Judged by the course of events of the last century, rather by the avowed aim of Mill and Marx, there is much for reversing the stereotyped roles assigned to the two men. If collectivism ultimately triumphs over individualism, it will be in no small measure a result of the influence of the ideas first popularized and made respectable by Mill; whereas, if individualism ultimately triumphs, it will be in no small measure a result of the ultimate effects of the belief in revolutionary action to which Marx and Engels gave such vivid expression in the Manifesto…
The great defect of the Benthamite liberals among whom Mill grew up was the absence of any theory or doctrine of the positive role of the state in the organization of economic activity. Benthamism was at bottom a fervent belief in the possibility of improving the condition of mankind through legislative enactment devoted to achieving the “greatest happiness of the greatest number.” These central premises do not themselves prescribe any particular content for legislative action. They are, in strict logic, consistent equally with fargoing collectivism and paternalism or with the ”laissez faire” doctrines with which they were in fact combined. The acceptance of laissez faire as a guiding principle was far less the product of explicit analysis or comparison of any exhaustive set of alternatives[;] prohibited were largely assaults on person or property overwhelmingly regarded as clearly indefensible and the appropriate subject for punitive legislation. In this way, the success of laisses faire removed one of the chief factors responsible for the initial acceptance of laissez faire. By the end of John Mill’s life, the state was no longer what it was during his father’s or Bentham’s time—a corrupt, inefficient instrument whose enactments were widely held in low repute. It had become a relatively honest and efficient body, whose enactments were held in high esteem by the body politic.
The sweeping away of the hindrances to the free movement of men, goods, and capital was followed by the great improvements in economic well being. Yet there obviously remained much misery and poverty to which a passionate humanitarian like Mill could not remain blind. It was perhaps not unnatural that we was willing to sanction action by an honest and much improved state administration to redress grievances. He had no principles of state action by which to test proposals for reform. He was almost certain to minimize or reject entirely the argument—if it were made—that direct interference by the state would threaten that private liberty he prized so highly. For this argument conflicted with his deep, though naïve, belief in the perfectibility of human beings through education. Once men were educated, he believed, they would become not only wise but also good.--Milton Friedman (September 10, 1948) "Discussion of Paper by V.W. Bladen The Centenary of Marx and Mill" at The Eight Annual meeting of the Economic History Association. Hoover Institution, Collection Title: Milton Friedman papers Container: box 39. [HT David M. Levy]
Bladen's paper can be found here. Originally Friedman had been invited to comment on a paper on laisser faire by J. Bartlett Brebner (which was turned into an influential article: "Laissez Faire and State Intervention in Nineteenth-Century Britain." The Journal of Economic History, 8(S1), 59-73.) From the correspondence at Hoover it's unclear what prompted the move, but Bladen's paper was the opening and keynote to the conference, and Friedman did not object. The other commentator on the program is Elizabeth Schumpeter--the schedule adds in parenthesis: "Mrs. Joseph A." And it would be lovely to locate her comments.
Bladen was late sending Friedman his paper, and this may help account for the fact that much of Friedman's discussion reads as a riff on A.V. Dicey's (1905 [1914]) Law & Public Opinion rather than a detailed criticism of Bladen (although Friedman added a passage on trade unionism that clearly is critical of Bladen). Throughout Friedman's writings Dicey is an important source, not the least his better studied (1951) “Neo-Liberalism and its Prospects” Farmand, 17 February 1951, pp. 89-93 [recall this post] and his (1962) "Is a Free Society Stable?" New Individualist Review [recall here] some other time I will return to that. (The 1962 piece draws on themes from the manuscript I am discussing today.) And while in today's post 'Marx' is clickbait in the title, I will return to Friedman's comments on Marx, too. Okay, with that in place, let me turn to the text.
Friedman attributes to Dicey (1835 – 1922) a kind of road to serfdom thesis in which Mill's good intentions lead not just to the prevailing support for collectivism that Dicey diagnoses as the effect of Mill's writing at the end of the nineteenth century, but also that the collectivist reforms proposed by Mill would (now quoting Friedman) "seriously threaten political liberty" in virtue of the gradualism that Mill advocated and the tendency to attribute difficulties consequent intervention to the "defects of the price system." Crucially, for Friedman it's the historical experience of Marx's effect on the Russian revolution that halts the English road to serfdom.
Now, in his analysis Friedman ignores the role of imperialism, and the opportunities for rents this provided, in changing the political culture of nineteenth century liberalism. Hobson, for example, argued that this undermined the pacific, free trade coalition. And while Dicey has less nostalgia for this coalition, he concurs with Hobson's diagnosis. {Of course, given Mill's own advocacy for a civilizational mission of British imperialism, it's not as if this lets Mill off the hook.} It is worth noting that Dicey thinks that imperialism (and high taxation that is the effect of it) may well have slowed the road to serfdom process that Friedman attributes to him (see, especially, the 1914 introduction to the second edition, and chapter XII).
It's a bit odd that Friedman misses the significance of (financial and military procurement) rents to imperialism. Because earlier, in describing the rise of laissez faire, Friedman argues in a public choice vein, that “The Benthamites devoted much attention to improving public administration. Their success in this connection was as great as in establishing a large measure of laissez faire, and the two achievements are not of course unrelated. The establishment of laissez fair enormously reduced the benefits which civil servants could confer on private individuals and greatly lessened the incentive or opportunity to break laws.”
As an important aside, I am pretty confident that Friedman had read Hayek's Road to Serfdom by 1948. And there is no sign in his 1948 argument that he is as critical of Hayek in the way that his later use of Dicey in 1962 suggests (recall here).
What's neat about the material I have quoted above is that according to Friedman the key defect in Mill's political economy is that "he had no principles of state action by which to test proposals for reform." That is, the central problem that Mill faces in using state action to ameliorate the plight of the poor and miserable, is that according to Friedman Mill lacks -- and now I am using terminology common to Mill, J.N. Keynes, Friedman, and Foucault -- an art of government.
In fact, (recall) we know from his correspondence with Stigler (Hammond & Hammond) that by 1948 Friedman had started working on his (1953) "Methodology of Positive Economics" paper that uses that very terminology. And that Friedman ends up echoing Mill by treating the art of economics as dependent on empirical science. For it’s this science that provides the knowledge that constitute at least part of the rules of how one gets from given ends to proper outcomes. That is, the dependence of the art on positive science is epistemic in character. And so lurking here is a more fundamental (Marshallian) criticism of not just Mill's art of government, but his political economy more generally one that attributes to Mill a kind of violation of a do no harm principle in political life. To be continued.
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