The textbook summary is absurd, of course. Far from being a proponent of “might makes right,” Spencer wrote that the “desire to command is essentially a barbarous desire” because it “implies an appeal to force,” which is “inconsistent with the first law of morality” and “radically wrong.”¹ While Spencer opposed tax-funded welfare programs, he strongly supported voluntary charity, and indeed devoted ten chapters of his Principles of Ethics to a discussion of the duty of “positive beneficence.”²

Spencer’s evolutionary theories predated Darwin’s by several years. For Spencer, neither physical nor social order requires deliberate design for its emergence; language, for example, was not the “cunningly-devised scheme of a ruler or body of legislators,”³ nor is the economic organization of society, without which “a great proportion of us would be dead before another week ended,” to be attributed to “the devising of any one.”⁴ Rather, order arises spontaneously, through the operation of natural laws; industrial civilization emerged “not simply without legislative guidance” but “in spite of legislative hindrances,” through the “individual efforts of citizens to satisfy their own wants.”⁵

The two chief modes of social organization are the militant—operating through compulsory cooperation and oriented toward violent conflict—and the industrial—haracterized by voluntary cooperation and peaceful exchange.⁶ The militant mode, Spencer maintained, was necessary at a certain stage in human history, before human beings had fully adapted to social existence; but its day is passing. Since “a society in which life, liberty, and property, are secure, and all interests justly regarded, must prosper more than one in which they do not,” the selective pressures of social evolution can be expected to bring about a gradual shift toward the industrial mode.⁷

Spencer’s long-run optimism was tempered, however, by short-run pessimism; although militant society was destined to give way to industrial society eventually, there would inevitably be temporary reverses and detours along the way. And Spencer believed that the modern world, after a long period of liberalization, was headed into just such a retrograde phase. Observing an increase in “imperialism, re-barbarization, and regimentation,”⁸ he foresaw this trend’s eventual culmination in a “lapse of self-ownership into ownership by the community.”⁹ Like many classical-liberal thinkers at the end of the nineteenth century, Spencer prophetically predicted for the century to come a grim relapse into collectivism and war.

An Ethics of Liberty

In ethics Spencer dismissed the debate between egoism and altruism, maintaining that human interests, properly understood, are so interdependent that one cannot effectively pursue one’s own welfare without giving others’ needs their due, and vice versa.¹⁰ Life and happiness are a human being’s proper goals, but he can achieve these goals “only by the exercise of his faculties,” and so “must be free to do those things in which the exercise of them consists.” But since all human beings by this argument have a moral license to exercise their faculties, “then must the freedom of each be bounded by the similar freedom of all.”¹¹

Hence Spencer derived a Law of Equal Freedom: “Every man has freedom to do all that he wills, provided he infringes not the equal freedom of any other man.”¹² Concluding that “whatsoever involves command or whatsoever implies obedience is wrong,”¹³ Spencer proceeded to deduce, from the Law of Equal Freedom, the existence of rights to freedom of speech, press, and religion; bodily integrity; private property; and commercial exchange—virtually the entire policy menu of today’s libertarians. His moral theory thus demands the complete displacement of the militant mode of social organization by the industrial.

Spencerian ethics is not exhausted by the Law of Equal Freedom; non-interference is the essence of justice, but ethics comprises beneficence (so long as it is voluntary) in addition to justice. Spencer insisted, however, that since production is logically prior to distribution, charitable assistance should aim at helping the needy to become productive rather than habituating them to a condition of dependence.

Liberalism and Democracy

Spencer lived in an age when the word “liberal” was beginning to change from its classical to its modern meaning. Where the earlier liberals had sought to promote the common welfare “as an end to be indirectly gained by the relaxing of restraints,” the new liberals treat the common welfare “as the end to be directly gained,” and by “methods intrinsically opposed to those originally used” — that is, by increasing governmental restraints instead of relaxing them.¹⁴ While the new liberals, like the old, do not “presume to coerce men for their spiritual good,” they nonetheless think themselves “called upon to coerce them for their material good.”¹⁵ “Most of those who now pass as Liberals,” Spencer concluded, “are Tories of a new type.”¹⁶

To the reply that the liberal state, unlike its predecessors, is justified in employing compulsory methods because its edicts express the will of the majority, Spencer answered that a majority imposing its will on a minority stands as much in violation of the Law of Equal Freedom as does the reverse; the “divine right of parliaments” is no less a “political superstition” than the divine right of kings.¹⁷ Spencer granted the need for majority rule, but only on those matters that fall within the majority’s jurisdiction.¹⁸ The purpose of joining together to form a political community is the protection of individual rights; hence decisions about the means to this end fall within the competence of the majority, but decisions contrary to this end do not.¹⁹ Modern democracy renders the individual citizen’s refusal of consent invisible; whatever the citizen says or does is viewed through consent-colored spectacles, obliterating the possibility of a no that means no.²⁰

Spencer saw the decline of liberalism—its deterioration from a doctrine of individual freedom to a doctrine of majoritarian despotism—as part of a general retrogression of modern civilization from industrialism to militarism. For Spencer there was an intimate connection between aggressive warfare abroad and political oppression at home; a society’s “internal and external policies are . . . bound together.”²¹ He denounced European imperialism as a succession of “deeds of blood and rapine” inflicted on “subjugated races” by “so-called Christian nations.”²² But imperialist policies are harmful to the colonizers as well as to the colonized; war diverts capital from productive to destructive uses, thus squandering “the accumulated labor of generations”—and because it gives the domestic economy an illusory “appearance of increased strength,” a state of war encourages politicians to impose higher taxes which the economy cannot in reality sustain.²³

Militarism vs. Trade

Military action to promote international trade is a fraud: “Trade is a simple enough thing that will grow up wherever there is room for it. But, according to statesmen, it must be created by a gigantic and costly machinery.”²⁴ In fact, such wars are waged not to promote the economic welfare of the common people, Spencer maintained, but instead to benefit powerful special interests, “rich owners” — the beneficiaries of government-granted privileges and monopolies — at the expense of “the poor, starved, overburdened people.”²⁵

While allowing that warfare is permissible as self-defense, Spencer added that few wars described as “defensive” really are such, and denounced any nation that “gives to its soldiers the euphemistic title ‘defenders of their country,’ and then exclusively uses them as invaders of other countries.”²⁶ Spencer thus opposed his own nation’s military adventures in Afghanistan, India, South Africa (the Boer War), and elsewhere.

Foreign expansionism, Spencer taught, brings domestic tyranny in its wake. Given that “the nations of Europe are partitioning among themselves parts of the earth inhabited by inferior peoples, with cynical indifference to the claims of these peoples,” the governments of these nations can hardly be expected to “have so tender a regard” for the rights of their own citizens.²⁷ Indeed, “the exercise of mastery inevitably entails on the master himself some form of slavery,” since unless he means to let his captive escape, he must continue to be fastened by keeping hold of the cord.”²⁸ Hence the need to maintain the subjugation of foreign peoples inevitably requires an ever greater imposition of constraints on the conquering state’s domestic citizens as well, until “the army is simply the mobilized society and the society is the quiescent army.”²⁹

While the long-run tendency of social evolution, he believed, is toward industrial society, and thus toward peace, Spencer viewed the immediate future with despair—in his later years increasingly so. The inexorable short-run trend of modern civilization, he came to believe, is toward greater political centralization, hyper-regulation, and militarism; as governments grow more powerful, popular culture grows more vulgar and brutal, each trend serving to reinforce the other. The few remaining lovers of peace and liberty are doomed to political irrelevance as militant society regains dominance for the foreseeable future.

At the time of Spencer’s death the number of libertarians was indeed dwindling. Today, a century later, it is growing. The centralized, hierarchical information channels of the political elite have been superseded by the Internet, the supreme embodiment of voluntaristic, “industrial” social interaction. The state still regulates, regiments, and kills, but an antithetical mode of life is sprouting in its interstices.

Spencer saw his own voluminous writings as a bitter cry of protest in the face of irresistible defeat. But for those of us who stand at the beginning of the 21st century, they can serve instead as an inspiration in our struggle to reverse the trend of history from the militant to the industrial mode.

—————-

1. Herbert Spencer, Social Statics: The Conditions Essential to Human Happiness Specified, and the First of Them Developed (New York: Robert Schalkenbach Foundation, 1970), pp. 144-45, available online at oll.libertyfund.org/Texts/ToC/0331 _ToC.html.
2. Herbert Spencer, The Principles of Ethics (2 vols.), ed. Tibor R. Machan (Indianapolis: Liberty Fund, 1978), available online at oll.libertyfund.org/Texts/ToC/0155_ToC.html.
3. Herbert Spencer, The Man Versus the State, with Six Essays on Government, Society, and Freedom (Indianapolis: Liberty Fund, 1992), p. 437; available online at www.econ lib.org/library/LFBooks/Spencer/spnMvSContents.html.
4.Herbert Spencer, Illustrations of Universal Progress: A Series of Discussions (Chestnut Hill Mass.: Elibron Classics, 2000), p. 320.
5. Ibid., p. 320.
6. The Man vs. the State, p. 6.
7. Herbert Spencer, The Principles of Sociology, vol. 2 (New York: D. Appleton, 1884), p. 608.
8. Herbert Spencer, Facts and Comments (New York: D. Appleton, 1902), p. 200.
9. Herbert Spencer, The Principles of Sociology, vol. 3 (New York: D. Appleton, 1910), p. 605.
10. Principles of Ethics, vol. 1, pp. 217-85.
11. Social Statics, p. 69.
12. Ibid., p. 95. (This is the passage to which Justice Oliver Wendell Holmes was referring when, in his famous dissent in Lochner v. New York, he opined: “The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics.”)
13. Ibid., p. 145.
14. The Man Versus the State, pp. 14-15.
15. Ibid., pp. 267-68.
16. Ibid., p. 5.
17. Ibid., pp. 24, 123.
18. Ibid., p. 130.
19. What about people who do not wish to join any political community, for any purpose? In his first book, Social Statics (1851), Spencer included a chapter on “The Right to Ignore the State”; in later years he deleted the chapter from subsequent editions, apparently embarrassed by its anarchistic implications.
20. Social Statics, p. 190.
21. The Man Versus the State, p. 174.
22. Social Statics, pp. 328-29.
23. The Man Versus the State, p. 211.
24. Social Statics,, p. 323.
25. The Man Versus the State, p. 220.
26. Principles of Ethics, vol. 2, p. 67.
27. Ibid., vol. 2, pp. 239-40.
28. Facts and Comments, p. 158.
29. The Man Versus the State, p. 74.

