Thoughts on market democracy, part 1: Capitalistic economic freedoms as vital aspects of liberty

This is part 1 of a projected four-part series, of which the only other part I’ve completed is the first half of part 2.

A while back I read the essays in the online symposium on John Tomasi’s book Free Market Fairness at the Bleeding Heart Libertarians group blog. I’ve previously noted why I think the book and its topic are important. But what exactly is “free market fairness”? It is Tomasi’s particular take on a broader concept he calls “market democracy”:

Market democracy is a deliberative form of liberalism that is sensitive to the moral insights of libertarianism. Market democracy combines . . . four ideas . . .: (1) capitalistic economic freedoms as vital aspects of liberty, (2) society as a spontaneous order, (3) just and legitimate political institutions as acceptable to all who make their lives among them, and (4) social justice as the ultimate standard of political evaluation. (p. xv)

This paragraph packs a lot into a few words. In this series of blog posts I’ll give my personal thoughts on the idea of market democracy, not as a professional (or even amateur) philosopher or economist, but simply as someone who is interested in this general line of thought and somewhat sympathetic to it. Do not expect sophisticated arguments or penetrating insights; I have many questions and few answers.

The first sentence of the above paragraph situates Tomasi’s project in the general history and taxonomy of political philosophy. The main point of interest to non-philosophers is that there’s actually a common intellectual heritage between political “liberals” in the US sense (i.e., those generally supportive of government and its associated regulatory and redistribution schemes) and those who oppose them and call for less government and freer markets. Tomasi’s goal is to draw upon that common heritage and create a hybrid philosophy that acknowledges the importance of the free market but does not dismiss the concerns of those concerned with “social justice” in the general sense. The first two ideas of market democracy come out of the “classic liberal” and libertarian traditions, and the second two from the “modern” or “high liberal” tradition.

Let’s start with the first component of Tomasi’s concept of market democracy, “capitalistic economic freedoms as vital aspects of liberty.” By this Tomasi means that the freedom to engage in typical capitalist activities—owning private property (including the “means of production”), starting a business, producing products and services and selling them in the market, accumulating wealth as a reward for one’s efforts—should be thought of as equally important as other freedoms, for example the freedom to freely speak one’s mind, to practice a religion (or not worship at all), and so on.

Tomasi and others have crafted sophisticated philosophical arguments as to why economic freedom should be viewed as equally important as freedom of speech, religion, etc. Tomasi in particular sees economic freedom as necessary to support “responsible self-authorship”:

A just society is one whose institutions respect citizens from every social class as free and equal self-governing agents. Market democracy affirms a thick conception of economic freedom . . . as a requirement stemming from its foundational commitment to respect persons as free and equal moral agents: responsible self-authors must be free to make a wide range of decisions in the economic domains of their lives. . . .

To restrict the capacity of people to make economic choices or, worse, to treat their economic activities merely as a means to the social ends of others, would violate the dignity of such persons and so would be to treat them unjustly. (p. 97-98)

Others have created equally sophisticated arguments as to why economic freedoms really aren’t basic. I’m not equipped to adequately evaluate and critique all the philosophical arguments. However I do have some questions as to whether or not most people in practice would see economic freedoms as basic, and thus would treat perceived violations of those freedoms as a moral wrong comparable to violations of other freedoms.

Here I follow the theory of “moral foundations” formulated by Jonathan Haidt and his colleagues, that “several innate and universally available psychological systems are the foundations of ‘intuitive ethics’,” that people are genetically and culturally predisposed to weight these factors in different ways, and that these different weightings are associated with the “conservative” vs. (modern) “liberal” divide we see in politics. Stated in these terms the overall theory seems plausible to me, even if Haidt and colleagues haven’t (yet) got all the details right.

One of the claimed moral foundations is liberty/oppression, associated with the “feelings of reactance and resentment people feel toward those who dominate them and restrict their liberty.” Ravi Iyer, Haidt, and colleagues recently published research claiming that libertarians form a distinct group from liberals and conservatives in their weighting the liberty/harm moral foundation as of high importance, and weighting other moral foundations low in comparison. Libertarians also show up as a coherent group expressing similar sentiments in other survey-based categorizations such as the Pew Research Political Typology. Clearly we can expect libertarians to value economic freedom and to treat it as a basic freedom. But what about other people?

