Human Nature,
Anarchy, and Capitalism

Liberty or Freedom is not, as the origin of the name may seem to imply, an exemption from all restraints, but rather the most effectual applications of every just restraint to all members of a free society whether they be magistrates or subjects.

Adam Ferguson (1723-1816)

What is government but the greatest of all reflections on human nature. If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on the government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this:  you must first enable the government to control the governed; and in the next place oblige it to control itself.

James Madison, The Federalist No. 51

It would be difficult, if not impossible, to estimate the contribution which government makes to business. It is notorious that where the government is bad, business is bad. The mere fundamental precepts of the administration of justice, the providing of order and security, are priceless. The prime element of the value of all property is the knowledge that its peaceful enjoyment will be publicly defended.

President Calvin Coolidge, 1924

Since I became persuaded of Classical Liberal ideas (i.e. libertarianism -- although "libertarian" can also mean the narrower ideology of Ayn Rand and Murray Rothbard), something I have encountered frequently is the objection that these principles are unrealistic because they do not take human nature into account. Libertarianism, it seems, is based on the idea that people are intrinsically good, so that they can be trusted to treat each other well under conditions of complete freedom. Since people are not intrinsically good, they cannot be trusted with anything like complete freedom.

In 1992, when I announced my political conversion to my friends -- some of whom I have never heard from since -- one answer I got was the following statement, of December 1, 1992, from John O., whom I had then known for 23 years. John and his wife had helped look after my University of California group at the American University of Beirut in Lebanon, 1969-70. He latter became a professor chemistry at California State University.

My philosophical objection to libertarian ideas is that they start from the premise that, in the absence of a political/social fabric, everything will work out for the best. It just doesn't work that way. Life in a libertarian world is, for the most part, nasty, brutish, and short. (If you don't believe that, move to...Yugoslavia, or Lebanon, or Somalia, or.... for awhile).

The starting point for meaningful political discourse, it seems to me, is O.'s First Law:

People are no damn good.

The second pillar of political discourse (which probably can be deduced as a corollary of the First Law) is Kissinger's Law, which I would be willing to wager that you could show, in a series of erudite footnotes, is actually Nebuchadnezzar's Law:

Might makes right.

The point is that, in the absence of a social fabric under which everyone gives up something in order to gain a common advantage, everything goes to hell. So, minimalist government guarantees that only those who lack ethical standards will thrive, because they will do anything to get ahead. Of course, the opposite extreme of maximalist government - as practiced most prominently by tin-horn third-world megalomaniacs - also causes everything to go to hell. You can trace the failure of both extremes to O.'s First Law and his friend Nebuchadnezzar's corollary. When the corollary becomes ascendant, the First Law guarantees a bad outcome.

I quote John because he is an intelligent, learned, and informed person, but not a specialist in economics or political science. I take his views therefore as representive of much educated opinion in the United States. It is people like him, more than the specialists, who must be answered and persuaded if the mythology of the New Deal and the welfare state is to be exploded. At the same time, his misconceptions are similar to those of recognized scholars. Thus, the Pulitzer Prize winning U.S. historian Richard Hofstadter (1916-1970) said, in The American Political Tradition (1948), speaking of the American Founders:

They thought man was a creature of rapacious self-interest, and yet they wanted him to be free -- free, in essence, to contend, to engage in an umpired strife, to use property to get property. They accepted the mercantile image of life as an external battleground, and assumed the Hobbesian war of each against all.

The reference to Hobbes is, as we shall see, characteristic in this debate. Hofstadter was typical of a school of historians who rejected Jacksonian Democracy because it was anti-intellectual and shunned the rule of the "best" that had been the promise of Federalism, or even of Jeffersonianism. I had a history professor at UCLA who paradoxically contended that the Jacksonian regime was even less "democratic" than what came before, because in so popular and vulgar a government, people did not know their own true interests well enough. The implication of the quote by Hofstadter is that raging self-interest, the Hobbesian war, is really inconsistent with freedom; and the implication of all the anti-Jacksonian historians is that people are better ruled by an intellectual elite who know their "true" interests and who do not allow them too much freedom to exploit each other. Thus, as with John, "people are no damn good."