Where does Giuliano get his notions about utilitarianism? Clearly not from the writings of such great philosophers and economists as David Hume, John Stuart Mill, Henry Hazlitt, Ludwig von Mises, and R. M. Hare (and F. A. Hayek, who was a utilitarian despite evidently disliking that label). Nor from Aristotle, whose eudemonism foreshadows the soundest strands of utilitarianism. No, Giuliano seems to be thinking, at n-th hand, of an extreme “act-utilitarianism” or “situation ethics,” which would disregard principle and treat each case on its own supposed merits. This caricature version, if ever actually advocated, has nowadays become no more than a straw man for critics to blow down while claiming victory for their own favorite doctrines.

A sounder version, “rules” or “indirect” utilitarianism, recognizes powerful reasons for respecting principles, including those of natural or personal rights; and it distinguishes between good and bad personal characters, thus incorporating “virtue ethics.” This version quite rejects recommending any specific behavior or policy just because its intended good consequences are thought likely to outweigh any bad ones. Instead, it endorses enduring principles like those of Giuliano himself, and precisely on grounds of utility, on the grounds that they are essential to “social cooperation,” as Mises said, the kind of society affording free individuals the best prospects of achieving their various goals in life—in a word, happiness.

Like many of the critics whom he parrots, Giuliano takes Jeremy Bentham as his whipping boy. Not all but much that John Stuart Mill wrote deserves applause, including his essay on “Bentham” (1838). Mill understood Bentham’s distinctive personality. Bentham was good at probing for the exact meanings, if any, of noble-sounding but possibly empty words and slogans. He was good at probing for the rationale of inherited institutions and legal technicalities. But Mill did not think much of Bentham as an original philosopher and regretted the publication of his Deontology. Bentham’s offhand remark about the greatest good for the greatest number, uncharitably interpreted, is indeed nonsense. His faith in the great benefits that suitably instructed legislators could achieve is, as we now see, gravely misplaced. Bentham was far from being the soundest of utilitarians, and it is just wrong to take him as defining what utilitarianism is all about.

Public policy is largely ethics, applied or misapplied. What, then, does Giuliano conceive of as the soundest basis for ethics? Principles of honesty, property, freedom, and rights, as well as the distinction between good and evil, are decisive for a good society and human happiness; but they are not irreducibly intuited ultimates: they can be explained and argued for. Would Giuliano not argue for them? What grounds for them could he find, other than ultimately utilitarian grounds? Conceivably the authors of the policies that Giuliano rightly condemns had the parrot-like misinterpretation of utilitarianism at the back of their minds. That is no excuse, however, for giving the misinterpretation further currency.

—Leland B. Yeager

Auburn University (Emeritus)

Michael Giuliano replies:

Professor Yeager’s response to my article suggested that the view of utilitarianism represented therein was a “caricature version” that “has nowadays become no more than a straw man for critics to blow down.” The article was referring to a certain species of utilitarianism in order to provide one possible explanation, among several, as to how the welfare state has lowered the threshold of allowable risk such that more and more behavior is elevated toward artificial criminality.

My reason for criticizing this “caricature” version of utilitarianism, this version that is “indeed nonsense” according to Yeager, is that it is the version that legislators and other lawmakers so often adopt if only implicitly and independently of any actual theory. It is rarely sophisticated “rules” utilitarianism that is the force behind legislative crusades. Bentham’s “oversimplified test” involving “Pleasure-and-Pain, or the Greatest Happiness,” as Hazlitt observed, could conceivably be applied in a blind “manner to all traditional ethical judgments.” That much of our legislation follows a similarly sweeping rule was the true object of my criticism. 

Bentham was used as the example because these oversimplified tests are, in the most basic way, generally identified with utilitarianism applied in the more common situational and legislative settings. I had no intention of suggesting that this was truly the best of utilitarianism as understood in an academic, philosophical sense. I am compelled to defer to the esteemed Professor Yeager as to the best and most appropriately understood utilitarianism as that concept might be used before an academic background.

My argument was hardly that, emanating from the ink and pen of Bentham, his ideas directly flowed through the strands of history into the conscious minds of lawmakers. Perhaps there might be a certain indirect relationship. The point was simply that much of the criminal legislation at issue (though I do not suggest a formalistic distinction between criminal and other enactments) was based on transient public demands and outcries and limited by no particular ethical judgment at all.

As Professor Yeager concluded his response with the observation that the lawmakers might have “had the parrot-like misinterpretation of utilitarianism at the back of their minds,” it is apparent that he essentially recognized my point, however clouded it may have been by a semantically sweeping condemnation that had as its purpose a brief point in the essay. The utilitarianism I referred to was not, excepting the point on Bentham, intended to generally diminish scholarly utilitarian thought, but was instead focused toward the garden-variety utilitarianism that often animates the lawmakers creating the legal landscape we live in.

The problem with all these “oughts” is that they eventually confront the principle ought implies can. Can the desired end (improving the welfare of the poor, for example) be achieved by the chosen means (income “redistribution”)? If not, then what does the “ought” really mean? “Oughts” without “cans”–ethical pronouncements without economics–are likely to lead to disastrous public policies.

In exploring the relationship between economics and ethics, we can start with two definitions that seem relevant here. The economist David Prychitko once defined economics as “the art of putting parameters on our utopias.” And in a particularly insightful definition, Nobel laureate F. A. Hayek wrote that “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” What both definitions suggest is that economics deals with the realm of the possible and in doing so demarcates the limits to what should be imaginable. Before we say we “ought” to do something, perhaps we should be sure we can do it, in the sense that the action is likely to achieve the intended ends. Put differently: ought implies can.

Ethicists can imagine all kinds of schemes to remedy perceived social ills, but none of the aspiring benefactors can afford to ignore economic analysis. Being able to dream something doesn’t guarantee it is possible. Too often ethical pronouncements have an air of hubris about them, as the pronouncer simply assumes we can do what he says we ought to do. By contrast, economics demands some humility. We always have to ask whether it’s humanly possible to do what the ethicists say we ought. To say we ought to do something we cannot do, in the sense that it won’t achieve our end, is to engage in a pointless exercise. If we cannot do it, to say that we ought to is to command the impossible.

So contrary to the commonly heard complaint, it is not that economists ignore ethical issues. Rather we attempt to describe the likely results of putting particular ethical rules into practice. For example, someone can argue that a living wage is an ethical imperative, but that doesn’t change the economic analysis of minimum-wage laws. Those laws increase unemployment and/or lead to reductions in nonmonetary forms of compensation among all unskilled workers, but especially the young, male, and nonwhite. No matter how much we think we ought to pass such legislation as a way of helping the poor, the reality remains that economics shows us that we cannot help them that way. Those who argue we ought to have such a law can still pass it if they want, but they should do it with eyes wide open to the fact that it will not achieve the result they wish, no matter how much they think we ought to have it.

It might be more accurate to say that ethicists ignore economics than that economists ignore ethics. To the extent that good economics shows what we can and cannot do with social policy, it is engaged with ethics. After all, if the point of saying we ought to do X is that we think it will achieve some set of morally desirable goals, then knowing whether or not doing X will actually achieve those goals is, or at least should be, a key part of moral inquiry. One of the tasks that economists should set for themselves is to engage in this sort of dialogue with moral philosophers and others who argue from “oughts.” Economist Leland Yeager’s recent book Ethics as Social Science is a good example of how economics can inform ethical questions just this way.

Studying “Ought,” Ignoring “Can”

The more interesting question is the degree to which moral philosophers are engaged with economics as they develop their theories. It might be true that introductory economics courses do not consider moral questions as often as they might, but it would seem at least as true that courses in ethics and religious studies are unlikely to confront either economic arguments or economic data that relate to their subjects. Exploring the “ought” without broaching the “can” will not get one far in designing policies that will achieve the intended results. One exception to this neglect of economics is the philosopher Daniel Shapiro’s Is the Welfare State Justified? In that book he brings to bear a good deal of empirical data and economic theory on the question of whether the welfare state can do what its proponents claim for it. From the philosophy side, this is the kind of work that needs to be done.

Can Doesn’t Imply Ought

Once we recognize the insight behind “ought implies can,” we can see that the reverse is true as well. Just as we cannot do everything people say we ought, we ought not do everything we can. We see this in the frequent calls for political actors to “do something” in the face of a crisis. There are many things politicians can actually do in a crisis, and doing them is often fairly easy, especially if the politicians can generate a climate of fear to help make the “ought” seem more pressing. But the fact that they can do something does not always mean they ought to. Even if it is true that “yes we can,” understanding the unseen and unintended consequences of what politicians are able to do should help us to decide whether they ought to do it.

Both ways of looking at “ought implies can” put economists in the position of throwing cold water on the plans and designs of social engineers left and right. This is what Prychitko and Hayek mean. Economists are thus often seen as only knocking down the ideas of others without coming up with solutions of their own. There is some truth to this claim. That is how economists spend much of their time. But it’s an important function: showing why a proposed solution would only make matters worse is a valuable contribution to the broader process of solving the problem.

