Part 3: Problems with Individualism
We saw in Part 1 and Part 2 that wealth allows the wealthy to constrain other citizens' choices, and to direct people's daily affairs. In other words, economic power yields a control over others that is comparable to, or even greater than, that normally achieved through political power.
And yet the wealthy argue that just as democratic power is properly wielded after an election, so is economic power properly wielded by those who come upon their wealth honestly, through voluntary exchanges.
This idea that economic power might be justly wielded by private individuals has its roots in the Enlightenment philosophy of Liberalism and its two conflicting ideas: the expansion of both personal rights and property rights.
For both personal and property rights, though, Liberalism focused on the individual's right at the expense of the state. Perhaps in light of the universal political experience of the time it was natural to be most concerned about the tyrannical exercise of public power by kings and clergy, and to view most sympathetically the oppressed individual.
However, this one-dimensional approach (Individual v. State) failed to recognize the risks to liberty associated with private power, such as corporations, or the opportunities for liberty based on publicly secured rights, such as security and a clean environment. Liberalism's failure to consider the risks of private power and the benefits of collective liberties resulted in a lop-sided development of rights theory, with ever-expanding protections for individual rights, but all kinds of opportunities for collective wealth and shared assets unrecognized and undiscussed.
There nonetheless emerged institutions not anticipated by Liberal theory, institutions to secure collective economic rights, and to limit private power. Libraries, bridges, parks, and fire departments made people richer and freer by sharing instead of by competing, and by joining together their resources instead of building dual, redundant, separate and privately owned assets.
Institutions also emerged to limit private property rights. Zoning laws, business regulation, and civil rights laws limited the antisocial impacts when private property operated in the public sphere. So, for example, business owners discovered that the public had a say in where a factory could be located, what emissions were permitted, who might be excluded from service or employment, and what working conditions might be allowed.
Libraries in particular challenge all kinds of Capitalist notions, because they embody efficiency, government action, and community wealth, without profit or private enterprise. Such economic anomalies highlighted the fundamental flaws in Liberalism's demonization of government and failure to acknowledge the possibilities of wealth administered in common.
Liberal theory could have been expanded to accommodate these emerging social insights by recognizing a core obligation to advance both individual and collective freedoms, and to protect against abuses by both private and public power. Instead, the new considerations were cast as "Socialist," and the resulting economy characterized as "mixed," because it included elements of Socialism.
Liberalism continued to understand the state as the enemy of personal freedom, even as new, greater threats emerged. This antagonism toward the state, rooted in an ancient and justified animosity toward monarchic tyrants, eventually became a fetish. Even after states were subjected to democratic controls, and even after individual and property rights were secured with Constitutional protections, Thoreau was still inclined to argue, "That state governs best which governs least."
The inherent contradictions of Liberal theory were fully realized with the invention of the modern corporation -- a privately owned, non-democratic governing entity capable of amassing practically unlimited power -- easily on a par with state power -- and affording its owners complete control over personal and property rights for all within its domain.
These private corporate-states should have been greeted with horror by Liberals, who might have recognized modern corporations as new feudal entities risen from the ashes of monarchy, once again set to anoint lords and nobles, enriching a few and relegating the majority to serfdom. Instead, the corporation was hailed as symbol of freedom, even as democratically accountable governments were accused of latent tyranny. The maturation of this great philosophical contradiction that fears only the exercise of public power and not private power marks the transformation of Liberalism to Individualism.
Individualists assert that the role of the state is to protect the liberty of individuals to act as they wish as long as they do not infringe upon the liberties of others. This formulation fails to address the conflict between individual property rights and individual personal rights, and does not explain why individual freedoms that can only be secured collectively are inferior to other individual rights -- or even how to resolve simple disputes between competing liberties.
However, Individualism is more than just an inadequate theory of government. In the 20th century, Individualism blossomed in Philosophy, Literature, and Economics and become a complete ideology that would eventually authorize the destruction of the planet and enslavement of the masses, all the in the name of individual freedom.
The Individualists advance three main arguments in favor of the unfettered exercise of economic power by private individuals.
First, to limit a person's exercise of a property rights is to treat that person as a means to benefit another, and therefore is immoral in the Kantian sense. This deeply ironic position was advocated most forcefully by the Philosopher Robert Nozick.
Second, it is argued that the moral purpose of a person's life should be to pursue his or her own happiness, not sacrificing himself or herself for others, with rational self-interest as the only proper morally guiding principle. This view was advocated by the novels of Ayn Rand.
Third, it is argued that, regardless of the moral goodness of individualism, states are intrinsically unable to act efficiently, so any good that can be achieved through individual rather than collective action should be so achieved, and governments, as the means of collective action, including regulation, should be weakened and restricted. This view was advanced by Milton Friedman and his Chicago School of Economics.
It is easy enough to pick apart these arguments. Nozick's inconsistent appeal to Kant is shown by Nozick's willingness to accept a contract for slavery, which of course Kant would not have. Rand's willingness to abandon the concept of universalism, and to embrace a code that would place humans on unequal footing at birth drains the morality from her moral imperative. And Milton Friedman's assault on government action is disproved by the the efficacy not only of libraries, but also fire departments, police departments, national parks, public universities, public hospitals, the military, Medicare, and Friedman's express foe, the postal system, none of which fall into his exemption category of natural monopolies.
The common flaw in these and most arguments for Individualism is to disregard Individualism's negative consequences. The negative effects of limiting property rights cannot establish the moral sanctity of property if the failure to limit property rights leads to equally bad or worse results. An honest critique of Individualism would consider both the benefits and the harms, and would not proclaim a moral virtue no matter what awfulness results.
Therefore, the measure of Individualism cannot merely be the benefit gained by select individuals, but must consider the fate of all individuals. That, of course, is a collective consideration, and leads to the paradoxical inquiry of whether Individualism advances the collective good better than collective action.
This is the moment in the argument where Individualists raise the specter of Adam Smith's "Invisible Hand," which purportedly advances the collective good through the mechanism of individual decision-making. Never mind that Adam Smith defined very carefully the preconditions for this outcome to be achieved, one of which was just the kind of competitive market that is made impossible by wealth concentrations -- instead, note that even Adam Smith uses the yardstick of the collective good.
Therefore, we are left with an empirical question of whether Individualism in fact advances the collective good. We have already considered in Part 1 and Part 2 many examples in which unregulated individualism leads to good outcomes for the few, but terrible outcomes for the many, especially when economic power is self-perpetuating, either through passive investment or bequest, which completely severs the reward from its moral justification.
We must accordingly disregard the defense of private power, and instead insist that all exercises of power that have public consequence be democratically accountable, regardless of whether the exercise be political or economic, public or private. A proposal to deploy a significant amount of wealth to build a stadium will have the same effect on the local population regardless of whether the proposal is advanced by a city or by a private developer, and thus the subject population's ability to influence the project should be the same in either case.
This is not an argument against private property, but against concentrations of wealth. In fact, a concern for collective wellbeing could be fully implemented without any noticeable change to our property system for most people. If wealth were more or less equally distributed, then nobody's expenditures would disproportionately influence anything. Therefore, one way to protect and maximize private property would merely require the elimination of socially significant wealth concentrations, which could of course be done by adjusting marginal tax rates and limiting bequests. Alternately, even concentrations of wealth might be tolerable as long as the effects of its use be subject to adequate democratic controls, so those impacted have a voice in the outcome. But there are many potential arrangements. In Part 4, we will look at the kinds of institutions that would allow the just exercise of economic power -- economic democracy akin to political democracy.