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McCloskey’s Brief Against Antiliberalism

From its very title, Deirdre McCloskey’s new book takes up the mantle of liberalism’s cause against naysayers both left and right. Why Liberalism Works plays off against Why Liberalism Failed, the title of the much-discussed book by Patrick Deneen. By “liberalism” McCloskey means classical liberalism of one version or another, the ideas which today’s anti-liberals often refer to as “neoliberalism.” McCloskey’s book is the place to start for a vigorous, easy-to-read, fact-based case for the significant benefits provided by market liberalism over the last 200 years.

I cannot recommend it more highly for both liberals and for critics of liberalism. Any reasonable case against liberalism must recognize the tradeoffs that will have to be borne by ordinary people—not just wealthy capitalists—if market liberalism is to be limited or rejected. At the same time, McCloskey shares the deafness of many liberals to antiliberal suggestions that the personal and social losses caused by the market’s “creative destruction” cannot be compensated by material gains, and that philosophical problems remain at liberalism’s core in which liberal principles can lead to illiberal outcomes.

The Great Enrichment

McCloskey focuses on the staggering gains in income realized as a result of liberalism in the West and, indeed, realized throughout most of the world over the last two centuries. Most folks in the West recognize living standards have increased over the last century or two. Most underestimate the magnitude of the increase, and to a massive degree. In a poll of informed folk, most guessed that incomes in the U.S. have increased “by around fifty percent” since 1900. That guess is off by a factor of ten. In the last century, U.S. incomes have increased by a multiply of five to seven. Since 1800, per capita income in the U.S. has increased by a factor of 30.

McCloskey calls this the “great enrichment.”

These gains are not confined to the West. Both right-wing and left-wing antiliberals habitually refer to incomes stagnating over the last generation, as if the U.S. experience of income stagnation is in fact a global phenomenon. First, incomes have not actually stagnated in the U.S. over the last generation. But it’s even more untrue of the world where over one billion people have escaped “extreme poverty” in the last thirty years. In 1960, half of the world’s population lived in “extreme poverty.” Today about a tenth do, and this number keeps falling.

McCloskey underscores again and again that if one cares that the poorest among us have more to eat, then one ought to desire market liberalization, not oppose it.

McCloskey also aims several well-placed darts at arguments advanced by proponents of a postliberal order. Modern Romantic antiliberals tend to idealize social relationships that existed in aristocratic and other pre-modern hierarchical societies. They often ignore or minimize the dark side of these societies. Why the idealization in the first place? Neo-Romantic antiliberals of both left and right long for the humane manners of aristocratic societies, manners that leavened all classes of those societies, not simply the aristocratic class. Antiliberals reject liberal-democratic society because it does not, and cannot, generate those manners. Yet this idealization often results in antiliberals minimizing the constriction, even oppression, that also characterized those societies. Karl Polanyi, for example, makes only passing mention of the fact that the economy prior to The Great Transformation necessarily confined the movement of commoners to their lords’ estate. Milbank and Pabst similarly acknowledge only in passing that movement of workers would be restricted in the virtue-economy they envision. McCloskey provides a corrective against the romantic idealization of premodern social relationships, as if pre-modern hierarchical societies reflected only paternalistic nurturing.

McCloskey also makes the important point that many of the problems antiliberals ascribe to markets would be replicated in non-market social economies. Modern socialists seem ignorant of the extended debate in the 1930s over pricing and production decisions in socialist economies. This debate effectively ended with socialist economists conceding that centrally-controlled production decisions advancing the common good would necessarily replicate a market pricing system.

Oskar Lange, a socialist economist and communist functionary of note, declared that for Mises’s role in making the point clear, “a statue of Professor Mises ought to occupy an honorable place in the great hall of the Ministry of Socialization or of the Central Planning Board of the socialist state.”

So, too, non-market economies would need to take advantage of the efficiencies inherent in the division of labor and scale economies. While antiliberals may romanticize pre-modern small-is-beautiful economies, those economies can be replicated only with significantly lower living standards or a much smaller world population.

