Digressions&Impressions

Effective Altruism and Gary Becker

The conclusion is that firms making cash transfers because of their altruism obtain greater utility than other firms with the same preferences and market opportunities who subsidize customers, workers or suppliers. Consequently, firms making cash transfers are more likely to "survive" because they do better than firms using market transactions to convey their altruism. Although participants in market transactions may be highly altruistic, they act as if they are selfish and maximize their money incomes. They express their altruism through cash transfers not tied to market transactions, as dramatically illustrated by the enormous charitable contributions by allegedly selfish captains of industry in the United States at the end of the nineteenth and the beginning of the twentieth centuries.'--Gary Becker (1981) Altruism in the Family and Selfishness in the Market Place, Economica, New Series, Vol. 48, No. 189 (Feb., 1981), 11

As regular readers know (recall), because of Melinda Cooper's excellent Family Values, I have been re-reading neoliberal texts in light of their analysis of the family. Gary Becker's work on the role of the family of making the division of labor possible is crucial to her argument (see p. 10 in linked piece), and something I wish to discuss in the future. But the passage above caught my eye because it is a quasi-Darwinian style of argument (indebted to Alchian and Milton Friedman in the early 1950s) that shows, in context, why cash transfers are more "efficient." And while the official point is not to make the normative argument that we ought to prefer expressing our "altruism through cash transfers not tied to market transactions," the rhetoric of the passage leaves no doubt that's implied. It turns out that the "captains of industry" are worth emulating for  their altruism!

Now, this idea is a core feature (see here) of the so-called effective altruism movement which ordinarily is traced back to Peter Singer's writings, especially his (1972) "Famine, Affluence, and Morality."  When the efficiency of cash transfers is connected to the idea one can give most and so generate highest utility if one makes a lot of money in market economy, one can obtain the result that a successful mergers & acquisition consultant who annually donates 70% of her salary to Give Well does more good than most aid workers in crisis areas. Critics dislike this feature of effective altruism not because it violates our intuitions but because it may well be that market transactions actually generate the structural causes that do -- or the political forces that reinforce -- real damage to people's lives.*

As it happens, Becker's argument is articulated in terms of "effective altruism" and "effective altruist." A google-scholar search (1900-1981) shows nobody used the term "effective altruist" in a scholarly context before Becker's influential article. (This surprised me!) And if we search on "effective altruism," the term gets used extremely rarely (see especially Quinton's (1973) Utilitarian Ethics) and never in this specific context. For example, granting Bradley that "it is, no doubt, true that a consequentialist manner of reasoning in morals leaves more scope for self-regarding distortion," Quinton writes, "on the other hand it also leaves more room for apt and effective altruism than a set of rigidly unconditional specific principles." (96; I thank Neil Levy for locating this passage.) This foreshadows the ruling idea of the movement, but it is underdeveloped in Quinton.

Now, by linking these ideas to Becker I mean to suggest that the effective altruism movement has clear neoliberal features, in particular, the technocratic wing of neoliberalism. Of course, I do not mean to deny that elements of the effective altruism movement are developed independently from Chicago economics and its cultural influence. But I got thinking about the links because of the following passage in Becker's article: 

The effect of a little altruism on cooperative and efficient behaviour can be illustrated by Good Samaritan situations (see the analysis in Landes and Posner, 1978). A selfish person encountering someone drowning, being assaulted or in other dire circumstances would refuse to help without the expectation of monetary or psychic compensation. An altruist, however, might help even if he became exposed to danger, and even if his altruism were sufficiently weak that he did not help in any way prior to the misfortune. Although the marginal utility from helping might have been small prior to the misfortune, the total increase in utility to the altruist from helping could exceed the disutility of the effort or risk involved because of the large imminent decline in the victim's welfare. Note that this example shows not only how altruism can induce efficient behaviour where selfishness fails, but also how altruism can significantly change behaviour even when the altruism is weak. (10)

Landes and Posner (1978) is "Salvors, finders, good samaritans, and other rescuers: an economic study of law and altruism," which is a famous article in Chicago law and economics. It discusses rescuing drowning people cases in terms of "the economics of altruism." (Altruism is understood in terms of lack of expectation of compensation.) And they offer a utilitarian model to do so that clearly anticipates Becker. But their interest is really in to what degree the law should require compensation for failures to rescue. (Their prototypical case is: "A drowning man cries for help, a strong swimmer ignores his cries, and the man drowns. Is the decedent's estate entitled to damages from the swimmer?"

Now Landes and Posner do not cite any philosophers. As regular readers know (recall) drowning child/adult cases have a long history in philosophy, from Mencius to Sophie de Grouchy, to motivate (the existence of) natural compassion. But the central example for our present purposes is Peter Singer's own famous drowning man case:

 If I am walking past a shallow pond and see a child drowning in it, I ought to wade in and pull the child out. This will mean getting my clothes muddy, but this is insignificant, while the death of the child would presumably be a very bad thing. Singer (1972) "Famine, Affluence, and Morality."  (231)

Here the case is used to motivate the idea that, "if it is in our power to prevent something very bad from happening, without thereby sacrificing anything morally significant, we ought, morally, to do it." This duty itself does not require commitment to utilitarianism, but in Singer's hands it is a key step toward the idea that "we ought to give until we reach the level of marginal utility-that is, the level at which, by giving more, I would cause as much suffering to myself or my dependents as I would relieve by my gift."

Now, in his main line of argument, Becker is thinking about altruism in terms of a kind of intra-family insurance scheme. And so I don't want to suggest that he and Singer agree on all important issues. And I don't think Becker ought to accept Singer's strong version of his intuition. After, all Becker wants to explain why altruism, even at considerable cost to oneself, can be genuinely utility enhancing even efficient. (And, in fact, he can explain why all things equal altruists tend to be more responsive to disaster relief than prevention.) I don't want to claim that Singer influenced Becker. 

Okay, let me wrap up. It is conventional wisdom to think that in the nineteenth century, the economic, normative, and psychological branches of utilitarianism were tightly bound up with each other. And that in the twentieth century, as economists moved to revealed preference, these connections weakened if not dissolved. Much (PPE style) research in policy relevant philosophy on, say, inter-generational justice and climate policy, shows that utilitarianism is not exhausted as a living tradition in which the different branches influence each other.

And, if we look at the history of the effective altruism movement, it is undeniable that some of its most important ideas were developed, perhaps independently, within Chicago economics and law & economics. And so when critics say that effective altruism is neoliberal in character, they have a point. Some other time I'll explore if effective altruism also inherits the problems (and benefits) I associate with Chicago.

 

On Milton Friedman, Political Realist, and American Empire; On Brouillette on Melinda Cooper

Most important of all, floating rates would enable us to separate issues and determine our national policies on the right grounds. Monetary and fiscal policy could be directed toward pursuing internal stability without being hamstrung by the. balance of payments. We could decide how much foreign aid to give in terms of our resources and our values, not by the irrelevant consideration of the currency in which it is expressed. We could instruct the military to buy in the cheapest market and keep the real costs to a minimum—not turn them into a foreign exchange authority. We could conduct foreign policy in terms of our true national interests—not in terms of the effect on gold flows. We could behave in foreign trade like a great nation, not like a mendicant, by unilaterally moving toward freer trade without having to be concerned about balance-of-payments problems.
This last point perhaps deserves a slight digression. Not the least of the advantages of floating rates, in my opinion, is that it makes it so much easier for the layman to understand the merits of free trade. With rigid rates, the first effect of a reduction in tariffs is an increase in imports without any immediate effect on exports. It looks as if imports have simply displaced domestic products and so produced unemployment. It takes a subtle chain of reasoning to show that this is only part of the story, that the increase in imports will have indirect effects that will ultimately lead to an expansion of exports so that the final result is an increase in foreign trade not an increase in unemployment. And, indeed, with our present nearly paralyzed adjustment mechanism, the indirect effects may be long delayed and highly unreliable.

With floating rates, a reduction in tariffs will also produce an attempted increase in imports. But how can this be realized? Only if the importers can get some foreign exchange. To do so they will bid up its price which immediately makes exports more attractive to foreigners. The first effect of a reduction in tariffs is thus a rise in the price of foreign exchange and a simultaneous increase in imports and exports. There is not even a temporary importation of unemployment.--Milton Friedman (1967), "First Lecture" in The Balance of Payments: Free versus Fixed Exchange Rates, American Enterprise Institute, 17-18

The passage above caught my attention for a number of reasons. First, the slight digression shows Friedman's sense that, in a democracy, public policy relies on public opinion. And he assumes that perceptions of policy X (free floating exchange rates) can influence perceptions of policy Y (free trade). (A further assumption is the Humean one that people are more easily swayed by direct perception than long or subtle chain of reasoning.) And that he sees clearly the linkages among distinct policy aims. Public support of X can lead to public support of Y. We see Friedman here showing his policy-sensitive skill of playing chess on multiple connected boards. To be sure, Friedman's support of X is not merely instrumental. Most of the lecture offers distinct arguments for it. 