More relevant, however, is that economics teaches us that solutions are much more often found in the actions of individuals and organizations responding entrepreneurially to the situations they face. The notion of a top-down solution to any social problem is going to attract the economist’s critical eye. In terms of “ought implies can,” economists are often reluctant to say what everyone ought to do because no one person or group knows what people can do. If ought implies can, and “can” is particular people in particular contexts developing solutions to their problems, then it is difficult to say what we all ought to do, especially in a crisis. This is the way that Prychitko’s and Hayek’s definitions cash out in the real world.

All the themes above have been on display in the current economic crisis. The bailout of the financial sector is a classic example of both letting the “ought” blot out the “can” and of assuming we ought to do whatever apparently can be done. The original promise of the bailout was that government would buy up the bad assets of troubled financial institutions then later resell the assets, making the real cost substantially less than the original $700 billion. Many critics, including many economists, suggested not only that this plan was counterproductive–because it only enhanced the likelihood that other firms would take unwise risks in the future–but also that the availability of those funds would lead to demands for the government to use them in other equally unproductive ways. That is more or less what has happened, as the bailout expanded to partial government ownership of banks and then demands from the auto and insurance companies to get in on the goodies. The plan changed again when the government announced it wouldn’t purchase troubled assets but instead would inject money directly into banks and other kinds of businesses. But soon all the “oughts” were crashing against the limits of what can be done via government intervention. Meanwhile, the machinery of government did many things it can do–borrow and create money, for example–without the planners thinking very much about whether they ought to do any of those things.

Social scientists who disregard ethical issues abandon one of their central roles in bettering the human condition, and ethicists who ignore social science in formulating their moral prescriptions are negligent for not asking whether those solutions will achieve their stated ends. Only when both realize that ought implies can will we get public policies based on an accurate understanding of human interaction.

by Lynne Viola

Oxford University Press • 2007 • 278 pages • $30.00

Reviewed by Richard M. Ebeling

In The Harvest of Sorrow (1986), historian Robert Conquest estimated that in the early 1930s as many as nine million people may have died during the forced collectivization of land in the Soviet Union. They were shot, tortured, or starved to death. Peasant resistance to the state’s seizure of their farms was dealt with by Stalin through a planned famine that finally broke all countryside opposition to the march into the bright and beautiful socialist future.

In 1931 Lady Astor of Great Britain was privileged with an audience with Stalin in the Kremlin. She point-blank asked him, “And how long are you going to go on killing people?” Stalin calmly replied, “As long as it is necessary. . . . The violent death of a large number of people was necessary before the Communist State could be firmly established.”

One of the few Western journalists of the time who was able to get outside Moscow to visit some of the famine areas in southern European Russia and Ukraine was William Henry Chamberlin. In a series of articles that he wrote on his return to the United States in 1934, he reported seeing skeleton-like undernourished children, adults barely able to walk from hunger, and hushed whispers of cannibalism in a gruesome attempt by some to stay alive. Red Army detachments and units of the secret police attempted to block all roads into these areas to prevent any of the victims from escaping or their friends and family members in the cities from bringing food to those condemned to this terrible fate.

The main target of Stalin’s wrath was the supposedly richer peasants known as kulaks, who were said to be the main opponents and resisters of collectivization. They were labeled the countryside “capitalist class” and therefore the primary “enemies of the people.”

Stalin’s other method of dealing with the kulaks was compulsory exile to some of the harshest and least inhabitable parts of northern European Russia. These victims are the subject of Lynne Viola’s book, The Unknown Gulag, the tragic details of which have never been thoroughly studied before. She estimates that between 1930 and 1933, well over two million people were transported to these faraway regions of the Soviet state.

Hundreds of young Communist Party members from the cities, who knew nothing about the peasantry or farming, were sent to the rural areas to assist in the collectivization. Indoctrinated by the party’s propaganda that the kulaks were the stumbling block to “building socialism,” these communist thugs intimidated and violently abused people when and how they wanted. Inspired by the idea of production quotas under the newly instituted five-year plan, they set up quotas for killing and exiling peasants as quantitative indicators of breaking the resistance to state-run collective farming.

Like much in the Soviet planned society, the details of exiling millions of people had not been thought out beforehand: how to transport and feed hundreds of thousands of families, how they would build shelter, what types of work they would be required to do once they reached their assigned locations. But trains were arranged, and these hapless people were crowded into cattle cars with barely room to stand, little or no food, and no hygienic facilities. The journeys would take two or more weeks to the north Russia territories around the towns of Archangel, Vologda, and Kotlas, or across the Ural Mountains to northern Siberia.

Only slowly were party commissions appointed to decide what was to be done with the exiles. In their secret reports to senior party officials, the heads of these commissions admitted that disease, starvation, and bitter cold weather were decimating the kulak families. It was reported that during a two-month period in 1931, more than 3,000 children who succumbed to the harsh conditions were buried in the Vologda area.

Stalin’s dream was to use the vast army of slave laborers to work in the deep forests of the north to supply lumber for construction projects and to mine for the rich minerals buried above the Arctic Circle. The exiled families were to be divided into groups of 1,500 people and made to construct permanent settlements for themselves in the forest and mining areas. Their sentences would be indeterminate so they might be used for as long as it served the interests of the state. If in the process many died, the multifamily barracks in these settlements would simply be filled with the next group of slave laborers.

Violence was the main tool to maintain order. One of these exiles said, “Here they beat us horribly. . . . They beat us with revolvers while we slept. The commandant broke one man’s skull. . . . There is no defense from anyone. We will likely perish here.” Some attempted to escape; by 1933 the authorities estimated that several hundred thousand had tried. But most either didn’t make it through the frigid land or were recaptured and usually sent to a camp worse than the first one.

By the end of 1931 “the plan” for the design and construction of these settlements and the work to be done there had been drawn up to the smallest detail. But as Viola explains, “It represented an ‘imagined future’—laid out in endless plans, reports, memos, figures, tables, graphs, and budgets—superimposed on the present-day realities of the Soviet hinterlands. . . . Reality was vastly different—untidy, unmanaged, and shaped more by geographical, economic, and cultural realities than by Moscow ‘s seeming omnipotence.”

These “imagined” exile-populated settlements, which she reminds us were nothing more than “a shoddily constructed institution of forced labor,” were brought down by the nationwide government-caused famine of 1933–1934. Because of the failure of “the plan” and the shortage of food and materials, most of them were closed.

But the human cost was horrific. Out of the more than two million exiles sent to these areas, by 1934 only 973,000 had survived. Subtracting those who succeeded in escaping, close to 50 percent had died. Sometimes, however, there is a perverse justice in the world. Two of the leading party officials responsible for the planning and initial execution of this forced-labor system were themselves arrested during Stalin’s Great Purges and executed in 1937 as “enemies of the people.”

Most of the kulaks who survived were merely transferred to the larger and far more terrifying and lethal Gulag system of labor camps that stretched across the entire length of the Soviet Union and consumed tens of millions of lives during the nearly 75 years of the nightmare socialist experiment.

* * *

In Our Hands: A Plan to Replace the Welfare State

by Charles Murray

AEI Press • 2006 • 140 pages • $20.00

Reviewed by Michael Tanner

If, as Richard Weaver famously wrote, “ideas have consequences,” then Charles Murray is a truly consequential man. Only a handful of thinkers over the past quarter century have had as much impact on public policy. It was his 1984 classic, Losing Ground, that led to a bipartisan consensus about the failure of the Great Society welfare state. Now, ten years after the welfare reform that owes its existence to Murray ‘s ideas, he is back with a thought-provoking approach to government antipoverty policies.

Murray ‘s latest book, In Our Hands: A Plan to Replace the Welfare State, provides a blueprint for doing just that.

By Murray’s estimate, federal, state, and local governments spend roughly $522 billion per year on antipoverty programs, yet poverty rates have barely budged over the past 40 years. As he notes, “Only government could spend money so ineffectually.” His answer, therefore, is to take the money away from the government and give it directly to the people.

Murray would abolish all welfare programs. He would also terminate all other government transfer programs: Social Security, Medicare, and even agricultural price supports. In their place he would provide every American citizen with an annual grant of $10,000 to do with as he or she pleases. The grant would be untaxed for those earning less than $25,000 per year, thereby establishing a floor of national income, and entirely taxed back for high-income earners. There would be no work requirements or other restrictions. All Americans would get that check—but nothing else.

This, of course, wouldn’t actually abolish welfare. In fact, Murray’s proposal would initially be more expensive than current programs. Yet it would sweep away the vast edifice of the modern welfare state—not just the agencies and bureaucrats who administer the dozens of overlapping aid programs, but the rules, regulations, and restrictions that make the welfare state as much the overseer of the poor’s behavior as a dispenser of alms. At a time when big-government conservatives seek to use welfare as a weapon to micromanage the lives of the poor, this comes as a breath of fresh air.

For example, it is widely acknowledged that existing welfare laws act as a disincentive to family formation. Recipients are frequently penalized for marrying. Big-government conservatives would counteract this by creating federal programs to teach the poor about the benefits of marriage, or even bribe welfare mothers into marrying with the offer of additional benefits.

Murray ‘s plan avoids all this. Those who act responsibly, who marry, save for their retirement, purchase health insurance, and so on would be better off. Those who make irresponsible choices would be forced to fall back on private charity. Murray accepts the inevitability that modern societies will redistribute income, but doesn’t want them to run people’s lives.

Yet Murray ‘s proposal is undermined by one simple flaw. His plan would establish as both a legal and philosophical concept that every American citizen is entitled to a minimum income—exacted from the taxpayers. Once that “right” is established, the political process will inevitably expand it. Murray argues that $10,000 is the correct amount. But how long before some politician comes along and says, “No one can live on $10,000. We need to make it $11,000.” Soon another politician, not wanting to be thought less compassionate than the first, will propose $12,000. Look to the current debate over “a living wage” to see how this would work.

