Hobson on The Referendum and Training in the Art of Government

The final and weightiest claim for the Referendum, as attested by Swiss experience, is the training in the art of government it gives to the people. It may indeed be questioned whether a people whose direct contribution to self-government consists in a single vote cast at intervals of several years, not for a policy or even for a measure, but for a party or a personality, can be or is capable of becoming a genuinely self-governing people. Some amount of regular responsibility for concrete acts of conduct is surely as essential to the education of a self-reliant people as of a self-reliant individual. To the intelligent Swiss democrat it never occurs to base his democracy upon a doctrine of infallibility of the people. The people, he is aware, make mistakes; the Referendum offers more opportunity to make mistakes, and therefore to learn from their mistakes than is furnished under purely representative government. But he holds that the obligation imposed on each citizen to take a direct part in the making of the laws he is called upon to obey is essential to the reality of popular self-government.--John A. Hobson (1909) "The Swiss Referendum" in The Crisis of Liberalism: New Issues of Democracy, pp. 69-70

Since David Hume (here), there is a persistent strain of liberal thought, that looks to Switzerland as a source of inspirational on constitutional matters. And while some authors (like Hume) will emphasize its federalism (or its militia), later authors will also emphasize its history of regular so-called corrective referenda since 1830.

In fact, while neo-liberals of the middle of the twentieth century are often not exactly known for their fondness for democracy and one-man-one-vote, they often celebrate the federated Suisse and their democracy. In fact, Röpke (who lived there in exile for a while), sometimes even modelled his defense of the process of market economies on the positive valence of referenda: "The process of the market economy is like an uninterrupted referendum on what use should be made (at every minute) of the productive resources of the community."* Even Hayek, who allows himself plenty of skeptical comments about democracy, thought that judicial review of the sort practiced Stateside ought to be complemented by a referendum (see The Constitution of Liberty, p. 286).**

Before the neoliberals of the second half of the twentieth century there were the 'New Liberals' of the early half.  Of these Hobhouse and Hobson (1858-1940) were the most famous. And while it is quite possible to emphasize the differences between the left-leaning New Liberals (Mises called them 'moderate socialists') and the later (more right leaning) neo-liberals, it would also be a mistake not to notice some of their important similarities. (There is also a historical fact that the New Liberals shaped, as I first learned from Stefan Kolev and Ekkehard A. Köhler (recall), Herkner and Oppenheimer, the social liberal teachers of the Ordoliberals.) In fact, Hobson's emphasis on the significance of equality of opportunity (which is articulated in a companion piece in The Crisis of Liberalism) is itself an enduring contribution to liberal thought.

Okay, let's turn to Hobson's fondness for the Swiss, corrective referendum. Hobson's argument for the utility of a referendum is rooted in his concerns over rent-seeking practices of concentrated interests facilitated by parliamentary democracy. (I wouldn't be surprised to learn if Mancur Olson had studied Hobson!) This concern, which is key to the ORDOs analysis of monopoly and democracy, is central to Hobson's really famous analysis of late nineteenth century imperialism, and it also shows up in his The Crisis of Liberalism, including the chapter on the utility of the corrective/veto referendum. This chapter is a companion to an essay, "Lords or Referendum," which proposes the reform of the House of Lords alongside a corrective referendum (to be initiated by the reformed upper house as a check on parliament). I quote from both in this post.

In fact, Hobson makes two very important points. First, what makes rent-seeking by the rich and powerful so easy in a modern parliamentary system is that "the real control of our legislation is in the hands, not of the body of elected representatives, but in those of a small Cabinet." (47) The party-whip alongside the effective control of the party by the cabinet makes it easy to lobby for rents through only a few insiders. While in his (1902) Imperialism Hobson emphasizes financial corruption, in these essays Hobson emphasizes that rent-seeking is facilitated by the fact that the Cabinet is recruited "mainly out of of a little aristo-plutocracy with a leaven of successful lawyers" (and supported by a "powerful bureaucracy whose class sympathies" are narrow). This anticipates Schumpeter's account of rent-seeking.

Second, interest groups are often created by government policy and can create the conditions under which parliamentary democracy is undermined:

Wherever powerful business interests are founded upon or supported by legal privileges in the shape of charters, tariffs, or other concessions, wherever lucrative offices are available for party spoils, wherever public expenditure can be made a source of private profit through contracts, loans, and subsidies, this skilled manipulation of the representative system will continue. (Hobson, "The Swiss Referendum, p. 51)

Now, it's important to recognize that Hobson's argument for a corrective referendum is not that it is infallible. He recognizes that it may well allow for the expression of, say, anti-Semitism in the "famous anti-Jewish Slaughter House Law" or "to the unimaginative parsimony of the peasant and the petty bourgeois. (63) 

Rather, he views -- and there is an anticipation of Dewey here -- the habitual exercise of a corrective referendum as an education in becoming a self-governing people. The corrective referendum doesn't just school people in the issues of the day, it also provides a form of feedback loop between voting on the issues and responsibility. Getting things wrong is not without public or social consequence. And because referenda are more focused (and more regular) than parliamentary elections the relationship between the exercise of the vote and outcome is more direct and so more informative.

And so while most contributions to the liberal art of government focus on rulers and their intellectual advisors, Hobson thinks the corrective referendum has the capacity to school 'the people.' And so a referendum is a mechanism to bridge the gap or tension between liberalism and democracy. As my colleague, the political sociologist, Tom van der Meer has argued where they are used frequently, referenda correlate with higher political trust.

All friends of liberalism (left and right) can point to referenda with perverse outcomes. Even in places where the referendum is used regularly and with sober pre-conditions, it may misfire spectacularly. But in an age in which the dangers of the concentrated power of elected presidents (and prime-ministers) and unelected judges and bureaucrats are quite apparent to many, and friends of liberty are often pushed into despair or techno-utopia, it is a mistake to forego the use of one of democracy's most democratic institutions as a countervailing power to the others. In a system of checks-and-balances a corrective referendum would provide a democratic veto in an existing context of extremely imperfect democracy! So, two cheers to the corrective referendum. 

 

 

*That's from a public lecture from 1951, "The Problem of Economic Order" (Third lecture), published in Two Essays by Wilhelm Ropke, edied by Johannes Overbeek, Lanham: University of America Press, 1987, p. 26. Röpke's racism, which was always visible, soon become rather pronounced in the context of South Africa.

**Of course, Hayek also says in a footnote, "It is useful to remember that in the oldest and most successful of European democracies, Switzerland, women are still excluded from the vote and apparently with the approval of the majority of them." (The Constitution of Liberty, p. 169, note 4) Hayek does not seem bothered by this. (Hobson, by contrast, was in favor of full female suffrage.)

Comments

[Aaron Lercher]

Ellen Immergut (among others) argues that referenda function as veto points. She studied healthcare politics in Switzerland, France, and Sweden. Referenda in California 1994 and Colorado 2016 defeated moderate universal healthcare system plans.

Perhaps that isn't always the case. Perhaps this claim fits with many of my biases. Perhaps it only applies to particular issues.

But all my political experience in the US seems to confirm her claim. The last thing the US needs is more veto points!