoyed by the people.

III. Consequentialist Defenses of Government Power

Like Daniel Klein, I believe that creation and consent-based arguments for government control over property rights are seriously flawed. But I am not convinced that such arguments are either the most important or most commonly used justifications for the modern activist state. As the widespread negative reaction to the Supreme Court’s decision upholding the taking of property for “economic development” in Kelo v. City of New London shows,[9] most Americans reject the claim that government has an inherent right to dispose of private property as it wishes.[10] Even 77% of self-described liberals disapproved of the decision, which was also opposed by a variety of liberal activists, including Ralph Nader and the NAACP.[11]

Most modern liberals and social democrats instead resort to consequentialist arguments to justify the powers they wish to allocate to the state. For example, President Obama usually defends his health care plan on the grounds that it is necessary to increase access to health care and reduce its costs. More generally, the political left advocates severe restrictions on property rights and economic liberties because these are supposedly needed to promote beneficial consequences such as public welfare, happiness, and equality. For their part, many social conservatives often argue that such restrictions are needed to enforce good “moral values,” thereby justifying such policies as bans on prostitution and gay marriage, and the War on Drugs. Even if sweeping government authority over property rights cannot be justified on a priori grounds, perhaps it must be accepted because the consequences of rejecting it are too dire to risk.

In my view, these kinds of consequentialist arguments for activist government have serious weaknesses. Both liberals and conservatives overstate the benefits of big government, while underrating its dangers. Nonetheless, this kind of consequentialism is the most important opposing view that libertarians and other property rights advocates must engage with.


[1] See, e.g., Robert Ellickson, Order Without Law: How Neighbors Settle Disputes, (Cambridge: Harvard University Press, 1991); Elinor Ostrom, Governing the Commons (New York: Cambridge University Press, 1990), Hernando de Soto, The Other Path: The Invisible Revolution in the Third World, (New York: HarperCollins, 1989); Harold Demsetz, “Toward a Theory of Property Rights,” American Economic Review 57 (1967), 347–59.
[2] See Richard Pipes, Property and Freedom, (New York: Vintage Books, 1999), pp. 64–94.
[3] Stephen Holmes and Cass R. Sunstein, The Cost of Rights: Why Liberty Depends on Taxes, (New York: Norton, 1999), 210, 217.
[4] Sunstein has, however, used these types of arguments to justify wide-ranging government restrictions on freedom of speech. See Cass R. Sunstein, Democracy and the Problem of Free Speech, (New York: Free Press, 1995).
[5] In Crito, Socrates argues that he is required to obey Athens’ laws because he chose not to leave the city. See Plato, Crito, in The Collected Dialogues of Plato, (Edith Hamilton and Huntington Cairns, eds. 1969), 27.
[6] For a more detailed critique of the consent argument along the same lines, see A. John Simmons, Moral Principles and Political Obligations, (Princeton: Princeton University Press, 1979), 95–101.
[7] I have criticized this and related consent arguments in more detail in Ilya Somin, “Revitalizing Consent,” Harvard Journal of Law and Public Policy 23 (2000), 765–72.
[8] Mario Puzo, The Godfather, (New York: Fawcett Crest, 1969).
[9] 545 U.S. 469 (2005).
[10] Some 80% of the public opposed the decision, which was also denounced by a wide range of politicians and activists. Ilya Somin, “The Limits of Backlash: Assessing the Political Response to Kelo,” Minnesota Law Review 93 (2009), 2108–2111.
[11] Id. at 2111.

The Conversation

Life, Liberty, and Professor Matthijs

My essay is about two conceptions of the configuration of ownership in the polity, the individualist and the collectivist. The latter implies overlordship.

I say that an intellectual shift from the former to the latter occurred principally after 1880. I quote a few of the great many authors who championed the shift. They talk clearly about issues of ownership. I quote L.T. Hobhouse three times. He was one of the important figures in the shift.

The heart of my essay, then, concerns the two configurations of ownership and the semantics and presumptions that correspond to each. As I say in the essay, “The issue all turns on the configuration of ownership.”

The three-letter permutation own occurs 29 times in my essay. All 29 occurrences pertain to the central idea.

In Professor’s Matthijs’s comment on my essay, the three-letter permutation own occurs just twice, as follows:

  1. “Klein’s own ‘straw-man’ argument”
  2. “his own dogmatic libertarian thinking”

Thus, there is not a single occurrence of own as it relates to the central idea of the essay that Professor Matthijs is supposed to be commenting on.

The first two sentences of my essay read: “Libertarians and conservatives say that Obamacare forces you to buy health insurance. Folks of the left are apt to shrug at calling it force.”

Professor Matthijs has shrugged off the entire essay. All I can do is put the question to him directly:

Professor Matthijs, does Obamacare force individuals to buy healthcare?

The individualist configuration of ownership frames the idea of liberty we associate with Hume, Smith, and so many other leading figures up through 1880, and later with such figures as Ludwig von Mises, Friedrich Hayek, Milton Friedman, and Richard Epstein. It was the heart of the old liberalism, which the many exponents of the “New Liberalism”[1] saw they needed to call “old” because theirs — openly framed by the collective configuration of ownership, or overlordship — was new.

Another question:

Professor Matthijs, Do you understand why I see Obamacare as forcing individuals to buy healthcare?

Likewise, I ask the following questions to Professor Matthijs:

Does marijuana prohibition initiate force? Is the law (and concomitant enforcement) an initiation of coercion?? Does it tread on liberty?

And, do you understand how I see it?

Does the minimum wage initiate force against employers who would pay less than $7.25 per hour? Is the law itself an initiation of coercion? Does it tread on liberty?

Do you see any difference between these laws and laws against theft and murder?

If Professor Matthijs is able to understand how I see it, then perhaps we can have a conversation about that way of seeing things, and how Hobhouse and social democracy relates to that way of seeing things.

I would be most interested in his thoughts about the place of that idea of liberty — the Hume-Smith idea — in social democracy.

Professor Matthijs, what place does that idea of liberty have in social democracy?


[1] Allett, John. 1981. New Liberalism: The Political Economy of J.A. Hobson. Toronto: University of Toronto Press. Weiler, Peter. 1982. The New Liberalism: Liberal Social Theory in Great Britain, 1889-1914. New York: Garland Publishers.

So David, How’d You Like My Essay?

My lead essay contains the sentences: “You naturally claim ownership of your own person. The claim springs, at least in part, from the uniquely intimate knowledge and control of your bodily processes; it springs from the constitution of your being.”

At the end of that passage, I cite David Friedman’s excellent, highly Humean essay, “A Positive Account of Property Rights,” published in Social Philosophy and Policy in 1994. That essays offers a fuller discussion of David’s installment here, entitled “A Positive Account of Rights.”

