One portent of Progressivism is found in the Liberal Republican movement of the 1870s. Prone to Paris Commune panics, distressed by strikes and labor trouble, such reformers as Charles Francis Adams (descended from John Adams), Francis Amasa Walker (Boston laissez-faire economist and Indian manager), and E. L. Godkin (Anglo-Irish editor of The Nation) concluded that efficient, inexpensive bureaucracy was just the ticket. It could manage questions too important to be left to democratic processes, especially those touching on the lately acquired government-bestowed advantages of big business. (“Efficiency” had a great future before it.) This movement was urban, basically eastern, and closely connected with economic elites (Nancy Cohen, Reconstruction of American Liberalism).

Another tributary into Progressivism—populism—began in opposition to all the above. Populists stated the case for tariff- and debt-ridden farmers in the South and the West. Their key innovation, or deviation from the Jeffersonian-Jacksonian tradition, was the belief that “the powers of government . . . should be expanded,” as their 1892 platform put it. How far this idea actually reached depended on the particular populist, but this new approach brought some of them closer, in method anyway, to the later Progressive movement.

A third source of Progressivism was a university-based intellectual movement whose leading figures included Justice Oliver Wendell Holmes, philosopher John Dewey, economist Thorstein Veblen, and historians James Harvey Robinson and Charles A. Beard. What united them was historicism and cultural organicism (Morton White, Social Thought in America). The ferment amounted to “a pragmatic revolt against formalism, abstraction and deductive methodology in the social sciences” (Wallace Mendelson, Capitalism, Democracy, and the Supreme Court). Darwinism, variously read, and scientism were among their weaponry.

A vaguer force was post-millennial Protestant reform, originally based in Greater New England, but now of national scope. Kicked off center-stage by science, many Protestant clergymen engaged social causes in a distinctly Progressive spirit. All these tendencies, plus an ingrained American penchant toward panic, pointed toward a busy future.

These forces (and perhaps others) converged on certain economic, social, and political problems stemming from America’s rapid industrial growth: the Gilded Age’s blatant corruption and subsidies (embodied in the railroads, their origins, and practices), labor strife, urban poverty, economic concentration, and financial manipulation. (Subtext: no stone unturned, no child left alone, no person unregistered, and no physical entity unregulated.) (See my October Freeman article, “The Gilded Age: A Modest Revision.”)

Progressives were fierce critics of federal courts, which they saw as the bulwark of big business. (This was never exactly untrue.) Their foremost concern was how to sustain the new industrial order while conserving American values and institutions. As they saw it, the main alternatives were: 1) restore competition by various means, including antitrust laws, or 2) accept and closely regulate an economy of large corporations. These conflicting visions constituted a serious fault line within Progressivism.

East versus West Approximates Hamilton versus Jefferson

New Republic editor Herbert Croly tried to bridge the Progressives’ divide by setting Hamiltonian means alongside Jeffersonian ends—a “synthesis” that could not survive the slightest clash with real life. Taking “Jeffersonian” as answering roughly to Plan I (restore competition) and “Hamiltonian” as answering to Plan II (accept and regulate big corporations), we can spot the rough geographical outlines of what were (as much of the literature suggests) two quite different forms of Progressivism.

Self-identified Progressives were concentrated in the GOP. Eastern Progressives proposed to regulate big corporate businesses, whose rise they viewed as inevitable. Thus for the eastern wing of the Republican Party “the problem was not how to remedy the evils of the new finance capitalism. [It was] how to manage the discontent it aroused, particularly in the once-docile middle class.” The eastern Progressive icon, Theodore Roosevelt, “wished to see the American people governed by a liberal oligarchy; he did not want them governing themselves.” By contrast, western Progressives tended to see “big business as an artificial menace to self-government, not merely aided but made possible by a whole system of special privilege” (Walter Karp, Politics of War). This means, in effect, that westerners thought some of the damage could be undone. Western Progressivism owed more to populism; it was “more rural and sectional than nationwide” and “represents, in a sense, the roots of modern American isolationism. [It was] less pacifistic and isolationist than it was nationalist,” but “opposed to imperialism or colonialism or militarism.” Such Progressives rejected American imperial initiatives precisely because of their apparent connections to Wall Street and the British Empire (Richard Hofstadter, The Age of Reform).

Given this political geography, there was considerable overlap between farm spokesmen and these “populist” Progressives. Historian Elizabeth Sanders writes that the farm bloc pursued specific reforms through statutory regulations enacted by Congress and enforceable in the courts, and not through expert commissions and administrative bureaucracies. To that extent, then, they were antibureaucratic. The more developed parts of the Midwest and Pacific coast fell midway between populism and eastern Progressivism, while peripheral western zones and much of the South remained essentially populist.

Further: “[I]t was the periphery that furnished most of the opposition, in both parties, to Wilson’s preparedness efforts, for in this momentous sense . . . the agrarians were not statists: far more than other sections, the periphery opposed war, standing armies, and imperialism” (Sanders, Roots of Reform, italics added). Certainly, these positions ought to count on the antistatist side of the ledger, unless war, militarism, and empire are not causes and instruments of aggravated statism. (President Wilson’s ruthless purge after 1917 of antiwar Democrats has long obscured the antiwar aspects of populism in the South. See Anthony Gaughan, “Woodrow Wilson and the Rise of Militant Interventionism in the South,” Journal of Southern History, November 1999.)

It was not just farmers with whom quasi-Jeffersonian western Progressives identified. Senator William Borah (R., Id.) saw himself as a defender of small business and carried on a two-front war against large corporations and state bureaucracies. A noninterventionist foreign policy completed the package. And somewhat jarringly perhaps, Georgism was the default economic position of many Progressives. This makes sense, however, because Henry George’s reform program, like that of the farm bloc, rejected administrative solutions. (Ransom E. Noble, “Henry George and the Progressive Movement,” American Journal of Economics and Sociology, April 1949.)

Creeping American Statism

There are attempts from time to time to father American statism on Progressivism. This will hardly do. First, union-nationalist theorists like John W. Burgess and Orestes Brownson reveled in the vastness of national sovereignty after 1865. In cases like In re Neagle (1890), the U.S. Supreme Court theorized abstrusely on national sovereignty per square foot. At the level of ideas there was quite a lot of statism about. Second, as legal historian William Novak writes, a steadily rising curve of interfering (“statist”) state and federal legislation runs from the 1870s into the 1920s. This upward trend was across-the-board and predated Progressivism. (“The Legal Origins of the Modern American State,” in Austin Sarat et al., Looking Back at Law’s Century.)

Here is one example. After the biggest western land-grabbers crowded small farmers onto marginal lands, especially in California (see my “The American Land Question,” Freeman, July/August 2009), the cry went up for federal engineers to build colossal dams in the arid West to help small farmers become competitive. These projects reinvented ancient hydraulic despotism, coupling it rhetorically with a Jeffersonian end. (Donald Worcester, Rivers of Empire). Here Veblen’s favorite social class, the engineers, did wondrous works and overcame nature itself over many decades. It was impressive—but hardly chargeable to Progressivism.

Progressivism, Law, and State

Eastern, urban Progressives were committed to efficiency, expertise, regulatory bureaucracy, and scientism. Their program was effectively a political phase of corporate liberalism, of which Teddy Roosevelt, an artificial westerner, and Woodrow Wilson, an ex-southerner, offered somewhat different brands. (Wilson’s corporate liberalism did not wear the Progressive label.)

An important point of historical controversy concerns the relation of big business to Progressive legislation. Gabriel Kolko has argued that many key statutes were prepared by big-business lawyers and contained provisions intended to cartelize industries by restricting competition and discouraging new entrants. Sanders counters that the resistance of the farm bloc and organized labor sometimes kept business from getting exactly what it wanted (Kolko, Triumph of Conservatism; Sanders, 179–182).

The related “capture” thesis holds that, whatever the intention of legislators, the businesses to be regulated will eventually dominate the relevant bureaucracy. American socialist William J. Ghent commented that regulatory bodies were “Irresponsible to both the people and the people’s officials” and “peculiarly liable to the influence of the Big Men” (Our Benevolent Feudalism). In private, businessmen themselves agreed with Ghent.

To the extent that eastern Progressives were able, between 1900 and 1916, to control legislative agendas nationally and in the states, they unleashed the reign of bureaucratic tidy-mindedness. In southern states legislatures fine-tuned racial segregation and classification (George M. Frederickson, White Supremacy: A Comparative Study in American and South African History). In a cross-section of states, legislatures blessed the pseudoscience of eugenics and provided for sterilization of unwanted classes. At the federal level Justice Holmes helped out by finding such laws constitutional. (See Edward Black, War Against the Weak.)

There was also what we might call “departicipation”—a trend that reflected upper- and middle-class WASP panic about the working classes, immigrants, and “unassimilable” races. Instances of departicipation included judicial rules narrowing legal standing, increasing top-down control over juries, and eroding common-law concepts; voter disenfranchisement North and South; city manager regimes with at-large voting in city elections and standing armies of police; and finally, detailed task-management in the workplace, or Taylorism. (On the last, see Kevin A. Carson in the September 2011 Freeman).