Second, Friedman's argument in the first quoted paragraph is very much couched in terms of national greatness and national interest. (It is not obvious these always point in the same direction, but for great powers they do.) This is very much a realist rhetoric meant to appeal to the national statesman. Friedman is far removed from the attacks on nationalism one can find, say, in neoliberals like Mises. 

To be sure, Friedman is also committed to the idea that gains from trade and free floating exchange rates are mutual. So, he is not advocating polices that necessarily make other states poorer. But he is advocating removing a clear constraint -- concern over balance of payments -- on American freedom to maneuver in foreign affairs and so be able to pursue its national interests. 

This matters also for the critics of neoliberalism. In her perceptive review of Melinda Cooper's Family Values (a book I have recently praised here (see also here)), Sarah Brouillette notes that the age of the Fordist family wage to which many critics of neoliberalism seem to pine "was also hugely resource extractive and suburbanizing. The capacity to redistribute wealth more evenly in the US was, in addition, contingent upon broader economic transformation that required dispossessions, expulsions, enclosures, primitive accumulations, US hegemony propped up by global wars, and the origins of the whole phenomenon of US industrial triumph after WWII in wartime accumulation and relative devastation across Europe."+ 

The question is to what degree US Hegemony was the cause of the capacity to redistribute wealth more evenly in the US or an effect of such domestic Fordist/racialized egalitarianism or both were the effect of economic might. Brouillette assumes  that "the accumulation of wealth requires these devastations." But that's to say not jus the marxists were right (exploitation is endemic to capitalism), but the mercantilists were right all along. There is no possibility of mutual gain. Here I do not intend to resolve this. Just register my skepticism.

Rather, Brouillette is right to note that behind the debates over the ways in which neoliberals displaced the efforts to extend the Fordist family wage to other groups, is a wider debate over foreign policy. Or to be precise, Friedman saw that getting domestic policy right was also a means to American hegemony. Any reckoning of neoliberalism, its virtues and vices, must (recall) confront its role in facilitating empire. 

On Mestmäcker; Ordoliberalism (vs Libertarianism), and the EU

The rhetoric of Bentham's critique must not prevent us from recognizing the very real difficulties that go with the implementation of individual rights limiting or modifying the binding force of legislative acts. Bentham points out uncertainties of interpretation and application that, to this day, trouble judges and law-makers. They concern the applicability of human rights in private law relations, particularly in family law and labour law; the limits of human rights where strict discipline is required as a matter of law as, for example, in the military; and finally, the balancing of legislation by majority rule and the power of courts to interfere with or declare void, specific legislation.
To take these objections seriously does not mean that they are dispositive. Experience shows that, on balance, the benefits of protecting individual rights justify its costs. One reason is foremost in this context. It is the protection of minorities and of individuals against the majority. "Even in republics", James Madison observed, "a danger to the minority arises from opportunities tempting a sacrifice of their rights to the interests real or supposed of the majority" Just as relevant is the finding that even the most conscientious and equal-handed legislator is unable to foresee the actual effects his legislation is going to have upon individual liberties. Those effects are dependent upon a great variety of present and future circumstances. Judicial review of these effects in individual cases is the only effective remedy.

These observations are directly relevant for the jurisprudence of the Strasbourg institutions on human rights. The difference to individual rights recognized in the EC is one of degree only. Some of these protect personal interests similar to human rights in general...Although European law is based upon international agreements and its source is still the sovereignty of Member States, it is no longer the instrument of implementing the will of national sovereigns. In the light of these developments, Community law may be defined as a federalized and functionally limited legal system. Ernst-Joachim Mestmäcker (1994) "On the Legitimacy of European Law" The Rabel Journal of Comparative and International Private Law, 625-626 [emphasis added!--ES]

As I have said before (recall here. here, here), Quinn Slobodian's Globalists introduces a significant number of interesting and sometimes influential twentieth century neoliberal thinkers which do not ordinarily figure in the polemics surrounding neoliberalism. One of these is the Ordoliberal jurist Ernst-Joachim Mestmäcker, who was a "special adviser to the Commission of the EEC from 1960 tpo 1970." Now, it turns out I had encountered his name before, in 2005, when I was starting to research my paper on Milton Friedman and the Chicago Boys (in Chile). At the time, I wrote Bruce Caldwell -- the world's leading Hayek scholar -- for some leads.*

In his email response to me, Bruce kindly gave me some advice and offered some background. This background included the circumstances of an invitation to Hayek to Chile in order to be (now quoting from his 2015 article with Montes) "Honorary President and Council Member of the newly formed Centro de Estudios Públicos (CEP, or Center for Policy Studies)."+ CEP also hosted a conference which included some of its other foreign council members. In his 2005 email to me, Bruce wrote (and I quote with his generous permission), "The others who attended were Theodore Schultz, Armen Alchian, Ernst Mestmacker (I don't know him), and Chiaki Nishiyama." With the benefit of hindsight I am struck by Bruce's candor of ignorance about Mestmäcker and my own lack of further curiosity. As it happens I did investigate Alchian, who has (recall here and here) ended up important in my story about the displacement of Knightian uncertainty. I write this not to make fun of Caldwell. It is just to note that knowledge about the Ordos that played an important role in the Bonn republic and the development of the EU was really relatively scarce even among specialist scholars (like myself) in the English speaking world. (Much of what I know about the Ordos has been taught by Stefan Kolev.) 

Okay, now let's turn to the texts. At the end of the quoted passage, Mestmäcker mentions a theme discussed throughout his writings. For Mestmäcker the original source of legitimacy of European treaties can be found in the democratic sovereignty of the member states. (This was especially so when each of the member states had a veto power.) These express a kind of general will. Now, to be sure, Mestmäcker is no fan of Rousseau's doctrine of the general will, but he recognizes that in social and historical context Rousseau's views are a kind of shared background commitment in European liberal democracies. And he recognize the significance of such commitments. But the treaties tend to be too vague (or too full of compromises) and, like all law, encounter new circumstances. So, in practice, European courts develop (much like the common law tradition) the treatises into European law on a case by case basis. Mestmäcker thinks this is a good thing. In fact, let me quote one of his most characteristic passages (from another (1972) article):

The historical and political importance of the Rome Treaty lies not least in the fact that it has provided the hundations for progressively restraining economic power through the development of Community law. Against the background described, this attempt is of value as a model for the development of international economic law not only in Europe. (621)

That is to say, and this echoes the preamble of the treaty of Rome ("ever closer union"), Mestmäcker sees the EU as an unfolding work in progress in which developing law functions (a) as a means of integration. It is also, simultaneously, an exemplar to other such regional integrations. Mestmäcker, too (recall), is inspired by Kant's Perpetual Peace! But this means that as law develops away from its original source democratic control and so legitimacy is reduced. That's a feature not a bug. To see why, we need to realize there is a second function of law: it is explicitly aimed at (b) "restraining economic power," that is, cartels and other rent-seeking economic elites (Mestmäcker often writes of multinational businesses and unions in this way; today he would surely include oligarchs). In so far as law does so, and becomes impartial, and -- as part of an economic constitution -- generates a kind of second order output legitimacy. This output is both economic (growth, no concentrated economic power) and legal-moral (human rights are protected in an impartial, rule-governed way). 

I don't mean to suggest that democratic legitimacy cannot be renewed. In the European context, treaties end up being updated and refreshed rather regularly by the (sovereign) member states. So, there is a kind of tacit democratic and explicit ongoing legitimacy to law as developed by the European courts. 

Yet, the point of (b) raised an important issue. Mestmäcker understands politics as a realm of competing interests from which one is unlikely to expect neutral legislation. He rejects both the tacit idealism about politics and its black-boxing of the earlier (recall here and here) generation of neoliberals. But it also means the treaties themselves are going to be sub-optimal from the perspective of, say, protecting minorities. I return to this below.

In the passage quoted above the post, Mestmäcker rejects the Benthamite critique of rights on empirical, even cost-benefit grounds. As it turns out, societies that protect rights may incur some costs, but also gain, in the right circumstances, many considerable benefits (moral, legal, and economics). Many human rights can also good for the economy over time. 

While some readers may be made uncomfortable by Mestmäcker's pragmatic defense of  rights, I want to close with a different issue. In the passage that I highlighted above ("Judicial review...is the only effective remedy"), Mestmäcker tacitly rejects a number of alternative remedies against the rent-seeking and other oppressive practices by majorities: 1) compensation of the minority by the majority; 2) moral appeals by the minority to the majority; 3) medium term effects of economic competition; 4) exit.** We may say that the first two are much beloved by democratic theorists, while the latter two are beloved by folk with sympathy for libertarianism (with an economic flavor).  Mestmäcker' does not expect much from the political arena to redress wrongs it generates, but he is equally unlikely to expect the market to solve them.