The book is not a casual read. It packs a great deal of information into a short space, and sometimes the numbers and programmatic interactions fly by in a blur. Murray can unexpectedly veer off to discuss subjects such as tort reform or expected future stock returns. These are topics that have consumed volumes in their own right. It is hard to do them justice in the few pages Murray devotes to them. Many of the details are designed to show that Murray has thought through all the implications of his proposal. This is a testament to his excellence as a scholar, and a treasure trove to policy wonks, but of marginal utility to the average reader.

Also, there’s a general assumption that the reader shares Murray’s view that the current welfare state is a failure. Consequently, the book is unlikely to persuade anyone who starts from a different premise.

Murray says he conceives of his proposal as a “thought experiment.” It fulfills the role brilliantly. His solution is dubious, but if Murray can once more get us to question traditional wisdom, he will have again proven how consequential ideas can be.

* * *

Actual Ethics

by James R. Otteson

Cambridge University Press • 2006 • 349 pages • $75.00 hardcover; $25.99 paperback

Reviewed by Tibor R. Machan

More and more books sympathetic to classical liberalism and libertarianism are coming on the market from publishers that haven’t offered such works until recently. Cambridge University Press has started to take on such works regularly.

This is important because in the contest of ideas, it matters where the ideas are published. It influences their use in classrooms, the promotion of the authors, and so forth, so when a certain line of thinking gains a forum at the more prestigious publishing houses, that can be identified as an advance. Thus James Otteson’s Actual Ethics is a triumph, and all those who value individual liberty should rejoice.

Having said this, I should also note a small quibble, namely, with the idea that classical liberalism and libertarianism are ethical rather than political stances. It is not new, of course, to believe this. Murray Rothbard and quite a few of those who discuss the constitution of a free society suggest that this is a matter of ethics proper, not only of political theory. Yet prominent classical liberals, such as Milton Friedman and F. A. Hayek, have held that no commitment to any kind of ethics is involved in championing the free society. (I myself have argued that there is but a minimal ethical substance in such a political position.) This is supported by the idea that ethics addresses the question of how we ought to live our lives, day in and out, while politics is about how human communities are best organized.

Otteson, who has been teaching philosophy at the University of Alabama but is moving to Yeshiva University, contends that ethics is directly relevant to the politics of classical liberalism. In his own words, he is advancing “the simple and . . . inspiring vision of free and independent individuals who take no and brook no violation of personhood, who thus meet each others as equals in personhood, and who seek to provide for themselves and for those they care about a good and happy life.” For him this is an ethical claim, not so much one concerned with politics or law.

Actual Ethics is a work with a unique approach, one that reminds me of John Hospers’s way of philosophizing—common-sense philosophy. Otteson says he is concerned with “how you should live,” yet the book is more often than not about how you should not live, as well as about the important notion that one needs to figure out for oneself the details of how one should live. For Otteson government’s purpose is “to secure people in their lives,” although this could imply a far more extensive role for law than Otteson supports—for example, universal health care. That is why the American Founders’ notion that government is about securing our rights (to life and so on) is, I believe, more precise. But I think Otteson agrees with that position.

Otteson’s achievement here is to make a persuasive case for classical liberalism based on the moral superiority of individual freedom and responsibility. With so much philosophy these days tending to support the expansion of the state, this book is a gust of fresh air.

Actual Ethics has a lot of provocative and well-executed discussion about all the problem areas that critics of the free society keep mentioning—welfare, health care, child care, poverty, education, and so forth. These are all dealt with in admirably accessible fashion, free of the kind of jargon that often mars philosophical discussions of human affairs. For example, Otteson considers various reasons for placing education in the hands of government and although his idea of inviolable personhood would render any kind of state schooling indefensible, he patiently examines most of the justifications and finds them wanting.

Each chapter ends with a long list of relevant publications that would be of great use to anyone wishing to develop some of the nuances of the questions that Otteson is exploring.

I would like to end this brief review by commending Otteson for invoking the ideas of the late Julian Simon, especially the extremely important notion that the greatest resource for making advances in our lives is the individual’s initiative, the creative mind. I would also like to take exception to Otteson’s calling me something of an anarchist. His list of those who are supposedly in the anarcho-capitalist school is debatable. But that debate will have to await another book. Actual Ethics has so much value to offer that this minor mistake can be set aside.

* * *

Black Americans and Organized Labor: A New History

by Paul Moreno

Louisiana State University Press • 2006 • 325 pages • $49.95

Reviewed by George C. Leef

Among the virtues of free markets is that they provide all who wish to compete the opportunity to do so. Free markets are not burdened by coercive interference that favors some groups and shuts others out. That is particularly beneficial for people who are of a religious sect, nationality, race, or other group that is widely disliked. Even if most people choose to discriminate against them, they can still succeed by working for or selling to those who don’t share the general prejudice, or at least who will put prejudice aside in favor of good-quality work.

On the other hand, where a market is subject to government regulation, unpopular groups are often excluded or handicapped. That is because dominant groups are able to exercise their political power to pass laws that stamp out competition from outsiders.

Black Americans have suffered a great deal from official discrimination in the labor market. For example, under the Jim Crow laws enacted in southern textile-producing states, it was illegal for a mill owner to employ black workers in better-paying positions. The job of loom fixer, among others, was by law a whites-only job. Many owners would have been glad to hire or promote people for that job just on the basis of work quality, but racist politics dictated otherwise.

Labor unions have long used both legal and illegal means to secure for their members higher pay than they would be able to get in a free market. In the early years of America, virtually every labor union admitted whites only. Racist sentiments teamed up with the desire for economic advantage to produce overwhelming hostility toward any blacks who had the temerity to try to compete. In his book Black Americans and Organized Labor, Hillsdale College history professor Paul Moreno gives a detailed account of the one-sided battle between blacks and unions. It’s a “warts and all” picture that reveals much about the ugly, coercive side of organized labor that is usually kept hidden from the public. Moreno quotes Samuel Gompers, who once ranted that “Caucasians are not going to let their standard of living be destroyed by Negroes, Chinamen, Japs, or any other.” The early civil-rights leader A. Philip Randolph clearly understood what the unions were all about when he said that the American Federation of Labor was “the most wicked machine for the propagation of race prejudices in the country.”

In the nineteenth and early twentieth centuries, violence was often used by white unionists against black workers and white-owned businesses that employed them. Moreno gives some revolting instances. What he labels “the bloodiest race riot in American history” took place in New York City in 1862 when white workers rioted against a tobacco-manufacturing company that had hired black workers. Hundreds were killed and injured before the riot was put down by army troops. Violence was illegal, of course, but the unionists were certain that they could get away with it.

One of the key themes in the book is that black workers and white business owners were allies against the attempts to cartelize the labor market by unions. In the post-Civil War South, Moreno writes, “industrialization could have undermined the region’s racial hierarchy, but segregation forced business to conform to it.. . . Railroad owners balked at enforcing racial segregation and fought the laws in court—joining Homer Plessy, for example, in challenging the requirement of separate accommodations in New Orleans streetcars.” Frequently businesses that chose to employ black workers were targeted by unions with violence.

Nor was racial animosity confined to the South. In Northern states unions used their power to ensure that skilled trades remained exclusive white preserves. One favorite tactic was to get occupational-licensing laws passed, and then to use their control over apprenticeship programs to keep anyone they didn’t like from learning the trade.

Eventually some unions began to soften their stance against blacks, a combination of receding racial hostility and self-interest. (The money of black union members was just as good as that of whites.) Political pressure was building for legislation to forbid racial discrimination by unions, and most union officials supported it, although there were some who opposed it and even declined to comply until forced to do so.

Unionists like to talk about what they call “labor’s bitter struggle”—which is their rhetoric for efforts at establishing legally protected cartels—but the really bitter struggle was that of black (and other minority) workers to be allowed to compete freely in the labor market. Paul Moreno’s book beautifully tells the story of that struggle but also makes a bigger point, namely that society must not allow interest groups to use the law as a sword to cut down competition from other people.

* * *

It has often been said that markets are led “as if by an invisible hand” to bring about order and cooperation among people. Markets use incentives and mutual interests to achieve this harmonious result. But there is another, “older” mode of organizing people, namely to organize them around what is “good” or “right.” That would seem to be the way of ethics. Ethics, in contrast to markets, seems to organize people around authoritative commands and directives.

This raises a question: how can it be said that self-regulating and spontaneously ordered markets in any way depend on or use ethics? Does it even make sense to encourage ethics in a system that is spontaneously produced and self-regulating? Are not these two opposed, rather than complementary, principles of organization?

In short, what exactly is the connection between the visible hand of ethics and the invisible hand of the market?

Liberal market orders make little reference to moral norms as a basis for solving the problem of coordinating people in society. Most of the time we do not even know the persons with whom we interact well enough to formulate any ethical judgments about them at all. This “impersonality” is certainly a good thing. We can interact with, and benefit from, more people in more ways than if we had to worry about whether their view of right and wrong was the same as ours, or whether they adhered to the same principles as we do. In markets we trade for mutual advantage and then go about our business.

Some have therefore claimed that the market order is at best amoral and possibly immoral. Others still cling to the idea that markets produce “chaos” and want something more like an ethical directive to serve as the basis for social cooperation. That would certainly seem to ensure that ethics somehow gets into the picture, but it may rest on the completely false notion that markets produce chaos. So let’s keep to the idea that markets can coordinate people perfectly well on the basis of mutual interest and consent. Assuming that, why do we need ethics? And more generally, even if we find some use for it, isn’t ethics going to be of minor importance in a market order?