In foreign affairs many eastern, corporate-liberal Progressives favored forceful American expansion into overseas markets. If this required empire—and even war to secure the deal—they were up for it.

Progressivism: A Partial Defense

Murray Rothbard famously called World War I the “fulfillment of Progressivism,” a substantially true assertion, if eastern Progressivism is meant. (It was.) One would not wish to defend those Progressives. They gave us the War Industries Board, Prohibition, and much else besides. (Perhaps any war party would have given us some of those.) The war witnessed John Dewey’s endorsement of force as the royal road to progress and Randolph Bourne’s daring escape from Dewey’s instrumentalism and liberal practicality (White, Social Thought in America).

Even western Progressives were a bit mixed. Some pursued bureaucratic solutions at the state level. But on national issues of war and peace, and on the question of empire, western Progressives like Senators Borah and Robert LaFollette (R., Wi.), and U.S. Rep. Jeannette Rankin (R., Mt.) earned their keep. One suspects this is why contemporary conservatives prefer to jam all Progressives into a single category to be dismissed as statist at home and naive abroad—the better to flog their own impossible program of freedom at home and empire abroad.

Progressivism and the New Deal

Progressivism as an outwardly unified (but internally divided) movement effectively ended in the 1920s. American politics limped along, bereft of real ideas. This is normal. Then the Great Depression called forth the New Deal. The ensuing leap into governmental problem-solving wasted the memory of the former days—Novak’s previous 70 years of creeping statism. It would be easy, but inexact, to say that the New Deal continued and consolidated Progressivism—but which one? The first New Deal adopted a rather eastern Progressive program of corporatism and cartelization modeled on World War I legislation. Here was the test of Croly’s Hamilton-Jefferson synthesis, and it drove many relatively Jeffersonian Progressives out of the New Deal. The administration’s later (partial) retreat from corporatism did not bring them back (Otis Graham, Old Progressives and the New Deal).

The argument that equates Progressivism with the New Deal and the New Deal with fascism is also misleading. A little care is needed. Certain New Deal economic policies had definite structural resemblances to those of fascist Italy. The New Deal laid part of the groundwork for a uniquely American fascism, but did not finish the job. More building blocks would be needed. (Anyway, an exceptional people like Americans deserve an exceptional form of fascism—nicer, bigger, better, more efficient, and so on.)

John T. Flynn was one of those Jeffersonian Progressives who turned his back on the New Deal. He also helped launch comparisons between New Deal and fascist economic policy. But more important, he tried to discover what would be required for a completed exercise in American fascism. In As We Go Marching (1944), he developed a set of criteria. Measured by those, America was still only potentially fascist. It might be different in the long run. We didn’t have to take the same branch at every fork in the road. But we might.

Living in the Long Run

Flynn’s checklist for realized fascism was as follows: perpetual public debt, autarchy, socialization of investment, bureaucratic supervision of society, public-works militarism, overseas empire, executive dictatorship, and the institutional changes to make them all work together. Seventy-some years later, we are well along. Flynn was wrong of course about autarchy in the short run. He did not anticipate that one imperial State could become strong enough to force its economic rules on most of the world, while preaching about “free trade.”

Flynn was right, however, about what would hold American fascism together: executive power effectively above the law. (Shelley called monarchy the knot that tied the robber’s bundle.) Long ago, tidy-minded eastern Progressives championed executive power but did not perfect it. Other hands—“liberal” and “conservative”—did that. Today important “conservatives” and Chicago-tinged theorists proclaim executive supremacy a universal blessing. (See, for example, Eric Posner and Adrian Vermeule, The Executive Unbound.)

American Progressives, Sinners, and Republicans

So here we are, trying to find some shade under the twisted tree of Progressivism. There is a little, and if the tree is twisted, that is partly because so many have made it into various things it was not, while imposing a false unity on it. Some of it was bad; but Progressivism cannot take the blame for every bad thing that came along after it was dead. An awful lot’s happened since then, and there is a lot of blame to go around. One could wish for a happier ending.

The great battle is to persuade those people that our ills are rooted in statism—that is, reliance on government to do things that should be left to voluntary action. Back in the 1930s most Americans also thought the country was on the wrong track, but unfortunately they blundered into the wrong conclusion—that a great expansion of government power was what we needed. The challenge today is to convince them that government is the problem, not the solution.

Among the most stalwart opponents of big government and its apologists is historian Thomas Woods. His 2009 book Meltdown explained why the housing bubble and its aftermath were caused entirely by politics, not the free market. With this book he and his essayists indict statism generally and argue strongly in favor of radical depoliticization. In his introduction Woods identifies a key element in our national malaise: “The more functions the state usurps from civil society, the more the institutions of civil society atrophy. Once supplanted by coercive government, the tasks the people used to perform on a voluntary basis come to be viewed as impossible for society to manage in the absence of government. . . . The spiritless population comes in turn to look for political solutions even to the most trivial problems.”

The book consists of ten essays. In the first, Brian Domitrovic gives a useful history of the growth of the American State over the last two centuries. Carey Roberts follows it with an essay showing the continuing damage we suffer due to the statist thinking of Alexander Hamilton. Swedish economist Per Bylund then demolishes the notion, so often uttered by advocates of the welfare state, that Sweden proves how effective the “third way” (a welfare state neither capitalist nor socialist) can be.

Those three essays establish a solid framework for thinking about the impact of government interference with society’s spontaneous order. Woods next places Anthony Mueller’s essay exploring the true causes of the recent financial crisis, offering a corrective to the desperate scapegoating we’ve gotten from the politicians responsible for it. Mueller’s essay is followed by one by Mark Brandly, who reasserts the case for free trade and the international division of labor, which is under attack by statists who would have us believe that free trade hurts workers in poor countries. Dane Stangler next shows how entrepreneurship is threatened by the ever-encroaching power of government and how foolish it is to think that the State can perform the entrepreneurial function.

Journalist Tim Carney contributes the next essay, eviscerating one of the great myths of modern life: that big business is opposed to big government. The truth, Carney shows, is that big business is extremely cozy with both “liberal” and conservative politicians. As a result America’s economy is steadily drifting toward a syndicalist system dominated by politically favored firms.

Two essays deal with the interface between religion and the politicized society. Gerard Casey examines the traditional hostility many Christian clerics have toward capitalism and finds that it is without any foundation in the Bible. John Larrivee also evaluates the religious arguments against the free market. In his view those arguments are not only naive but ultimately undermine both faith and civil society.

In the book’s final essay Paul Cantor shows how government intervention in culture, specifically television, substitutes bureaucratic directives for the spontaneous origins of true culture. If you ever wondered why the boat on the series Gilligan’s Island was named “Minnow” you’ll find out by reading Cantor’s essay.

These are all splendid pieces, but I am especially drawn to Per Bylund’s. In it he demonstrates the truth of Hayek’s argument that socialism destroys the foundation for prosperity by gradually changing the character of the people. Bylund observes that young Swedish adults today are far different in their outlook from their grandparents. Whereas Swedes had once been known for their solid work ethic, after many years of the welfare state and its numerous entitlements, it is largely gone. Young Swedes are known for taking as much time off as they can while collecting as much as possible in government benefits. The nation’s standard of living is falling and must continue to do so.

I have just one tiny quibble with the book’s title. When were we ever off the road to serfdom?

Born in Schwarmstedt in northern Germany in 1899, Röpke came from a family of Lutheran ministers and medical doctors. After his time in World War I he studied law and economics and embarked on a career as an academic economist. A firm opponent of National Socialism, Röpke was forced to “retire” in late 1933 and left Germany. He taught briefly in Turkey before settling permanently in Switzerland, whose tough and sturdy bourgeoisie he came to admire.

The intellectual historian Razeen Sally notes that Röpke produced around 900 publications. His books include Economics of the Free Society (1937, 1963), International Economic Disintegration (1942), The Solution of the German Problem (1946), Civitas Humana (1948), The Social Crisis of Our Time (1950), International Order and Economic Integration (1959), and A Humane Economy (1960; see The Freeman’s review here). In Germany, the Röpke Stiftung (Institute) keeps alive his work and memory.

Röpke was closely identified with Germany’s “Neo-Liberals” (or “Ordo liberals”), who included Walter Eucken, Alexander Rüstow, Alfred Müller-Armack, and Ludwig Erhard. Writing in the aftermath of Weimar and National Socialism, these men wanted competition and free price movement ensured by a strong State (more on this shortly). Favoring a social-market economy, they served as architects of the West German economic “miracle.” While Anglo-American liberals claimed to be aggregating and balancing interests, German Neo-Liberals wanted an honest (and rather rational Hegelian) civil service to establish and preserve free competition. Seeing “planless” State intervention in aid of organized interests as the key problem, Neo-Liberals wished to block the influence of private “social power” over State policy and foster the common good.

For conservative economist William Campbell, Röpke was a Protestant thinker in the line of Erasmus and Grotius, despite his adoption of the Catholic principle of subsidiarity. His work displayed distributist and radical Jeffersonian themes along with a dislike of entrenched aristocracies, and he distrusted what Campbell called “scientistic approaches to the production process,” such as Taylorism.