So, for Mestmäcker,  judges must, when they do their job, find ways to make the law more impartial and side with the vulnerable against majorities. This is a normative desideratum that Mestmäcker puts on them. The problem is not that judges may lack democratic legitimacy (although Mestmäcker does worry about it). Rather, that the judges are themselves products of particular political cultures (if not indirectly simply political appointments in disguise). This tension seems to me unresolved in his thought, and difficult to resolve. 

 

On Haberler, Bretton Woods, Keynesianism vs Neoliberalism, reconsidered

The recent movements toward integration are often regarded as an entirely new development which has been envisioned and proposed by many but has never before made headway on a significant scale. I submit that this is true only in a formal and narrow sense. Looking over the evolution of the world economy during the last two hundred years or so, we can clearly discern three big waves of integration-preceding and dwarfing the regional integration movements of the last ten years. The secular trend toward integration and growth of the world economy was interrupted by one period of sharp decline and disintegration...

The first wave was the internal integration of the economies of the nation states which we find today on the map of the world. The economy of Great Britain was the first to be unified and integrated, the French and American followed soon after. Later came other Continental European and overseas countries.
The second wave overlapping or, if you prefer, superimposed upon the first was the free trade movement that reached its high point at the end of the 1870's. The movement towards freer trade was reversed in 1878, but despite the fact that in most countries tariffs became higher and higher, world trade continued to grow rapidly up to World War I. For the underlying forces of rapid technological progress in transport and mass production, as well as massive migration of labor and capital toward the regions of "recent settlement" in the Western Hemisphere, Oceania, and South Africa, still dominated over increasingly protectionist commercial policies in many parts of the world...

The third wave of world-wide integration and growth started soon after the end of World War II, gathered momentum after 1948, and is still in progress. It has been centered on and propelled by the spectacular recovery and rapid growth of all industrial countries, including the United States and United Kingdom, notwithstanding their recent troubles and their lower growth rates compared with the Continent of Europe and Japan. Contrary to what is often said, the prosperity of the "industrial centers" of the world economy did spread, though not as rapidly and fully as one would wish, to the "periphery" of the less developed countries, to use Raul Prebisch's picturesque designation of the two areas. This wave of world-wide integration has had more powerful and beneficial effects than the much more advertised and talked-about series of regional integrations.--Gottfried Haberler Integration and Growth of the World Economy in Historical Perspective, The American Economic Review, Vol. 54, No. 2, Part 1 (Mar., 1964), 2-3

One of the really great features of (recall) Quinn Slobodian's (2018) Globalists : The End of Empire and the Birth of Neoliberalism, is his recovery and insistence on the significance of people associated with so-called Geneva school of neoliberalism. A central figure in his narrative and, this school, is Haberler (who spent most of his professional life at Harvard--the quoted lecture is a Presidential address of the AEA.) A key point Slobodian makes is that by working through international institutions, the guided development of international law became a means to constitute a neoliberal order. I think this is right, and also helps explain much about the contemporary global order and the European Union.

Now, if we turn to the quoted passage Haberler, he offers a stylized historical account of three waves of world integration.* Haberler thinks such world integration is a good thing. In the first, the mercantile state creates national markets with freedom of movement of people and goods. In the second, such (partially liberal) states create (relatively) free, globalizing trade regime as part of their imperial projects. There is much to be said about the role of illiberal agents producing liberal outcomes.

Crucially, for my present purposes, Haberler thinks he is (ca 1964) living through the third such wave of world integration. As my students noted, this entails that he views the Bretton Woods regime as a positive era of world integration. Since they associate Bretton Woods with the age of Keynesianism, they were surprised by this because they tend to see neoliberalism and keynesianism in contrasting terms. 

But upon reflection Haberler's on balance positive evaluation of the Bretton Woods regime is not surprising because it has many characteristics that neoliberals pined for during the disintegrating age between 1914-1945. In particular, Bretton Woods operates under a (modified) gold standard and is committed to free trade with the lowering of barriers that prevent it). Haberler plays a crucial role in developing the GATT framework that facilitates this latter point.

As an important aside, I do not mean to suggest only neoliberals could endorse this. After all, Haberler's famous (1958) report, Trends in International Trade, was co-authored with Jan Tinbergen (later the first Nobel laureate in economics), who was no neoliberal (but social democrat) and James Meade (another Nobel laureate) also no neoliberal. (The fourth co-author Roberto de Oliveira Campos is harder to classify, but I am willing to grant he may be thought neoliberal.)

That is to say, it makes sense to see the Bretton Woods system as, in part, a neoliberal project because that is how people like Haberler see it. But one that also fit the aspirations of cosmopolitan social democrats and neo-Keynesians in many ways. (I don't mean to suggest all neoliberals would agree with all elements of Bretton Woods.) When Bretton Woods collapsed, neoliberalism had to reinvent itself or at least it opened the door to more radical policies (now associated with names like Milton Friedman and even Hayek). But if we see Bretton Woods as neoliberal, then we can discern how over time the EU became a kind of mini Bretton Woods. But about that some other time more.

One final observation (connected to the thought I just left hanging): the polemical point lurking in Haberler's ideal-type history is worth mentioning: he thinks regional integration -- such as the one associated with European Union -- risks undermining world integration. And his lecture can be understood as a plea for sticking with the global multilateral project as distinct from both nationalist protection, which he thinks is a recurring temptation Stateside, and regional integration, which he thinks risks protectionism at the expense of exports of the developing world.

On a Nazi and a Nürnberg prosecutor in the history of Neoliberalism

In fact, the British case against the expropriation of Anglo-Iranian Oil was one of the most important signals to the inter-national business community that new standards were necessary for more robust protection of foreign property. The German Society’s president, the Deutsche Bank head Hermann Josef Abs, who had over-seen the expropriation of Jewish property in the Third Reich, became an international spokesperson for property rights in the second half of the 1950s. After the Society drafted an “International Convention for the Mutual Protection of Private Property Rights in Foreign Countries,” Abs made his case before the American Society of International Law in 1956 and, most influentially, in a San Francisco speech at the International Industrial Development Conference on October 15, 1957, in which he cited the ICC statement. The speech, titled “The Safety of Capital,” was reported in Time magazine under the headline “A Capitalist Magna Carta” in an issue that featured Ludwig Erhard on its cover. Abs’s proposal opened an international conversation on the rights of the investor. His “capitalist Magna Carta” would oblige signees to abstain from “direct or indirect illegal interference” with “foreign cap-ital” and would create an International Court of Arbitration to judge violations. Investors could turn to the third-party court first, without using local courts. To punctuate the need for his code, Abs brought up the recent cases of the expropriation of the Anglo-Iranian Oil Company, the United Fruit Company in Guatemala, the Suez Canal, Dutch land in Indonesia, and foreign-owned power plants in Argentina. For Abs, like the ICC, the UN had become an enemy accomplice of the property thieves, passing resolutions supporting the idea that “expropriations are permissible at any time without compensation.”That an individual who had been an active participant in processing the expropriation of the property of German Jews would later be actively defending property was incongruous, but Abs did not act from amnesia or repentance. In his San Francisco speech he made a point of raising Cortney and Röpke’s bugbear issue of foreign holders of accounts of German banks who were “still waiting for a fair settlement.” Abs was the man who signed the document forgiving Germany’s massive war debt in 1953, and it is known that he did so in the belief that it was not forgiveness per se but instead a just settling of accounts for the German assets seized abroad. Abs’s campaign for investor protection was a continuation of the dogged commitment to the economic constitution dividing the public world of states from the private world of property. Part of his original proposal, described by an observer as “idealistic,” would have made alien property immune from confiscation during times of war...

Combined with the work of a group of British attorneys under Sir Hartley Shawcross, Abs circulated a “Draft Convention on Investments Abroad” for comment in 1959. The document was concerned entirely with the protection of the property of “nationals,” which were defined not as individuals but (following the ICC code) as “companies,” including “both juridical persons recognized as such by the law of a Party and associations even if they do not possess legal personality.” The legal experts who commented on the convention were not encouraging. The preamble of the convention presented itself as a “restatement of principles,” one expert noted, but “in several respects, it is clearly a good deal more than that.” They saw the convention as unprecedented in the protection it gave the foreign investor. In every instance, it tipped toward the investor, dismissing “public interest” as a reason for expropriation, allowing investors to turn to an international court before national courts, and breaking with current practice by forcing compensation to be made in the investor’s own currency and making the primary object of protection the company rather than the individual. By referring to both “direct” and “indirect” expropriation, the Abs-Shawcross convention even anticipated the later inclusion of “regulatory expropriation” in international codes.--Quinn Slobodian (2018). Globalists : The End of Empire and the Birth of Neoliberalism. Cambridge, Massachusetts: Harvard University Press, 139-141.

One of the most fascinating features of Slobodian's book (recall) is connecting intellectual developments within neoliberalism to the development of international law. Along the way he makes a compelling case that Geneva neo-liberals played a key role behind the scenes in developing the global architecture within and beyond the Bretton Woods structure. A point I return to before long.  Here I want to offer some critical remarks about one of Slobodian's historiographic techniques that are clearly intended to cast neoliberals in the worst possible light.