First, we know that in any social order we cannot allow people to do whatever may interest them. We shouldn’t be allowed to set up Murder, Inc. So it seems we need some kind of rules even within a market system. This suggests right off the bat that ethics has a role to play in setting those rules. But then, why not let ethics set up everything? Why, in other words, do we consult ethics for some things and not others? We could say that we stop doing ethics when the market approach of using interests rather than commands starts to work better than the visible hand of ethics. This response, unfortunately, brings us pretty much to a standstill in terms of how to proceed.

On the one hand, for example, there could be those who are less interested in what works and more interested in being sure that people do the right thing. On the other hand, there are those interested in what works, but who might have different opinions about what works better than what. Finally, besides those few who don’t think markets really work at all, there are those who might say that markets are okay in very limited spheres, but that ethics should really be the dominant way in which to organize people. All these qualifications seem to stand in the way of a robust defense of the liberty offered by the market. And if we went the other way and gave in to a largely market system, we would seem to be encouraging a culture of interest rather than one of ethical responsibility, since ethics seems to be so little referred to in the daily workings of the market.

We, however, believe that this apparent “ignoring” of ethical concerns is not only justified but is actually a kind of celebration of ethics. In a certain sort of way, less is more. A lot less concern about adherence to commands and directives at the public level may mean a good deal more respect for ethics generally. We’re not saying that the liberty of the market will make people more ethical. We might believe that’s possible—even generally true—but whether true or not, our point is different. We’re saying that this way of organizing society—giving people some simple rules and allowing them to interact with each other based on their mutual interests, agreements, plans, or projects—is an approach that gives ethics utmost importance in society. By “utmost importance” we don’t mean we’ll necessarily get more ethical behavior or that the society will work better. We mean that the society will in some important way give ethics a critical role to play in its structure.

In this connection there are really only two ways to go. Either society is structured around some ethical principle or set of principles such that the purpose of the society is to live according to them, or society takes some ethical principles to be central to it while leaving others for people to follow on their own. Obviously, the market society, or “liberal” order, is an example of the latter. Of course, that just poses our same question: which principles should be at the center and why?

Perhaps we can get at this question a bit differently. Instead of assuming we’re all clear on what ethics and politics means, let’s ask some basic questions. For example, just what is ethics? We take ethics to be an investigation of how one ought to live. That means specifically what actions one ought to take to live well. Put in these terms, one thing that immediately jumps out is that the answer to this question for one person may not be the same as for another. If this is true, then the market order is certainly one that allows for and indeed encourages a pluralism of ways of living. That’s not our main point here, but it is something important to remember when thinking about ethics and the market. If there can be more than one way to live well, then the market may be the best organizing principle in recognition of that truth.

Of course, one might live badly under freedom and pluralism as well. The market order may allow someone to misuse or abuse his responsibility to live well. It would seem, then, that the market order (in the abstract) is neither a supporter of nor a detractor from the good life. It could go either way in any individual case. But that may not quite settle the issue. For in asking ourselves what ethics is, we might also want to ask what social problem we are trying to solve that brings us to this question about ethics in the first place. We already know part of the answer. We need some rules to live by when we’re in the company of others.

But in light of what we’ve said, those rules have to do two things at once. First they have to apply equally to everyone in the society. We can’t have them applying to some people and not others, because these are the basic rules for society as a whole. By the same token, they have to apply to everyone while at the same time recognizing that there may be different ways of living well. This means that they need to recognize the pluralism we’ve spoken about while still somehow treating everyone the same. We cannot fall back into the trap of making everyone live a certain kind of life. That would violate the variety we’ve already said is necessary for ethical pluralism and which is generously allowed by the market. We also cannot go to a position that gives up on general rules. That would make it unclear how to deal with each other when we don’t know if we share the same ethical principles. We’ve got to be both general and specific at the same time with whatever basic governing principle of society we adopt.

It still seems like we’re at an impasse. What kind of rule or principles could possibly both speak to everyone at the same time, allow for plural forms of living well, and not at the same time bias things in favor of one form of living well over others? What principle could possibly serve such a role?

Different Types of Ethical Principles?

Before answering this question we need to be open to one more possibility. It might just be the case that not all ethical principles are the same type of thing. Maybe some ethical principles are of one type and others of another, and thus only some are really relevant to our problem here. Another way of putting the matter is to suppose that maybe some principles are appropriate for solving the problem of how to live among our fellow human beings and others about how to live well. Yet that cannot be quite right either, for living well involves living among others. Maybe, then, we need principles that speak to the very possibility of living well among others and principles that speak to living well, including among others. If you’re open to that, we think we’re ready now to see the answer to our problem.

What is it, then, that a) can apply to everyone, b) can apply to every ethical situation, c) does not bias society more in the direction of one way of living well over another, and d) is something each of us has an ethical interest in every time we act? Could there possibly be such a principle?

We think there is: the principle of “self-direction.” More specifically, the principle is that the first principle of social order must be to protect the possibility of self-direction. By “self-direction” we don’t mean anything complicated—just the ability to make and exercise choices as an acting agent. One doesn’t have to be autonomous—that is, in full possession of all relevant information and powers of reasoning—nor does one have to be choosing rightly. One simply has to have the ability to make choices within whatever system of constraints one confronts. We have such a simple understanding of self-direction because for any act to count as ethical it has to be something one chooses or is responsible for. If one didn’t actually choose the action or could only be responsible for it when she had full information or god-like understanding of the situation, then there wouldn’t be much ethics around.

The most obvious and common way to impede self-directedness is with the use of physical force. There may be other ways, but physical force is easily recognizable by all and more or less easily prevented. Because our basic principle has to be general and public, we need to have one that is relatively easy to identify and not over-subtle and qualified. The usual list of crimes, such as theft, rape, murder, assault, fraud, and the like, serves this criterion quite well. If we don’t allow these things in society, there is a strong presumption of self-directedness when we see people acting.

In protecting the possibility of self-directedness, it should be clear that we’re not trying to make people good or even increase their effectiveness in being self-directed. What we’re really trying to do by protecting the possibility of self-directed behavior is to give ethics a chance. Indeed, if, as we believe, self-direction is at the base of every act that is to count as ethical, the surprising conclusion is that it is the market system that, in giving liberty pride of place, actually gives ethics the most chance!

We still don’t have a completely ethical society in protecting the possibility of self-directedness. That would depend on whether the people exercised their freedom in ethical ways. Notice though that if you don’t exercise yours in this way, it doesn’t keep me from exercising mine, since what we’re protecting is the possibility for self-direction—not particular forms of self-directed conduct. Notice, too, that if we try to enforce more than the possibility of self-directedness, we’re very likely to begin to bias things in favor of some forms of self-directedness over others. It seems that either we must embrace liberty completely as our social principle or not. But if we do not, the surprising conclusion is that we’re also abandoning a commitment to what is central and necessary for any act to count as ethical. We must, in other words, keep in mind one type of ethical principle in order to protect another—in this case what is fundamental to all other acts in a social context. If we reverse the priorities, we may actually be destroying the foundations of ethics.

Making Ethical Actions Possible

It may seem that market societies are indifferent or ambivalent about ethics, but if so it is because they and only they recognize that there’s a difference between ethical principles that make ethical actions possible in society and ethical principles that guide us in what we need to do to live well or fulfill our obligations to ourselves and others. This is another way of saying that the market order, for good reason, does not want to be understood as an ethical philosophy. It isn’t a philosophy of ethical living. It is rather an answer to the limited question of what is the role of ethics in organizing society. The answer is simply that it should be organized to protect the possibility of ethical behavior, and attempts to do more will actually compromise that basic goal. That may be some distance from a philosophy of living, but it is in accord with the truth that living well can only be accomplished by individuals who are responsible for their own actions.

We can say by way of conclusion about liberal market orders, therefore, that they and only they exhibit a profound recognition of the centrality of self-directedness to morality and thus a recognition of the need to protect it. This recognition would thus naturally manifest itself in a suspicion of any effort to replace self-direction with some form of predetermined moral trajectory, however appealing or compelling such a program of direction might be. The norms protecting self-direction can only be altered in the name of self-direction, otherwise self-direction must be left alone to be exercised. The hidden wisdom of classical liberalism, and indeed the reason for its incredible practical success and power, is the insight that the less ethics is an object of political concern, the more it has a chance to flourish socially. While there is solid evidence to support the contention that liberal orders make people generally better off, what is perhaps less well noticed is that liberal orders allow something deeper and more profound. They allow people to be human—that is, they allow people to employ their peculiarly human capacities of reason, judgment, and social sympathy toward ends and purposes they themselves have chosen. The market order is not, then, a dehumanizing institution, but the most human, and ethical, of them all.

Debauching disease, the currency of medicine, is an even more insidious and more powerful means of overturning the moral and legal basis of modern society. This is a consequence of the fact that, in modern societies, the definition of disease is a state monopoly, the dispensing of medical care a state responsibility, and the receipt of medical services an “entitlement” of the citizen-patient. Willard Gaylin, co-founder and president of the prestigious bioethics center, the Hastings Institute, and professor of psychiatry at Columbia University College of Physicians and Surgeons, explains: “Hatred is not an entitlement like health care. It is a disease like tuberculosis. It may infect others, but it inevitably destroys the hater, diminishing his humanity.”

Gaylin, one of America’s pre-eminent “medical ethicists,” takes for granted that health care is an entitlement and asserts that hatred is a disease that diminishes the hater’s “humanity.” The assertion is plainly false. Hatred, like love, increases rather than diminishes the subject’s humanity, making him more wicked or more virtuous, as the case may be. It is the absence of these emotions under appropriate circumstances that we regard as inhuman.