David’s installment nicely supports the two sentences of mine just reproduced, confirming the aptness of the citation to his 1994 essay. I would be interested to know what David otherwise thought of my essay.

Beyond that, I register two qualms about David’s contribution.

First, in the effort to relate his words to mine, David says that my essay “contrasts positive rights to negative rights;” he refers to “Klein’s issue of positive versus negative rights;” and he speaks of “[p]ositive rights – in his [i.e., Klein’s] sense.” Let it be known that the word negative does not appear in my essay, and that positive occurs just once, in a quotation.

Second, viewing David’s installment apart from the role it was supposed to play in relation to mine, I question whether the positive/normative talk is helpful. I don’t think it is, but getting into that would take us farther away from the question of whether overlordship underlies leftist ways of speaking.

Not All Power Is State Power: A Response to Matthijs

Matthias Matthijs writes:

On what planet has the author of this month’s lead essay of Cato Unbound been living these past thirty years? … Klein, like most libertarians, casually overlooks the fact that it is his own dogmatic libertarian thinking — centered on lower taxes, deregulation, absolute private property rights, and smaller government — that has led to the biggest economic disaster since the Great Depression; the very financial mess we are in right now.

If Matthijs believes that the trend over the past thirty years has been to smaller government, he is confusing rhetoric with reality. Thirty years ago, federal expenditures were 21.7% of GNP. In 2008, the latest year for which the Statistical Abstract provides actual rather than estimated figures, they were 21%; the estimates for 2009 and 2010 are considerably higher than that. During that same period, state and local expenditure rose from 11% to 14% of GNP. If he thinks that the trend has been towards absolute private property rights, he might want to read Kelo v City of New London.

He might also consider that what set off the “current financial mess” was the collapse of a market dominated by two firms, Fannie Mae and Freddie Mac, both created by the U.S. government.

Matthijs also writes:

[T]here is nothing “natural” either about laissez-faire capitalism or private property rights; they were both enforced by the state in the first place. … At a basic level, property rights originate from power …

The first statement is demonstrably false; private property rights predate the existence of the state. He is correct, however, that property rights originate from power. His mistake is the assumption that all power belongs to the state. Rights, to private property and much else, originate in a radically decentralized form of power, the power of each individual over his own body. For details, see my essay.

Rejoinder to Daniel Klein on Consequentialist Social Democrats

There is only limited disagreement in this exchange between Daniel Klein and myself. We both favor strong protection for private property rights, and we both reject claims that the government should have largely unconstrained authority to override those rights because it supposedly “created” them or because the owners have consented to it.

However, I do continue to disagree with Daniel’s claim that “leftist talk about [property rights and government] entails the collectivist configuration of ownership, or overlordship.” I think that is true of some left-wing rhetoric about these issues, but by no means all or even most of it. As I pointed out in my original reply essay, most modern liberal rhetoric justifies government intervention on consequentialist grounds, not on the basis that government owns everything.

Daniel himself recognizes, “one could affirm the individualist configuration of ownership and then go on to say that he nonetheless favors the myriad initiations of coercion of the modern activist state.” In my view, this is in fact what most American left-liberals (and many European ones) do. They accept the basic idea of private property rights (what Daniel calls the “individualist configuration of ownership”), but then claim that such rights must often be overridden in order to achieve beneficial consequences such as promoting equality, increasing social welfare, protecting the environment, eliminating “blight,” and so on.

This is not to say that the “collectivist configuration” Daniel attacks is a straw man. Ever since Plato, a variety of prominent political theorists and legal scholars (not all of them leftist) have espoused just that. It is certainly an important idea whose serious weaknesses are worth pointing out — as I tried to do in my reply essay. But it is not quite as ubiquitous as Daniel seems to assume.

Freedom Is Not an Absolute: A Response to Daniel Klein

It is my pleasure to respond to Daniel Klein’s questions, many of which go to the core of our disagreement. But before I answer his questions directly and one-by-one, I first want to make four observations that will provide the analytical framework through which libertarians can better understand the social democratic argument.

Firstly, I did not want to play Klein’s “own” counting game because I question his fundamental premise of ownership of self in the first place. “Ownership” is a convention which can take many forms — public or private — and is not given by God. While social democrats and American liberals would certainly agree that we “own” ourselves, what sets them apart from libertarians is what that is taken to mean. Social democrats believe that we live together in one society and that how we treat ourselves often has ramifications for others; something economists refer to as externalities. What makes it possible to be truly free is the fact that there are certain public goods provided which no individual would see the benefit to provide on his own. Societies, however, are not “naturally” endowed with those public goods. So, if I own property, I still have to pay taxes on it. But taxation is not the same thing as slavery, and while it may be an imposition to be forced to pay property taxes, it does not mean that the government “owns” you. It simply means that as a member of a society — a society in which you have a voice if it is a liberal democracy — you have to take part in the provision of these public goods which allow societies to function.

Secondly, libertarian thinking has to be attractive to those who are “naturally” better endowed in our society by birth — the strong and the rich — and of course to those who have an instinctive abhorrence of paying taxes (something which social democrats at least recognize to be a necessary evil, even though no social democrat loves to pay them either). But the largest part of the population, which is not naturally endowed by birth with great fortune or strength, probably finds less appeal in libertarian thinking, and is much more (and often all too painfully) aware that we are all born unequal. And the danger is that the more unequal a society becomes, the more there will be a need for the government to protect the richer few from the poorer masses, for the obvious reason that the poor might start burning the rich their houses down. The paradox of this is that such a state could quickly become the most intrusive and oppressive state possible. I would imagine libertarians to worry about this even more than social democrats. The issue of inequality goes to the heart of our debate, because once you take inequality as a starting point, the libertarian logic starts to crumble.

Thirdly, a fundamental problem remains with the libertarian use of concepts such as freedom and liberty in absolute terms. The French Revolution, and the classical “liberal” Enlightenment ideas it was based on, did not single out just one basic value but three: it was about liberty, equality and fraternity. Singling out liberty as the only idea that matters — and defining it in very narrow terms focusing on negative liberty — of course leads one to see everything the government does as an attack on liberty. As great liberal thinkers like John Gray, John Rawls and Michael Oakeshott have argued, liberty cannot be understood as an absolute on its own terms: it gains its content and function in relation to the limits which are placed upon it. In other words, it is wrong to privilege one-third of the ideas of the French Revolution — liberty — if this cannot be understood divorced from the two others — equality and fraternity.