Röpke’s work in technical economics bore considerable resemblance to that of the Austrian school. Believing strongly in the market mechanism and free price movement, Röpke was nevertheless quite critical of modern business practices, corporations, advertising, and more. As he wrote in 1958, “[A]ctually existing forms of market economy . . . are a far cry from the assumptions of theory.” Social conditions shape outcomes “beyond supply and demand.” In 1929-30 Röpke argued that once a depression is under way, modest “reflation” to stimulate new demand may be called for. This argument for compensatory credit expansion can hardly be rejected out of hand—despite a partial agreement with Keynes—and a number of Austrian economists have taken a similar position. (Certainly he later rejected Keynesian methods as a normal part of State fiscal policy.)

One of Röpke’s central concerns was restoration of the world market crippled by World War I. Economically the world before 1914 had been “virtually a unit.” Customs duties were “merely data,” and there were no “raw materials” problems. The “gold standard was a working fiction of a real ‘world money’” with London at its center. In its heyday this order had promoted social and international peace. Pre-war protectionism had, however, fostered domestic monopoly, but Röpke lost little sleep over the modest tariffs of a bygone age. Instead, it was heavy State involvement in national economies (national corporatism) during World War I and between the world wars that concerned him.

The old trading system had not been a self-sustaining natural order but had had an “extra-economic . . . framework of moral, political, legal and institutional conditions.” Röpke’s views on international trade—“liberalism from below” by agreement of independent nations—appear to conflict with the current American top-down globalization model, even if Röpke showed some affection for the Pax Britannica. Under reasonably free trade there would be no special problems of “raw materials” and “living space,” and business as such was not the source of imperialism. Instead, States were the key promoters of monopoly, and if monopoly led to empire, State policy remained the most important cause.

While opposed to national corporatism, Röpke was perhaps insufficiently critical of the post-1945 (and U.S.-led) multilateral corporatism (“embedded liberalism”) of GATT and the ITO. On the other hand, he criticized exported U.S. inflation from the late 1950s onward and generally frowned on the top-down economic management of the Common Market, ancestor of the European Union.

Reflecting in 1946 on the disastrous course of German history in his Solution of the German Problem, Röpke applied his historical and economic ideas to the renewal of German political and economic life. As he saw it, a proper federal equilibrium had never existed in Germany. In late-medieval and early modern times, communal (town-based) decentralization succumbed to powerful feudal magnates making the transition to absolutism and bureaucratic management (“state feudalism”). On the land in western Germany free peasants emerged; to the east in Prussia “feudal” magnates successfully suppressed the peasantry. This dualism of agrarian structure persisted into recent times. Prussia’s underdeveloped cities posed no counterweight to the East-Elbian landed aristocracy (Junkers), and the factory-like Prussian state made society rational, mechanical, and clock-bound—whence inhuman Kantian “ethics” and the Prussian “cult of the colossal.”

German unification had been less organic than that of Italy. The new central state (from 1871) dominated by Prussia adopted elements of economic liberalism and abandoned them as needed. Here was a top-down social revolution involving proletarianization, population increase, mass conscription, State education, and the rise of atomized mass society. Subsidized, cartelized, hierarchical, and centralized as it was, German capitalism was “the prototype of monopoly-and-proletariat capitalism . . . of rigidly organized industry” looking toward “organized socialism” (italics in original).

The ideal political revolution would have constrained Prussian domination, while the ideal “economic and social revolution” would have required “agrarian reform breaking up the great estates and putting peasant farms in their place,” and tariff abolition to undermine industrial cartels. Interestingly, important Social Democrats opposed agrarian reform as necessarily backward and unprogressive.

Now—in 1946—something positive could be done about German agrarian and industrial “feudalism” and their attendant evils. Ideally, a new German revolution—sponsored by the Allies—would dissolve Bismarck’s imperial edifice in favor of the Länder (states). Local administration had survived the collapse of the National Socialist state, and the Allies could revive the constituent German states by negotiating a separate peace with each one, effectively dissolving the Reich. The Allies, Röpke thought, should also enforce “complete free trade, external and internal, for all these German states” to assure German economic viability in spite of political decentralization, thereby preventing the persistent poverty envisioned in the punitive Morgenthau Plan. Allied-enforced free trade would undermine the old order of cartels. As to Germany’s new political structure, a working compromise between a Staatenbund (confederacy) and a Bundesstaat (federal state—in the unfortunate American sense) would be required.

Röpke’s treatment of the German case reflected a broad historical vision. He spied a “plutocratic taint” in early capitalism and wrote that historical (and actually existing) capitalism featured “monopolies, mammoth industries, stock corporations, holding companies, mass production, proletariat,” and was thus “very misshapen” indeed. (This line of analysis parallels that of Franz Oppenheimer, who was a direct influence on Albert Jay Nock, Rüstow, and Röpke.)

The “feudal-absolutist heritage” resulted in “immense accretions of capital and economic positions of power which endow capitalism with that plutocratic taint which clings to it”—giving it “a false start from the very beginning.” But “violent contrasts between rich and poor, between power and impotence, are rather due to extra-economic (‘sociological’) positions of power” such as “feudal land holding . . . profits from the slave trade . . . war and speculative profits . . . pirates’ and soldiers’ booty, monopoly, concessions granted in the age of absolutism, plantation dividends, and railroad subsidies.” Such things were the basis of later “development.” Some were now gone; some, like “feudal mining properties,” lingered as “strongholds of robber barons. . . .” Thence came the odium unjustly extended to all market activity. As for that emblematic nineteenth-century investment—railroads—they had been premature and inflationary.

Consistent with this approach, Röpke found mass society and proletarianization central to the twentieth-century crisis. And where had proletarians come from? His answer: Political power made them, even if their numbers (population) increased later. In both eastern Germany and England (especially in the seventeenth and eighteenth centuries) dispossession of peasants created a reservoir of cheap industrial labor. In Röpke’s opinion, Capitalism and the Historians (1954), a book on the Industrial Revolution edited by Hayek, swung “too far the other way,” but could not dispose of proletarians—whatever their caloric intake may have been—and the social “catastrophe” that came with them.

Such phenomena had feudal-absolutist causes in Europe—but why then did we see much the same results in the United States? Here Röpke refers to Oppenheimer’s “political means” to wealth. The State, whether feudal-absolutist or not, made possible interest-group politics, and American democracy had long allowed “vested interests to flourish unchecked.” Indeed, the interpenetration of interests and bureaucracies “has probably reached its highest degree in the United States”! For Röpke the underlying cause of the evil was “the division of labor, pushed to extremes, and interlocking everything in the most complicated manner”—an unnecessary result since division of labor could in fact be “more humane and natural, and less mechanical and proletarian.”

Röpke announced his “Third Way” revisionist liberalism as early as 1941 in the Swiss Journal of Economics and Statistics, calling for the restoration of competitive markets and distinguishing good economic intervention from bad. He contrasted the industrial division of labor—within a firm or factory—with the social division of labor in which markets coordinate “activities of independent units.” Real, functional independence was what distinguished market economies from socialism, while excessive division of labor led “increasingly to mechanization [and] monotonous uniformity.” The obvious antidote for Röpke was widespread ownership of productive assets: deproletarianization through small property. Where possible, the realm of self-provision outside the market should be expanded and competition enforced.

On Röpke’s rather institutionalist view, State and economy are not and cannot be entirely separated except for purposes of analysis. As noted, he—like other German Neo-Liberals—saw interest-group liberalism as false pluralism: “Unhealthy pluralism . . . is not defensive but offensive. It does not limit the power of the state but tries to use it for its own purposes and make it subservient to these purposes.” Here then is a kind of socially conscious liberal cameralism as opposed to corporate syndicalism.

The false or unhealthy market economy rested on “legal forms and institutions”—“stock companies, the corporation, patent law, bankruptcy,” trusts, and so on, supported by legislation. Indeed, “the growth of the corporation with its much discussed but unfortunately too seldom remedied abuses has led more and more to the assumption of risk by the community.” The State’s job was to defend competition and refrain from favoring monopoly.

Röpke favored free movement of prices rather than a command economy, but insisted on a suitable legal-social framework, in stark contrast to the kind of liberal who imagines that private property and free price movement themselves constitute a social order. To achieve such fit legal foundations, Röpke suggested the need to overhaul laws dealing with bankruptcy, corporations, patents, money and banking, and antitrust. He saw economic concentration as being in particular the product of company law and tax policy. The low birthrate of new firms (as of 1960) surely reflected “something fundamentally wrong with the capital market and the tax system.”

For Röpke the best counterweight to the State was “the minimum economic independence for the individual which in turn is based on a minimum amount of property, economic freedom and security of existence.” Only a market economy could produce favorable outcomes—but what kind of market economy? Real independence was “jeopardized by proletarianisation, by concentration of private economic power, by increasing organization and monopoly, by cartels and associations, by agglomerations of financial interests, by corporativism, by the private planning of vested interests, in short by ‘business collectivism’”—which resembled (at best) a kind of feudal-authoritarian decentralization. The market required mutual trust, long-run legal stability, an ethic, as well as “certain psychological-moral reserves.” The economy was not “an autonomous sphere of rational behavior,” and philosopher Max Scheler (an important influence on Pope John Paul II) had shown that “contractual cooperation of men . . . cannot work without genuine communities.”