I was reminded of John's kind of objection to libertarianism through an article in The Independent Review, A Journal of Political Economy, Volume II, Number 1, Summer 1997 (published by the Independent Institute), "Wreaking Hobbes on Mankind," by Philip Coates (pp. 109-116). Coates sees the falling away from Classical Liberal principles by people like John Gray and Robert Nozick as a consequence of their taking Thomas Hobbes's view of human nature too seriously. Hobbes, indeed, is very far from believing that people are intrinsically good or that they can be trusted to treat each other well under conditions of complete freedom (the "state of nature"). For Hobbes, freedom is granted at the discretion of the Sovereign only to the extent consistent with good public order, since that was sole real purpose of government in any case, to end the war of all against all (bellum omnium contra omnes) in the state of nature, where life was always "nasty, brutish, and short" (a famous phrase, invoked by John above). Gray and Nozick, consequently, seem to have been moved by the arguments that imperfect human nature is not consistent with libertarian principles.

Philip Coates himself argues that Hobbes's view of human nature was simply falsified by events and that Gray and Nozick have failed to note the historical sequel to the context of Hobbes's work. The English Civil War, which certainly looked like a war of all against all, and motivated many to wish for strong government just to end all the trouble, gave way to peace, but a peace based, not on absolute monarchy, but on a Liberal order where, in 1689, William and Mary accepted the principle of constitutional monarchy and granted the English "Bill of Rights" (the "Claim of Rights" in Scotland). This achievement, so durable that Edmund Burke could use it as the basis of a conservative ideology, was immortally described and celebrated by John Locke in his Second Treatise of Civil Government of 1690, unintentionally laying down the foundations for the American Revolution.

Coates's argument is fine as far as it goes, but it actually was not the view that motivated John Locke or the architects of the American Revolution and the United States Constitution. The irony of the viewpoint of John O. above, or of Gray and Nozick, is that the Classical Liberal order itself used to be seen as justified precisely by the very imperfections of human nature which now are thought to turn against it; for the classical thinkers were the most acutely aware of something that more recent people seem to have forgotten:

Those in government are subject to the same imperfections of human nature,
the same greed, as everyone else.

Thus, in his "Farewell Address" of 1796, George Washington warned:

The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create whatever the form of government, a real despotism. A just estimate of the love of power, and proneness to abuse it, which predominates in the human heart is sufficient to satisfy us of the truth of this proposition.

Similarly, Thomas Jefferson (Notes on Virginia, 1784) warned:

Mankind soon learn to make interested uses of every right and power which they possess, or may assume. The public money and public liberty...will soon be discovered to be sources of wealth and dominion to those who hold them; distinguished, too, by this tempting circumstance, that they are the instrument, as well as the object of acquisition.

And, in his Autobiography:

It is not enough that honest men are appointed Judges. All know the influence of interest on the mind of man, and how unconsciously his judgment is warped by that influence.

The fear of these men was not first of all the damage that free men could do in private life, but the great damage, the tyranny, that could be done when fallible men are given too much power through the reins of government. This principle was stated most succinctly by Lord Acton (John Emerich Edward Dalberg Acton, 1834-1902):

Power tends to corrupt, and absolute power corrupts absolutely.

Now, it is clear that John O. is aware of this problem. The passage above ends with him saying, "When the corollary [might makes right] becomes ascendant, the First Law [people are no damn good] guarantees a bad outcome." This, however, only acknowledges that "absolute power corrupts absolutely" and brushes over the implications of "power tends to corrupt" in conjunction with the same "First Law." The error of this omission is then compounded by the manner in which John evidently confuses libertarian or "minimalist government" with the anarchy of Hobbes's "state of nature" -- an "absence of a political/social fabric," where life becomes nasty, brutish, and short.

There are, indeed, libertarian anarchists, and it is even possible to argue that John Locke's own principles make it difficult to avoid anarchy. On the other hand, neither Locke, nor Smith, nor Washington, nor Jefferson, nor Mill, nor F.A. Hayek, nor even Ayn Rand were anarchists. To them "minimalist government" meant, indeed, government; and such a government needed to exercise maximal power but only for certain purposes, as never expressed better than by Jefferson himself, in his First Inaugural Address of 1801:

Still one thing more, fellow citizens -- a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