Fourthly, I want to emphasize one more time the difference between positive and negative liberty. Along with a few other basic things such as public education, social democrats do not believe that you can be truly free – that is, capable of making rational and truly independent choices — without basic health considerations taken out of the picture. Social democrats are the true believers in liberty, real liberty, not the rather thin or limited kind most libertarians advocate. The social democratic concept of liberty is not encumbered by things we cannot control, like pre-existing health conditions or the financial resources of our parents.

Now, let me now respond directly to Daniel Klein’s questions.

1. Does Obamacare force individuals to buy healthcare?

Yes, I would not even contest that point. However, I will admit to this only if you admit that the fifty federal states of the United States of America “force” their adult citizens to buy car insurance. And to your immediate response that “nobody forces you to buy a car or drive one” I can only ask how anyone in this country could be truly free without a car, given the decrepit state of public transportation everywhere. As a good libertarian, you will surely appreciate that the only way you can exercise your liberty to move around the country is by car, and you do not even have to live in Los Angeles or Texas to understand this. Now, it is not a leap of faith to make the same point about health care. If you choose not to buy health insurance, and have the misfortune of being hurt in a car accident, you will be rushed to the emergency room and the cost of your care will be borne by society. Surely there is an externality from not buying health insurance in this case, which costs society dearly.

John Stuart Mill would not disagree. Not buying health insurance violates the Millian “no harm” principle, or the idea that the right to swing your fist ends where the other man’s nose begins. Mill defines the harm principle in chapter one of his On Liberty as follows: “that the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.”[1] It surely cannot be an optimal solution or the best use of your tax money if you as a “responsible” person who paid for your own insurance were forced to pay — through general taxation — the hospital bill of an uninsured person.

But let us consider the alternative of not forcing people to buy healthcare and of refusing the uninsured any medical care. Are we as a society — morally or practically — prepared to let people without insurance die? I imagine libertarians would say “yes” and argue that it was that person’s “choice” not to buy health insurance. That person was fully well aware of the consequences, and hence “chose” to die. Social democrats prefer not to live in such a society. And insofar as people agree that letting people die if they do not have insurance is either morally wrong or impractical, social democrats would reason that some sort of government force is necessary.

2. Do you understand why I see Obamacare as forcing individuals to buy healthcare?

Yes, of course I understand why you see Obamacare as government force, but as I have argued above, in certain situations social democrats see such government force as justified and even necessary for people to be truly free in a society. Even Friedrich von Hayek — that celebrated hero of libertarian thinking — did not only accept a limited welfare state, but singled out health care as an area where the state should intervene. I quote Hayek in The Road to Serfdom: “There is no reason why, in a society which has reached the general level of wealth as ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”[2]

3. Does marijuana prohibition initiate force? Is the law (and concomitant enforcement) an initiation of coercion? Does it tread on liberty? And, do you understand how I see it?

I suppose it does tread on liberty. If you define liberty as freedom from all control (especially government control), then paying any kind of taxes for any kind of public good means that you are treading on liberty. But do we really want to live in an ungovernable society, with no care for those born less equal?

And on this point of legalization of soft drugs, many European social democrats would actually agree with libertarians. Cases in point are Belgium and the Netherlands, where social democrats argued in favor of personal use of marijuana.

4. What place does the Hume–Smith idea of liberty have in social democracy?

The Hume–Smith idea of liberty as you define it has its rightful place in social democracy, just like it does in a libertarian world view. Social democrats just do not give it god-like status, but place it next to many other values, such as justice and equality. As I mentioned earlier in my response, the distinction between positive and negative freedom is at the heart of social democratic thinking. If one refuses to make this distinction, as most libertarians do, then it will be very hard to find any common ground between American liberals and libertarians.


[1] John Stuart Mill, On Liberty, chapter 1.

[2] Bruce Caldwell (ed.), F.A. Hayek: The Road to Serfdom: Text and Documents (The University of Chicago Press), p. 148.

You Cannot Put All the Blame for the Financial Crisis on Fannie and Freddie: A Response to David Friedman

I want to thank David Friedman for his comments and would like to write a brief response.

Firstly, nowhere in my original response to Daniel Klein’s essay did I argue that the trend in the United States over the past thirty years has been towards a smaller state. Unfortunately, both Republicans and Democrats find it quasi impossible in a mature democracy as this one to cut spending and public services to their constituents. They seem to have a much easier time cutting taxes. Hence we should not be surprised that we are stuck with record federal deficits and national debt. I am actually surprised by Friedman’s numbers that the federal government shrunk in size from 21.7% to 21%. I also believe that very few modern democracies will be able to make a significant dent in public spending for the simple reason that such governments will be committing instant political suicide.

I think the more important point is not about the size of the state — something which nobody disputes — but about the distribution of income. Since the coming to power of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom, both countries have become almost as unequal as many developing countries today. The distribution of income as a consequence of their regressive measures of cutting income tax and raising all kinds of indirect taxes — all in the name of supply side stimulus — became much more unequal since 1980. Now, as most economists would argue, inequality is not necessarily a bad thing: it gives market participants the right incentives to work hard and move up the social ladder. No disagreement there. However, if the richest one percent’s share of pretax national income goes from 8% in 1980 to 17% in 2008, and the bottom quintile of the income distribution sees virtually no increase in wages, U.S. society starts to have a problem in that many people will no longer believe in the system. By some measures, there is now higher social upward mobility in France than in the United States. That surely cannot be a positive trend if you are in favor of a more libertarian society, and must make many libertarians nervous.

Secondly, it would be wrong to blame the global financial crisis only on just one factor, namely government intervention in the mortgage market. It’s like blaming community organizers like Barack Obama for the crisis because they tell people that they could aspire to buy their own home one day. Every crisis needs a trigger, and this crisis was indeed triggered by subprime mortgage defaults in the United States starting in the summer of 2007. Both Democrats and Republicans are to blame here, as both parties see “owning your own home” as part of the American Dream. This has of course nothing to do with free market ideology, so libertarians definitely have a point here. When I interviewed Nigel Lawson, Thatcher’s “brilliant chancellor,” in 2006 in London, he told me that subsidized mortgage rates for the lower middle classes were always a major point of contention between him and the prime minister. Thatcher thought it was important to help what she considered ‘her people,’ while Lawson steadfastly held the view that it was distorting the market.

So I agree that Fannie and Freddie had the wrong incentives and issued way too many mortgages to people who could not afford them. Also, there is no doubt in my mind that government mistakes were made by the Federal Reserve (keeping interest rates too low for too long, which fueled the housing bubble) as well as lax regulation and perverse incentives for rating agencies and financial institutions.

