Chapter 15 CLASSICAL LIBERALISMS NEED FOR A NEW LEGITIMACY

The political science concept of legitimacy refers to the general acceptance of a social system, a prerequisite for the societys holding together. In his book Political Man, S. M. Lipset says, "legitimacy involves the capacity of the [political] system to engender and maintain the belief that the existing political institutions are the most appropriate ones for the society."1 This is much the same as in The Blackwell Encyclopaedia of Political Science: "The legitimacy of a rule rests upon a sense of obligation within a shared sense of what is appropriate or right."2 Legitimacy is not only a matter of majority assent. There is a crisis of legitimacy if even a significant minority of people militantly refuse to acquiesce in the prevailing system, as was true for generations in Ireland. Because of this, we can see why the "multiculturalist" ideology held to by dominant opinion in the United States threatens a crisis of legitimacy through the "disuniting of America" (to use Arthur M. Schlesinger, Jr.s phrase in the title of a book by that name). This is especially so when the ideology is reinforced by a massive influx of peoples who don't share the common heritage and are implored to retain much of their allegiance to their cultures of origin. This sort of threat to legitimacy has important relevance to the theme of this book, since potentially non-assimilable immigration will continue as an even greater flood as economic displacement occurs in the Third World. The general assent to a market system is threatened as we go into the future because the impending displacement and polarization will falsify many of the factual, theoretical and moral underpinnings of classical liberalism. That philosophy, unless it adapts to the new conditions, will no longer serve the needs of a great many people, who will be desperate and enraged. In the preceding chapter we saw several weaknesses in the market economys theoretical system. Now, in the context of legitimacy, it is important to point to two other clusters of ideas that are central to a market-centered free society and that the new conditions make no longer applicable: The first involves the premise that everybody is basically able to take care of himself. This assumption of human capability, combined with the expectation that the market "will in fact work" as the context for personal independence, is fundamental to "individualism" and is one of the things that stands out most about the vast gulf between the Left's perception of society and classical liberalism's. It is in this context that I find that the world faces a problem not unlike the one that concerned me when I went to attend the Mises seminar in the mid-1950s to ponder the solution to the trade cycle. The issue that looms is whether capitalism the market economy , despite its capacity (in combination with science and technology) to produce abundance, will continue to work for everybody. If it will not, two of the basic assumptions of classical liberalism (a) that people in general can "make it" if they strive with enough character and energy, and (b) that accordingly a free market will lead to a vast middle class are falsified. Classical liberalism's legitimacy (i.e., its acceptability as perceived by

the great run of people) depends upon these assumptions being met. If a massive problem that could falsify those fundamentals doesn't force a rethinking within classical liberalism, nothing will. It is no longer the province just of the socialist critics of capitalism to face the issue. The question of a free markets sufficiency is coming into the laps of precisely those who favor a market system and know the great liberal benefits it can give. Right now, my fellow admirers of a free market can be counted on to deny the existence of the problem on the ground that "the market is always self-adjusting through its price system. Free markets always clear themselves of the goods and labor that are offered." If that holds true, there should be no chronic displacement, only the frictions of adjustment. But recall this: that hundreds of millions of people shifted from agriculture into industry during the industrial revolution; that in recent decades, millions more have shifted from industry into the "service sector" as industry has needed relatively fewer workers to produce an ever-increasing volume of products or has imported goods made by low-pay foreign workers; and that, as a final step, much of the American focus has most recently shifted to finance, moving away even from service. Where, then, do the millions or even billions of people go, for the earnings that will allow them to live and to be consumers, when non-laborintensive technology more and more diminishes the amount of labor needed even for service functions (and relatively few people are needed to work in the financial sector)? Will people be picking up scraps and hoping that those will provide them the means to be consumers at the lush table that technology can set? The British economist Lord Robbins told how essential it is that the market be wellfunctioning in serving the basic needs the population: ...however much you may believe in liberty for its own sake, you are unlikely, unless you are mentally unbalanced, to recommend liberty if there is reason to believe that liberty must necessarily involve chaos. Therefore, before the leaders of eighteenth- and nineteenth-century liberalism could recommend liberty in economic relations, it was necessary that there should exist a body of thought which showed, or which purported to show, that, if left uncontrolled save by due process of law, individual initiative in the economic sphere would not lead to economic disaster: that is to say, it was necessary to show that the interplay of spontaneous self-interest would harmonize with public good.3 The Left has long believed that individuals are molded and impinged upon compellingly by the context within which they live, so that their setting is almost entirely responsible for what they become. To this view, if a person fares badly economically, it is because of factors beyond his control; or if he acts criminally, it is society's fault more than his own. Classical liberalism has disagreed with this in three ways: First, it has believed individuals bring considerable vitality to life, so that they are not simply plastic figures acted upon and molded. Second, they have held that a society should work to create a setting in which a "moral imperative" toward self-reliance