So, for example, until I read Slobodian's book I knew little about the proposed Abs-Shawcross convention and its indirect impact on, and recent controversies about, the role of arbitration panels in contemporary bilateral investment treaties (including why they are criticized). It's the kind of connection that makes Slobodian's book so valuable and interesting; this is a terrific intellectual history that illuminates existing practices of our own times. I write 'indirect' because the proposed Abs-Shawcross convention was, as Slobodian reveals, initially rejected as a multilateral regime due to firm opposition.  So far so good.

But it is notable that Slobodian calls significant attention to Abs' role as a Nazi. I don't think Slobodian is wrong to do so. Abs' life is striking, and there is no reason to offer him the benefit of the doubt about his particular motives. But the implication of Slobodian's framing is that neoliberalism is tainted by Nazism. This is especially notable because Slobodian is not exactly adamant here, and elsewhere, to remind the reader of neoliberal criticism of, and even opposition to, Nazism or racism more generally.* 

But it is by no means obvious one should interpret Abs as a neoliberal, or even a fellow-traveler. I am unfamiliar with any evidence that he studied with neoliberals, attended their seminars, or was held in high esteem by them. I don't mean to deny that the foreseeable effect of Abs-Shawcross convention would be a policy that neoliberals would like. It would increase the protection of property invested abroad by corporations, their shareholders, and individuals. I think Slobodian does not emphasize  -- and this is what makes the proposed convention genuinely liberal -- the expansion of scope of legal protection to individuals who would have increased standing in international law against the state-centered doctrine of sovereignty of states. This was a route to remedy state sponsored attacks on the individual. The Abs-Shawcross convention is, in fact, explicit (in its own comment on Article III) that this is modeled on, and part of, the expanded protection of human rights for individuals. (It quotes UN Resolution 390A.)

I do not think this connection to human rights is an accident. Not because I think Abs developed much interest in human rights. But, rather, because of Shawcross. It is notable that Shawcross is not remarked upon at all. For, Shawcross once a major Labour politician was "a British barrister and politician and the lead British prosecutor at the Nuremberg War Crimes tribunal. He also served as Britain's principal delegate to the United Nations immediately after World War II." Later in life he founded JUSTICE, an important human rights organization. Now, to be sure, while drafting the Abs-Shawcross convention he was counsel to Shell (see here). So, I don't mean to suggest he was not also defending corporate interests. Interestingly enough, unlike Abs, there is a plausible connection to neoliberalism in his life: Shawcross studied at LSE and law at Geneva University (a bastian of the Geneva school of neoliberalism). So, Slobodian could have connected the convention to neoliberalism through Shawcross. But Shawcross is a much more sympathetic character than Abs.

In addition, one may think the link with human rights law if not far-fetched than at least a rhetorical fig-leaf. But recent research by Yuliya Chernykh suggests that Elihu Lauterpacht played a major role in drafting the Abs-Shawcross convention. (Lauterpacht helped develop the dispute mechanism.) Elihu Lauterpacht was the son of Hersht Lauterpacht, one of the founders of modern international human rights law, and himself a contributor to the field. Of course, Lauterpacht was also involved in advising corporations (including Anglo-Iranian Oil).

I say this not to defend neoliberals come what may; as regular readers know (just read yesterday's post) there is plenty to criticize about neoliberals/neoliberalism. But I think it is a mistake to reduce Abs-Shawcross to the Nazi connection. It is possible to treat the involvement of Shawcross and Lauterpacht as mere brains for corporate hire who only incidentally expand the rights of individuals and provide mechanisms to give individuals remedies against state wrongs. But their interest in human rights law has been continuous and genuine throughout their careers. More important, within liberalism there is no necessary trade-off between doing what's right for individuals and making money advising corporations. The latter can be problematic, but need not be so intrinsically. To create a legal framework in which business uncertainty is removed and the law stabilizes expectations for powerful corporations and vulnerable individuals alike is a feature not a bug of liberal thought.

That it takes a Nazi banker-lobbyist to advance liberal ends is surely worth noting, but it is equally notable that his key collaborator was a prosecutor of Nazis. The origin of the rule of law is, alas, not in clean hands. 

 

 

Hayek (Streeck, Hazony) and World Federation and Colonialism

In the national state current ideologies make it comparatively easy to persuade the rest of the community that it is in their interest to protect “their” iron industry or “their” wheat production or whatever it be. An element of national pride in “their” industry and considerations of national strength in case of war generally induce people to consent to the sacrifice. The decisive consideration is that their sacrifice benefits compatriots whose position is familiar to them. Will the same motives operate in favor of other members of the Union? Is it likely that the French peasant will be willing to pay more for his fertilizer to help the British chemical industry? Will the Swedish workman be ready to pay more for his oranges to assist the Californian grower? Or the clerk in the city of London be ready to pay more for his shoes or his bicycle to help American or Belgian workmen? Or the South African miner prepared to pay more for his sardines to help the Norwegian fishermen?--Hayek (1939) "The Economic Conditions of Interstate Federalism."

Hayek's (1939) "The Economic Conditions of Interstate Federalism" plays two roles in recent critical discussions of  neo-liberalism. First, Wolfgang Streeck (recall) sees in it the neoliberal masterplan for the European Union by which a federal structures prevent the development of socialism and the welfare-state among member units (of the federation). Streeck's reading of Hayek is not wholly misleading.  Hayek does state that "it would be desirable for the constitution of the federation to impose on the freedom of the individual states would have to be even greater than we have hitherto assumed and that their power of independent action would have to be limited still further." And this is not limited "to state economic policy but also to economic policy conducted by trade and professional organizations extending over the territory of the state."

But even so the justification of this is not to prevent the welfare state or local experimentation, but "to prevent evasions of the fundamental provisions securing free movement of men, goods, and capital." Hayek's real targets are "trade-unions, cartels, or professional associations," and other would be local monopolists. That is to say, Hayek is no Lionel Robbins (his LSE colleague), who in his (1941) "Economic aspects of federation" proposal did leave more room for local "experimentation" even socialist experimentation (albeit with various restrictions). For Robbins "the [member] states are completely free to set up collectivist undertakings."* This is surely a bridge too far for Hayek. But the target of Hayek is, as he writes shortly below, not primarily redistribution, but interference "with economic activity" and "state control." (This is not to suggest that Hayek is a fan of redistribution, but see Zwolinski's recent essay.)

The second line of interpretation is due to (recall) Yoram Hazony, who in The Virtue of Nationalism, reads Hayek (1939) as endorsing (quoting Hazony) an "international federal state without significant boundaries between nations." (See also the accompanying notes in Hazony.)** If we look at the passage quoted at the top of this post we can see what inspired Hazony. Hayek is clearly thinking of a trans-Atlantic North American (e.g., "California")-European federation; Hayek calls it a federation of "Atlantic democratic states," but one that includes Europe's dominions/colonies (e.g., South Africa).  And, indeed, when after the war plans were developed for a European (economic) Community the African colonies were very much included. (Before it become independent in 1962 Algeria was part of the EEC.)

Hayek's stance is, in part, if not inspired by the phenomenal success of Clarence Streit's (1939) Union Now, at least clearly co-extensive with it. (Streit is explicitly mentioned in Hayek's piece.) While Hayek proposes a geographically extensive federation, it is not global in character. In Hayek, this is so because he wishes to exclude the "socialist" countries like the USSR. Or to be precise, he thinks the USSR would refuse to "submit" to the rules governing his proposed "interstate federation." So, while Hazony has accurately discerned the drift of Hayek's proposal, his federation is not necessarily global in character and there is no expectation it will naturally become such a global empire. So, unlike Mises -- who often writes as if the success conditions of liberalism presuppose the establishment of global liberalism --, Hayek thinks liberalism need not entail global federation.+

But that leaves another question. As Or Rosenboim recounts, and building on Orwell, Streits'proposal while centered on the virtues of liberal democracies, clearly also is meant to secure domination of a (racialized hierarchy of) 'civilized' peoples. How does Hayek see the relationship between the federation and European colonies. Recall that while Mises hoped to secure a liberal global order, Mises thought the sooner the European imperial powers de-colonized the better. Hayek recognizes that the question is lurking behind his own proposal. Here's what he writes.

It does not come within the scope of a short article to consider in any detail the positive tasks of the liberal economic policy which a federation would have to pursue. Nor is it even possible to give here further consideration to such important problems as those of monetary or colonial policy which will, of course, continue to exist in a federation. On the last point it may, however, be added that the question which probably would be raised first, i.e., whether colonies ought to be administered by the states or by the federation, would be of comparatively minor importance. With a real open-door policy for all members of the federation, the economic advantages derived from the possession of colonies, whether the colonies were administered federally or nationally, would be approximately the same to all the members of the federation. But, in general, it would undoubtedly be preferable that their administration should be a federal and not a state matter.

