Liberalism and Egalitarianism

This post is cobbled together from comments I've made recently here and elsewhere that have been fleshed out a bit.

The fundamental issue politically is between the opposing views of liberalism set forth in the words of the first Chief Justice of the Supreme Court John Jay and President Abraham Lincoln.

  “No power on earth has a right to take our property from us without our consent.” ~John Jay

“Those who own the country ought to govern it.” ~John Jay (American History Central)

"It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth." ~Abraham Lincoln, The Gettysburg Address

These are expressions of mutually exclusive principles of social and political philosophy that define the difference between the left and right — economic liberalism based on republican propertarianism and elitism and democratic social liberalism based on egalitarianism and human rights.

In the view of the right, distribution is exclusively an economic matter to be determined in the competitive marketplace in which all compete equally and the most meritorious reap the greatest success from their own superior qualities.

In the view of the left, distribution is a social and political matter as well as an economic one, and perfect competition does not exist under capitalism in a monetary production economy that is influenced not only by market-based exchanged but also cultural and institutional factors that result in asymmetries that direct outcomes with respect to status, power, and accumulation.

The argument is over the balance between liberty and law and order, which is the distinction between libertarianism at one extreme and authoritarianism at the other, and between personal freedom and cultural convention expressed as custom and tradition, which is the distinction between social liberalism and social conservatism, with radicals at one extreme and reactionaries at the other. The tension among these poles modulates historical change dialectically.

A fundamental issue is the degree to which economic liberalism is compatible with political liberalism, and other is the degree to which social liberalism is compatible with cultural continuity. This implies a critique of the feasibility of alternatives.

Different people fall into different quadrants and different positions within the quadrants, so it is impossible to find outcomes that please everyone. Therefore, the need to address the "tyranny of the majority" in a popular democracy.

The way we do that now is through asymmetrical status, power, and wealth, tilting the playing field toward an elite.

If the desire is to change this, the questions then become, what are the options, and what are the advantages and disadvantages of the anticipated outcomes.

Neoclassical economists assumes a market with no government, no banks, and no intruding social, political or economic institutional arrangements that supervene or strongly influence, in which there is near perfect symmetry among individuals with respect to all relevant information and bargaining power. It's not even correct to call the model built on such assumptions simplistic. It's a fantasy world.

This issue, like most, is much more complex that most narratives make it out to be. There is no such thing as an economy that is the subject of study of the discipline of economics. "The economy" is a conceptual construct that is built on assumptions that characterize one methodological approach among many other existing approaches and many more possible approaches.

The conventional approach that starts with the problem of scarcity rather than the distribution of a surplus defines the problem and therefore constructs the subject of study based on a set of assumptions that assume certain things as relevant and assume away other things as irrelevant. Conventional economics assumes a cycle of production, distribution, and consumption in which distribution is handled by the invisible hand of the market, which is presumed to be optimally efficient to the degree that it cannot be improved upon.

Only those institutional arrangements are appropriate that advance market efficiency or economic efficiency more broadly considered. For example, intellectual property like patents, copyright and trademarks, are considered to advance economic efficiency through creating incentive — even though they also create asymmetric market power. The corporation as a legal person capable of owing property in perpetuity is another. There are many more. The proof of their efficiency and effectiveness is in the innovation that they bring and growth they produce.

Opponents object that this disregards negative externalities that are socialized, ecological, environmental, social and political, in addition to economic. The so-called free market as a mechanism of price discovery and efficient distribution is a myth. Actual practice, such as administered pricing that now predominates, and legal and institutional arrangements that dictate winners and losers reveal that markets are not as represented.

They cannot be made free either, any more than friction can be eliminated from physical systems owing to the construction of modern society and its institutions. "Liberalization" simply increases the market power of factions in that social, political and economic asymmetry cannot be eliminated from individual relationships any more than friction can from the physical world. The idea of a market in which all participants are symmetrical in information, power, and influence is a fantasy.

Once this is recognized and acknowledged then that problem of allocating scarce resource comes to be seen in a different light, where the surplus a society creates is social rather than an aggregate of the contributions of individuals competing equally on a level playing field. Just it was a social and political issue initially about what institutional arrangements to create to produce results that are effective and efficient according to defined criteria; so too, is it a social and political issue to distribute those results in a way that takes into account that certain participants were favored in order to produce the optimal results.

The notion of redistribution is a matter of responsibility where there is a right to use private property for economic gain in addition to subsistence. Since individuals characteristically do not rise to the responsibility, it becomes necessary to undertake it institutionally.

Economically, the issue may be seen as addressing scarcity in the optimal way to achieve efficiency and effectiveness in accordance with defined criteria (norms). However, in the larger context of a society social, political, legal, institutional factors must be considered along with the economic factors.

In addition, open national economies must be considered relative to a closed world economy. Given that modern economies are interdependent, e.g. with respect to resources, and humans inhabit the same global ecology in which externalities play a fundamental role socio-economically, addressing scarcity and abundance becomes a human issue, involving human rights, and a global issue with respect to context.

These opposing views are based on conflicting ideologies. Paradigms provide the context for the development of ideas within the bounds of a universe of discourse. All ideologies are paradigms of a sort in that they define a universe of discourse through a framework of methodological rules in which assumptions are included as ideological norms. Theorems are deduced from these starting points as defining norms. Any conceptual system that privileges its assumptions from error or question is dogmatic rather than scientific. Dogmatic ideologies characterize phenomena like religions and they can persist with little change over long periods of time. Science, however, is developmental and reacts to changing circumstances like new knowledge and changing context.

Moderns generally agree that the scientific approach is superior to a dogmatic one. However, all discourse takes place in terms of "webs of belief" (W.V.O. Quine) that are defined by assumptions that function as norms. Key assumptions functioning as norms are considered first principles and taken to be self-evident and non-negotiable. Being privileged from error or even question, they are non-empirical and non-scientific. Almost everyone is dogmatic about key fundamentals.

Once a debate argues down to opposing first principles the parties either agree to disagree, or they come into conflict unless they can compromise. Compromise is of the essence of the democratic process of governing as the only way to accommodate the range of views is a complex society. This is an ongoing process in that context is ever-changing and it is an unfolding process owing to discovery, invention, and innovation.

The two views of liberalism, which might be characterized as economic liberalism and social liberalism, have been in conflict since the dawn of liberalism in the Enlightenment. The road since then has been rocky and it is no less so now. Much ink has been spilled over this, but now it is Thomas Piketty's work that is the contemporary catalyst for a debate that is getting underway.

Are economic liberalism based on property rights and social liberalism that includes egalitarianism and human rights possible to achieve simultaneously through a political process given the institutional arrangements in place? If yes, what are the obstacles to achieving this? If not, what needs to change if this is a desirable goal? Can political compromise achieve it without conflict?