The heart of the matter is what made this system possible in the first place. It seems to me that the overarching neoliberal economic framework — of privatization, deregulation and liberalization — should get the major part of the blame. When Raghuram Rajan of the IMF suggested to Larry Summers that the derivatives markets probably should be better regulated, he was dismissed by Summers as a “Luddite,” and when others warned the Fed that it should increase interest rates to slow down the housing and stock market boom, they were told that there was such a thing as the “Great Moderation” and that central banks knew exactly how to run a modern economy based on neoclassical economic principles.

Since 1979, there has been a relentless movement towards less government intervention in the economy — probably all over the world. So, to now blame the biggest economic disaster since the Great Depression on two quasi-governmental firms with perverse incentives in the mortgage market strikes me as too easy an explanation.

On a hopeful note, one issue where I think liberals and libertarians might find more common ground in the United States is on the ‘too big to fail’ problem, and to advocate the reinstatement of some kind of version of the Glass-Steagall Act. Free markets can only function well if there is competition and economic power is not concentrated in just a few firms. The sorry outcome of the financial crisis is that there are now fewer big banks on Wall Street than ever before. They are not only “too big to fail,” but probably also “too big to bail” by now.

Social-Democratic Feudalism and Its Upper Paleolithic Impetus

I think I am understanding Matthias better than he is understanding me. If so, it might be because he is better at making himself understood.

In his last response to me, he declares in the title “Freedom Is Not an Absolute,” something I said plainly in my opening essay. Similarly, he says that “taxation in not the same thing as slavery,” that taxation “does not mean that the government ‘owns’ you,” that “Singling out liberty as the only idea that matters” is wrongheaded. Perhaps he confuses me with Robert Nozick, the nonlibertarian’s favorite libertarian philosopher. That could explain why he thinks that the Hayek passage he provides is more at odds with what I say than it is. Yes, the taxes used to fund a government safety net would be reductions in liberty, but nothing I have said necessarily implies a position against such impositions.

Matthias admits that Obamacare forces individuals to buy health insurance. But he continues:

I will admit to this only if you admit that the fifty federal states of the United States of America ‘force’ their adult citizens to buy car insurance. And to your immediate response that ‘nobody forces you to buy a car or drive one’ I can only ask how anyone in this country could be truly free without a car, given the decrepit state of public transportation everywhere. As a good libertarian, you will surely appreciate that the only way you can exercise your liberty to move around the country is by car, and you do not even have to live in Los Angeles or Texas to understand this.

I agree that it is hard to move around the country without driving. One is thus dependent on roads, and thus on the owners of the roads. But dependency is not the same as force or coercion.

To draw the distinction, consider what Smith says about dependency in The Wealth of Nations. He says that in feudalism individuals “lived almost in a continual state … of servile dependency upon their superiors.” But in commerce: “Each tradesman or artificer derives his subsistence from the employment, not of one, but of a hundred or a thousand different customers. Though in some measure obliged to them all, therefore, he is not absolutely dependent upon any one of them.”[1]

We feel forced to buy car insurance because the government has enveloped the road industry. It is like the great lord. But in the feudal context, if we grant the lord’s ownership of his lands, we cannot say that he coerces the peasants who live on them. Assuming that the peasants are free to leave and that the lord sticks to agreed terms, the peasants are dependent, and probably servile, but not coerced. It is a terrible situation, but the problem is that society is enveloped by the feudal lord, not that the lord coerces. A better situation would come from voluntarily subdividing the land, giving rise to many competing owners.

I am supposing that car insurance today is a condition simply of driving on government roads. The government owns the road, and, as owner, it offers certain rules for use of its property, as the feudal lord offers for his. (I realize that our simplifications of both feudalism and car insurance are probably inaccurate in some respects, but I am assuming away complications to draw a basic parallel.)

Smith detested the dependency of feudalism, and he wrote at length about the feudal period as an “unnatural” development built and sustained by violations of natural liberty, including the engrossing of uncultivated land, primogeniture, and entails. He advanced natural liberty, whose natural tendency was toward subdivision not only of labor but also of land. Smith saw liberty as the bulwark of independence and the school of virtue.

Suppose there were liberty in road ownership, perhaps restricted in that crossing easements were imposed (sometimes coercion is our friend!). Roads owners would be private and multiple. Would all of them require users to have car insurance? Who knows. But even if they all did, we would feel less forced in the matter.

Practically all restaurants require a shirt and shoes, but that is not force, either. To say that we are forced to buy car insurance is to say that we are forced to wear a shirt and shoes by the pizza shop.

If you go about your business and avoid agreements that require buying car insurance, no one will stick a gun in your face for not buying car insurance. Someone will stick a gun in your face for not buying health insurance, under Obamacare. Unless you count being in the polity as agreeing to Obamacare — unless, that is, you grant overlordship — you have not entered any such agreement, and the gun is an initiation of aggression.

Dependency is one of the hazards of social democracy. The government monopolizes schooling by coercion, partly in the tax financing that advantages government schools, partly in the restrictions put on private competition (which in some states, such as California, are very significant[2]). In consequence, students and parents enter passive dependency on the local government school. Smith said that when our position is only passive, our sentiments tend to be sordid and selfish; when active, generous and noble.[3]

In social democracy individuals indeed often live in a state of “servile dependency upon their superiors.” People stoop to get permission to engage in voluntary intercourse. Pharmaceutical companies would no sooner antagonize the FDA than a slave would antagonize the whipping master. About 30 percent of the workforce is now in fields subject to occupational licensing.[4] The policy is to ensure that noncompliant service providers, though perfectly peaceful, will be fined and, as necessary, arrested and shot, and it creates other forms of dependency. Practitioners have to submit to the requirements to get permission. For many of the trades, one must get an accredited college degree — what Smith called “the privileges of graduation,”[5] and these are privileges again based on the gun pointed at anyone who would practice without the required credentials. Students are thus induced to go to college, a realm of privilege and dependency, sustained in part by this coercion-induced demand and the coercion of tax financing.

Social democracy is the new feudalism. That is why Hayek titled his work The Road to Serfdom. Thousands of coercions create dependency on officialdom and its cultural institutions. Many of the professors and experts, and most leftists, tell us that the coercions are good for society.

In fact, the vast majority of professors range from left to center or neutral; there are very few libertarians or conservatives, especially outside economics. Maybe it is because professors are such a smart bunch. They want more Americans to go to college. They favor new coercions to induce more college-going. It is good for America, they say.