Röpke insisted that free markets require a moral framework outside themselves in order to work optimally. The market is only defensible “as part of a wider general order encompassing ethics, law, the natural conditions of life and happiness, the state, politics, and power.”

Röpke could perhaps be seen as wanting precisely the combination of “free market and strong State” some writers associate with Margaret Thatcher and Ronald Reagan. But in that model (also called “neo-liberal”) the strong State pursues a two-pronged strategy of “starving” the welfare beast while feeding the military-industrial one—the latter being (beyond controversy) a great den of special interests. Empirically, then, it appears that the Thatcher-Reagan regimes involved the triumph of new political coalitions working—free-market rhetoric notwithstanding—wholly within the logic of interest-group liberalism. (Financial magicians might also be mentioned.)

In Röpke’s Neo-Liberalism the State is “strong” in an ethical and not just a structural sense and is therefore able to resist special-interest pressures, whatever their ideological coloration. It is of course nearly impossible for Americans to believe that a neutral and ethical civil service can exist (or ever has existed) anywhere. But as John Taylor of Caroline, Hans-Hermann Hoppe, and Röpke have suggested, republican forms of government are the special prey of well-organized, rent-seeking interests.

Liberal and Libertarian Constructs

But, alas, Röpke frequently mentioned “regulation” and even “planning.” Here acquired reflexes will inevitably kick in, with sundry classical liberals shouting “statism” in a crowded tea party. But does Röpke’s model really differ so much from certain liberal-to-libertarian constructs? Let us consider some of those. In the educational model associated with F. A. Hayek, dedicated scholars put in decades of work, eventually turning the tide of public opinion, whereupon the State relents and gives us free markets. This plan is as old as the Physiocrats’ idea of persuading an absolute monarch to impose their vision of free internal markets on all of France. A good idea, no doubt, but it was the State that would do the imposing.

Next comes the model in which a libertarian legal code solves all our problems. All we need do is have a revolution of some sort. In one variant a kind of Patriot King will rally the masses behind a right-wing populist agenda. This “libertarian” man on horseback will then dismantle the State and give up his own (State-like?) power when his State-smashing frenzy is over. The law code being in place, we are asked to believe that thenceforward individual contracts undertaken in a complete ethical vacuum will constitute society.

(This version does not have probable success written all over it.)

So here we arrive at some common paradoxes of libertarian policy-making. Everyone concerned wants a government of laws and not of men, but this unlikely outcome demands some automatic mechanism to replace the fallible men. Have we ever seen such a mechanism? In practice it seems, everyone wants the State, or some suitably stateless-looking substitute for the State, to impose his or her program. On balance, Röpke’s ideal of a genuinely neutral and ethical civil service with a limited agenda subordinated to the common good does not seem more utopian than the proposals just sketched.

Institutions and Culture

Röpke’s Third Way, with its revision of liberalism and its slight tilt toward distributism and agrarianism, has the virtue of foregrounding issues of economic sociology, institutions, and culture, which everyday classical liberalism and libertarianism contrive to ignore. His specific insights and themes—however radical-reactionary and Romantic they may seem—ought to be of interest to all who see a need to combine the insight that markets are very useful with “thicker” social theory able to take account of community, shared values, and nonmaterial interests. Front Porch communitarians, “civic republicans,” left libertarians, conservatives, and many others might do well to revisit Röpke from time to time.

Perhaps Röpke was mistaken in thinking that, absent his ideal ethical and neutral State, people surrounded by “thin” markets could not generate essential “thick” (intermediate) social-cultural relationships. If he was wrong, then arguably it is naturally generated thick libertarianism that would in fact be the true Third Way. Röpke’s own experience, however, convinced him that non-neutral States and capitalism (in a negative sense here), working in tandem, had done so much damage (as in Germany)—and for so long—that it would be idle to rely on society to reconstitute itself in the short run.

In our first issue, on October 2, 1950, we published an editorial called “The Faith of the Freeman,” in which we outlined our fundamental economic, political and moral philosophy. In the fifteen months since then our articles and editorials, we trust, have made that basic philosophy and its practical application increasingly clear.

Now, at the completion of our first full calendar year of existence, we think it appropriate to say something about our function. That function is in one respect obvious. It is to propagate our announced philosophy, and to apply it, as we have been doing, to current issues as they arise. On the constructive and positive side, in other words, our function is to expound and apply the principles of traditional liberalism and individual freedom. On the negative side, it is to expose the errors of collectivism of all shades—of statism, “planning,” controllism, socialism, fascism and communism. One of our central aims is, on the one hand, to hearten and strengthen those who already accept most of the philosophy of individual freedom and to help them to clarify their own thinking; and, on the other hand, to convert open-minded collectivists to the philosophy of freedom.

The mere announcement of such an aim is likely to be followed by immediate expressions of skepticism or incredulity. Some of our correspondents tell us, for example, that a magazine like The Freeman is read only by those who already believe in its aims, and therefore we are doing nothing more than “talking to ourselves.” But even if this were true, which we do not believe, we would still be performing a very important function. It is imperative that those who already believe in a market economy, limited government and individual freedom should have the constant encouragement of knowing that they do not stand alone, that there is high hope for their cause. It is imperative that all such people keep abreast of current developments and know their correct interpretation, and that, through constant restatement and mutual criticism of each other’s ideas; they continue to clarify, improve, and perfect their understanding. Only if they do this can they be counted upon to remain true to a libertarian philosophy, and be proof against collectivist fallacies. Only if those on “our side” do this can we even hope to hold our ranks together and cease constantly to lose converts, as in the past, to collectivism.

But the function of a journal of opinion like The Freeman only begins here; it does not stop here. It is necessary for the believers in a free system to do far more than hold their present thin ranks together. If they hope to see their ideas triumph, it is imperative that they make converts themselves from the philosophy of collectivism, “security” and serfdom that dominates the world today.

They can do this only if they themselves have a deeper understanding than the collectivists, and are able not only to recognize the collectivist errors, but to refute them in such a way that the more intelligent and well-meaning collectivists themselves will recognize, acknowledge and renounce them as errors. And those on “our side” cannot do this, cannot live up to their responsibilities, unless they have troubled to keep themselves informed to make their ideas clearer and their understanding deeper than those of the collectivists. For our side can hope to grow only if it attracts and keeps adherents who in turn will become, not blind or one-eyed partisans, but enlightened and able expositors, teachers, disseminators, proselytizers.

To make this possible, it is essential that there should exist a prospering periodical with the aims of The Freeman.

* * *

Children’s books about the environment are so dull and devoid of active people that Andrew Morriss hopes kids are playing video games rather than reading that stuff.

A report claiming that the tax burden is the lightest since the Truman administration gave Progressive talk-show hosts something to beat the tax-cutters over the head with—until the report was debunked. As D. W. MacKenzie points out, it’s easy to make the tax burden look small if you don’t count all the taxes.

Government schooling has been subjected to all kinds of criticisms. Michael Bors shows that Public Choice arguments shed further light on why the schools are bad and don’t improve.

This sounds like a bad dream, but people inside and outside of government are actually proposing that the failing newspaper business be bailed out by the taxpayers. Edward López shows why that’s a terrible idea.

The Glass-Steagall Act was the major banking regulation of the New Deal. In 1999 a key part was repealed. Was that repeal responsible for the recent financial debacle? Warren Gibson and Jeffrey Rogers Hummel have the skinny.

The welfare state isn’t just wasteful and larcenous. It’s morally corrupting. Richard Fulmer tells why.

Police departments have ways to keep abusive officers’ names out of the papers. Wendy McElroy says that denies citizens one of their greatest protections against police misconduct.

Contrary to Lord Keynes’s maxim that in the long run we’re all dead, his spirit is alive and well more than 64 years after his death. Richard McKenzie looks into this curiosity.

Our columnists have plenty to talk about: Lawrence Reed reveals his sympathies for Marxism. Thomas Szasz scrutinizes the medicalization of suicide. Burton Folsom has a few choice words about Theodore Roosevelt. John Stossel catalogues attacks on our freedom. Walter Williams exposes some Washington lies. And Mark Skousen, hearing for the nth time that consumer spending drives the economy, objects, “It Just Ain’t So!”

Our reviewers dissect books on the financial mess, British libertarian Arthur Seldon, antipsychiatry, and public schooling.

That man was Karl Marx.

Advocates of liberty often suffer bouts of despair. How can the cause of freedom ever triumph in a world so dominated by interventionist and welfare-statist ideas? Governments often give lip service to the benefits of free markets and the sanctity of personal and civil liberties. In practice, however, those same governments continue to encroach on individual freedom, restrict and regulate the world of commerce and industry, and redistribute the wealth of society to those with political power and influence. The cause of freedom seems to be a lost cause, with merely temporary rear-guard successes against the continuing growth of government.

What friends of freedom need to remember is that trends can change, that they have in the past and will again in the future. If this seems farfetched, place yourself in the position of a socialist at the time that Marx died in 1883, and imagine that you are an honest and sincere advocate of socialism. As a socialist, you live in a world that is predominantely classical liberal, with governments in general only intervening in minimal ways in commercial affairs. Most people—including those in the “working class”—believe that it is not the responsibility of the state to redistribute wealth or nationalize industry and agriculture, and are suspicious of government paternalism.