Of note as well, and contrary to antiliberal snarking on both the right and the left, is McCloskey’s observation that modern market economies do not in fact require ever-expanding consumption and debt in order to sustain themselves.

There are any number of additional points McCloskey makes in the book that any serious antiliberal will want to engage. I don’t mean that liberalism necessarily “wins.” But engaging McCloskey’s arguments, and the tradeoffs they imply, would create a more honest, more-productive debate over liberalism.

That said, there are several points at which I would challenge McCloskey’s argument.

Polanyi’s “Great Transformation” in Light of McCloskey’s “Great Enrichment”

The first requires that we look across McCloskey’s work rather than simply within this book. There is an inconsistency in McCloskey’s treatment of the uniqueness of the period that saw the heyday of the rise of market liberalism. McCloskey identifies this heyday as occurring uniquely in the first half of the 1800s. Yet in other venues McCloskey takes Karl Polanyi to task for arguing for the historical uniqueness of market liberalization during this very same period.

This may seem an obscure quibble to take up. But Polanyi’s 1944 book, The Great Transformation, plays an outsized role in the arguments of today’s antiliberals on both the left and the right. Recently, for example, right-wing antiliberals such as Patrick Deneen cite and rely on Polanyi’s argument, as do Milbank and Pabst. On the left, antiliberals such as Wendy Brown, Eugene McCarraher, and others, also rely on Polanyi’s analysis.

Polanyi argues that a “great transformation” occurred in the early 1800s that made economic life after this transformation discontinuous with the experience of economic life before this transition. He argues that Western economies transitioned from non-market economies based on hierarchical and horizontal “gift” exchange to economies in which the “autonomous” market ruled. Polanyi argues that this transition to market rule ran roughshod over the more human and humane scale of social and economic life in the earlier era and caused untold human misery. The political and economic history of the West in the following century, Polanyi argues, can be understood as a reaction to the unleashing of this autonomous market.

In reviewing Polanyi’s book, McCloskey, with co-author Santhi Hejeebu, takes issue particularly with Polanyi’s historical argument that the post-1800s market economy stood in essential discontinuity with economies before 1800. McCloskey summarizes her signal argument against Polanyi in her review of Deneen’s book:

Deneen swallows whole Karl Polanyi’s “classic study” of economic history The Great Transformation (1944). Polanyi’s claim . . . is that the evil “liberal” market is a Western novelty of the nineteenth century. That way we can set aside modern liberalism as a lamentable aberration and get back to God or community and be truly happy. Though conservatives and socialists believe the tale and accept its moral, historians have since the 1950s shown over and over that it is entirely, even embarrassingly, wrong. Markets of supply and demand have existed since the caves . . .

Here’s the thing. McCloskey’s central criticism of Polanyi is that, contrary to Polanyi’s historical claim, the rise of market society is NOT a Western novelty of the nineteenth century. Continuity reigns with earlier economies. But McCloskey’s central claim in Why Liberalism Works is that the rise of the market in the first half of the nineteenth century was a unique historical event: The development of the market during this period was fundamentally discontinuous from the economic life before this period, both quantitatively and qualitatively.

Polanyi thinks the Great Transformation is a bad thing; McCloskey thinks “the great enrichment” is a good thing. But contrary to McCloskey’s criticism of Polanyi, they both now seem to agree that this historical period was qualitatively unique and pivotal for markets and for society. The argument is not whether the great transformation occurred, the argument is over the consequences of that transformation.

Polanyi’s black and white line between the pre-market economy before 1800 and the market economy after 1800 is incorrect. But taking issue with Polanyi’s rhetorical excess is just a debater’s point if Polanyi’s central historical claim can be made substantially true with the addition of a few weasel words.

McCloskey too confirms Polanyi’s argument that after huge gains by market liberalism in the first half of the nineteenth century there was a dramatic retrenchment. Polanyi cheers this pullback while McCloskey laments it. Yet while McCloskey discusses several hypotheses to account for this pullback, she doesn’t consider Polanyi’s hypothesis, that the speedy transition to market liberalism ran roughshod over the lives of many ordinary people and disrupted traditional life. In essence, McCloskey is too sanguine about the personal and social costs of the market’s creative destruction, costs that can arise along side the market’s massive material benefits.