In Mattias’s first response, he quoted Karl Polanyi, to the effect that there is nothing particularly natural about private property. Polanyi was a Hungarian for whom liberalism was liberalism, however much he misunderstood it. Unlike the Anglos I quoted in my opening essay, he felt no impulse to pass his outlook off as “liberalism.” Throughout The Great Transformation he heaps contumely on liberalism, for example, speaking of “the liberal virus.”[6] It is not hard to see overlordism in Polanyi’s outlook:

Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society.[7]

In this subordination, “the actual content of property rights might undergo redefinition at the hands of legislation.”[8] For the overlordist, private ownership of the manufacturer is not attenuated; liberty is not infringed. Rather, the manufacturer’s rights are redefined. Again, it makes sense if one grants that “democratic society” is the owner either of the resources handled by the subordinates, or the owner of some kind of enveloping substructure with which the manufacture is then under contract. Either way, there is no incursion on liberty: If you do not like our terms, you are free to leave.

Ilya, in his second posting, says that overlordism underlies “some left-wing rhetoric about these issues, but by no means all or even most of it.” I had noted, and Ilya quotes me, that “one could affirm the individualist configuration of ownership and then go on to say that he nonetheless favors the myriad initiations of coercion of the modern activist state.” Ilya adds: “In my view, this is in fact what most American left-liberals (and many European ones) do.”

Ilya is suggesting that most American leftists would grant that, say, the minimum wage law is an incursion on liberty, but simply say that they nonetheless favor it (assuming they do favor it, that is). Well, I have some evidence on that.

In October 2006, 659 individuals, mostly economists, signed a petition to raise the minimum wage. I wrote a questionnaire asking them about the matter (Klein and Dompe 2007). Among the questions were the following:

In one manner of speaking, liberty is freedom from political or legal restrictions on one’s property or freedom of association. Subscribers to this definition are apt to say that the minimum wage law is coercive because it (along with concomitant enforcement) threatens physical aggression against people for engaging in certain voluntary, consensual acts (namely, employing people at sub-minimum wages). (Notice that even subscribers to this definition of liberty recognize that it does not by itself carry a policy recommendation; values other than liberty exist and might conflict with it.)

Q7: Please indicate which of the following options best fits your view of this semantic issue:

  • A. [ ] I agree that that definition of liberty is the primary definition of liberty, and in that sense the minimum wage law is coercive.
  • B.[ ] I give some weight to that definition of liberty, but not primary weight; the minimum wage law is only coercive in a sense.
  • C.[ ] I give little to no weight to that definition of liberty; the minimum wage law is not coercive in any significant sense.
  • D.[ ] Other [please specify]:

Now, if we take the questionnaire respondents to be a representative sample of vocal leftists, then, on Ilya’s supposition, most would have chosen option A. Yet, of 93 respondents who answered the question, only five did.

The responses frequencies (in percentages of the 93 individuals who answered the question) were as follows:

  • A. 5.4%
  • B. 19.%
  • C. 50.5%
  • D. 24.7%.

Thus, a straight-up majority selected the option that says that the minimum wage law “is not coercive in any significant sense,” and given that most of the responses at D were essentially denying the classical liberal interpretation, we may say that a vast majority of these respondents did not fit Ilya’s description of how leftists think. Again, 94.6 percent rejected the option that simply says that the minimum wage law is coercive.

For leftists, the minimum-wage law, which threatens to stick a gun in the face of employers who peaceably contract to pay less than the specified minimum, does not tread on their liberty. To use Polanyi’s term, the law simply “redefines” the employer’s rights.

Most leftists do not accept the individualist configuration of ownership. Do they affirm the collectivist configuration, or overlordship, as I have described it? Not consciously, perhaps. But, again, in the original period of social-democratic reaction to liberalism, the collectivist configuration was often quite explicit, as seen in quotations in my opening essay and many other quotations that could also be shown.

But the Left Hates Feudalism and Domination: Enter the Atavism Thesis

Frankly, I do not know what to make of the left. They fail to support school choice, the repeal of occupational licensing, and 100 other focal liberalizations that would obviously help the poor, whom they say they care about. Even worse, they often champion interventions. This conundrum has puzzled thinkers for centuries.

Searching for explanation, I look around and see what we can come up with. One of the best explanations available is Hayek’s conjecture that leftist ideology is an atavistic expression of deep-seated yearnings and penchants evolved over millions of years but little changed since the Upper Paleolithic ending 10,000 years ago.[9] It seems that the Upper Paleolithic band was a small, simple society, quite democratic in its structure and functioning, with solidaric ethics and encompassing experience and sentiment. Like any band of 20–40 members, consisting largely of family groupings, there would be a leader, an “alpha male,” but our researchers seem to suggest that the social relations were rather egalitarian and consensus-oriented.

Band-man sees society as organizational, not a network of spontaneous relationships. He yearns for an encompassing coordination of sentiment, not a cosmos of intersecting romances.[10] He yearns for common knowledge, and is uncomfortable with disjointed knowledge.[11] He yearns for social justice, and is not satisfied with merely procedural or commutative justice.[12] He presupposes an underlying configuration of collective ownership, not one of individual ownership.

In the narrative of ideological development, the biggest factors in enlivening the political reassertion of these instincts as a modern statist ideology are the rise of the nation-state and universal suffrage. Those provide the mythos that enlivens the Paleolithic ethos and mentality.

Although there are always jackals and others interested in overlordship and dependency, I think that the raw leftist impulse is Paleolithic, not feudal. In the small band of 10,000 years ago, there is collective ownership in the community: Even if nomadic, the troop is a collective club, and if you belong to the club you are agreeing, as it were, to its consensus-based governance and habitus. Otherwise you exit or are expelled. In the small band, there is no overlordship because there is just one level of organization. There is no basis for the “over” in overlord. And even the “lord” does not really apply, because of the personal familiarity and democratic ethos of the simple troop.

So the left wants “The Cooperative Commonwealth,”[13] not feudalism, dependency, and overlordship. But the latter is what their penchants yield in a society that is no longer small and simple. From leftist foolishness we get social-democratic feudalism, as though by a vicious and evil invisible hand.

I regret I am being so critical of the left. If they would stop championing coercions and opposing liberty, I would be a lot friendlier.


[1] Smith, WN, 412, 420.

[2] Seireg 2004.

[3] Smith, TMS, 137.

[4] Kleiner and Krueger 2009.

[5] Smith, WN, 778, 780.

[6] Polanyi 1944, 196.

[7] Polanyi, 242.

[8] Polanyi, 243.

[9] Hayek 1967, 1976, 1978, 1979, 1988.

[10] Klein 2005.

[11] Klein 2010.

[12] Hayek 1976, 1978.

[13] The leftist expression “the cooperative commonwealth” presumably originates with Gronlund 1884.


Gronlund, Laurence. 1884. The Cooperative Commonwealth. Boston: Lee and Shepaud.