What is notable is that unlike Mises, who is explicit about the unmitigated evils of colonialism, Hayek leaves his views on the matter oblique here.++ It's pretty clear, however, that he is primarily focused on the way that colonies generate interstate rivalry (and so war, protection, etc.). An interstate federation is a solution to the problem of such state rivalry over colonialism. The benefits, if any, of holding a colony now accrue to all the members of a federation.

It's possible (perhaps this is lurking behind the "in general") Hayek also thinks that the federation would treat the inhabitants of the colonies more humanely than the member states. But if so, he does not say it. And his remarks are naturally read as endorsing continued colonial rule by the federation. It is striking that roughly in the same period, Mises comes out as looking much more committed to democracy and freedom than Hayek does. 

Let me close. In his paper, Hayek writes "that nineteenth-century liberalism did not succeed more fully is due largely to its failure to develop in this direction; and the cause is mainly that, because of historical accidents, it successively joined forces first with nationalism and later with socialism, both forces being equally incompatible with its main principle." In the accompanying footnote, Hayek treats John Stuart Mill as exemplary of both (regrettable) tendencies. 

We may say, without a sense of superiority, and a considerable note of melancholy and regret, that twentieth-century liberalism did not succeed more fully is in no small matter due to its continued temptation to treat the economic interests of (Northern) Atlantic states as co-extensive with the true direction of liberalism. Even those that explictly rejected Mill's civilizational mission were often infected by this tendency.

 

On Plumbing for Capitalism; or, on Indirect Public Philosophy

I have always demanded, wisely or not, my autonomous creative space away from my professional commitments. It may be that I do not in fact have a right to such a space. After all, when you become a diplomat, say, or a priest or a supreme court judge, it is generally understood that your are foregoing your freedom to be, at least publicly, more than a diplomat or a priest or a judge. But the professorial career doesn't rise, I don't think, to that level of vocational self-erasure, where one is no longer free to be more than what one is....There are no doubt countless others who were squeezed out of the academy when they came to understand that staying in would likely require the sacrifice of certain other dimensions of their personhood.

Yet something is happening in the present moment that complicates matters a great deal. All of a sudden, there seems to be a general reversal of the valence of extramural activities undertaken by academic philosophers, from bad to good. There is a hitch however: these activities must be subsumable within the academy under the banner of “outreach”.,,Recently, however, I have been noticing that this writing is being taken up by philosophy peers as a contribution to the broader public mission of the discipline. It seems, now, there's just no escape.

...

But this isn't what the neoliberal academy means when it encourages “public philosophy”. What it is encouraging, rather, is a variety of “service”, as in, that one-third of the promotion dossier that hangs there at the end, the poor cousin of teaching and research. The academy will try, to the extent possible, to subsume whatever creative work one of its own puts out there, redescribing and repackaging our work as if it were done for the sake of the guild. But there is a limit to what redescription can do. It is very adept at absorbing non-fiction prose writing, less so when it comes to fiction.

This uneasy relation to disciplinarily non-specific creation reveals a deep unease about the place of philosophy in the world, and it speaks to the dismal consequences of many decades of retreat from the world by anglophone philosophy that the only means it has to engage with the broader culture is by clunky conjunction...

One thing this dreary arrangement forgets is that there is an old and venerable model for philosophers to engage with culture, not with an “and” but with an “in”. This is what is known as “criticism”. It has often been produced by philosophers, or by people sufficiently immersed in a learned tradition to know as much about philosophy as one would come to know in the process of getting officially licensed by the guild. Lessing did it, Schiller did it, Adorno did it: they wrote about the cultural output of their time, not as a parenthesis in their philosophical careers for the sake of some light-hearted Entspannung, not to show “non-philosophers” that philosophy can be “fun”, but because they were philosophers and it was obvious to them that such endeavours, creative and intellectual at once, were within the scope of their calling. They hated fun, or at least did not consider it something to be valued for its own sake.

I hate fun too, and I have no interest in convincing anyone that philosophy partakes of the fun. I am not some jovial country vicar who, for the good of the parish, joins in for a bean-bag toss or a three-legged race at carnival time. I would be happy to do “public philosophy” in a cultural setting in which the bounds of philosophy and non-philosophy, member and non-member, specialized and popular, were differently drawn. But as things are, no way. I'll do my job, I'll do it well, and I'll clock out when I'm done. And I will resist to the end the neoliberal academy's attempt to claim for itself, aided by the emerging system of surveillance capitalism, what is in fact mine alone.--Justin Smith "Against Public Philosophy" [HT Dailynous]

In analytic philosophy, criticism does not have high status so it is no surprise that, in his Parisian (internal) exile, Justin, himself a very fine essayist, overlooks our very own (Danto, Iris Murdoch, and, perhaps, Cavell) in his list of exemplary critics.* Now, Smith does not pause to reflect on the fact that to be art critic today is not a true (Weberian) calling because its main function would be to add value to the billionaire funded corporate, 'neoliberal' art-industry. The spiritual values, and the bourgeois culture that sustained them, that made engagement with art, even Hollywood, so worthy have collapsed.

Even so, it is useful to be reminded that public philosophy (for complications recall here; here; and on Dotson here) need not be exhausted by (i) the contribution to public opinion in the service of some moral or political cause(s), (ii) the dumbed down dissemination of recent pinnacles of thought to the educated in the life-style section(s), or (iii) engagement with fun, low-brow entertainment (so loathed by Justin). It can also be -- let's grant him this -- (iv) the creative expression of philosophical sensitivity not oriented to the eternal motions of the starry skies above, but rather, as critic, immersed in the shadows of one's time tracking sources of ephemeral light. Despite their many distinct skills, motives, and practices (i-iv) have in common an orientation toward a 'public.' (This is so even though it's possible even if most readers of public philosophy are philosophers and their students in some sense.) This public may be narrow or broad; the very possibility of such a public may be a projective construct of the public philosopher's imagination -- this is very much the case in David Hume's philosophy -- or may, in fact, be dispersed in millions of twitter accounts. Hence, public philosophy is aptly named.

In what remains of this digression, I would like to sketch yet an alternative patsh for public philosophy one that is not directly oriented toward a public. One may think this impossible. For, one may well think that if a philosopher is not talking to herself or fellow (professional) philosophers, now or in posterity, or to the public, there is nothing left. But this is a mistake. A philosopher can also be oriented toward a specialist community. We are already quite familiar with something like this in so far that the so-called 'philosophers of X' (biology, physics, economics, law, medicine, cognitive science, etc.) do not just talk to fellow philosophers, but sometimes contribute to, even constitute, the developments in X (recall my interest in (v) synthetic philosophy.) Some philosophy of x or synthetic philosophy is oriented toward the public, but most of it is to fellow academic experts. I hope this is familiar enough so I don't have to recount it here.

But, and now I am getting to the point, there is also expertise outside the academy. In particular, the modern bureaucratic state -- and the international institutions (IMF, World Bank, WHO, WTO, BIS, etc.) that characterize the liberal regime today-- is full of experts that keep the regulatory and administrative state going. They are also, often, non-trivially involved in the development of the details of policy. These experts serve the public, while generally not contributing to the public (unlike, say, their counterparts in think tanks, NGOs, social movements, and political parties). In fact, as Justin notes above, their professional commitments may even prevent them from doing so--or if they can be oriented toward the public, only in very scripted fashion. On the whole, their work is invisible to the public--treated as technique by even serious thinkers.

Yet, for those of us who may wish to improve our governance and, thereby, improve the institutions that shape our lives, including the lives of the vulnerable and those that lack effective voice, being oriented to these public serving, invisible (non-academic) experts may well be an important way to practice public philosophy.+ Philosophers can develop expertise in a field of governance (e.g., public health, bank regulation, defense procurement, anti-trust practice, social insurance, migration, etc.) and orient their philosophical work toward improving or reconstituting it. This already exists (not surprisingly, somewhat quietly), for example, Ryan Muldoon has helped the World Bank; and Nancy Cartwright is developing a more general framework on how to use research to build better social policies. I think of such efforts as indirect public philosophy.

Such (vi) indirect public philosophy is service oriented because it aims toward improving policy and governance; but rather than addressing the public (although that is compatible with it), it engages and collaborates with (primarily non-academic) technocratic experts behind the scenes.** My interest in (vi) is personal. Through funded research I am quietly working on developing a new normative, governance framework for financial debt. I call this -- cf. Locke -- plumbing for capitalism. Some other time, I'll share more on the practice of indirect public philosophy.

 

I have always demanded, wisely or not, my autonomous creative space away from my professional commitments. It may be that I do not in fact have a right to such a space. After all, when you become a diplomat, say, or a priest or a supreme court judge, it is generally understood that your are foregoing your freedom to be, at least publicly, more than a diplomat or a priest or a judge. But the professorial career doesn't rise, I don't think, to that level of vocational self-erasure, where one is no longer free to be more than what one is....There are no doubt countless others who were squeezed out of the academy when they came to understand that staying in would likely require the sacrifice of certain other dimensions of their personhood.