Science is synonymous with materialism and with objective standards of measurement. The term objective here means fixed in terms of some fact of nature, not alterable by personal caprice or political power. Familiar examples are the speed of light in natural science, the gold standard in economics, and the pathological standard in medicine. It is axiomatic that there can be no scientific investigation or scientific theory of non material “entities”, “such as hate, racism, and anti-Semitism, now often said to be diseases. Yet, addressing the concept of disease, prominent medical scientists and prestigious publications regularly ignore, overlook, and obscure that we use the concept of disease both as a value-neutral scientific term to describe and explain aspects of the material world, and as a value-laden ethical term to identify, excuse, condemn, and justify (nonmaterial) human aspirations, laws, and customs.

Prior to the nineteenth century, the “scientific” concept of disease was an imbalance among the four “humors,” and blood-letting, emetics, and purgatives were the most important forms of medical treatment. So-called humoral imbalance was a (pseudo)explanatory fiction. It could not be observed, much less measured. The same is true for today’s “chemical imbalance,” said to explain the nature (cause) of mental illnesses.

Only after considerable struggle did the unobservable humoral standard of disease yield to the observable pathological standard. Following the publication in 1858 of Cellular Pathology as Based upon Physiological and Pathological Histology, by Rudolf Virchow (1821-1902), the standard scientific measure, or “gold standard,” of disease became bodily lesion, objectively identifiable by anatomical, histological, or other physico-chemical observation or measurement.

A related watershed event occurred in 1869, when the Russian chemist Dimitri Mendeleyev (1834-1907) published his paper “The Relation between the Properties and Atomic Weights of the Elements,” the first formulation of the Periodic Table of Elements. This scheme provided not only a precise identification of all the then-known elements, but also identified elements not yet known but the existence of which could be predicted by Mendeleyev’s epochal insight.

Gold as a monetary standard, the Periodic Table as a classification of elements, and disease as pathological lesion are examples of ordering an aspect of our world, natural as well as social, by objective criteria, independent of human desire, moral judgment, or political power. The items so ordered are among the most important things in our everyday lives, touching on religion, medicine, drugs, law, economics, and politics. Organizations and persons aspiring to exercise control over our personal lives—church and state, politicians and physicians—have always experienced, and continue to experience, independence from them as an impertinence, an interference with their “sacred duty” to govern, rule, and “do good.”

From the early days of modern scientific medicine in the mid-nineteenth century until World War I, medical theory and practice were independent of the state. During the following two decades, political control of medicine remained relatively minimal, except in the Soviet Union and in Germany after 1933. After World War II the distribution of medical services throughout the developed world was transformed from a capitalist to a socialist system: the source of the physician’s income shifted from the patient to the government or a government-regulated insurance system. Pari passu, medical research, the definition of disease, and the classification and control of drugs became politicized. One result was that more and more “problems in living”—from smoking to obesity to the unruliness of children and unhappiness of adults—became defined as diseases, and more and more drugs were removed from the free market and made available only to persons diagnosed as ill and called “patients.”

People, we must remember, have always used drugs—alcohol, opium, cannabis, cocaine, tobacco—to cope with life. Under the new medical-socialist regime, many of these and other drugs became available to persons only by prescription, and physicians can write prescriptions for them only for persons diagnosed as ill. Not surprisingly, the result is an epidemic of mental illnesses throughout the Western world, especially in the United States.

Medicine and Metaphor

Medical practice is based on science and makes use of scientific technology, but is not a science: it is a type of human service, the content and delivery of which are shaped by economic, ideological, religious, and political interests, and by fashions. Medical science, on the other hand, is a part of the body of science: it is concerned with the empirical investigation of the material world by means of precisely defined methods and measures, rigorously applied. In the delivery of medical care, insistence on precision and rigor is condemned as intolerance, lack of compassion, and rigidity. The irreconcilable conflict between the need for precision and rigor in science and the need for flexibility and compassion in providing medical care is reflected in our current nosology—lumping together uremia and schizophrenia, anemia and addiction, diabetes and depression—as “diseases” belonging in the same “natural” class. This is disease inflation, pure and simple.

A government committed to a gold monetary standard cannot create money by means of printing presses and defining the product as the sole legal currency. Absent the gold (or another commodity) standard—under a fiat paper “legal tender” standard—the government can and does do just that. The same goes for disease. A medical profession and government committed to the “gold” pathological standard of disease cannot create new diseases by attaching disease names (diagnoses) to unwanted behaviors. Absent the pathological standard—under a fiat “medical model” standard—countless metaphorical illnesses have become legally defined and popularly accepted as real diseases. Every one of them entitles, perhaps even obligates, physicians to write prescriptions for them.

In the scope of a few centuries Western societies were transformed from theocracies to democracies and then to pharmacracies, that is, therapeutic states. In such states deprivations of liberty are rationalized as health measures, imposed by medical authorities, and perceived as disease prevention or medical treatment.

Those nations that have failed to adopt freedom as a first principle have also failed to realize the benefits of freedom. They have ignored the great liberal idea, as articulated in The Law by Frederic Bastiat in the mid-nineteenth century, that “the solution of the social problem lies in liberty.”

By “social problem” Bastiat meant the problem of coordination that confronts every society—that is, the problem of satisfying people’s wants for goods and services without central planning. The beauty of the market system, based on private property rights and freedom of contract, is that it allows individuals to continuously adjust to new information about wants, resources, and technology, and to engage in mutually beneficial exchanges. Economic freedom increases the range of choices and thus the wealth of nations.

Those countries with greater economic freedom have higher standards of living than those with less freedom (figure 1). Moreover, countries that have liberalized more quickly—as measured by the index of economic freedom—have tended to grow faster than countries that have failed to liberalize or that have liberalized more slowly (figure 2). Economists James Gwartney and Robert Lawson, the authors of the Fraser Institute’s annual Economic Freedom of the World report, find that “long-term differences in economic freedom explain approximately two-thirds of the variation in cross-country per capita GDP.” It is no secret that countries that have opened to the forces of international trade and have restrained the growth of government have prospered, while those countries that have limited the scope of the market have stagnated.

Hong Kong’s consistent adherence to market-liberal principles has resulted in long-run prosperity and the world’s freest economy since 1970. In its 2005 Index of Economic Freedom, the Heritage Foundation and the Wall Street Journal once again ranked Hong Kong number one. On hearing the good news, Financial Secretary Henry Tang remarked, “I am pleased virtues we have been upholding to keep Hong Kong flourishing as a free market economy have once again been reaffirmed by the international community.”

Those virtues include credibility and reliability, prudence and thrift, entrepreneurial alertness, personal responsibility, respect for others, and tolerance. They are fostered by private property rights, the rule of law, freedom of contract, open trade, low tax rates, and limited government. Nations that have not followed the virtues of Hong Kong have not reaped the long-run benefits of economic freedom. North Korea, Cuba, Sudan, Iraq, and Haiti are but a few examples.

The lesson is that the virtues of the market require constant practice if they are to survive and flourish. Government policy must be market-friendly and transparent; it cannot be muddled. Markets discount future effects of current policy changes. If those changes are in the direction of greater economic freedom, they will be immediately rewarded and wealth created. Illiberal trade policies, higher tax rates, increased government spending, erratic monetary policy, and wage-price controls undermine private property rights, send negative signals to the global capital markets, and destroy the wealth of nations.

The failure of central planning in the Soviet Union and China has moved those countries in the direction of greater economic freedom, but the ghost of communism still haunts Russia, while the Chinese Communist Party has yet to abandon its monopoly on power.

Leaders of emerging market economies need to recognize that economic freedom is an important component of personal freedom, that free-market prices and profits provide useful information and incentives to allocate resources to where consumers (not politicians or planners) deem them most valuable, and that markets extend the range of choice and increase human welfare. Most important, leaders must understand that ultimately economic liberalization requires limited government and constitutionally protected rights.

Emerging market economies, especially in Asia, have discovered the magic of the market; they have also found that chaos emerges when the institutional infrastructure necessary for free markets is weakened by excessive government. When politics trumps markets, coercion and corruption follow.

The Ethical Basis
The ethical basis of the market system is often overlooked, but not by those like Zhang Shuguang, an economist at the Unirule Institute in Beijing, who were deprived of their economic liberties under central planning. He compares the coercive nature of planning with the voluntary nature of the market and concludes: “In the market system . . . the fundamental logic is free choice and equal status of individuals. The corresponding ethics . . . is mutual respect, mutual benefit, and mutual credit.”¹

The moral justification for individual freedom is self-evident. In Ethics for the New Millennium, the Dalai Lama wrote: “We all desire happiness and wish to avoid suffering. . . . Ethical conduct is not something we engage in because it is somehow right in itself but because, like ourselves, all others desire to be happy and to avoid suffering. Given that this is a natural disposition, shared by all, it follows that each individual has a right to pursue this goal.”

Freedom without rules is an illusion. The famous Zen master Shunryu Suzuki wrote in his classic text, Zen Mind, Beginner’s Mind: “People, especially young people, think that freedom is to do just what they want. . . . But it is absolutely necessary . . . to have some rules. . . . As long as you have rules, you have a chance for freedom.”

The rules necessary for a market-liberal order are rules to protect the private sphere so individuals can pursue their self-interest while respecting the equal rights of others. Without clear rules to limit the use of force to the protection of persons and property, freedom and justice will suffer—and economic development, properly understood, will cease.

In 1740 the great liberal David Hume wrote that “the peace and security of human society entirely depend [on adherence to] the three fundamental laws of nature, that of the stability of possession, of its transference by consent, and of the performance of promises” (A Treatise of Human Nature). His legacy of liberty should not be forgotten.

Development and Freedom

In Economic Analysis and Policy in Underdeveloped Countries, the late Peter (Lord) Bauer argued that economic development and freedom are inseparable: “I regard the extension of the range of choice, that is, an increase in the range of effective alternatives open to people, as the principal objective and criterion of economic development.”

Economists have found that countries with secure private property rights create more wealth (as measured by real GDP per capita) than countries in which property is not protected by law. Trade liberalization is vital to the process of development. Voluntary international exchange widens consumers’ range of effective choices and lowers the risk of conflict.