How could socialism ever be victorious in such a world so fully dominated by the “capitalist” mindset? Even “the workers” don’t understand the evils of capitalism and the benefits of a socialist future! Such a sincere socialist could only hope that Marx was right and that socialism would have to come—someday—due to inescapable “laws of history.”

Yet within 30 years the socialist idea came to dominate the world. By World War I the notion of paternalistic government had captured the minds of intellectuals and was gaining increasing support among the general population. Welfare-statist interventionism was replacing the earlier relatively free-market environment. And the socialist ideal of government planning was put into effect as part of the wartime policies of the belligerent powers beginning in 1914.

Socialism triumphed during that period because while socialists advocated collectivism, they practiced a politics of individualism. They understood that “history” would not move in their direction unless they changed popular opinion. And implicitly they understood that this meant changing the minds of millions of individual people.

So they went out and spoke and debated with their friends and neighbors. They contributed to public lectures and the publishing of pamphlets and books. They founded newspapers and magazines, and distributed them to anyone who would be willing to read them. They understood that the world ultimately changes one mind at a time—in spite of their emphasis on “social classes.”

They overcame the prevailing public opinion, defeated powerful special interests, and never lost sight of their long-term goal of the socialist society to come, which was the motivation and the compass for all their actions.

The Superiority of Freedom

What do friends of freedom have to learn from the successes of our socialist opponents? First, we must fully believe in the moral and practical superiority of freedom and the free market over all forms of collectivism. We must be neither embarrassed nor intimidated by the arguments of the collectivists, interventionists, and welfare statists. Once any compromise is made in the case for freedom, the opponents of liberty will have attained the high ground and will set the terms of the debate.

FEE’s founder, the late Leonard E. Read, once warned of sinking in a sea of “buts.” I believe in freedom and self-responsibility, “but” we need some minimum government social “safety net.” I believe in the free market, “but” we need some limited regulation for the “public good.” I believe in free trade, “but” we should have some form of protectionism for “essential” industries and jobs. Before you know it, Read warned, the case for freedom has been submerged in an ocean of exceptions.

Each of us, given the constraints on his time, must try to become as informed as possible about the case for freedom. Here, again, Read pointed out the importance of self-education and self-improvement. The more knowledgeable and articulate we each become in explaining the benefits of the free society and the harm from all forms of collectivism, the more we will have the ability to attract people who may want to hear what we have to say.

Another lesson to be learned from the earlier generation of socialists is not to be disheartened by the apparent continuing political climate that surrounds us. We must have confidence in the truth of what we say, to know in our minds and hearts that freedom can and will win in the battle of ideas. We must focus on that point on the horizon that represents the ideal of individual liberty and the free society, regardless of how many twists and turns everyday political currents seem to be following. National, state, and local elections merely reflect prevailing political attitudes and beliefs. Our task is to influence the future and not allow ourselves to be distracted or discouraged by who gets elected today and on what policy platform.

Let us remember that over the last hundred years virtually every form of collectivism has been tried—socialism, communism, fascism, Nazism, interventionism, welfare statism—and each has failed. There are very few today who wax with sincere enthusiasm that government is some great secular god that can solve all of mankind’s problems. Statist policies and attitudes continue to prevail because of institutional and special-interest inertia; they no longer possess the political, philosophical, and ideological fervor that brought them to power in earlier times.

There is only one “ism” left to fill this vacuum in the face of collectivism’s failures. It is classical liberalism, with its conception of the free man in the free society, grounded in the idea of consent, peaceful association, and individual rights. If we keep that before us, we can and will win.

And just how important are fossil fuels relative to so-called renewable energies? Oil, gas, or coal generates the electricity needed to fill in for intermittent wind and solar power and ensure moment-to-moment reliability. So renewable energy, ironically, is codependent on nonrenewable energy short of (currently) prohibitively expensive battery technology firming the flow of electricity.

As a component of all products and services, energy needs to be affordable, convenient, and reliable. To this end, public policy should respect consumer preference and allow energy producers to meet the demands of the marketplace. This requires a respect for private property rights and voluntary exchange to facilitate the global exchange of energy and its innumerable subcomponents.

Global energy supplies are primarily the product of government, unfortunately, not the free market. In state-run economies political elites make the decisions that otherwise would be made by the multitude. Win-win exchanges are supplanted by government-dictated win-lose transactions. Wealth is redistributed. Pure waste results from the intervention of (political) third parties into what otherwise would be mutually advantageous self-interested exchange.

For example, electric utilities may be forced to buy wind power, solar power, or another politically correct energy under state law. A mandate is required because a free marketplace would not support such expensive, unreliable—noncompetitive—supply.

Oil and gas producers may be unable to access offshore properties because of government constraint. In such cases, supply is not produced and higher-cost substitutes elsewhere pick up some of the slack. Consumers are left with less supply and higher prices. Economists have a name for this: inefficiency.

Government intervention may also give life to uneconomic projects. Such ventures may include carbon capture and storage, a “smart” electricity grid, or even a nuclear plant that requires a federal loan guarantee. Resources that go to these projects do not go to other, more economical projects (which may or may not be in the energy sector) as judged by the marketplace. Resources are again misallocated.

Proponents of government intervention cite “market failure” as the reason for regulating or subsidizing energy projects. Negative externalities created by self-interested exchange require the government to modify transactions in ways ranging from a prohibition to a tax, they say.

Nonmarket Failures

But there are two other types of failure that also must be considered before rushing to policy judgment.

One is analytic failure, in which the outside evaluator’s prescription for intervention (such as a per-barrel “energy security” tax on oil imports or a per-ton “climate change” tax on carbon dioxide emissions) overcorrects or undercorrects for the “real” problem. The error might be purely intellectual—or it might reflect the personal prejudice of the analyst. Fallible self-interest in the marketplace has a counterpart in the ivory tower.

Second, there is government failure, whereby even the “correct” analytical blueprint is altered and violated in the political process. Special-interest tinkering adds to or subtracts from the core proposal, and political actors resort to “logrolling,” where extraneous issues are added to the legislation just to win votes.

House passage of a cap-and-trade energy bill last year and health insurance legislation enacted this year are stark evidence of sausage-making in Washington, D.C.—and something scarcely recognizable in “we the people” textbooks.

Thus “market failure” does not automatically require a government correction. This suggests a different approach. Knowing that political solutions are likely to be as bad as or worse than the problems, alleged market failures should be scrutinized to see if they are really serious problems. And if so, can the real problems be addressed by novel voluntary approaches and reforms rather than by government dictates?

Intellectual and political debates over energy have revolved around four “sustainability” issues: depletion, pollution, security, and climate change. Whole books address these issues, most from the market-failure viewpoint, concluding that mankind is on a perilous path and government-engineered energy transformation is necessary.

But students of energy history and energy policy must ask: Has a political makeover of any industry ever worked well for consumers and taxpayers? Or has it had the opposite effect? Creative destruction—a market makeover from shifting consumer demand—is one thing; having government pick winners with carrots and sticks is quite another.

Free-Market Sustainability

The arguments for allowing free markets, rather than government planning, to address the four sustainability issues can be summarized as follows:

1. Estimated quantities of recoverable oil, gas, and coal have been increasing over time, according to the statistical record. Human ingenuity in market settings has and will continue to overcome nature’s limits, leaving in its wake errant forecasts of resource exhaustion. The resource challenge is political: restricting access and perverting incentives prevents the ultimate resource—human innovation and entrepreneurship—from expanding energy supplies and multiplying energy’s productive utilization.
2. Statistics of air and water quality in the United States show dramatic environmental improvement and, in fact, indicate a positive correlation between energy usage and environmental improvement. While improvements have been achieved by politicized, command-and-control environmental regulation, the results could have been achieved at lower cost through market methods.
3. Energy security in the electricity market is assured by abundant domestic coal and the fact that almost all U.S. gas imports come from Canada. Most of the oil needed for transportation comes from domestic supplies supplemented by imports from a variety of countries led by Canada and Mexico. Oil imports from unstable or unfriendly nations, such as Venezuela and those in the Middle East, can be more effectively addressed by privatizing U.S. oil and gas resources than by government penalties against oil imports that cannot distinguish between “good” and “bad” barrels. Even if the United States were to use the powers of government to pare domestic oil consumption, the resulting drop in world oil prices would encourage non-U.S. demand and subsidize foreign industry. The world oil market will continue to exist and thrive even with reduced U.S. participation, and this will become more true over time.
4. The global warming scare is plagued by open scientific questions, economic tradeoffs, and the reality that carbon-based energy is necessary for economic growth. Carbon rationing (via the Kyoto Protocol) is a failed policy for the developed world and a nonstarter for the developing world. Not only have targeted reductions proved to be elusive, the economic costs of carbon rationing are not unlike those from (postulated) deleterious climate change.