Here’s where things get complicated because antiliberals miss the upshot of Polanyi’s argument: In agreement with McCloskey, Polanyi argues that the market transformation was incredibly productive. His criticism is that the transformation took place more rapidly than people and communities could accommodate without harmful disruption.

Polanyi argues that the response to this disruption then not only birthed modern, big-state liberalism, but more pathologically also birthed nationalism and fascism.

McCloskey’s and Polanyi’s arguments are not as contradictory as they initially seem: Markets producing fabulous advances in wealth can occur in tandem with harmful disruptions of traditional life and communities. The spread of markets provides diffuse gains to all people as consumers in the form of lower prices and more goods and services. But individual workers and entrepreneurs typically work in only one or a few markets. The individual cost of disruption in these particular markets can outweigh diffuse gains of competition, prompting a political backlash. Liberalization causes both the gain and the backlash.

The antiliberal case then is this: That it is possible people in a society can judge the disruption caused by liberalism to traditional social and economic life to be so significant that they would forgo the disruption even at the cost of significant losses in material well-being. McCloskey shows that the material tradeoff would be huge. Antiliberals need to deal with the argument head-on.

Tensions Between Liberal Principles and Liberal Outcomes

McCloskey also glosses over philosophical tensions at the heart of liberalism. At the center of liberalism is the ideal of “voluntary arrangements”; that contract and consent should structure human interaction. McCloskey writes, “The classic definition of liberty/freedom is the condition of being liberated/free from physical interference by other human beings. It means . . . not being a slave.”

There are a couple of problems with McCloskey’s analysis.

First is the problem of the materialism inherent in the traditional liberal definition of freedom. That is, that only harms of “physical interference” count. It is arbitrary to limit recognition of “interference” to physical harm unless one denies that important aspects of humanity—perhaps the most important aspects of humanity—derive from incorporeal aspects of what it means to be human. Even if one does not believe in the soul, the human mind cannot be reduced without loss to mere physical matter. To be sure, the liberal limitation to “physical interference” serves a very practical purposes in liberal philosophy in limiting the domain over which the state can interfere. But while practical, the limitation is arbitrary and anthropologically indefensible.

Even more problematic is McCloskey’s repeated treatment of “slavery” as the definitional opposite of “voluntary arrangements.” The philosophical question is whether “liberty” itself is an alienable or an unalienable right. Locke and the Declaration of Independence hold liberty to be an unalienable right, a right that individuals cannot consent away. Philosopher Robert Nozick, whom McCloskey commends, holds that liberty includes the freedom to sell oneself into slavery. The problem for liberal theory is this: Holding that some rights are unalienable is a restriction on the freedom of the individual.

This may sound irrelevantly abstract. Who would choose voluntarily to become a slave? Yet well-known examples exist. In the Bible, the book of Deuteronomy recognizes that people might sell themselves into slavery if they become too poor. So, too, in the book of Genesis almost the entire civilian population of Egypt voluntarily alienate their liberty to Pharaoh. Less draconian, McCloskey praises the Civil Rights Act of 1964. Yet why on classical liberal principles should the government be allowed to restrict private property owners from voluntarily choosing to discriminate on the basis of race, religion or other characteristics?

Irrespective of these and other problems, McCloskey’s book is a welcomed addition to the debate over liberalism. She provides a largely fact-based account of the advantages that liberalism has conferred on the modern world. Modern antiliberals on both the right and the left must account for these benefits, recognizing that antiliberalism necessarily posits there are fundamental, even tragic, tradeoffs at stake.

Reader Discussion

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on February 04, 2020 at 07:15:15 am

This is an intelligent and thoughtful treatment of an important book and fundamental issues. I will return to it an am grateful to Rogers for it. He must also acknowledge however that the tragic choices he points to are faced not only by liberalism’s critiques but by liberals as well.

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Anne Norton
on February 04, 2020 at 09:29:34 am

Nice piece.