Hayek, Friedrich A. 1967. The Legal and Political Philosophy of David Hume. In Studies in Philosophy, Politics, and Economics, 106-121. University of Chicago Press, Chicago.

Hayek, Friedrich A. 1976. Law, Legislation and Liberty, Vol. 2: The Mirage of Social Justice. Chicago: University of Chicago Press.

Hayek, Friedrich A. 1978. The Atavism of Social Justice. In New Studies in Philosophy, Politics, Economics and the History of Ideas, 57-68. University of Chicago Press, Chicago.

Hayek, Friedrich A. 1979. The Three Sources of Human Values. In Law, Legislation and Liberty: Volume 3, The Political Order of a Free People. Chicago: University of Chicago Press, 153-176.

Hayek, Friedrich A. 1988. The Fatal Conceit: The Errors of Socialism. Chicago: University of Chicago Press.

Klein, Daniel B. 2005. The People’s Romance: Why People Love Government (as Much as They Do). The Independent Review 10(1): 5-37.

Klein, Daniel B. 2010. “Knowledge Flat-talk: A Conceit of Supposed Experts and a Seduction to All.” The Independent Review 15(1): 109-121.

Klein, Daniel B. and Stewart Dompe. 2007. Reasons for Supporting the Minimum Wage: Asking Signatories of the “Raise the Minimum Wage” Statement. Econ Journal Watch 4(1): 125-67.

Kleiner, Morris M. and Alan B. Krueger. 2009. Analyzing the Extent and Influence of Occupational Licensing on the Labor Market. NBER Working Paper 14979.

Polanyi, Karl. 1944/1957. The Great Transformation: The Political and Economic Origins of Our Time. Boston: Beacon Press.

Seireg, Bahaa. 2004. Addition and Subtraction: State and Local Regulatory Obstacles to Opening a New Private School. Policy Study 329. Reason Public Policy Institute, December.

Smith, Adam. 1790. The Theory of Moral Sentiments. Edited by D.D. Raphael and A.L. Macfie Indianapolis: Liberty Fund, 1982.

Smith, Adam. 1976 [1776]. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by R.H. Campbell and A.S. Skinner. Oxford: Oxford University Press. Indianapolis: Liberty Fund, 1981.

More Empirical Evidence for Property Rights Beliefs

In his most recent essay in the conversation, Daniel Klein continues our debate over the question of whether most contemporary liberals assume government “overlordship” of all property — that, in Daniel’s words, “everything is owned by the state.” In my view, outlined in my two previous contributions, most modern liberals don’t make any such assumption. They merely believe that private property rights can often be overridden in order to promote other values, such as equality or utility.

In response, Daniel cites a poll of economists asking whether they believe that “that the minimum wage law is coercive because it (along with concomitant enforcement) threatens physical aggression against people for engaging in certain voluntary, consensual acts.” Some 50.5% chose the response that “I give little to no weight to that definition of liberty; the minimum wage law is not coercive in any significant sense.”

This survey is at best only very weak evidence for Daniel’s point. As a tool for addressing the issue in dispute between us, it has several flaws. First, it does not ask respondents a question about property ownership. Rather, it asks about a restriction on contractual freedom, which is a distinct, even if related, issue. Second, one can in fact give the answer Daniel points to without believing that the state has ownership rights over either contractual freedom or property rights. Giving “little or no weight” to the “definition of liberty” outlined in Daniel’s question and believing that the coercion inflicted by the minimum wage is not “significant” is perfectly compatible with the view that these liberties belong to individuals rather than the state. The respondents might also believe that the restriction on liberty imposed by the minimum wage is minor in nature, and outweighed by other values.

In this context, it’s worth nothing that a large percentage of economists are utilitarian consequentialists, who judge all or most moral and policy issues based on utility maximization. To a utilitarian, it does not matter whether a given policy restricts liberty or is “coercive” except in so far as that reduces the sum total of happiness in society. Focusing on economists biases the sample towards utilitarians and away from believers in natural rights.

Finally, the question cited by Daniel is flawed in that its wording is long and complex and conflates several different issues. For example, respondents may be confused about whether the question is primarily focused on “liberty,” “coercion,” or both issues at once. As a general rule, survey researchers try to err on the side of asking questions that are as simple as possible, and clearly focus on just one issue. I think that I understand what Daniel was trying to get at with his question, having read it over carefully several times. But respondents who answered it quickly after only a casual reading might not have.

A better test of Daniel’s theory are the surveys cited in my initial response essay about the public’s reaction to Kelo v. City of New London, the 2005 decision where the Supreme Court ruled that government has the power to take property from one individual and transfer it to another for purposes of “economic development.” To a person who believes that “everything is owned by the state,” such a transfer should be morally unproblematic. Even if he or she regards it as bad policy, it should not inspire outrage. Yet recent surveys and numerous polls conducted in the immediate aftermath of Kelo, show that the overwhelming majority of both the general public and self-described “liberals” oppose such transfers, with many expressing great indignation about the Court’s decision.

Unlike Daniel’s survey question, the data on Kelo includes a representative sample of the general public — not just economists. And the results are based on simple and clear questions, with the outcome being robust to changes in survey wording. Even when the wording of the question is favorable to the pro-condemnation side, over 80% of the public still opposes economic development takings, with liberals differing little from the average.

Obviously, liberals who oppose Kelo are far from being libertarians. They still likely support numerous other restrictions on property rights and economic liberties, many of which I think are unjust and harmful. But they do not seem to believe that “everything is owned by the state.”

As I have noted previously, the “collectivist” view Daniel criticizes is a real position endorsed by a number of prominent legal scholars and political theorists. It is certainly worthy of sustained discussion and critique. But it is not the view held by the majority of modern liberals.

The Financial Crisis as Political Football

Matthias Matthijs writes:

Firstly, nowhere in my original response to Daniel Klein’s essay did I argue that the trend in the United States over the past thirty years has been towards a smaller state. Unfortunately, both Republicans and Democrats find it quasi impossible in a mature democracy as this one to cut spending and public services to their constituents.

And yet, in his original essay, he wrote:

Klein, like most libertarians, casually overlooks the fact that it is his own dogmatic libertarian thinking — centered on lower taxes, deregulation, absolute private property rights, and smaller government — that has led to the biggest economic disaster since the Great Depression.

If the dogmatic thinking of libertarians, centered on smaller government, didn’t result in smaller government, it’s a bit hard to see why Matthias blames it for recent economic difficulties. Ditto for the rest of his list.

He continues:

I think the more important point is not about the size of the state — something which nobody disputes — but about the distribution of income. Since the coming to power of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom, both countries have become almost as unequal as many developing countries today. The distribution of income as a consequence of their regressive measures of cutting income tax and raising all kinds of indirect taxes — all in the name of supply side stimulus — became much more unequal since 1980.