becomes internalized within the individual in the form of self-discipline. This isn't thought of as something an individual does for himself, although he can contribute to it; the expectation is impressed on individuals by family, church, school and community. Although pressed on the individual from outside himself, the internalized ethic serves not to negate but to reinforce his self-sufficiency. Third, classical liberalism has believed that the other circumstances of life are not monolithic, especially in an advanced civilization, but offer the individual a variety of possible influences from which to choose. A saloon may be next door, but a library is just in the next block. I have very much favored the classical liberal perspective on these things, which I have discussed at length in Chapter 7 of my book Modern Social and Political Philosophies: Burkean Conservatism and Classical Liberalism.4 But now there is a reversal: if a non-labor-intensive technology either creates vast unemployment or marginalizes work in a society deeply divided between rich and poor, the Left's perspective comes true, and classical liberalisms is falsified. It isnt too much to say that the implications of this reversal are earth-shaking. The individual won't be able to take care of himself or his family and not because of any failure on his own part that could be corrected by society's putting more emphasis on self-reliance. It won't be caused by anybody's failure, but by the very success of the technology. It is no wonder that Anthony Harrigan, a conservative thinker whose ideas resonate with a profound insight into life, felt moved to write me after he read my initial article on this in late 1996: "You have the full, albeit terrifying, vision of the grim reality we face with a near-workerless society. And I agree that the situation will cause the collapse of all our economic notions."5 The second cluster of classical liberal ideas that will no longer hold true is normative: the rationale for property and earnings. The preceding chapter discussed this in detail. Now, as we note its relation to the issue of legitimacy, we see that much that we have discussed before comes to bear. A vast polarization or displacement due to technology will cause the legitimacy of much property and earnings to evaporate. We have seen how a century ago Henry George made the point that land and minerals should be considered community property. Most supporters of limited government thought it wise to ignore his point. But now the new technology extends the question much further, and we are forced to ask, as we did in the preceding chapter, whether the extreme wealth created for some is due entirely to their contribution or is due instead, at least in major part, to the technological, global market system that they have merely stepped into. Hundreds of millions, even billions, of people will have good reason to deny the justice of such polarized wealth. Those who grow enormously rich from a hyper-technological economy or complex financial architecture, no matter how talented they are, will not themselves have created the context in which they have thrived. As we have noted, it will have been created by countless people before them. It will be intolerable for a few to draw incredible wealth from it while others, dispossessed by the technology's drastically reduced need for labor, are able to earn little or nothing. Much of the wealth going to those who are highly remunerated will be an "unearned increment" in Henry George's sense. This will deprive the system, as it has existed, of its moral sanction. Success wont correlate with ability, virtue or economic contribution. It will no longer be possible to say, as present market theory so resolutely insists, that "the income must be considered earned, since it was received through voluntary contract." That was a valuable premise so long as there was a market for work that everyone could participate in. But such a rationale is rapidly evaporating.