One way to approach this question is to look at extreme cases in which economic freedoms are egregiously violated. Consider for example the Arab Spring, which most people now think of (if they think of it at all) as a straightforward struggle of people for democracy and against dictatorship, now potentially hijacked by Islamists seeking to translate religious belief into political power. But the original spark of the Arab Spring had nothing to do with promoting democracy or Islam. It was the anger and frustration of Mohamed Bouazizi, “a Tunisian street vendor who set himself on fire on 17 December 2010, in protest of the confiscation of his wares and the harassment and humiliation that he reported was inflicted on him by a municipal official and her aides.” While some of the details of Bouazizi’s story remain fuzzy (was street vending actually illegal, or just obstructed by corrupt police officers in search of bribes? did the official actually slap Bouazizi or not?), there’s no doubt that the root of Bouazizi’s protest was his need and desire to provide for his family through commercial trade, and the perceived obstruction of that quest by agents of the state.

The people of Tunisia responded to Mohamed Bouazizi’s act with protests of their own, which in turn inspired protests in other countries. While the motivations of the protestors differed, a common theme was anger at governments that did not provide economic opportunities for the people subject to their rule. Bouazizi’s story arguably affected the protestors in the same general way that the death of religious martyrs or attacks on civil rights protesters have affected others. Perhaps people see the situations as morally equivalent in some deep way, and perhaps this felt sense of moral equivalence indicates that we should indeed treat economic freedom as equal in importance to other freedoms whose violations we view as morally wrong.

However I think the situation is more complicated than that, because it’s possible that the strong reaction to Bouazizi’s act was based on its invoking multiple moral foundations simultaneously. People might feel outraged because the state committed an act of aggression against him, taking his goods and preventing him from selling them (liberty/oppression moral foundation). However the outrage might also be because the state’s action resulted in Bouazizi not being able to provide for himself and his family (care/harm moral foundation), or because it prevented Bouazizi from reaping the rewards that his work might have earned him in other circumstances (cheating/fairness foundation, with an emphasis on fairness as proportionality of rewards). It’s also possible that the fact that Bouazizi was (allegedly) slapped by a woman added to the outrage felt by those in the male-dominated traditional societies of the Arab world (sanctity/degradation foundation).

One way to unravel this is to imagine hypothetical scenarios in which the effect of the other moral foundations is removed or altered. For example, suppose Mohamed Bouazizi were a prosperous merchant who already owned several successful produce trucks, so that the state’s actions might have mildly impacted his income but not fundamentally threatened his well-being and that of his family. Would thus lessening the relevance of the care/harm foundation decrease the sympathy others would have for Bouazizi and the outrage they might feel? Or suppose that Tunisia’s government were widely perceived as legitimate and its police force free of corruption, and the state’s actions against Bouazizi were based on his violating anti-street vending ordinances that had been duly considered and passed by a democratically-elected legislature. Would some people now see Bouazizi himself as in violation of moral norms, namely those related to the authority/subversion foundation?

The problem here, at least for me, is that a philosophical argument that a freedom is basic (and thus deserving of special protection) will ultimately stand or fall in the world at large on the degree to which a claimed violation of that freedom can be perceived as a moral wrong by the mass of people operating from their different weightings of the various moral foundations. An act that violates all or most of the moral foundations would likely never be seen as moral, while an act that violates none or at most one of the moral foundations could be seen as morally neutral by most of the population. Since different people weight the various moral foundations differently, and since only a small fraction of the population appears to treat the liberty/oppression foundation as primary, I suspect people are inevitably going to disagree on the extent to which restrictions on economic freedom constitute a moral wrong, and hence on whether economic freedom is seen as a basic right.¹

This is particularly true since freedoms are typically thought of as inhering to individuals, and so much economic activity is mediated not through individuals but through collective institutions, most notably corporations. Unfortunately Tomasi doesn’t really address the role of corporations in Free Market Fairness. For example, in the course of claiming that “many life experiences have a moral value that can only be appreciated firsthand,” Tomasi gives the (real-life) example of Amy, “a college dropout who has an entry-level job as a pet groomer,” but who through hard work and savings is able to own her own pet grooming business, Amy’s Pup-in-the-Tub: “What does it mean to Amy to walk into her own shop each morning or, when leaving after a particularly long day, to look back and read her name up on the sign?” (p. 66).