The recent oil spill in the Gulf of Mexico raises an additional sustainability issue: unexpected setbacks that cause massive property damage and even fatalities. Short-run problems, however, can result in longer-term gains so long as the firm faces full liability and pays restitution to the victims. Accountability in private property settings encourages companies to square profits, people, and the environment—and avoid the financial losses that come from performance failure. Currently companies have their liability for damages capped by law at $75 million, though politics could potentially nullify the cap in any given case, as it apparently will in the BP Deepwater Horizon incident.

Rather than expand government, public policy should end preferential subsidies for politically favored energies and privatize such assets as public-land resources and the Strategic Petroleum Reserve. Multibillion-dollar energy programs at the U.S. Department of Energy should be eliminated. Such policy reform can simultaneously increase energy supply, improve energy security, reduce energy costs, and increase the size of the private sector relative to the public sector.

To Al Gore the “planetary emergency” is five billion to six billion people using oil, gas, or coal for most of their energy needs. But the real energy problem is that nearly one and a half billion people do not use modern forms of energy. Rampant statism in place of private property, voluntary exchange, and the rule of law is behind this problem.

Energy-impoverished people use dried dung and primitive biomass to stay warm and cook their meals, destroying their health and shortening their lives. Without electricity or machines, they do not have clean water, reliable lighting, or other means for comfortable, sanitary living. This here-and-now problem demands energy freedom and an end to debilitating energy statism.

The free-market vision stresses that these impoverished people should not be subject to energy rationing by government. Solar panels and industrial wind turbines can only generate a fraction of the energy produced by diesel generators or a conventional power plant—and are much less reliable. Energy brawn is needed, not inferior but politically correct energies that appeal to energy planners.

Property Rights vs. the Resource Curse

More fundamentally, these victims of statism need private property rights to in-ground minerals and ownership title to energy infrastructure. In this way, they can overcome the so-called resource curse whereby siphoned energy wealth underwrites government control and bad economic policy.

Countries worldwide should reject energy planning from a politically endowed elite. Government planners suffer from a “fatal conceit” that their knowledge and goals must override those of the masses. But on-the-spot energy consumers and energy producers, guided by prices and profit/loss, have much more collective wisdom than faceless bureaucrats commanding from on high. Top-down planning misdirects and destroys despite the best efforts of even well-educated, well-meaning bureaucrats.

Freedom—the use of reason and persuasion in place of coercion—is a worthy goal. In the U.S. energy sector, market reliance, though compromised by both pro-business and anti-business government intervention, has produced economic coordination, fostered economic growth, and democratized wealth. Government intervention, on the other hand, such as occurred in the 1970s with U.S. oil and gas price controls, has produced shortages, civil strife, and bureaucratic waste.

Markets are not perfect, inspiring some to devise and champion government intervention. But political solutions must contend with analytic failure, implementation problems, and public-sector (taxpayer) costs. Imperfect markets, in other words, may well be better than “perfect” regulation in the real world. The burden of proof, therefore, should be on government intervention, rather than on voluntary transactions premised on private property and governed by the rule of law.

There is not much new in Liberty and Tyranny, but Levin’s attack on the statist–yes, that’s the word he uses throughout–mindset is for the most part sound and effective. Unfortunately, the book is marred by a glaring flaw. Levin tries to couch the predictable conservative-versus-libertarian disagreements as a battle between conservative “common sense” and statist folly; that is, he doesn’t even acknowledge that there are pro-liberty arguments against his notions about immigration and “national security,” but attempts to cast all who disagree with him as “statists.”

I will start with what’s good about the book, then deal with the chapters that are like fingernails on the blackboard.

Levin begins with this description of America’s dominant political philosophy: “For the Modern Liberal, the individual’s imperfection and personal pursuits impede the objective of a utopian state. In this, Modern Liberalism promotes what French historian Alexis de Tocqueville described as a soft tyranny, which becomes increasingly more oppressive, potentially leading to a hard tyranny. . . .”

Because modern liberalism is infatuated with authoritarian mandates and prohibitions to bring about its utopian vision, it has nothing whatever to do with its root word, “liberal.” That’s why Levin insists on using the more accurate term “statist.”

Good. Calling those who want to, for example, force people into a politically contrived health care system “liberal” is a capital offense against the English language. I tip my hat to Levin for demanding terminological accuracy.

And statist thinking is responsible for most of our socioeconomic troubles, Levin shows. Statism has given us a panoply of “rights” that are not rights at all, but which actually undermine people’s true rights to life, liberty, and property. Levin takes issue with FDR’s horrendous “Second Bill of Rights,” wherein he proclaimed that Americans have “rights” to sufficient income for a “decent living,” to “adequate medical care,” and to a “good education.” Levin gives that babble the back of his hand, writing, “These are not rights. They are the Statist’s false promises of utopianism [used] to justify all trespasses on the individual’s private property.”

Exactly. Levin then approvingly quotes Frédéric Bastiat on the proper function of the law, writes an excellent chapter on the need to protect the free market against interventionism (the harm from which is then blamed on what is left of the free market), identifies the welfare state as responsible for our current and looming future economic debacles, and pummels the authoritarian agenda of “enviro-statism.”

Too bad he didn’t stop there. Instead, he moves on to immigration and national security.

On the issue of immigration Levin forgets what he has previously written about the benefits of liberty and repeats all the stock conservative tropes about the supposed danger of immigrants who don’t “assimilate” as quickly as he thinks they should and who pose some nebulous danger to “our culture.” The same things were said by nativists about immigrants 150 years ago. Levin tries to draw a distinction by claiming that the immigrants of yesteryear had skills that were needed for building the country. Of course they had a lot of skills, but so do current immigrants. If they didn’t, we wouldn’t be hearing that they’re “taking jobs from Americans.” Worse, Levin tries to suggest that those of us who would just leave immigrants alone are on the side of statism and that cracking down on “illegals” is consistent with liberty. Is he not aware of the brutal, military-style raids the government launches against employers and workers suspected of immigration violations? Or does he think they’re part of “liberty”?

Equally weak is Levin’s chapter “On Self-Preservation,” an apology for neoconservative policies of military adventurism abroad and the constriction of civil liberty at home. He sets up a false dilemma between a statist foreign policy of the kind Obama favors (which, by giving power to international bodies to control the United States, is undeniably hostile to American freedom) and conservative foreign interventions (which impose enormous costs in lost lives and expended dollars, only to create still more enemies) without bothering to observe that there is a third possibility–a truly noninterventionist policy that ignores the United Nations, stays out of places like Iraq and Afghanistan, and leaves it to individuals to decide if they want to donate any foreign aid.

The bad chapters come at the end of the book. I can only hope that readers finished the first eight chapters and then got tired of it.

Locke’s fame rests on his Two Treatises of Government. Thanks to Peter Laslett’s introduction (1960), we know Locke wrote his First Treatise answering Sir Robert Filmer’s Patriarcha (1680) at a time when his Second Treatise was well underway. The Second Treatise defended (prospectively) the conservative revolution of 1688. Its argument owed much to a Calvinist political tradition in which certain political authorities oppose other authorities that are breaking the social compact. Seeking to justify government by consent regardless of historical specifics, Locke deployed a version of natural law.

The point of the rights adduced—labor-based property and so on—was to buttress an argument that the king could not (should not) expropriate English gentlemen–a rather meager result, unless of course all their rights eventually “trickle down” to the rest of us. To reach his goal Locke undermined the natural-law assumption that God gave the earth to men “in common.” First, Locke set up each individual as a self-owner, rightfully appropriating natural resources to sustain life. By “mixing” their labor with resources (land), individuals rightfully acquired property, provided enough was left for others: the famous “proviso.” (You could not, for example, grab all the acorns and then leave them to rot.) Next, he introduced money, an “invention” of civilized men, which can accumulate without “spoiling.” A monetized economy overcame the problem of “waste” (spoilage) and allowed men to build large estates through production, exchange, and purchase. The increased productivity of larger estates assured that enough was left for others (provided bare subsistence from wage labor is “enough”). Arguing from economies of scale, Locke built an apology for the land enclosures into his system (not to mention a kind of Lockean multiplier whereby enclosed lands yield 10 times the product of commons). Paying wages made other men’s efforts count as “mine” in appropriating property out of common resources (“The turfs my servant has cut,” and so on).

These market activities precede the creation of states. Since individuals’ personal “execution” of the natural law caused predictable problems, property holders created government through a social contract to provide impartial judicial services and common defense, putting their rights in trust. Accordingly, Locke held that property cannot (normally) be alienated even by conquest. Locke’s applied system was less obviously liberal. From the theoretical high ground we suddenly descend to actual English property holdings in the late seventeenth century, with Locke pretending they rest on individual labor and free exchange rather than on conquest and expropriation.

So far Locke appears to be an advanced Whig and founder of liberalism with a nice rationale for infrequent and minimally disruptive uprisings by a consensus of great landholders, gentry, merchant capitalists, and bankers, duly supported by respectable tradesmen, shopkeepers, and farmers who survived enclosure. These are “the people,” moderately and prudently redressing their grievances, even if (as Christopher Hill notes) Locke never actually defined who “the people” are. Americans took Locke fairly literally during our Revolution, and as a result his ideas sometimes seem the only American political tradition, as Louis Hartz complained.