Moreover, our normative system based on work will be gone. It is ingrained in us to rank people according to their economic success and by what profession or skill gives them stature. Americans live in a credential-, career-oriented society. Competitiveness is not just a virtue, it is a necessity. When that is gone, entirely new ways of thinking and of relating people to each other will necessarily develop. This will be a sea-change from classical liberal culture. Our review of classical liberal philosophy spoke of its belief that differences in outcome inevitably arise from individual freedom. This sort of inequality has been just and valuable within a market society. But when the market no longer has a place for people who want and are able to work, the inequality will be of a different sort, and the rationale that justifies it as valuable will have disappeared. In any restructured social system that has a competitive market as a central feature, such as in a shared market economy, it will be necessary and justifiable to reward innovation, work and creative effort by those who engage in that market. But these rewards will be subject to limits and to the needs of a broad distribution. These, too, will be necessary and justifiable. The shock to classical liberals is palpable. The shock will be in part because the proposal of a "shared market economy" corresponds to major aspects of the Left's program and outlook: (1) it makes provision for people who won't otherwise be able to do so for themselves through the market economy; (2) it is premised on a perception that the market won't work for the benefit of everyone under coming conditions, which at least superficially seems to support the criticisms socialists have made all along; (3) it calls upon the state as a helpmate; and (4) it downplays competition and the work-ethic as a way of life, just as socialism long has. The idea of guaranteeing every American an income by having each person own a share of the economy will probably be an easy one for present-day American liberals (and the "moderates" who follow them) to accept. The idea of a "guaranteed annual wage" has been around within liberal circles for many years. The question, however, will be whether these Americans will care about the potential for statist abuse that this amount of "government intervention" can involve. Pursuant to classical liberal principles, I would have us separate the mechanism for economic-sharing from the other functions of the state. Most twentieth century liberals (modern liberals) have considered such worries a chasing after goblins. They have been ambivalent about the state. In performing what they see as its beneficent functions, the state has not seemed to them to be a dangerous instrument. On the other hand, they have strongly asserted rights that would protect their ability to dissent from the societys mainstream, and they have seen themselves as protectors of individual rights as they have asserted the claims of minorities. (The New Left, with its attack on the "militaryindustrial complex" instilled some fear of the state and has had much influence on liberal thought, but raised the point as part of a far-reaching attack on modern liberalism itself.) Be all this as it may, a shared market economy is something that free-market supporters ought well to favor as a way to continue to serve important classical liberal values under vastly changed conditions. It will retain the dynamic innovation and nexus of personal freedom that comes from a competitive market economy, while at the same time assuring that the productivity of that economy serves the people in general, maintaining a broad middle class. As we saw in Chapter 5, a vast displacement of workers and/or transformation of all economic effort are certain to occur, as well, in the less developed economies. Classical liberalism, if it continues to aspire to be a

philosophy of potentially universal application (with or without a messianic impulse to impose itself), will need to speak to the needs that emerge on a worldwide basis. There will be a crisis for any peoples who will not then have the wealth-producing technology. Many of classical liberalisms values will continue to be highly relevant. As we review them, we can see that these will fit in well with the aspirations of other points of view and can form the basis for a new legitimacy. a. One of these is the desire for limited government. Up to now, this ideal has prevented American conservatives and libertarians from supporting the redistributionism that has been so prominent a part of American life since the New Deal. But now it is worth noting that a comprehensive system of distribution can actually lessen the intricacy and volume of governmental activity. Milton Friedman had this in mind a few years ago when he recommended a "negative income tax," a guaranteed floor under incomes which he emphasized should replace all other programs of governmental assistance. Once a system of general distribution exists (and the coercive potential which resides in the possibility of its discriminating on political, religious, ethnic or other grounds depending upon propensities under varied historical conditions is guarded against by safeguards as extensive as those now employed to protect against meltdown in nuclear reactors), it becomes possible to talk again of a more constrained state with regard to its other functions. Supporters of limited government will think it ironic that socialist thought has long discussed this possibility. It was even involved in the "withering away of the state" that Marx talked about. As with all of this, the irony allows a convergence of classical liberals, libertarians and anti-statist socialists. Cultural conservatives will find the convergence agreeable because they prefer to look to the rich texture of life itself rather than to the state. b. What the Left has long derided as "bourgeois decency" will become critically important. It may surprise those on the left to find that it is something they themselves will come to value. I say this because of impending changes in the relation of the Left to the predominant society. As we have seen, there is reason to hope that the alienation that the intellectual subculture has so long felt toward the commercial middle class will largely disappear in an age when the market is not central to peoples' lives. Much of the condonation for deviant behavior today has ideological roots: it comes from the alienation's support for anything that is at odds with the predominant middle class. If that ideological factor dissipates, a consensus of thoughtful, sensitive and productive people may well form to insist on types of behavior that are generally acceptable. If not, there will be a potential social crisis. Earlier, we saw the danger that in an age without work a great many people may conceivably become a replica of Jonathan Swift's monstrous Yahoos as portrayed in Gullivers Travels, with rational, more elevated people withdrawing into enclaves of their own. It isnt possible in advance to know the effects of there being a great many people who have little, if any, work to do. They can fill their lives in countless ways, on a continuum from the creative and selffulfilling to the destructive and dehumanizing. Jeremy Rifkin looks ahead to peoples being occupied, as they are now in jobs, in an independent or volunteer sector where a person gives ones time to others. He points to the 1,400,000 nonprofit organizations that already exist in the United States. Community service is a revolutionary alternative to traditional forms of labor It is neither coerced nor reduced to a fiduciary relationship. He sees this third sector as a place where personal relationships can