The CBO has published estimates of the distribution of the federal tax burden as of 2007. I don’t know if Matthias has looked at them. The top 1% of the income distribution pays almost 40% of all federal income taxes; the bottom 60% pays just over 1%. The burden of other federal taxes is somewhat less uneven; the CBO’s estimate is that the top 1% in 2007 paid 29.5% of all federal taxes, and the bottom 60% paid 14.4%. It is also more ambiguous; it isn’t clear, for instance, how much of the payroll tax goes to lower after tax wages and how much to raise the cost of labor to employers, or who really end up paying corporate income taxes.

It is hard to see how a system where most of the taxes are paid by people in the upper part of the income distribution can be the explanation of increases in income inequality.

Matthias writes:

Since 1979, there has been a relentless movement towards less government intervention in the economy — probably all over the world. So, to now blame the biggest economic disaster since the Great Depression on two quasi-governmental firms with perverse incentives in the mortgage market strikes me as too easy an explanation.

There has certainly been such a movement in much of the world — accompanied, in poor countries such as India and China, by a striking increase in standards of living. It doesn’t follow that there has been a similar movement in the United States. Rhetoric has become more favorable to free markets, but practice need not follow rhetoric, as George W. Bush quite strikingly demonstrated. I believe that under Reagan the rate at which new regulations were issued declined somewhat, but that’s a reduction in the rate of growth of government power, not the level.

As far as the cause of the recession and the financial crisis, that is a subject on which there is widespread agreement: virtually every commentator attributes it to some set of policies he is against. The only disagreement is on the details — whether it was due to too much government intervention in the housing market or too little, regulation or deregulation, increase or decrease in the size of government. Matthias concedes that part of the cause was government intervention in the housing market, but nonetheless asserts with complete confidence that the real cause was “dogmatic libertarian thinking” in his first essay and “the distribution of income” and “the overarching neoliberal economic framework” in this one.

Reply to Ilya Regarding Evidence on How Leftists See Things

I have been arguing that leftist thinking typically involves a preconception of overlordship, with “the people” or “the state” (in the Hegelian sense, not merely the government) being the overlord. The best way to think of it is that the American people collectively own what I have called the “substructure” of the United States of America. Resorting to analogy I wrote: “you own the soil, perhaps, but the state owns the ‘flower pot’ within which your soil sits.” With the people owning the “flower pot,” you are then party to an implicit contract with the overlord restricting how you use your property and what contracts you make within the overlord’s realm.

On this conception of the configuration of ownership, the situation is analogous to entering a workplace and agreeing to limits on talking on your mobile phone, or entering a restaurant and agreeing to rules against wearing hats indoors, or entering a lease on an apartment and agreeing to rules limiting where tenants place a satellite dish. In these analogies, the mobile phone, the hat, or the satellite dish is your property, but you have voluntarily entered into a contract against doing certain things with it.

Ilya has suggested that most leftists do not actually think this way. Rather, he suggests that they, like libertarians, subscribe to an individualist configuration of ownership, and simply favor more restrictions on individual liberty than do libertarians.

I wish Ilya were right in this matter. I wish that leftists would affirm the individualist configuration of ownership, and identify liberty and coercion as libertarians do. They would then make themselves responsible to the presumptions and burdens of proof carried by such semantics. Unfortunately, I do not find Ilya’s arguments persuasive.

Ilya has suggested that survey data about the Kelo decision supports his contention about how leftists see things. As Ilya puts it, the survey data “show that the overwhelming majority of both the general public and self-described ‘liberals’ oppose such transfers, with many expressing great indignation about the Court’s decision.”

I see a couple of problems in invoking the Kelo survey results as evidence against my conjecture that leftists have overlordist preconceptions.

First, one can have overlordist preconceptions and still oppose certain rules that the duly appointed officers of the overlord implement. By analogy, I might think that my employer’s rules against mobile-phone use, the restaurant’s rules against wearing hats indoors, or my landlord’s rules about satellite-dish placement are bad or even immoral. Even though I disagree with the rule, I do not deny that the employer owns the worksite, the restaurant owner owns the restaurant, or the landlord the apartment complex. Likewise, if we subscribe to overlordism and the government passes a law forbidding the selling, manufacturing, and transporting of alcoholic beverages (as did the 18th Amendment), we could disagree with that rule without giving up our overlordism.

Second, in the case of the Kelo question, a survey respondent might have overlordist preconceptions and judge the decision to be a violation liberty. The reasoning here would be that the Kelo decision upholds a violation of the contract that Suzette Kelo had with the people, a contract based on the United States Constitution. That is, if a respondent with overlordist preconceptions regards the decision as unconstitutional, then he would regard the decision as a liberty violation, but that does not mean that he subscribes to the individualist configuration of ownership. He is still an overlordist.

Thus, I do not see the survey findings about Kelo as significant evidence against my conjecture about overlordist preconceptions.

Evidence regarding my conjecture would have to address not merely whether people agree with a certain decision or policy, but whether they view it as a liberty violation – two matters that we must learn to keep distinct. That is the kind of evidence I offered from the questionnaire put to people who had signed a petition to raise the minimum wage (Klein and Dompe 2007). But Ilya attempts to shoot down that evidence, saying it “is at best only very weak evidence for Daniel’s point.”

I find problems with Ilya’s criticisms of the minimum-wage questionnaire. First, that employment is a matter or contract, not property relations, is immaterial: In the overlordist view, the contract with the overlord is a matter of permissible contracts as well as property issues. Second, Ilya represents the question as asking whether the minimum wage law is a significant coercion, rather than what the question in fact asked, which is whether the law is coercive in a significant sense of that term. Third, he criticizes the sample of respondents, who were economists, who, he says, tend to be utilitarians. I do not see why that should affect how they see the underlying configuration of ownership. Finally, he criticizes the complexity of the question and suggests that respondents may have answered hastily without fully understanding the question. Yes, the question was very unusual and conceptually complex, but such is the nature of asking someone how they conceptualize a matter in terms of liberty/coercion. As for the possibility that the respondents answered hastily, note that the respondents were told that their answers to the questionnaire would be made public and would not be anonymous. They originally put their names into the public realm by signing the “raise the minimum wage” petition, and we proceeded to make our questionnaire public and non-anonymous as well. These circumstances would militate against responding carelessly or hastily.

When designing the minimum-wage questionnaire I wrote the liberty question to get at the issue of this Cato Unbound exchange. The responses show that very few leftist economists answer as Ilya suggested they would, and that a flat-out majority selected the option: “I give little to no weight to that definition of liberty; the minimum wage law is not coercive in any significant sense.” These responses are a unique form of evidence on the very questions with which we are dealing.