Yet something is happening in the present moment that complicates matters a great deal. All of a sudden, there seems to be a general reversal of the valence of extramural activities undertaken by academic philosophers, from bad to good. There is a hitch however: these activities must be subsumable within the academy under the banner of “outreach”.,,Recently, however, I have been noticing that this writing is being taken up by philosophy peers as a contribution to the broader public mission of the discipline. It seems, now, there's just no escape.

...

But this isn't what the neoliberal academy means when it encourages “public philosophy”. What it is encouraging, rather, is a variety of “service”, as in, that one-third of the promotion dossier that hangs there at the end, the poor cousin of teaching and research. The academy will try, to the extent possible, to subsume whatever creative work one of its own puts out there, redescribing and repackaging our work as if it were done for the sake of the guild. But there is a limit to what redescription can do. It is very adept at absorbing non-fiction prose writing, less so when it comes to fiction.

This uneasy relation to disciplinarily non-specific creation reveals a deep unease about the place of philosophy in the world, and it speaks to the dismal consequences of many decades of retreat from the world by anglophone philosophy that the only means it has to engage with the broader culture is by clunky conjunction...

One thing this dreary arrangement forgets is that there is an old and venerable model for philosophers to engage with culture, not with an “and” but with an “in”. This is what is known as “criticism”. It has often been produced by philosophers, or by people sufficiently immersed in a learned tradition to know as much about philosophy as one would come to know in the process of getting officially licensed by the guild. Lessing did it, Schiller did it, Adorno did it: they wrote about the cultural output of their time, not as a parenthesis in their philosophical careers for the sake of some light-hearted Entspannung, not to show “non-philosophers” that philosophy can be “fun”, but because they were philosophers and it was obvious to them that such endeavours, creative and intellectual at once, were within the scope of their calling. They hated fun, or at least did not consider it something to be valued for its own sake.

I hate fun too, and I have no interest in convincing anyone that philosophy partakes of the fun. I am not some jovial country vicar who, for the good of the parish, joins in for a bean-bag toss or a three-legged race at carnival time. I would be happy to do “public philosophy” in a cultural setting in which the bounds of philosophy and non-philosophy, member and non-member, specialized and popular, were differently drawn. But as things are, no way. I'll do my job, I'll do it well, and I'll clock out when I'm done. And I will resist to the end the neoliberal academy's attempt to claim for itself, aided by the emerging system of surveillance capitalism, what is in fact mine alone.--Justin Smith "Against Public Philosophy" [HT Dailynous]

In analytic philosophy, criticism does not have high status so it is no surprise that, in his Parisian (internal) exile, Justin, himself a very fine essayist, overlooks our very own (Danto, Iris Murdoch, and, perhaps, Cavell) in his list of exemplary critics.* Now, Smith does not pause to reflect on the fact that to be art critic today is not a true (Weberian) calling because its main function would be to add value to the billionaire funded corporate, 'neoliberal' art-industry. The spiritual values, and the bourgeois culture that sustained them, that made engagement with art, even Hollywood, so worthy have collapsed.

Even so, it is useful to be reminded that public philosophy (for complications recall here; here; and on Dotson here) need not be exhausted by (i) the contribution to public opinion in the service of some moral or political cause(s), (ii) the dumbed down dissemination of recent pinnacles of thought to the educated in the life-style section(s), or (iii) engagement with fun, low-brow entertainment (so loathed by Justin). It can also be -- let's grant him this -- (iv) the creative expression of philosophical sensitivity not oriented to the eternal motions of the starry skies above, but rather, as critic, immersed in the shadows of one's time tracking sources of ephemeral light. Despite their many distinct skills, motives, and practices (i-iv) have in common an orientation toward a 'public.' (This is so even though it's possible even if most readers of public philosophy are philosophers and their students in some sense.) This public may be narrow or broad; the very possibility of such a public may be a projective construct of the public philosopher's imagination -- this is very much the case in David Hume's philosophy -- or may, in fact, be dispersed in millions of twitter accounts. Hence, public philosophy is aptly named.

In what remains of this digression, I would like to sketch yet an alternative patsh for public philosophy one that is not directly oriented toward a public. One may think this impossible. For, one may well think that if a philosopher is not talking to herself or fellow (professional) philosophers, now or in posterity, or to the public, there is nothing left. But this is a mistake. A philosopher can also be oriented toward a specialist community. We are already quite familiar with something like this in so far that the so-called 'philosophers of X' (biology, physics, economics, law, medicine, cognitive science, etc.) do not just talk to fellow philosophers, but sometimes contribute to, even constitute, the developments in X (recall my interest in (v) synthetic philosophy.) Some philosophy of x or synthetic philosophy is oriented toward the public, but most of it is to fellow academic experts. I hope this is familiar enough so I don't have to recount it here.

But, and now I am getting to the point, there is also expertise outside the academy. In particular, the modern bureaucratic state -- and the international institutions (IMF, World Bank, WHO, WTO, BIS, etc.) that characterize the liberal regime today-- is full of experts that keep the regulatory and administrative state going. They are also, often, non-trivially involved in the development of the details of policy. These experts serve the public, while generally not contributing to the public (unlike, say, their counterparts in think tanks, NGOs, social movements, and political parties). In fact, as Justin notes above, their professional commitments may even prevent them from doing so--or if they can be oriented toward the public, only in very scripted fashion. On the whole, their work is invisible to the public--treated as technique by even serious thinkers.

Yet, for those of us who may wish to improve our governance and, thereby, improve the institutions that shape our lives, including the lives of the vulnerable and those that lack effective voice, being oriented to these public serving, invisible (non-academic) experts may well be an important way to practice public philosophy.+ Philosophers can develop expertise in a field of governance (e.g., public health, bank regulation, defense procurement, anti-trust practice, social insurance, migration, etc.) and orient their philosophical work toward improving or reconstituting it. This already exists (not surprisingly, somewhat quietly), for example, Ryan Muldoon has helped the World Bank; and Nancy Cartwright is developing a more general framework on how to use research to build better social policies. I think of such efforts as indirect public philosophy.

Such (vi) indirect public philosophy is service oriented because it aims toward improving policy and governance; but rather than addressing the public (although that is compatible with it), it engages and collaborates with (primarily non-academic) technocratic experts behind the scenes.** My interest in (vi) is personal. Through funded research I am quietly working on developing a new normative, governance framework for financial debt. I call this -- cf. Locke -- plumbing for capitalism. Some other time, I'll share more on the practice of indirect public philosophy.

 

Patrick Deneen and The Noble Lie

During one of the more infamous moments in Plato’s Republic, Socrates suggests that the ideal city needs a founding myth—what he calls “a noble lie”—to ensure its success. The myth has two parts. The first relates that every person in the city comes from the same mother, and thus encourages belief in a common origin and kinship of all the citizens who live in the city. The second relates that every person belongs by birth to a particular class based upon his or her talents and abilities, indicated by a metal gilded upon each soul at birth: gold for the ruling class; silver for ministers, soldiers, and high-ranking servants; bronze and iron for the workers.

Socrates argues that both parts of the myth must be believed by all citizens for the city to succeed. The myth at once seeks to unite and to differentiate, to explain what is common and distinct, to foster civic patriotism amid significant difference. The first part encourages civic commitment, shared sacrifice, and belief in a common good. The second justifies the existence of inequality as a permanent feature of ­human society....If anyone is likely to accept the myth, he suggests, it is the uneducated working class.

...

Unlike Marx, [Plato] did not believe that the members of the lower class would be unlikely to know their own interests. The underclass is likely to accept the myth because they realize it works to their advantage. Its members are keenly aware of the fact of inequality. That part of the “lie” hardly seems false to them. What is novel, and what works to their advantage, is the idea that inequalities exist for the benefit of the underclass as well as the rulers. That is, members with noble metals in their souls are to undertake their work for the benefit of everyone, including those whose souls are marked by base metals. By contrast, members of the ruling class are likely to disbelieve the myth out of self-interest. They balk at the claim that every person, regardless of rank, belongs to the same family. They do not want the advantages that might solely benefit their class to be employed for the benefit of the whole.

Only if each group accepts each part of the “lie,” as Socrates explains, is a kind of social contract achieved. Elites and commoners both accept the part of the myth that does not appeal to them for the sake of the part that does. Elites are distinguished in a society that justifies inequality; commoners are best off in a society that compels service of elites for the whole. Instead of acting as warring parties, both sides work for the good of all. Such a compact is difficult to achieve. 

...

The part of the “noble lie” that once would have horrified the elites—the claim of common kinship—is irrelevant; instead, they resist the inegalitarian part of the myth that would then, as now, have seemed self-evident to the elites as well as the underclass. Today’s underclass is as likely to recognize its unequal position as Plato’s. It is elites that seem most prone to the condition of “false consciousness.”

....