"Which shall restrain men from injuring one another," seems to rule out the chaos of "Yugoslavia, or Lebanon, or Somalia." Locke himself saw the institution of government as necessary to protect rights, especially property rights, that no one would be well able to defend in the state of nature. If Classical Liberal principles are indeed about abolishing rather than preserving the disabilities of the state of nature, with a sharp eye to the dangers of trusting too much power into the fallible, interested, greedy human hands of those in government, then the objections of John, and perhaps of Gray and Nozick, are answered. The confusion of Hofstadter is also revealed; for, far from "assumed the Hobbesian war of each against all," the Founders saw government as the negation of anything like the Hobbesian war (which they didn't believe in anyway, since they saw the state of nature in Lockean, not Hobbesian, terms). They saw that too powerful a government would actually create a "war of all against all," by which politicians and interest groups profit from the corruption of government power (see "Rent-Seeking, Public Choice, and the Prisoner's Dilemma"). Of course, this is all very different if any of these people do not really accuse libertarianism of advocating anarchy but simply of advocating capitalism.

"Greed," often used to reproach laissez-faire capitalism and libertarianism, is a trendy buzzword to refer to profit, corporations, and the rich. A façade of concerns about human nature, etc., may really conceal implied criticisms of the free market, capital accumulation, and private property. Admitting such criticisms, however, would move the argument over to very different kinds of considerations. Is there an "invisible hand" that produces public goods out of private interests under the conditions of voluntary exchange in the free market? Or does capital exploit labor? Trendy leftist opinion has nothing but contempt for the "invisible hand," and in the same context the principle that capital exploits labor virtually has the status of a self-evident truth. On the other hand, since the fall of Communism, the failure of economic development in command-economy Third World countries, and the stagnation and high unemployment of socialist European economies, overt attacks on capitalism now sound anachronistic and foolish:   They are usually only found at the fringe of leftist politics, even though the mainstream politics even of the Democratic Party still relies heavily on implicit anti-capitalist principles. The result is a great deal of confusion and cross purposes in political debate.

That is just the problem when answering accusations that libertarianism is somehow naive about human nature. The real argument is not about human nature, as we have seen (with those who hope for the "best" in government to restrain the greed of all the rest of us coming off as the naive ones), but about the nature of a market economy. The answer, however, will necessarily be similar. If the wealthy are thought to be greedy and so morally unworthy, are thought to have illegitimately acquired their wealth (through theft or exploitation), are thought to put their wealth to selfish and socially useless purposes, then it is clear that this wealth must be "redistributed" to produce more social good and create less "inequality of income." The problem with this we already see in Adam Smith [The Wealth of Nations, p. 423]:

The statesman who should attempt to direct people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

"Could safely be trusted," is the key phrase; for it reveals that Smith's concern is the same as that of any other classical thinker about the power of government. Government not only has a more secure monopoly than Standard Oil ever had, but it secures that monopoly by the force of arms. To be free of the government's monopoly, one must leave the country (if that is allowed). You cannot simply refuse to deal with it, or start a competing business, without men with guns (the police) showing up to force you to deal or to physically destroy the competition you represent.

When government is entrusted with the "redistribution" of wealth, no one should be surprised that the wealth straightaway is used to buy votes, to reward interest groups, to bribe constituencies, and to pay off friends -- not to mention to honor "public servants" with the style of life of which they think they are worthy. In terms of the growth of wealth and improvement of human life, these are all wasted uses, and they turn economics into a negative sum game. The situation is even worse when the money is borrowed or printed rather than taxed:   The borrowed money must be taxed or printed eventually, while the printed money is simply stolen, by creating an artificial price inflation, from those who hold monetary assets (less likely to be the rich, whose assets are varied, than the poor and middle classes). These are all the stigmata of the greed and irresponsibility that afflicts those in power who have been given too much power, and especially a degree of power over wealth and property that is a virtual blank check for corruption.

Some people accept this corruption because they are deceived by the moralistic rhetoric that accompanies it (that the "self-interest" of the rich is replaced by the "public spirit" of the politicians); but it is more likely that the rhetoric is waved through more because people are satisfied with their share of the loot. As long as I get my "benefits" (Social Security, Medicare, etc.), then government must be doing a good job. Or, if "programs" exist to end or alleviate poverty, then we can congratulate ourselves on our own benevolence and compassion, as expressed through the "collective action" of government.

That anyone running a private pension plan the same way that Social Security is run would get arrested for fraud hardly gets mentioned in public discourse. That "anti-poverty programs" usually promote habits that perpetuate people in poverty rather than "lift" them out of it is something that occasionally gets said in public, but then the poor soul who dares to say that is usually mercilessly attacked and ridiculed by people who have never had anything to do with the creation of wealth or of jobs -- but who mostly think that ending poverty simply means handing out money (or of requiring someone else to do the hiring).

