First Principles Foundational Concepts to Guide Politics and Policy

First Principles Foundational Concepts to Guide Politics and Policy

FIRST PRINCIPLES FOUNDATIONAL CONCEPTS TO GUIDE POLITICS AND POLICY NO. 69 | AUGUST 1, 2018 The Progressive Critique of Free Markets: A Response Luigi Bradizza, PhD Abstract The American economy today is mixed: It is partly free, vibrant, prosperous, and entrepreneurial—and partly unfree, obstructed, and lethargic. The free part is governed by the principles of our Founding and the U.S. Con- stitution. This legal structure has produced the most prosperous and innovative economy in human history. The unfree part of our economy, by contrast, is caused by changes—many of which are still in place today—brought about by Progressive thinkers and activists beginning in the late 19th century. In order to revive our economic health, we must begin to understand the significant moral differences between the free-market political economy of the Founders and the interventionist political economy of the Progressives. he American economy today is mixed: It is partly economic health, we must grasp the significant Tfree, vibrant, prosperous, and entrepreneurial— moral differences between the free-market politi- and partly unfree, obstructed, and lethargic. The cal economy of the Founders and the interventionist free part is governed by the principles of our Found- political economy of the Progressives. ing and the U.S. Constitution, which safeguard pri- For free-market proponents, including America’s vate property and contract rights that permit us to Founders, morality demands a respect for private gain, hold, use, and dispose of property. This legal property and contract rights. The economic sys- structure has produced the most prosperous and tem must therefore be subordinated to and consis- innovative economy in human history. The unfree tent with property and contract rights. Men must be part of our economy, by contrast, is caused by chang- free to use their talents and improve their material es—many of which are still in place today—brought circumstances in voluntary agreements with other about by Progressive thinkers and activists begin- men, provided they do not directly violate the right ning in the late 19th century. To grasp what has to life, liberty, and property of other people. The happened, what may come, and how to revive our goals of such economic activity are individual and national prosperity. Though leery of government intervention, America’s Founders were not opposed This paper, in its entirety, can be found at http://report.heritage.org/fp69 to economic regulations. Their political economy is The Heritage Foundation 214 Massachusetts Avenue, NE compatible with and requires a degree of regulation Washington, DC 20002 with a view to health, safety, and morals so as to pre- (202) 546-4400 | heritage.org vent uses of property harmful to the rights of others Nothing written here is to be construed as necessarily reflecting the views 1 of The Heritage Foundation or as an attempt to aid or hinder the passage of and to maintain the conditions of freedom. In con- any bill before Congress. sequence, free-market political economy permits FIRST PRINCIPLES | NO. 69 AUGust 1, 2018 and even requires economic regulations to restrain workers by underpaying and overworking them and, commercial activity that is harmful to our moral in general, by permitting the economically power- health, such as drug trafficking and prostitution. ful to dictate harsh terms of employment to the eco- nomically weak. They subordinated the discipline of economics to a moral ideal of redistributive social Above all, progressives wanted a obligation and cooperation, with the goals of more broad moral reorientation away widely distributed economic benefits, the maxi- mum flourishing of each individual, and a work- from competition and self-interest place that does not compel men to choose between and toward cooperation and central being unemployed and submitting to harsh terms of planning. employment. Like the free-market proponents they sought to replace, Progressives wanted individual and national prosperity, but believed that the free This approach is distinct from and should not market could secure neither. be confused with laissez-faire economics.2 While The progressive rejection of natural rights per- laissez-faire economics is also based on private mitted them to propose a massive increase in the property and contract rights, it often prohibits sal- scope, size, and power of the federal government. utary government regulations. For example, natu- They wanted intrusive and elaborate economic reg- ral rights free-market economics allows state and ulations aimed at reducing the power of business- local governments to regulate food safety and pro- men, managing the economy, and improving the hibit the sale of unsafe drugs, whereas many laissez- wages and working conditions of ordinary workers. faire advocates improperly see such regulations as They wanted much greater assistance for and relief unjust intrusions on an individual right to voluntary from conditions