Locke’s Problems

Since at least the eighteenth century, frustrated readers of Locke have “corrected” his system to purge it of apparently foreign elements. Some take Lockean rights as a starting point and move on (see Robert Nozick); others reject Locke’s system while extracting congenial points from it (Murray Rothbard). Truncated or not, Locke has left us some serious problems.

Social Contract. Whether seen as historical possibility or useful fiction, the social contract was always nebulous. The key perhaps was that something like a social contract “must have” happened, otherwise governments would not rest on voluntary consent. Further deductions from that premise would grind to a halt. Deductions were saved, but at a considerable cost in realism.

Mercantilism and Colonial Empire. As a political associate of the First Earl of Shaftesbury, Locke had access to the highest Whig circles. He was both a policymaker and theorist, serving as secretary to the Lords Proprietors of Carolina from 1668 to 1675 and writing (presumably with Shaftesbury) that peculiar neofeudal document Fundamental Constitutions of Carolina in 1669. He was a substantial stockholder in the slave-trading Royal African Company, and in 1696 we find him serving at the Board of Trade.

No stranger to mercantilism and colonial imperialism, Locke nevertheless argued that land is not rightly acquired by conquest unless it has been lying idle. This exception is extremely important, since Locke artfully fitted his “natural” right to property to English Protestant practices. Non-Europeans need not apply. Locke conceded that God had given land to mankind in common. On the other hand, the “industrious and rational” can—indeed must—prevent its being “wasted.” They can “mix” their labor with land to acquire it but must maximize the product. Anyone failing to maximize could rightfully be dispossessed—Indians in America, non-enclosing peasants at home. In effect, Locke promoted freedom for a minority of industrious Englishmen—a freedom to be paid for through constant growth premised in part on overseas empire. Like his successor Adam Smith, Locke favored relaxing the rules “within one part of the system” (as William Appleman Williams put it), which otherwise continued to require overseas expansion.

Locke and Slavery. For Locke slavery arises in a sort of social-theoretical Guantánamo. It was not part of any social contract but arose in “war,” private or public. In Locke’s view anyone who (in a state of nature) attacks another or steals his property “forfeits” all rights and becomes an “unnatural man” subject to death, outlawry, or enslavement in lieu of death. (Paragraph 19 of the Second Treatise wonderfully conflates defense with “war.”) Reject one step here, and the whole thing falls to the ground. (Locke’s reasoning nonetheless seems to inspire those war-prone libertarians who characterize the U.S. government’s enemies of the day as “pirates,” “common enemies of mankind,” and so on.)

This apparent “exception” to liberty hidden inside liberal State theory causes much interpretive anguish. Some writers see Locke as departing here from his real views. Others have him bending his theory to achieve a desired end. Still others believe Locke’s slavery doctrine reveals hidden premises in his system. Given Locke’s investments, it was perhaps convenient that he could accommodate slavery. His moves here involve some of his favorite hobby horses—aggression, forfeiture of rights, and enslavement.

Locke had labored to get around men’s “in-common” right to the earth and thought he had justified English gentlemen’s large estates. Looking abroad, however, he argued that some lands remained common, after all, owing to non-Europeans’ waste (failure to maximize). It seems a fair implication of the text that where such people resist European efforts to develop those “idle resources,” wars with them would be “just” and they might rightfully be enslaved if the conquerors forwent their “right” to kill them. In fairness, Locke never specifically said that “just wars” in West Africa accounted for the current supply of slaves, although Laslett believes Locke rationalized the matter thus.

Bastard Feudalism

Land and State. Why should anyone born after the imaginary social contract obey the current government? Here Locke’s claims about political obligation and consent reach their goal through what I shall call the Law of Conservation of Feudal Assumptions. As George Gale suggests, territoriality was Locke’s key (but hidden) premise: that is, civil society’s (the State’s) sovereign jurisdiction over a given territory to the exclusion of other States. But where has this come from? After adducing so many unlikely natural rights, Locke has suddenly become very conventional.

Now Locke might be describing a mere contract between neighboring property holders establishing a common defense agency (á la Murray Rothbard and Hans-Hermann Hoppe). In time this agency might assert a monopoly over “its” territory (the lands of its principals) and successfully march from Dominant Agency to minimal State (as in Nozick). Now the erstwhile agency would start commanding its former principals. But Locke took a shortcut and tied “Enjoyment of Land” to “a submission to the Government of the Country of which the land is part.” Civil society turns out to have a spatial dimension. All the “voluntary” consent Locke relied on to ground the social contract seems to vanish when he states that no one can withdraw himself and his lands from civil society. No secession here. He can of course emigrate, forfeiting his property.

State ownership of land has arrived, quite unexplained. One wonders what the State has “mixed” its labor with. Perhaps it has mixed its swords and cannon with another State’s soldiers or civilians. In any case, the social contract has somehow “annexed” individuals and their property to the community (State), and State control of land tenure becomes a chief means of enforcing obedience. So much then for all the “natural law” grounding of Locke’s system.

Naturalized immigrants have to pledge express allegiance. Native citizens are bound by the State’s not-so-hidden power to vacate their property titles. Further, the State is free to enclose outliers and renegades (and their lands) politically, without limit—no proviso here about leaving “enough” for others. Actual State practice has supplied Locke’s rules, leaving individual “owners” at the mercy of the State. Now Locke seems about as liberal—or as feudal—as William Blackstone.

Locke meant it when he described the “chief end” of government as “Preservation of Property.” But if the State is in some way the ultimate owner, the chief end now amounts to preserving the government’s claims—suggesting a modernized “bastard” feudalism, that is, feudalism without the advantages of the real thing: decentralization and reciprocal obligations. Like the Common Lawyers, Locke helped bridge the intellectual transition from one form of State to another. Accordingly, his liberalism is not in too much tension with his feudal recommendations for the Carolinas. Longstanding assumptions about (State) superiorities over land persist, while a modernizing State replaces feudal intermediaries.

Executive Liberalism. A closely related theme involves unknowably large emergency powers. Henry Parker, parliamentary propagandist in the Civil War (d. 1652), domesticated Machiavelli’s “reason of state” with all its unknown powers “outside” the law. Hobbes and Locke inherited this principle. Uniting a broad “Federative” (foreign affairs) power with ordinary executive power, Locke extended the executive’s arbitrary wartime capacities into domestic life. (On these matters, see Sheldon Wolin, “Democracy and the Welfare State,” Political Theory, November 1987.)

But Locke hardly bothered grounding this dual-use (“prerogative”) power and merely derived it from what men surrendered on becoming “one Body.” With men’s personal enforcement of the law ceded to the State, the king had a roving, “at-will” commission to do good at home or abroad. The king could suppress customary law to foster increased productivity (and thus greater State revenue) so as to outdistance his foreign rivals. Here is Locke the near-Hobbesian, employed by defenders of Lincoln’s executive dictatorship (“outside” or “beyond” the Constitution) and by latter-day “securitarians,” who dwell on eternally returning emergencies and national survival.

Seventeenth-Century “Natural Law” Swindles

How we got here on the high road of natural rights is an interesting tale. In it Locke is but one of many theorists who packed new content into the old shell of natural law in a kind of seventeenth-century Wrong Turn. The new international lawyers Suarez and Vitoria, seconded by Grotius, Locke, and others, asserted various unlikely “rights” belonging to natural individuals in hypothetical stateless societies. (I rely here on Richard Tuck, Brian Tierney, and Heinrich Rommen, among others.)

There were two jokes here. First, these “rights” derived from the observed behavior of States—such as Locke’s claim that someone has a “right” to kill his defeated enemy out of hand, and therefore may enslave him. Next, the theorists aggregated these State-like “individual rights”—private war-making, private death penalty, private enslavement—and gave them (back) to the State by way of imaginary general consent. Taken seriously, this “consent” bound actual persons even tighter, the gains being therefore rather murky. State practices were now justified by a collectivization of “rights” that individuals never had and which in the genuine, Christian natural-law tradition might never arise. Locke’s generously broad war powers—first private, then governmental—lead away from any serious just war theory toward total war.

These unhappy results hinge crucially on an explicit premise of the seventeenth-century “natural law” writers, namely, that promises must always be kept. (Hobbes claimed that even promises made under duress were valid; Locke disagreed.) “Will,” once expressed, supposedly provides full justification for both a contract and its enforcement. Skepticism seems warranted, especially regarding fictitious “contracts.” Justification, if we find it, will probably not be in some bare union of “wills” and nothing further.

The Devious Locke?

C. B. Macpherson remarked on the common “underestimate” of how much Locke subjected individuals to political power. He wondered why Locke’s landowner-State should have any jurisdiction over rural and town proletarians. The analogy that came to his mind involved merchant companies chartered by the king and empowered by sovereign bluster to use native labor (or imported slaves)—and land—wherever their enterprises took them. After all, if Locke’s property holders have created a real State—and on Locke’s account they have—they will use it. Once again Locke and imperial practice are not far apart, especially since Locke’s community (State), having eliminated law enforcement by individuals, does everything through legislation or prerogative. Here Locke’s model begins to approach legal positivism.