I write to alert people to two things about Polanyi's words.

Rogers identifies "the great transformation" with the first dramatic movement in Polanyi's epic narrative, the movement thought to crest in the first half of the 19th century and which Rogers here at one point calls the "market transformation." Rogers is not alone in understanding "the great transformation" that way.

However: Aside from the title, Polanyi uses the expression precisely twice (pp. 3, 227 in the old impression reprinted by Beacon Press). In both cases it clearly refers, not to the "market transformation," but to the second dramatic movement in Polanyi's narrative, namely the governmentalization of social affairs associated with the reaction to the liberal era. Here is the very first paragraph of Polanyi's work:

"Nineteenth century civilization has collapsed. This book is concerned with the political and economic origins of this event, as well as with the great transformation which it ushered in." (p. 3)

And here is the second occurrence of the expression:

"the National Government of 1931 in Great Britain performed in a modest way the same function as the American New Deal. Both these were moves of adjustment of single countries in the great transformation." (p. 227)

A proper metonym for the great transformation is not Watt's steam engine or the repeal of the Corn Laws but rather FDR's New Deal.

Second, Rogers writes: "Polanyi argues that the response to this disruption then not only birthed modern, big-state liberalism..." For Polanyi "liberalism" is classical liberalism, and his attitude toward liberalism is rather like that of leftists today in their discourse about "neoliberalism." Polanyi does not use "liberal" for the governmentalization he advocates.

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Daniel Klein
on February 05, 2020 at 06:04:09 am

Just don't forget that while market liberalism is the beginning of liberalism, it is not the end of liberalism. Market liberalism is the necessary means to the ends of religious-tolerance liberalism, free-speech liberalism, etc. Market liberalism without first-amendment and second-amendment liberalism is not classical liberalism but merely proto-liberalism.

Liberalism allows for many forms of life, not just market life. Markets allow for the accumulation of wealth that allows for the pursuits of many forms of other non-market pursuits of happiness that make life worth living. Most of the people you care about the most you never have any market interactions, nor do you spend most of the day thinking about market interactions, except to achiever the higher goods.

China is not freer because they are more capitalistic, they are just more capitalistic; they still move to America to get free (of coronavirus).

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Atom Blacksmith
on February 05, 2020 at 12:37:10 pm

Atom Blacksmith: (BTW: luv the nom de plume)

"China is not freer because they are more capitalistic, they are just more capitalistic; they still move to America to get free (of coronavirus)."

Absotively right! They are clearly NOT free as evidenced by this; nor are they, even the most knowledgeable, able to get away from coronavirus, nor is the ChiComm government able to overcome its disdain for anyone who *criticizes* the glorious Peoples Party Government EVEN if that person alerts the nation to a possible health pandemic"

https://strategypage.com/on_point/2020020583343.aspx

From the above link:

"Sometime in December 2019, Dr. Li Wenliang decided he must act. His clinic in the Hubei province capital, Wuhan, had too many patients with viral pneumonia symptoms. In a private online chat, he warned a few other doctors that analysis indicated a "SARS coronavirus." The SARS epidemic erupted in 2002 and still embarrasses Beijing.

On Jan. 1, the local Public Security Bureau arrested Li and seven other doctors, alleging they spread vile rumors. Major Chinese media outlets reported the arrests. Media shaming did its job: repressing information that embarrassed Chinese Communist Party officials. It also short-circuited the sharing of medical data, but in China, the CCP reigns supreme.

Police released Li Jan. on 3 after he admitted to "illegal acts." He went back to work combatting the epidemic the regime denied. By Jan. 10, Li and his family had contracted the novel coronavirus.

Li is alive and now an internet hero. However, the noxious Chinese domestic surveillance system that ignorantly silenced the doctor remains intact.

Li was a victim of China's Ministry of Public Security and its Social Credit Rating system. The system accumulates data on individuals using cellphones, video, internet and travel activity, and gossip. Security clerks cull the data for niggling signs of anti-government behavior. "

God, don't you just love Free trade / Free exchange (of viral contaminants).

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gabe

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.