While elites may suffer self-inflicted blindness to the nature of their position, the rest of society clearly sees what they are doing...Our ruling class is more blinkered than that of the ancien régime. Unlike the aristocrats of old, they insist that there are only egalitarians at their exclusive institutions. They loudly proclaim their virtue and redouble their commitment to diversity and inclusion. They cast bigoted rednecks as the great impediment to perfect ­equality—not the elite institutions from which they benefit. The institutions responsible for winnowing the social and economic winners from the losers are largely immune from questioning, and busy themselves with extensive public displays of their unceasing commitment to equality. Meritocratic ideology disguises the ruling class’s own role in perpetuating inequality from itself, and even fosters a broader social ecology in which those who are not among the ruling class suffer an array of social and economic pathologies that are increasingly the defining feature of ­America’s underclass. Facing up to reality would require hard questions about the agenda underlying commitments to “diversity and inclusion.” Our ­stated commitment to “critical thinking” demands no less, but such questions are likely to be put down—at times violently—on contemporary campuses.

....

From the vantage of nearly 2,500 years, Plato’s noble lie doesn’t appear to be a falsehood after all. For a society to function, two seemingly contradictory beliefs must be simultaneously held: We are radically different and radically alike. We are extensively differentiated yet bound together. We are called to sometimes radically unequal tasks, but those tasks are part of an effort to benefit the whole. Plato thought the “fact of difference” would be easy for people to acknowledge, since it is so evident to our senses, if not always easy for those in a position of lower status to accept. The challenge was how to achieve belief in a common origin and shared kinship. TheRepublic of Plato was one effort to answer that challenge, if a fairly absurd and implausible one (as Socrates readily admitted). 

....

So long as liberalism was not fully itself—so long as liberalism was corrected and even governed by Christianity—a working social contract was possible. For Christianity, difference is ordered toward unity. For liberalism, unity is valued insofar as it promotes difference.....

The new aristocrats believe we have transcended the need for Christianity, which they regard as a myth no less mendacious than Plato’s noble lie. They believe that by dispelling the old myths, they can become the vanguard of an ever more equal society. They blind themselves to the fact that this claim is a form of status maintenance, allowing denial of a deeper commonality with those they regard as benighted and backward. Elites denounce the “populists” while denying that they have fomented a class war. They deplore the obnoxiousness of Donald Trump, perfectly obtuse of their complicity in his ascent.

We are in uncharted territory. Liberalism coexisted with Christianity for its entire history, with Christianity moderating the harder edges of the regnant political philosophy, supporting forms and practices that demanded from elites the recognition of their elevated status, and hence, corresponding responsibilities and duties to those less fortunate. The thoroughgoing disdain and dismissiveness of today’s elites toward the working class is a reflection of our newfound “enlightenment,” just as is the belief among the lower class that only a strong and equally disdainful leader can constrain the elites. Liberalism has achieved its goal of emptying the public square of the old gods, leaving it a harsh space of contestation among unequals who no longer see any commonality. Whether that square can be filled again with newly rendered stories of old telling us of a common origin and destination, or whether it must simply be dominated by whoever proves the strongest, is the test of our age.--Patrick Deneen, "The Ignoble Lie" First Things.

I recently read Patrick Deneen's Why Liberalism Failed, and wanted to do a short piece on his claim in that book that liberalism today is in the grip of a noble lie that is serving the interests of elites at the expense of the have-nots; in Deneen's version the elites are deluded while the have nots see clearly. But I had left my copy at the office and instead found a version of his argument at First Things online. While the diagnosis is roughly the same between the book and the blog post, it is worth noting that in the book Deneen reads as an echt-Burkean -- distinct from the pseudo-conservatives who peddle national greatness and global markets --, who advocates a kind of withdrawal from politics in favor of small scale communal living (there are a lot of fond references to the Amish and even counterculture experimentation) while in the blog post he read as an angry Thomist who would, it seems, like to see the return of Christianity to its place of domination in the public sphere. I don't mean to suggest the two sides must be in contradiction with each other, or that Deneen is speaking in split tongues, but the distinct rhetoric is striking. (Here's another one: in the book the present-to-be-lamented-emphasis on diversity is traced back to Madison; in the blog Madison is dropped, and diversity is treated as a modern evil located in silly campus activists.) I also do not mean to imply that the historical Burke would reject national greatness and global markets!

But for my present purposes the differences between blog-Deneen and book-Deneen are irrelevant. For his account of the noble lie is fairly consistent between the two. I agree with Deneen one can encounter in elite social circles, rich folk in the grip of purported self-justifying meritocracy and victim blaming. (It is a bit peculiar that in the blog, but not the book, he seems to extol Charles Murray whose whole business-model turns on this.) But that fact is not to be confused with liberal self-understanding.

In particular, he seems to miss entirely -- and I think this is a great irony -- that his diagnosis of the modern noble lie echoes John Stuart Mill's in the introductory chapter 1 On Liberty. There Mill had argued (recall) that in conditions of domination/subordination, ruling ideologies will tend to favor the self-interest of the ruling classes. In so doing they corrupt the moral sentiments of the ruling class and even pervert how they treat each other. Deneen and Mill agree about this. In addition, Deneen and Mill agree that the lower classes see through the delusion. The one key difference is that Mill seems to suggest that the lower classes are, despite their knowledge, corrupted by becoming servile. Whereas Deneen suggests they turn to socialists and authoritarians. 

That is to say, and Deneen is oblivious to this, liberalism is quite capable of a truthful self-understanding of its own condition as an ideology that accommodates ruler-ship, while simultaneously recognizing that it needs to be committed to ameliorating the conditions that give rise to its rule while simultaneously reinforcing it. In my view this idea is also fully present in Adam Smith, who thought (recall) that property rights protect the rich from the indignation of the poor but that such a system would also benefit the poor. And while this does no justice to Rawls' arguments it is a pretty vulgar, but no less true, interpretation of the difference principle. In fact, once one pays attention to this feature of liberalism it is quite entrenched in the tradition.* 

So,  the more interesting fact is that for all his animus toward liberalism, Deneen can't see that the roots of his very critique is itself grounded in some of the best features of the liberal tradition. That is, the very terms by which Deneen proposes his criticism of liberalism is part of a historical dialectic generated by liberalism, and fully anticipated by the thinking branch of liberalism. In fact, in the book his solutions echo the Smithian strains in Pierre-Joseph Proudhon. What I am hinting at is that liberalism's understanding of progress also foresees the kind of reactions Deneen exhibits. 

What to make of this is a harder question. As regular readers know I am not complacent about the future of liberalism. And once I return to the office, I want to use the more perceptive elements of Deneen's diagnosis of liberalism to help articulate our challenge today. But here I close with a kind of puzzle and a further thought: it is a notable fact that some of the most strident and most intelligent enemies of liberalism since, say, Carl Schmitt (recall) have a tendency to treat it as rank stupidity. This is a shame because liberals and even the most skeptically liberal educators have always recognized that we need our critics. Which is the true reason -- and not some deference to Christianity -- our cannon (from Plato to Nietzsche) is, well, so illiberal.

Mises, Liberalism, and the Spiritual Life

Liberalism has often been reproached for this purely external and materialistic attitude toward what is earthly and transitory. The life of man, it is said, does not consist in eating and drinking. There are higher and more important needs than food and drink, shelter and clothing. Even the greatest earthly riches cannot give man happiness; they leave his inner self, his soul, unsatisfied and empty. The most serious error of liberalism has been that it has had nothing to offer man's deeper and nobler aspirations.
But the critics who speak in this vein show only that they have a very imperfect and materialistic conception of these higher and nobler needs. Social policy, with the means that are at its disposal, can make men rich or poor, but it can never succeed in making them happy or in satisfying their inmost yearnings. Here all external expedients fail. All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man's material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart. It does not aim at creating anything but the outward preconditions for the development of the inner life. And there can be no doubt that the relatively prosperous individual of the twentieth century can more readily satisfy his spiritual needs than, say, the individual of the tenth century, who was given no respite from anxiety over the problem of eking out barely enough for survival or from the dangers that threatened him from his enemies.
To be sure, to those who, like the followers of many Asiatic and medieval Christian sects, accept the doctrine of complete asceticism and who take as the ideal of human life the poverty and freedom from want of the birds of the forest and the fish of the sea, we can make no reply when they reproach liberalism for its materialistic attitude. We can only ask them to let us go our way undisturbed, just as we do not hinder them from getting to heaven in their own fashion. Let them shut themselves up in their cells, away from men and the world, in peace.
The overwhelming majority of our contemporaries cannot understand the ascetic ideal. But once one rejects the principle of the ascetic conduct of life; one cannot reproach liberalism for aiming at outer well-being.--Mises (1927), Liberalism (4-5)

For Mises the materialism of liberalism expresses a recognition of limits. The state should not be in the business of individual soul-craft nor in the business of creating a good society (in the sense of Adam Smith, Sophie Grouchy, or Lippmann). In a good society, the incentive structure of institutions, public education, and material conditions co-contribute to a flourishing society. For Mises, by contrast, and more minimally, the state should restrict itself to the material "preconditions" of the development of inner life.