harmful to the poor. They wanted exchange. Laissez-faire advocates typically argue for government staffed by a permanent administra- the complete or near-complete separation of state tive bureaucracy of supposedly impartial, scientific and economics.3 experts. They wanted social and economic prob- The progressive reaction against free-market lems analyzed and resolved by elites professionally economics originated during the Progressive Era, a trained in the new discipline of social science. Above period that lasted from about 1880 to 1920. At that all, progressives wanted a broad moral reorientation time, reform-minded political economists reject- away from competition and self-interest and toward ed the free market and the limited government cooperation and central planning. bequeathed to us by the Founding Fathers. Pro- gressive Era political economists such as Richard T. Ely, John R. Commons, and Simon Patten believed The progressive rejection of natural that limited government was based on a false theo- rights permitted them to propose a ry of natural rights, and that private property and contract rights were therefore purely a creation massive increase in the scope, size, and of the government and not ours by nature. While power of the federal government. they rejected natural rights and limited govern- ment on theoretical grounds, they also thought that the Founders’ political economy led to a damaging These Progressive Era political economists were selfishness that harmed ordinary citizens. They joined by progressive academics, politicians, jour- thought the free market immoral because it harmed nalists, and social justice activists. They called their 1. Ernst Freund, The Police Power: Public Policy and Constitutional Rights (Chicago: Callaghan & Co., 1904), pp. 5–6. 2. This term is of uncertain origin. Its use was popularized by 18th-century proponents of the free market. See Henry Higgs, The Physiocrats (New York: Macmillan, 1897), p. 67. 3. For example, Ayn Rand writes: “When I say ‘capitalism,’ I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.” Ayn Rand, “The Objectivist Ethics,” in The Virtue of Selfishness (New York: Signet, 1964), p. 33. 2 FIRST PRINCIPLES | NO. 69 AUGust 1, 2018 movement “Progressivism” because they believed and immoral was not as sound as the early Progres- that Americans were on the cusp of a new era of prog- sives imagined. As the heir to that early progressive ress whose goals and methods would make obsolete critique, today’s progressive economics is no sounder the political and economic thought of the past and in its rejection of free markets. propel us toward transformative and redemptive social, economic, and political reforms. Over time, The Attack on Natural Rights and Limited they gradually altered America’s legal system and Government politics to make it more tolerant of interventionism The progressive attack on free markets went and less accepting of natural rights and economic beyond the practical and moral attack on the visible liberty. Their gradualism permitted them to present effects of the free market to an attack on its underly- themselves as prudent—and thereby deflect charges ing principles. Progressives rejected the theoretical of radicalism. They were careful not to devastate the foundations of classical economics and the regime economy by totally repudiating private property and of natural rights upon which it rested. These attacks contract rights. They favored a mixed economy and took the same form in both cases. They charged that not a thoroughgoing socialism. In the many decades both systems were rigidly theoretical, outdated, and since the Progressive Era, one generation after anoth- disconnected from real world, contemporary, prac- er has been inspired by progressive visionary ideal- tical effects. They considered contemporaneous ism to take up and advance the cause of progressive defenders of the Founding and of the free market reform. In our day, self-described liberals and pro- to be ideologues for preferring their theory despite gressives in academia, think tanks, the media, and what Progressives claimed were its real-world fail- government are the heirs of these early Progressives. ings in economics and politics. To understand the progressive attack on natu- ral rights, we must first understand natural rights. We must return to and confront Natural rights are “inalienable,” as the Declaration the original moral arguments for of Independence states. Our rights are natural inso- far as we are born with them. These natural rights progressivism made during the include our rights to life, liberty, and property. It is Progressive Era, and in particular, the the task of government to “secure these rights,” as belief that ordinary people cannot the Declaration says. Rights are not gifts or endow- properly secure their interests by ments of the government. Government is an artificial means of the free market. creation established by and subordinate to the “con- sent of the governed.” Accordingly, ordinary citizens hold sovereignty over their government.

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