The defense of capitalism, therefore, even without appeal to purely economic truths, can proceed in the same manner as the defense of limited government before the forms of economic life even became an issue. Distrust of human nature but trust in government betrays an incoherence whose bitter fruit is necessarily corruption and tyranny, however lofty and deceptive the rhetoric by which power always masks and rationalizes itself. The references to Hobbes, who was despised by the likes of Locke and Jefferson, were, as it happens, always a misapprehension or, worse, a dissimulating misdirection.

Postscript, 2013

One thing that always puzzled me about the statement of John O. was the invocation of Thomas Hobbes in associaton with libertarianism . Since the originators of classical liberalism rejected the authoritarianism and positivism of Hobbes, I could not understand why critics of libertarianism would think that Hobbes was some sort of apologist for that political philosophy. Subsequently, I noticed others making the association of Hobbes with either libertarianism or capitalism. Recently, I had another friend referring to me as, "advocating libertarian ideas. Fortunately, we do not yet live so much in such a brutal Hobbesian state of nature." So why is anyone thinking that a libertarian or capitalist society is the equivalent of a "brutal Hobbesian state of nature"? Even in Hobbes, government is the remedy for the brutality of the state of nature.

Now I suspect that the answer comes from Marx, who says, "Religion has become the spirit of civil society, of the sphere of egoism, of bellum omnium contra omnes" [On the Jewish Question, 1843-1844]. Here we get a characterization of civil society as the bellum omnium contra omnes, "war of all against all," which is generally how the Hobbesian state of nature is characterized. While the connection here is by way of religion, there seem to be other statements by Marx that go directly from Hobbes to civil society to the bellum, but I have not been able to track them down yet. Since Hobbes allows for the existence of civil society under his absolutist sovereign, this is something that comes in for at least some praise from classical liberals and for condemnation from the opposite. And so we get Hobbes, obscurely and perversely, as a representative of libertarianism and capitalism. But the reason for this connection is mainly because of Marx's disparagement of civil society and his equation of it with the bellum omnium contra omnes.

If Marx is the source of the connection of Hobbes to capitalism, by way of civil society, this has overtones that are far more disturbing than the issues that I have previously considered in relation to John O. or Richard Hofstadter. This is because Marx's objection to civil society, and his desire to absorb it into political society, is based on its character as the sphere of private action (Marx's "egoism"). When feminism says that "the personal is political," this means that everything becomes political; and this means that there is no private life, privacy, or personal, voluntary relations. Everything is determined by political correctness. What you do supports the Revolution, or is against it -- which is a political crime of capital severity. This is why the internal dynamic of Marxism implies a totalitarian society, however much Marxists wish to dress that up as "real" freedom or "real" democracy. This dynamic was well understood by Leszek Koakowski:

...universal spying as the principle of government. People were encouraged -- and compelled -- to spy upon one another, but this was obviously not how the state defended itself against real dangers; rather, it was a way of pushing the principle of totalitarianism to its extreme. As citizens, people were supposed to live in a perfect unity of goals, desires, and thoughts -- all expressed through the mouth of the leader. As individuals, however, they were expected to hate one another and to live in constant mutual hostility. Only thus could the isolation of individuals from one another achieve perfection. In fact, the unattainable ideal of the system seems to have been one where everyone is at the same time an inmate of a concentration camp and a secret police agent. ["The Marxist Roots of Stalinism," 1975, Is God Happy? Selected Essays, Basic Books, 2013, pp.100-101]

The "perfect unity of goals, desires, and thoughts" is, of course, the ideal of social solidarity and "collective action" in which all private interests have been absorbed into the political whole. No egoism or self-interest allowed here. And anyone wanting to preserve some sphere of private action is clearly a criminal counter-revolutionary. While Koakowski was writing from his experience of Communist Poland, the urge to silence dissent and to criminalize private life is clearly visible today in American universities, whose values and program seemlessly follow from popular Marxist ideology. Thus, that totalitarianism follows from the elimination of civil society is not just evident in logic, it is demonstrated by the behavior of both obvious radicals and even timid administrators in American education. If John O. had insensibly picked up something from a Marxist critique of capitalism, perhaps without even realizing it, it was no more than part of the academic air he was breathing.

Political Economy

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