In Ilya’s comment he repeatedly quotes me as describing overlordism as the view that “everything is owned by the state.” In retrospect I see that I should have avoided any such simplified variation of the idea – I used those words as a warm-up to the fuller idea elaborated in my original essay. That is, I should have described overlordism only in terms of a contract between the individual and the owner of the substructure/ realm/”flower pot,” a contract that thereby envelopes his actions within the polity.


Klein, Daniel B. and Stewart Dompe. 2007. “Reasons for Supporting the Minimum Wage: Asking Signatories of the ‘Raise the Minimum Wage’ Statement.” Econ Journal Watch 4(1): 125-67. Link

What Surveys Tell Us about Liberal Views of Property Rights

In his most recent rejoinder, Daniel Klein helpfully clarifies his position on liberal views of property rights. He argues that liberals do not believe that “government owns everything,” as he suggested at one point in his original essay, but merely that they think that we have all consented “to an implicit contract with the overlord [i.e. — the government]” under which the state has the right to reorder property rights as it sees fit. He argues that his survey of economists who signed a petition supporting the minimum wage proves that most leftists take this view.

I remain skeptical that this survey proves Daniel’s point. As I pointed out in my last post, the minimum wage question has four important shortcomings for the purpose of addressing the issue we are discussing: it does not actually ask respondents about property rights; it does not test a representative sample of liberal opinion (instead focusing on a subset of economists); a respondent could give the answer emphasized by Daniel without actually believing that the government has any presumptive right to reorder property relations or restrict liberty; and finally the question is complex and confusing.

Let’s take each of these problems in turn. The original focus of this symposium is the relationship between property rights and the state. The subject of economic liberties in employment relations is related but distinct. Libertarians, to be sure, tend to support both strong property rights and strong protection for economic liberties. But one can potentially believe in stronger protection for the former than the latter. Much of the general public takes precisely that view – supporting strong property rights (as in the polls I cited reacting to the Kelo decision in my last post), while also supporting the minimum wage and various other restrictions on freedom of contract. Daniel assumes that attitudes on property rights and economic liberties are closely correlated. This is not always so.

Second, it is important that the survey focuses only on a sample of economists who support the minimum wage rather than left-liberals more generally. As I noted in my last post, many economists are utilitarian consequentialists. To utilitarians, arguments based on liberty or social contract theories are irrelevant except insofar as protecting liberty or honoring a contract might increase social welfare. Thus, a utilitarian could easily say that they give little to no weight to “th[e libertarian] definition of liberty” and that “the minimum wage law is not coercive in any significant sense” without endorsing the view that the government has the right to reorder property rights because we have supposedly consented to it. That is because the consistent utilitarian gives “little or no weight” to any definition of liberty, and likewise believes that no form of coercion is morally “significant” unless it reduces utility (and economists who support the minimum wage presumably believe that it increases it). Perhaps, as Daniel suggests, a utilitarian could believe that the minimum wage is coercive in “a significant sense of that term” even if he does not believe that the coercion is morally significant. But I think that most respondents were likely to interpret the term “significant” in a normative rather than purely linguistic or descriptive sense.

Third, we should recognize that a person could attach “little or no weight” to the definition of liberty described in the question without doing so on the grounds that we have consented to have the state regulate all liberties as it sees fit. Rather, the respondent might simply have a different definition of liberty that he or she prefers. Political philosophers have offered a wide range of options.

Finally, the question is complex and has several moving parts. Daniel is confident that his respondents read the question carefully enough to avoid such confusion, in part because they knew their answers would not be anonymous. Perhaps so, but I am skeptical. Certainly, complex questions of this sort go against longstanding conventional wisdom in survey research. Even if the respondents’ answers to the question were made public, I doubt that those who gave a “wrong” answer would feel great embarrassment; none of the possible choices are likely to harm their reputations. This would diminish their incentive to take great care in answering.

I also continue to believe that the survey data on the public response to Kelo and economic development takings is a much better test of public attitudes towards state restriction of property rights than Daniel’s minimum wage question. The former addressed a representative sample of the general public and actually focused on property rights, while Daniel’s question did not.

Daniel suggests that strong opposition to “economic development” takings is compatible with the “overlordist” view because respondents might simply disagree with the government’s policies but admit the government’s right to enact them if it chooses; alternatively, he suggests that they might believe that the government has violated its “contract” with the people, the Constitution.

The most recent survey question on the subject, however, does not even mention constitutional restrictions on such takings. Moreover, it did not simply ask whether the respondent supported or opposed economic development takings, but whether the government “should be able to” undertake them at all (emphasis added). A “no” answer suggests that the respondent denies not merely the wisdom of these takings, but the underlying right to compel them in the first place. Some 81% of respondents — including the overwhelming majority of self-described liberals — answered “no,” despite the fact that the question wording was in several ways favorable to the pro-taking side.

In a 2008 survey by the Associated Press and the National Constitution Center, some 88% of the public agreed that “private property rights are just as important as other rights like freedom of speech and religion,” with only 12% saying that they are “less important.” This strongly suggests that the vast majority of the public, including most liberals,[1] attach much greater value to property rights than Daniel believes. To be sure, one can interpret this result as proving that the public believes that we have consented to let the government restrict speech and religion (as well as property) as it pleases. But that seems a highly implausible characterization of either general public opinion or that of most left-liberals.

To my knowledge, no one has yet administered a survey question to a representative sample of liberals that would definitively resolve the issue we are debating. Such a question might look something like this: “Do you believe that Americans have consented to allow the government to take away private property rights whenever it chooses to do so?” I am fairly confident, however, that a majority would answer “no.” However, it would be useful to actually administer such a question to see if my conjecture is correct.

Obviously, most of the public — and even more so, most liberals — support far greater government restriction of both property rights and various liberties than Daniel and I do. And a number of leading political theorists and legal scholars do indeed believe that the government is entitled to absolute “overlordship” over property rights either because it “created” those rights to begin with, or because we consented to it. But the available evidence does not support claims that all or most liberals share this view. It is even more clear that the vast majority of the general public does not.


[1] If all of the 12% who said “less important” are liberals, they would potentially be a majority of liberals, since self-described liberals were about 22% of the U.S. population in 2008, according to Gallup. However, it is highly unlikely that all 12% were in fact liberal, with virtually no moderates or conservatives giving that answer. If we, assume, more realistically, that 75% of these respondents were liberal, we get a result under which 59% of liberals believe that property rights and other rights are equally important. And, obviously, believing that property rights are “less important” does not necessarily equate to believing that we have consented to let government override them at will.