Strikingly (ought  implies can), Mises claims that this normative limitation on state ambition is rooted in its inability to provide spiritual goods. I call it striking because the more standard liberal arguments against the attempt are (i) that there is potentially explosive disagreement over which religious faction gets to supply these needs; and/or (ii) that often the attempt to supply these spiritual needs through the state can lead to oppressive political consequences. (Mises is familiar with (i-ii) because he mentions them in a later chapter (see pp. 50-7.) That theocracies tend to be or have tendencies toward being oppressive is common ground among liberals and seems well supported empirically; that theocracies are completely ineffective at supplying any spiritual needs is by no means obvious. 

Unfortunately, Mises does not supply many arguments for his "conviction." In fact, I only discern one: that material "anxiety" prevents the development of a spiritual life.  This anxiety is caused by famine/hunger and by lack of physical security. There are faint echoes with the Epicurean tradition, although it also emphasized the role of clerics in manipulating anxiety for political power.

To Mises' credit he sees that the materialism he advocates can have perverse consequences. For example, "modern wealth expresses itself above all in the cult of the body: hygiene, cleanliness, sport." (192) Strikingly, beauty and aesthetics are completely missing from Mises' attention (but would strengthen his argument.)

Even so, I do not find Mises remotely convincing here because physical hardship seems to be no barrier to intense and apparently sincere religiosity. But lurking in Mises thought is, perhaps, the further somewhat aristocratic, even Nietzschean idea that the religiosity which is fueled or conditioned by hardship is in some sense less than the "highest and deepest" spirituality. (One finds hints of such an attitude, too, in Carnap's (recall) oblique praise for Nietzsche as the right sort of metaphysical poet.) This higher spirituality requires the kind of liberty which allows full, inner development; Mises seems to take this idea for granted.

As an aside, Mises also takes for granted that the "ascetic" and material lifestyles can co-exist. This may well be thought question begging given that Mises' liberalism is self-consciously cosmopolitan and, ideally, global. It is not obvious genuine inner retreat is possible in a world-wide, fully developed consumer society. Some preferences may simply be made impossible by market society. 

To return to the main point. Mises also assumes that the individual and the state exhaust the possible supply of the highest spirituality. When he thinks of communal religious activity he thinks of churches.  But strikingly these are not understood as suppliers of spirituality, but rather of "instruction and education." (56) (He also thinks much of what churches teach is nonsense.) Mises has no time to spare for intermediary, communal activities that may be a source of spiritual life. 

This privatized and individualized understanding of spirituality in Mises' thought is odd. Because he does explicitly recognize that a nationalist feels he participates in an "ethnic and spiritual community." (106) This is so even though Mises thinks nationalism is disastrous. 

Despite the passage I quoted, I suspect Mises must assume the nationalist's experience of spirituality is in some sense delusional (perhaps even caused by a neurosis).* For, Mises is adamant about the epistemic limitations of our access to any ultimate matter:

Our powers of comprehension are very limited. We cannot hope ever to discover the ultimate and most profound secrets of the universe. But the fact that we can never fathom the meaning and purpose of our existence does not hinder us from taking precautions to avoid contagious diseases or from making use of the appropriate means to feed and clothe ourselves, nor should it deter us from organizing society in such a way that the earthly goals for which we strive can be most effectually attained. Even the state and the legal system, the government and its administration are not too lofty, too good, too grand, for us to bring them within the range of rational deliberation. Problems of social policy are problems of social technology, and their solution must be sought in the same ways and by the same means that are at our disposal in the solution of other technical problems: by rational reflection and by examination of the given conditions. All that man is and all that raises him above the animals he owes to his reason. Why should he forgo the use of reason just in the sphere of social policy and trust to vague and obscure feelings and impulses? (7)

Reason here is the constrained reason of instrumental rationality. It is notable that in his rejection of the spiritual dimension of public life, Mises ends up opening the door to a technocratic conception of public policy, but about that some other time more. But by rejecting the very possibility by fiat of any ultimate grounding for the ends pursued in social life, Mises anticipates (by way of a very different route) the Rawlsian attempt to secure a political  form of liberalism. The material rewards of political liberalism may not pacify all who wish for more.

On Milton Friedman and Hayek on Consensus

I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominant from different predictions about the economic consequences of taking action - differences that in principle can be eliminated by the progress of positive economics - rather than from fundamental differences in basic values, differences about which men can ultimately only fight.--Milton Friedman (1953) "The Methodology of Positive economics" in Essays in Positive Economics, p. 5

Friedman relies here on [A] a tacit distinction between basic values and not-so-basic values. When there is (fundamental) disagreement over these society returns, we can say, to the state of nature. So, not unlike one of his Chicago mentors, Henry Simons, he relies on the idea (recall) that states presuppose considerable consensus. (I have noted the somewhat disastrous afterlife of this idea in Chicago economics elsewhere; e.g.  here and here.) Another, no less consequential, distinction he relies on [B]  is that between disinterested and (ahh) self-interested citizen. Presumably the disinterested citizen advocates the public or common interest, whereas the self-interested citizen promotes a self/sinister interest. 

This means that in a functioning political unity -- i.e., one with considerable background consensus -- if we encounter public disagreement, there are for Friedman three possible sources of controversy: (i) disagreement over likely outcomes of policy; (ii) disagreement over which no-so-basic value to prioritize [in the context of major agreement]; (iii) people advocating their own interest as opposed to public interest. In principle, and this is the point of Friedman's essay, (i) can be eliminated as positive (that is empirical) economics progresses. This suggests, and again this is no surprise, that for Friedman a mature positive economics will be characterized by consensus over the relationship between policy and outcomes. In addition, in principle, (ii) can be eliminated as normative economics progresses. Friedman does not spend much time on this, and it is unclear if he agrees with Robbons who does not expect such convergence in normative economics, or with later more optimistic professional philosophers.

An important consequence of Friedman's stance is that it entails that if, one agrees with him and understands oneself as a policy-scientist (and Friedman often does), one can model public policy debates with representative agents who exhibit public spirit. For these will all agree on the common good. For those who think of 'Chicago' as a bastion of self-interest this is surprising. It is worth noting this because it makes clear that the subsequent public choice (Buchanan/Tullock) and rent-seeking (George Stigler, etc.) revolution (by his Chicago trained contemporaries) also impacts Friedman's own program. 

Another important consequence of Friedman's stance is that one cannot assume that public spirited representative agents will agree across space and time, especially as they become culturally more distant. This has obvious consequences  when one aims to do comparative policy work.

I could end here, but I want to call attention to a feature in Hayek's thought (ca 1945). Consider the closing two sentences, in particular, from the following passage from a justly famous essay:

The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible. The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that it asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so he might still have developed some other, altogether different, type of civilization, something like the "state" of the termite ants, or some other altogether unimaginable type. All that we can say is that nobody has yet succeeded in designing an alternative system in which certain features of the existing one can be preserved which are dear even to those who most violently assail it-such as particularly the extent to which the individual can choose his pursuits and consequently freely use his own knowledge and skill. F Hayek (1945 "The Use of Knowledge in Society," 528

In the paper, Hayek treats the price system as a natural machine with a clear purpose: "We must look at the price system as such a mechanism for communicating information if we want to understand its real function." (526) This is compatible with the thought (a) that the price system has many derivative functions and (b) that the real function can be undermined or obstructed. (For Hayek's argument, (b) is very important.) And one can easily see, that the gap between Hayek and Ordoliberalism is fairly small, if Hayek were to grant the Ordos that (c) one of the key functions of the state is not just not to interfere with, but to maintain actively the conditions that enable the proper functioning of the price system.

Now, one may well wonder, why Hayek assumes that there is one and only one "real function" of the price system. I think he helps himself to this claim without argument. But let's stipulate he is right about this, and that it's methodologically kosher to attribute functions to social systems at all. Even so, one may well wonder what function the communicating of information serves. In this paper he is rather silent about this more fundamental end. And here it is clear that whatever it is, not unlike Friedman later, Hayek relatives this more fundamental function to "our civilization."

And somewhat surprisingly, not unlike Simons and Friedman, Hayek also assumes considerable agreement over what Friedman calls basic values.  This is clear from his response tho those who reject the price system as privileged machine. To them he de facto says, 'we agree about some of these fundamental ends -- which may call in short-hand individual 'freedom' and 'autonomy' -- and any replacement of the price-system will have to secure these, too.' My interest here is not whether this is an accurate claim about either the status of these ends in our civilization nor the extent to which illiberal critics of the price-system would endorse these. (I am, it should be clear, skeptical of both.) But rather that Hayek, too, ends up suggesting that if there is any disagreement over the functioning of the price system, it will not be due to disagreement over fundamental ends. And this suggests, that if there is disagreement, the other side(s) is/are engaged in special pleading. 

Not for the first time I am struck by the lack of space for genuine pluralism over ends in twentieth century liberalism. As regular readers know I think this plays no small role in the predicament it finds itself today.