In Locke’s finished model a majority of qualified property owners controls the State, while the State commands each individually. Once more, property—considered as part of an imposed mechanical order—counts more than specific owners of naturally occurring property. And security of property requires obedience. It is not surprising that Locke took rather little interest in constitutional issues or bills of rights, despite his involvement in Shaftesbury’s revolutionary Whig projects.

It is the contrast with Thomas Hobbes that makes Locke seem a great liberal. True, he does give us some “outs” (very narrow ones), which Hobbes denies us. But with the Whig Oligarchs’ triumph in 1688, Locke’s ideas gave valuable rhetorical cover for newly entrenched interests. Soon enough they shifted over to simple Hobbesian practices buttressed with feudal-statist legalisms. (Enter Blackstone.)

In connecting Locke to colonialism, slavery, and more, the point is not to condemn him but to ask how much we want to owe him. (After all, Hobbes seems a better guide on how States actually operate and on what premises.) Anticipating the Thatcher-Reagan program of “free market and strong State,” Locke wanted an active imperial State, along with liberty for the right sort and their right to revolt if things went sour. The point is not that Locke “failed” to be an anarchist; it is that despite appearances, he did not make a case for genuinely limited government. He would, however, have made a wonderful contemporary Republican politician.

What DiLorenzo offers is not a biography of Hamilton, but instead a critical examination of his ideas and a historical exploration of how they have shaped American history. DiLorenzo contrasts the statist, mercantilist, and nationalist philosophy of Hamilton with the strict constitutionalism of Jefferson. He portrays Hamilton as a schemer, quoting contemporaries who felt that he was intentionally confusing in his economic proposals as a means of hoodwinking the uninitiated. Above all, DiLorenzo shows how Hamilton’s interventionist ideas have had disastrous consequences for America up to the present.

Hamilton’s vision for the nation included a strong sense of nationalism, zealous protectionism, enthusiasm for central banking, and methods of constitutional interpretation like the doctrine of “implied powers” that essentially stripped away the Constitution’s restraints on the central government. DiLorenzo depicts Hamilton and his intellectual followers as technocrats who view society as a lump of clay for them to fashion with their expert hands. They couldn’t grasp the spontaneous order of the free market.

To borrow a phrase from Adam Smith, Hamilton was the quintessential “man of system.” In his ideal society he and others who were blessed with inside knowledge of “the common good” would arrange things just so, thereby creating the ideal society. DiLorenzo points out explicit parallels between Hamilton’s thinking and Rousseau’s idea of “the general will,” under which government officials would “force people to be free.” Individual liberty holds no importance for such people.

DiLorenzo employs Austrian and Public Choice insights to expose the lasting harm we have suffered owing to Hamilton’s assortment of big-government ideas. Those ideas later metastasized into the “American System” of Henry Clay (the term was Hamilton’s) and the wide-ranging interventionism of Abraham Lincoln. They reached their nadir in the disastrous year 1913, with the adoption of the Seventeenth Amendment (providing for direct election of U.S. senators), passage of the federal income tax, and the establishment of the Federal Reserve. DiLorenzo sees that terrible trio as destroying what was left of Jeffersonianism and shackling the nation, perhaps permanently, with Hamilton’s ruinous vision.

The book makes a persuasive case about the harm we endure because of “the curse,” but DiLorenzo left me wondering about the relative fragility and robustness of different institutional arrangements. He discusses how constitutional words and phrases like “necessary” and “general welfare” were either grossly misinterpreted or used to usher in all sorts of state interventions, and he refers to the Confederate States of America’s attempts to remedy some of these problems in their own Constitution. But the kind of restraint that would have satisfied Jeffersonian strict construction begs to be explored in greater detail.

Only a few years elapsed between the ratification of the Constitution and the violent suppression of Pennsylvania tax rebels (which Hamilton himself led), and not too many years later the United States were (yes, the plural was once used) experimenting with central banking. How did we get so far from Jefferson’s vision so quickly?

DiLorenzo blames “Hamilton’s Disciple,” Chief Justice John Marshall, for misreading the Constitution, but I have to wonder if his famous decisions were so obviously a misreading and misapplication. Some libertarians like to believe the Jeffersonian minimalist interpretation is the “real” Constitution while the expansive Hamiltonian view is indefensible, and DiLorenzo seems to accept that view without questioning it.

The exact, intended meaning of the Constitution—if that can even be discerned—is not the focus of DiLorenzo’s book, however. Hamilton’s Curse explores the intellectual history of some of the ideas that helped transform the United States from a country where the government mostly left people alone into one where the government interferes in their affairs constantly. DiLorenzo reminds us of Richard Weaver’s famous quotation that “ideas have consequences” and proceeds to show the terrible consequences of Hamilton’s ideas.

I’m inclined to think of George Orwell and F. A. Hayek at the same time. Both showed great courage in writing the truth, undaunted by the consequences. Both valued freedom, though they understood it differently.

Orwell, a man of the “left,” could not remain silent in the face of the horrors of Stalinism. Twice—during the Spanish Civil War and again at the dawn of the Cold War—he refused to permit his comrades to blind themselves to where their collectivism had led and could lead again. For his favor he was called a conscious tool of fascism, a stinging accusation considering he had gone to Spain to fight fascism. (But for a few inches, the bullet that penetrated Orwell’s neck in Spain would have denied us the latter warnings, Animal Farm and Nineteen Eighty-Four.)

Hayek, a man of the “right,” risked ostracism and worse in 1944 by publishing The Road to Serfdom. Writing in England at the height of World War II, this Austrian-turned-Briton warned that central economic planning would, if pursued seriously, end in a totalitarianism indistinguishable from the Nazi enemy. That couldn’t have been easy to write at that time and place—central planning was much in vogue among the intelligentsia. While a good deal of the reception was serious and respectful, a good deal of it was not. Herbert Finer, in Road to Reaction, called Hayek’s book “the most sinister offensive against democracy to emerge from a democratic country for many decades”; it expressed “the thoroughly Hitlerian contempt for the democratic man.”

Not surprisingly, The Road to Serfdom brought Orwell and Hayek together in print. Orwell briefly reviewed the book along with Konni Zilliacus’s The Mirror of the Past in the April 9, 1944, issue of The Observer. The man who would publish Animal Farm a year later and Nineteen Eighty-Four five years later found much to agree with in Hayek’s work: “In the negative part of Professor Hayek’s thesis there is a great deal of truth. It cannot be said too often—at any rate, it is not being said nearly often enough—that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of.”

But true to his left state-socialism, Orwell could not endorse Hayek’s positive program:

[H]e does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.

It’s disappointing to see Orwell give such short shrift to Hayek’s positive thesis. He is glib and dogmatic, which is unbecoming a serious intellectual such as Orwell. His ignorance of economics leaps from the page.

“[A] return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State.” It’s hard to believe that someone so familiar with Stalinism could have written that. Even without knowing much economics, could he really have thought that what goes on in market-oriented societies, even during depressions, could be worse than the famine Stalin inflicted on the Ukrainians, the show trials and executions, or the labor camps in Siberia?

“The trouble with competitions is that somebody wins them.” In a market producers compete to better serve consumers. The losers in that competition are not exiled or executed. They find other ways to serve consumers, just as producers are trying to serve them.

“Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led. . . .” Where has monopoly arisen without the aid of the State? We find no market-generated monopoly in England or the United States. There, major business interests actively promoted protectionism and other interventions precisely to tamp down competition and protect their market shares.

“[T]he vast majority of people would far rather have State regimentation than slumps and unemployment. . . .” But that’s a false choice. Slumps and unemployment, as Hayek and his mentor Ludwig von Mises taught, are products of central-bank manipulation of money and interest rates—that is, of government, not of the free market.

I must pause here to focus on Orwell’s disgraceful use of the word “regimentation.” I say “disgraceful” because he committed the sin he himself so eloquently condemned in his justly famous essay “Politics and the English Language”: the sin of euphemism. Regimentation is the least of the State’s crimes.

One wonders how Orwell avoided despair. He misidentified the free market with state capitalism and rejected it, and he saw the totalitarian tendencies of socialism up close. Yet he could write, “There is no way out of this unless a planned economy can somehow be combined with the freedom of the intellect, which can only happen if the concept of right and wrong is restored to politics” (emphasis added).

Hadn’t he just read chapter 11 of The Road to Serfdom, “The End of Truth,” in which Hayek described how a serious commitment to central planning must produce “contempt for intellectual liberty”?

“The word ‘truth,’” Hayek wrote, “itself ceases to have its old meaning. It describes no longer something to be found, with the individual conscience as the sole arbiter of whether in any particular instance the evidence (or the standing of those proclaiming it) warrants a belief; it becomes something to be laid down by authority, which has to be believed in the interest of unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.

“The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and of the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues to be decided by authority, are all things which one must personally experience—no short description can convey their extent.”

But of course Orwell had experienced those things in Spain and knew how it was in Russia. He certainly put a heavy burden on that word “somehow.” How restoring the concept of right and wrong to politics would make central planning either decent or practical is a mystery no one has solved. Mises had shown long before that socialism could not be practical because without prices arising out of the exchange of privately owned means of production, the socialist planner could not make rational calculations with respect to what should be produced, in what manner, and in what quantities. As for decency, Hayek addressed that in chapter 10, “Why the Worst Get on Top.”