be nurtured, status can be achieved, and a sense of community can be shared.6 Jose Ortega y Gasset warned that many millions of people are content to recline back in life, not putting expectations upon themselves, but have nevertheless become omnipresent by their sheer numbers. (An example is the intrusive noise that is now ubiquitous in the United States from the boom boxes in passing cars.) He decried the fact that they set the tone of the society. It will become harder, in fact, to know just what it means to be a slob under the new conditions. We have always judged each other in the context of the work ethic. Substitute standards will evolve within a given culture. There is danger in saying too much about it before the situation arises. It is a vastly important issue that our grandchildren will have to work their way through. John Howard, a former president of Rockford College, has written me that I find your analysis every bit as demanding of new thinking in the realms of religion, education, the family and literature as in economics. The coming generations of youth will be faced with disorienting uncertainties in the decades ahead beyond anything the present leadership can imagine. The need to imbue the young with deep-rooted serenity is profound. They must be armed not only with self-confidence and self-importance, but with humility, courage, and above all faith.7 The question of the meaning of life will loom larger than ever in a world where boredom is a distinct possibility and appeals to hedonism are powerful. What are we to be? What am I to be? What is my self-worth? Never will the questions have been posed with such urgency or with so many alternative answers. Socially revolutionary changes are likely in matters of sexual relations, marriage and family, especially as the human lifespan becomes increasingly long. Monogamous marriage has been an underpinning of an individualistic society for several reasons, but those reasons will become strained under totally new circumstances. It will be a challenge to people in the future to make a given societys responses constructive. As someone who values a free society, I would favor the allowance of much individual choice. There is a totalitarian frame of mind that insists that everyone think and act alike. There are cultures in which precisely that sort of preference prevails. That isnt my choice for the society in which I live. The decency that is desirable need not be Puritanic or bluenose. What will be essential will be to nurture all the elements of acceptable life within a human community: manners reflecting a respect for others, honest dealings, self-cultivation, elevation, devotion to one or more of the myriad of things that have meaning to people. (Those on the left will notice how closely this approximates the sort of life Edward Bellamy envisioned in his late-nineteenth century socialist best-seller Looking Backward. Bellamy saw pooling as an underpinning for individual self-expression.) c. Intellectual humility is another. The mass distribution system will have adopted a mechanism that in the past would be associated with collectivism. Does that mean that collectivism rather than individual liberty must result? Will people have to become marshaled under banners, marching in martial spirit to beating drums, or repeating sayings out of a "little red book"? Not if the intellectual humility inherent in classical liberalisms respect for the individual has its way. The same desire to stay out of peoples way has actuated anarchist thought, itself a powerful undercurrent historically within both the Left and the Right. The conflict between, say, Caesar and Jefferson will still be with us, and it will cut across the old

ideologies. d. Finally, private property will play a central role. As we saw in Chapter 3, the shared market economys system of general distribution will be based on using, not repudiating, private ownership. I haven't tried to obscure the fact that this will use what is essentially a socialist mechanism, in that it will involve an ongoing distribution of income from corporate shares through means other than the act of exchange. But, given the broad distribution of shares in index mutual funds, there is no reason the system of private property cannot remain central. Not just consumer property, but also "the means of production," can and should remain in private hands. I have already explained how this will need to be qualified by a framework of corporategovernance rules and implementation of the concept of "unearned increment." This will change the private property system significantly but won't destroy it (unless the concept is applied for its destruction, which is something very much to be avoided).

ENDNOTES

. Lipset is quoted in the entry on "Legitimacy" in The Concise Oxford Dictionary of Politics, Iain McLean, ed. (Oxford: Oxford University Press, 1996). 2. Entry on "Legitimacy" in The Blackwell Encyclopaedia of Political Science, Vernon Bogdanor, ed. (Cambridge, MA: Blackwell Reference, 1991). 3. Lord Robbins, Politics and Economics: Papers in Political Economy (New York: St. Martin's Press, Inc., 1963), p. 8. 4 4. This book, and all of the authors other writings, are available free of charge on www.dwightmurphey-collectedwritings.info 5. Letter to me from Anthony Harrigan dated October 4, 1996. 65 . Jeremy Rifkin, The End of Work (New York: G. P. Putnams Sons, 1995), all of chapters 16 and 17. 7 . Letter to me from John Howard dated November 22, 1996.
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