Clearly we can emotionally identify with Amy, just as we can identify with Mohamed Bouazizi, and like Bouazizi’s her experience supports Tomasi’s notion of individuals as responsible self-authors who should enjoy economic freedoms as a basic right. However Tomasi leaves unsaid exactly how the economic freedoms of Amy the individual relate and extend to Amy’s Pup-in-the-Tub the (presumably) incorporated business, and as with Bouazizi’s case it may be worth dissecting the relationship a bit.

Perhaps the fact of incorporation is irrelevant and, to echo Margaret Thatcher, there is no such thing as a corporation, but only individual men and women, namely Amy in this case. But this approach seems incomplete, since corporations in fact can do things that individuals cannot, such as owning property in perpetuity or taking actions without any particular individual necessarily being liable for those actions. Or perhaps corporations should be treated as persons in their own right, with their own rights to economic freedom (just as, for example, the US Supreme Court in the Citizens United decision held that corporations, unions, and other associations have First Amendment rights to free speech). If so, how does that affect Tomasi’s argument. For example, if I go down to the courthouse and register Philosophical Enterprise XLVII LLC, am I bringing a new moral agent and responsible self-author into the world?

From a moral perspective perhaps Amy’s Pup-in-the-Tub should be seen as simply a extension of Amy herself as its founder and head, just as (for example) Apple the corporation has been seen as an extension of Steve Jobs. If so, what happens when Amy sells the business to someone else (or, in the case of Apple, when Steve Jobs died and Tim Cook took over as CEO)? Are the economic freedoms of the corporation now in the service of the responsible self-authorship of the new management? What about the employees of Amy’s Pup-in-the-Tub (or of Apple)? Should their status as responsible self-authors be taken into account when considering the economic freedoms of the business employing them, or are they simply considered “factors of production” in this context? Is it specifically Amy’s role as owner of Amy’s Pub-in-the-Tub that is important—that the economic freedoms granted to a business are justified as enhancing the responsible self-authorship of its owners? What if Amy sells her business to PetSmart (NASDAQ: PETM) and ownership is dispersed among potentially millions of shareholders, many of whom may hold an ownership position for only brief periods of time?

Note that I’m not arguing that economic freedom should not be a basic right because corporations can do Bad Things. (Some of Elizabeth Anderson’s contribution to the BHL symposium reads this way.) Rather it’s just not clear to me how Tomasi’s argument based on responsible self-authorship extends from the world of individual proprietors and small businesses to the world of large publicly-traded corporations in which ownership is for the most part divorced from management, and those doing the management (especially at senior levels) amount only a small fraction of the total number of employees whose activities provide value to the firm. (Martin O’Neill and Thad Williamson make a similar point in their review of Free Market Fairness.)

Where does all this leave me in my personal thinking? Here are my tentative conclusions:

First, I agree with Tomasi that there’s a difference between believing that economic freedom is of equal importance to other freedoms and believing that economic freedom is the most important freedom, or even the only freedom that truly matters. We can be liberals (in the classic sense) without being libertarians.

Second, given (what I believe to be) the evolved and innate nature of much human morality I suspect that most people will judge economic freedom as important to the extent that it supports (or does not conflict with) other moral foundations beyond liberty/oppression, such as preventing harm or ensuring proportionality of rewards. In other words, most people are not libertarians and (in my opinion) are unlikely to ever be so. As a non-libertarian myself I don’t think we have to judge all restrictions on economic freedom as equally bad, to believe (for example) that in a modern democracy the imposition of a particular regulation or an increase in a particular tax rate carries anywhere near the moral weight of what was done to Mohamed Bouazizi.

Finally, although I think the right of people to join together in corporations and other collective organizations (e.g., unions) in pursue of economic goals is an important fundamental right, I don’t think we necessarily have to treat corporations as completely equivalent to individuals in all respects. Absent a more compelling argument (which may exist, for all I know) I think we could legitimately restrict a corporation’s freedom to act, in ways that we might not consider legitimate when applied to individuals.

What I believe we do have to do, however, is to treat economic freedoms with respect, whether we consider them basic or not, and to require reasonable justifications for government actions that would restrict them. Again, we can disagree as to what exactly “reasonable” means in this context, with different people making different arguments as to what restrictions on economic freedoms count as unacceptable. My point is simply that we cannot simply dismiss those who feel their economic freedoms are being violated in various ways, any more than we can dismiss those concerned about their political, religious, or other freedoms.

This completes my thoughts on the first of Tomasi’s core ideas of market democracy; I’ll take up the second idea, society as a spontaneous order, in my next post when (if?) I have time to write it.