There is a saying in China: “Wu wei ze wu shu bu wei”—”If no unnatural control, then there is nothing you cannot do.” In the Tao Te Clung, Lao Tzu advocates the principle of nonintervention (wu wei) as the ideal way of ruling. The wise ruler says, “I take no action and the people of themselves are transformed. I engage in no activity and the people of themselves become prosperous.”² To take no action does not mean to do nothing, but rather, as Chinese scholar Derk Bodde has noted, to refrain from those actions that are “forced, artificial, and unspontaneous.”³
Voluntary international exchange widens consumers’ range of effective choices and lowers the risk of conflict.

A natural order is one consistent with free markets and free people; it is Adam Smith’s “simple system of natural liberty.” As former Czech President Vaclav Havel so elegantly stated after the collapse of the Soviet Union, the free-market economy is “the only natural economy, the only kind that makes sense, the only one that can lead to prosperity, because it is the only one that reflects the nature of life itself.”⁴

Leaders in the West as well as the East should keep the following five lessons in the forefront of their minds as they contemplate future policy decisions: (1) private property, freedom, and justice are inseparable; (2) justice requires limiting government to the protection of persons and property; (3) minimizing the use of force to defend life, liberty, and property will maximize freedom and create a spontaneous market-liberal order; (4) private free markets are not only moral, they create wealth by providing incentives to discover new ways of doing things and increase the range of alternatives; and (5) governments rule best when they follow the rule of law and the principle of noninterference.

Notes

1. Zhang Shuguang, “Foreword: Institutional Change and Case Study,” in Zhang Shuguang, ed., Case Studies in China’s Institutional Change, vol. 1 (Shanghai: People’s Publishing House, 1996), p. 5.
2. In Wing-Tsit Chan, ed., A Source Book in Chinese Philosophy (Princeton, N.J.: Princeton University Press, 1963), p. 167.
3. Derk Bodde, trans., in FungYu-lan, A History of Chinese Philosophy, vol. 1, 2nd ed. (Princeton, N.J.: Princeton University Press, 1952), p. xxiii.
4. Vaclav Havel, Summer Meditations on Politics, Morality, and Civility in a Time of Transition (London: Faber and Faber, 1992), p. 62.

Really? That would be news to my libertarian friends who are Catholics, Protestants, Jews, Muslims, Aristotelians, Kantians, and Objectivists. Although there certainly are libertarians who embrace moral relativism, libertarianism is not intrinsically relativist. Toleration is not relativism.

She writes, “Libertarians are not comfortable with normative questions. They admit to one moral principle from which all preferences follow; that principle is self-ownership. . . . By contrast, conservatives are comfortable with normative issues. Conservative thought works within a hierarchical structure for behavior that has, at its top, absolute and enduring values. These values are not the result of the agnostic process of the free market.”

With all due respect, this is pish-posh. Libertarians aren’t typically uncomfortable with normative questions—they just don’t want politicians arbitrating them. Nor do they necessarily deny the existence of absolute and enduring values—they just don’t want the police enforcing them. No libertarian is obliged to believe that values are nothing but “the result of the agnostic process of the free market.” They are only obliged to believe that as long as a person respects the rights of others, he may choose his own values, however misguided he is. The market tells us what people value, but not what they should value.

Lee mistakenly merges ethics and politics. Ethics is concerned with right and wrong politics with the conditions under which government may legitimately use physical force. The disciplines overlap, but they don’t coincide. It is perfectly coherent to believe in an objective moral code, to teach it to one’s children, to urge it on one’s neighbors, and to think that it shouldn’t be inflicted with a nightstick.

Somewhere Ludwig von Mises wrote that classical liberals aim to exclude the state from morality and religion not because they are unimportant, but because they are very important. It’s a simple point, actually. How long is it going to take the rest of the world to get it?

The U.S. Defense Department wants to track Americans’ electronic activities and troll for possible terrorist patterns. David Brown warns that’s not all we should expect from Total Information Awareness.

A doll maker won success in an unlikely way: by getting girls to become interested in history. Andrew Morriss offers an eyewitness account.

It’s widely believed that a society cannot begin to get rich until it is educated—by the state. Christopher Lingle calls that nostrum into question.

As laws proliferate a new kind of “entrepreneur” comes on the scene: lawyers who can get rich by forcing settlements on businessmen guilty of no wrongdoing. Steven Greenhut reports on an ominous legal fashion in California.

A jury ordered the tobacco industry to pay big damages to smokers in Florida. The news made ex-smoker Ted Roberts think about his former “addiction” to nicotine and what this all says about our society.

When environmentalists proclaim that industry should turn waste byproducts into resources they are merely discovering what Victorian businessmen knew well. Pierre Desrochers shines the spotlight on profit-driven ingenuity.

If you wander into a typical college economics class you may think that calculus, not economics, is being taught. That’s the problem, Brandon Crocker writes.

This entrepreneur built an entertainment empire, launched the careers of many singing stars, and changed the culture in more ways than one. Larry Schweikart charts the career of Berry Gordy Jr.

It’s taken for granted today that democracy is good and that the United States should spread it. Norman Barry points out a few problems with everyone’s favorite political scheme.

As for our columnists, Lawrence Reed reminisces about Prague Spring; Doug Bandow sees ominous developments in health-care policy; Thomas Szasz exposes the fraud of health insurance; Burton Folsom tells the sordid tale of the progressive income tax; Donald Boudreaux says the market makes us smart; Charles Baird wonders why no one cares about union corruption; and Jerry Taylor says to those who think people sell us oil because they like us, “It Just Ain’t So!”

Our reviewers have kept busy pondering books about American power, American law in the twentieth century, the history of American psychiatry, reparations for black Americans, white nationalism, and the conflict between Thomas Jefferson and John Marshall.

—Sheldon Richman

Reviewed by Frederic Sautet

A new book by Israel Kirzner is like a new movie by a great director whose work and style are familiar, but who always surprises his viewers with new ways of exploring his lifelong themes.

In fact, “exploring” is a word that describes Kirzner’s work well. As he explains in The Driving Force of the Market, the proper approach to economics should be based on an “essentialist understanding of actual social phenomena.” This essentialist approach, which is a distinguishing mark of the Austrian school, is what Kirzner pursues in his work by exploring the essence of human action in the context of uncertainty.

The book gathers 14 essays and three obituaries (for Ludwig von Mises, F. A. Hayek, and Ludwig Lachmann), which cover many of the most fundamental ideas of Austrian economics: subjectivism, the ethics of competition, the institutional structure of the market economy, the market process, and entrepreneurship.

Kirzner’s account of the subjectivist approach in economics deepens our understanding of the sense in which Austrian subjectivism holds a “middle of the road” position between neoclassical economics and radical subjectivism. His defense is fundamental, as it allows Austrian economists to explain human action in an open-ended context through the notion of entrepreneurial alertness.

Questions of ethics (relating to economic concepts), explains Kirzner, should be answered with the best possible knowledge of the underlying economic issues. Thus ethical valuations of competition and profit, for instance, should be built on the knowledge that economics provides regarding the roles of entrepreneurial competition and pure profit. This relates to Kirzner’s position regarding institutions. The institutions of the market economy (for example, property rights) cannot be determined by economic theory per se. The issue of their existence belongs to the realm of ethics. In other words, there is no endogenous explanation of market institutions in Kirzner’s analysis. While economics can explain the existence of profit, it cannot explain the existence of the institutions that make profit possible. However, economics is necessary to pass a judgment on the usefulness of the market institutions that make profit possible. Whether one agrees or disagrees with Kirzner on the exogeneity of institutions, it is valuable to be reminded that “ethics and economics are intertwined.”

In the essay that gave its title to the book, Kirzner reaffirms what makes market-process theory so different from the neoclassical understanding of competition. Fundamentally, he explains, “there is no market process other than the competitive one,” even when the market brings about monopoly prices. In the absence of privileges (given to some market actors), the universality of the market process prevails and the interests of consumers are in line with those of producers. Since the case of true monopoly pricing is extremely rare in practice, the overwhelming majority of situations that neoclassical economists deem uncompetitive are in fact part of the discovery process of the market and cannot be improved on.

Economists such as Kirzner understand competition as a rivalrous process among market participants; that’s how businessmen, if not “modern” economists, understand it. The problem is that when modern economists talk about competition outside their journals, they sound like Austrians, but when they discuss the subject among themselves, they don’t. As a result, Austrian economists appear to the non-economist as if they were just giving a nonformal exposition of principles seriously explored by others. This, of course, overlooks the huge differences that only careful (essentialist) analysis can establish, which is why Kirzner’s work is important.

One could criticize Kirzner for not providing a realistic-enough account of entrepreneurial change. Indeed, the replacement of the horse-drawn carriage industry by the automobile industry discussed in chapter 13 lacks realism, as the new pattern of technological possibilities came only gradually into existence. In most cases, changes are not made up of one single big discovery by one entrepreneur but of a series of interdependent discoveries by many entrepreneurs. However, the issue is not so much the realism of his example, but the essence of entrepreneurial change. The automobile revolution, far from destroying an established order, “brought the pattern of resource allocation into a higher degree of coordination.”

At a time when a lot of what economists produce is not useful to the understanding of reality, Kirzner’s work is a great lesson in the way economics can contribute to the understanding of actual market phenomena. While being analytical and somewhat abstract, his work often offers direct policy implications. Kirzner has immensely contributed to the resurgence of Austrian ideas in the last decades, and this book is another instance of his invaluable contribution.

Frederic Sautet is senior analyst at the New Zealand Treasury.

Life is more than a game, and human beings are more than rule-bound strategists. Moral values are possible. Authentic allegiance to such values is possible.

Too obvious a point to debate, you think? Maybe not. In The New Republic (June 5, 2000), the very bright and philosophically astute Professor Peter Berkowitz of George Mason University Law School reviewed Eric A. Posner’s interesting book, Law and Social Norms (Harvard University Press, 2000). Posner’s book is essentially a rendering into economic language of the ethical and political issues of human life. Posner sets out to show that, using the tools of scientific economics alone (or even more narrowly, of game theory), we can explain why people act as they do. Why, for example, do people sustain their commitments to others even despite opportunities to “advance” their interests “by means of what game theorists call ‘defecting’ or ‘opportunistic behavior,’ and what ordinary people call lying, cheating, and stealing”?

The analysis by Berkowitz is insightful, largely setting forth, rather adeptly, often-heard complaints against economic reductionism. He explains that there is really more to ethics and politics, at their best, than merely the working out and following of narrow strategies for realizing what one desires in life. “In so far as we are small,” he concludes, “game theory may explain what we do; but we are not only small.”

Economists, like other social scientists, are always seeking some comprehensive and unitary explanation of human behavior, one that mimics the natural sciences, especially physics. What they want is surefire predictability of regular phenomena, a basic motive or drive to explain why people do what they do; and that explanation, once arrived at, is expected to be exhaustive. Usually the favored motive is the desire to prosper, even though the content of prosperity may vary tremendously from person to person, age to age, and region to region around the world. Indeed, just to make sure he covers everything, the economist tends to define prosperity as the getting of what one desires to get. Every sought goal is thus ipso facto an economic goal.

Posner proposes that the explanatory scheme he draws from economics and game theory can make complete, comprehensive sense of ethics and politics. Ethics and politics may not seem equivalent to straightforward economic thinking and behavior, but in fact they are just differing expressions of the same motivation: people do the right thing because it will get them what they want, fulfill their concrete desires, whether over the short run or the long run. Laws and social norms are but common practices that help us get our way; they are strategies for living. Actions that seem to supply evidence of moral commitment are really, according to Posner, just “behavioral regularities” undertaken “to show that they are desirable partners in cooperative endeavors. Defection in cooperative endeavors is deterred by fear of reputational injury . . . . People who care about future payoffs not only resist the temptation to cheat in a relationship; they signal their ability to resist the temptation to cheat by conforming to styles of dress, speech, conduct, and discrimination. The resulting behavioral regularities, which I describe as ‘social norms,’ can vastly enhance or diminish social welfare.”

Plausible—as far as it goes. Certainly human action is purposeful, at least; we do pursue ends and deploy means to achieve those ends. But as Berkowitz observes, Posner seems not only to be rather gratuitously translating the “wisdom of the ages” into the language of economic theory, but also to be claiming, “With Machiavelli, that it is more important to appear good than to be good.” A corollary claim seems to be that morality is either a mirage or, in Berkowitz’s words, “at least a discourse that is reducible to something more fundamental and thoroughly nonmoral.”

With deep moral commitment banned from the picture, so are its obvious incarnations; thus Posner, Berkowitz writes, can perform “the remarkable feat of writing an entire chapter on marriage and the family without ever mentioning love.” His stance thus fails to capture the wealth of human motivations and, in the end, is vacuous. If what drives us is the desire to have our desires satisfied, we do not learn anything about why there are so many extremely varied desires “driving” people. It is an odd science indeed that offers the same alleged explanation for the bank robber as it does for the bank executive, for the thief as for the producer, yet that is just how the economic explanation of human behavior tends to go.

Where Is Immorality?

It is odd, too, that the economist’s account of morality makes little room for immorality. One is invited to suppose that when people do lie, cheat, deceive, commit fraud, murder, rape, assault and such, somehow they have simply miscalculated or misjudged the proper strategy.

Posner’s reductionist economics has no room for choice (except insofar as it is smuggled into the discussion in contradiction to the terms of that discussion). But a bona fide understanding of ethics and politics requires a recognition of the genuine choices that human beings confront. If one ought to be honest, it must also be true that one might be either honest or dishonest. If one ought to care for one’s children, it must also be true that one might either care for them or neglect them. And indeed, we know well enough that just such is the case: lots of people act as they should and lots of others do not. But because this sort of economics, rational-choice theory, and game theory fail to take full account of morality and choosing, theoreticians like Posner wipe morality from the slate and reduce it to mere scheming. Even justice, on this account, can be broken down into what Socrates took so much trouble to argue against, namely, “the advantage of the stronger.”

Such an understanding of ethics and politics also faces the problem of explaining why seeming to be good would ever matter to anyone, if the capacity to be genuinely good is but a myth enlisted for strategic purposes. If it is a myth that one can be invisible or levitate, what benefit is gained by someone who manages to feign such abilities (other than the limited entertainment value magicians cash in on)? There is none. But sensible people do believe in moral possibilities (they experience those possibilities themselves), and that is why faking moral fiber might at least briefly fool even those who would not believe in your power to levitate. Just as hypocrisy is the compliment vice pays to virtue, so pretending to be good is the compliment pretentiousness pays to morality.

Despite its critical acumen, Berkowitz’s analysis of Posner fails to give an account of why economists have such a serious problem with ethics properly understood—that is, not as a strategic device but as a principled guide to action enabling us to live proper human lives. Interestingly, it is the father of scientific economics who may be called on to assist us in understanding this problem. In The Wealth of Nations, Adam Smith noted that even by his time, moral virtue had come to be regarded as disconnected from mortal happiness and the good life:

Ancient moral philosophy proposed to investigate wherein consisted the happiness and perfection of a man, considered not only as an individual, but as the member of a family, or a state, and of the great society of mankind. In that philosophy, the duties of human life were treated of as subservient to the happiness and perfection of human life. But, when moral as well as natural philosophy came to be taught only as subservient to theology, the duties of human life were treated of as chiefly subservient to the happiness of a life to come. In the ancient philosophy, the perfection of virtue was represented as necessarily productive to the person who possessed it, of the most perfect happiness in this life. In the modern philosophy, it was frequently represented as almost always inconsistent with any degree of happiness in this life, and heaven was to be earned by penance and mortification, not by the liberal, generous, and spirited conduct of a man. By far the most important of all the different branches of philosophy became in this manner by far the most corrupted. (Random House, 1937, p. 726)

Smith saw that when morality, or ethics, is conceived along lines that would be fully realized in the work of Immanuel Kant—who denied that anything done to advance one’s own cause can have moral significance—moral thinking cannot embrace the virtue of prudence, or practical wisdom. (Nor can any moral virtue be construed or justified, however broadly, in relation to the acting agent’s own well-being and flourishing.) But prudence—recognized as a prominent virtue indeed in the ethics of Socrates and Aristotle—would make plenty of room for an ethical conception of most economic activity. While prudence may not be the highest virtue in human life, economic action is well understood as an expression of it (as well as of such virtues as honesty, integrity, and justice). With prudence expelled from the moral realm, however, all the economists can do to render commerce and business respectable is to collapse them, along with the rest of life, into expressions of near-bodily functions à la Hobbes (which is what, in the end, Posner does, and what Berkowitz finds so objectionable). If economic value-seeking were taken to be as morally legitimate as any other human endeavor, the economist would not be quite so tempted, whether in self-defense or for revenge, to strip morality from human doings and replace it with game-theoretic constructs instead.

If the mechanistic world view of many economists is in part a response to Kantian reworking of moral theory, the Kantian philosophy was itself an attempt to escape the dilemmas spawned by the metaphysics of mechanism. For Aristotle and other moral philosophers, self-development and flourishing were things a person had to exert his will to achieve; they were not automatic. And so the care of the self could be seen as a moral virtue, a chosen, effortful practice for which credit could be due. But when the notion gained prominence that human beings behave exactly like the rest of matter-in-motion in the universe, free will took a beating. Hobbes, a materialist of the highest order, spent a lifetime denying its reality; he debated the topic until the day he died. In its stead he posited a drive for self-preservation, something that seemed close enough to the deterministic motion of matter. Self-preservation, on this view, is directly impelled by antecedent causes; the acting agent has no real autonomous say in the matter; he can only submit. Obviously, such ineluctable submission cannot earn one any moral credit.

Kant could not accept this obliteration of moral responsibility. But in the process of salvaging the moral dimension of life, he didn’t quite abandon the Hobbesian notion that we are all naturally driven by self-preservation. What he proposed was only that we can escape that natural drive and choose a different course of action—a moral course. If we will things impartially, utterly without regard to any personal drives or motives, and if we tear ourselves from a “dead insensibility” to perform an action “only from duty and without any inclination,” our action is now morally praiseworthy. By this move, morality was “rescued,” in a way, but rescued at the expense of relevance to individual life and flourishing. It is this kind of sundering that Smith was reporting, even before Kant’s final “solution” arrived on the scene.

In their very different ways, Posner and Berkowitz each accept the pitting of morality against individual well-being. For Berkowitz, the shortcoming of the game-theoretical universe is that it “permits explanations of human conduct only in terms of rational self-interest.” And it is true enough that we can act against our own interests (and also that we can act irrationally). But the more fundamental problem of the Posnerian universe is that it is premised on a too-narrow conception of self-interest, banning from its ken the moral values that can constitute and animate it. A rich conception of individual flourishing would surely embrace all the virtues of honor, integrity, commitment, and so forth. Prudent concern for self is not inherently inimical to any of these, nor to the heeding of the “promptings of conscience.”

This isn’t the place to address all the problems with the Kantian “solution” or with the scientism that lies behind the Hobbesian and Posnerian perspectives. Suffice it to note that a richer, more robust understanding not just of human affairs but also of reality itself—one that does not seek to reduce everything to just one thing—would go far to remedy matters. Such an understanding would also make ample room for the moral virtue of prudence and therefore for the task of every person to look after his or her prosperity. Economists can teach us a great deal about that, and can be proud of doing so.