Why Being a Liberal Doesn’t Mean You Support Capitalism

Matt McManus

October 4th, 2022

“In those days, I had seen little further than the old school of political economists into the possibilities of fundamental improvement in social arrangements. Private property, as now understood, and inheritance, appeared to me, as to them, the dernier mot of legislation: and I looked no further than to mitigating the inequalities consequent on these institutions, by getting rid of primogeniture and entails. The notion that it was possible to go further than this in removing the injustice—for injustice it is, whether admitting of a complete remedy or not—involved in the fact that some are born to riches and the vast majority to poverty, I then reckoned chimerical, and only hoped that by universal education, leading to voluntary restraint on population, the portion of the poor might be made more tolerable. In short, I was a democrat, but not the least a Socialist. We were now much less democrats than I had been, because so long as education continues to be so wretchedly imperfect, we dreaded the ignorance and especially the selfishness and brutality of the mass: but our ideal of ultimate improvement went far beyond Democracy, and would class us decidedly under the general designation of Socialists.”

J.S Mill, Autobiography

For many, being a liberal intrinsically means supporting capitalism. Consequently, this has meant accepting high levels of inequality and precarity. Of course, even hardened supporters like F.A Hayek supported minimal forms of welfarism and were deeply critical of the meritocratic mythologizations typically rolled out in support of market society. Indeed he often framed the conservative yearning for social hierarchies to rank the deserving from the undeserving in terms similar to his critique of the progressive yearning for a society to truck with social justice. Both attempted to impose abstract ideals of deservingness onto a free society, at the cost of both freedom and economic efficiency, beneficial to improving the quality of life for liberal citizens. From the standpoint of supporters of liberal capitalism, all people should obtain equality of basic rights, which includes the right to exchange and work as one wishes. But this does not imply that liberals should aim to create equality of outcomes. To do so would require constitutes what Nozick would call a violation of the results of freely chosen exchanges in favor of the authoritarian imposition of a “patterned” theory of economic justice.

The Liberal Socialism of John Stuart Mill

What complicates this picture is the fact that liberals have long held had deep reservations about the excesses or and sometimes even the legitimacy of capitalism, often rivaling and sometimes even outdoing their socialist peers in their critiques. Startlingly this includes the two most important liberal philosophers of the 19th and 20th centuries respectively.

JS Mill’s socialism was scandalous in its time. Along with his support for mass suffrage and women’s rights, his socialism made him a scandalous author for many in the United Kingdom. Early in the 20th century, his writings were deeply influential for many on the political right, particularly in the British labour movement. This lead to sharp reproval of his views by fundamentalists like Ludwig von Mises, who in his Socialism: An Economic and Sociological Analysis even chastized Mill for being a gateway to radical anti-market views. Nevertheless, the power and popularity of Mill’s arguments for free speech and personal liberty was so pervasive, and today even the most dogged proponents of capitalism will often appeal to him in their attacks on woke culture. One consequence of this has been that his radical views have often been blunted and sidelined. Only recently have a new series of commentators, for instance, Helen McCabe in her excellent John Stuart Mill: Socialist, begun to revisit the topic of Mill’s socialism and show how intrinsically he linked it to his liberal views.

Near the end of his career John Stuart Mill proudly identitied as a socialist in his Autobiography. This was reitered in his Chapters on Socialism were offered some important critiques of earlier socialist models, while never the less chastizing liberals-“the levellers of former times” but no more-for limiting their economic imagination to the contours of Victorian capitalism. He went on to praise socialists as their more “far sighted succesors” and condemned those who allowed poverty to perist in the midst of plenty as tantamout to the apologizing for the tyranny of “Nero or Domitan” and not recongizing that this constituted a “failure of social arrangements.” In his later editions of the Principles of Political Economy he expressed support for the democratization of the workplace, arguing there was “nothing” intrinsically necessary about capital management of firms and supporting the ideal of generalizing worker management. No doubt were Mill alive he would have been euphoric at the recent waves of unionization which have taken place in the United States, while cautioning that they were hardly enough given the extraordinary disparities which still exist. Finally he anticipated Rawls in being deeply critical of the meritocratic fairy stories to which many of the more crude defenders of capitalism remain addicted. Mill would have none of that, stressing:

“These evils then—great poverty, and that poverty very little connected with desert—are the first grand failure of the existing arrangements of society. The second is human misconduct; crime, vice, and folly, with all the sufferings which follow in their train. For, nearly all the forms of misconduct, whether committed towards ourselves or towards others, may be traced to one of three causes: poverty and its temptations in the many, idleness and desoeuvrement in the few whose circumstances do not compel them to work; bad education, or want of education, in both. The first two must be allowed to be at least failures in the social arrangements, the last is now almost universally admitted to be the fault of those arrangements—it may almost be said to be a crime.”

The Liberal Socialism of John Rawls

Moving forward, in the 20th century, John Rawls’ Theory of Justice is often taken to be the most seminal work of political philosophy published in the Anglo-American world. Its resurrection of the social contract tradition and criticisms of utilitarianism have become vital touchstones for serious students of the liberal tradition. Less appreciated is the fact that even in Theory of Justice Rawls insisted that no reasonable or rational person deliberating on the principles of justice that would be chosen for the social contract would choose to live in a purely market society. This would be for both self-interested reasons related to the potential consequences of winding up at the bottom rung of society without any safety net, and because they would recognize that people did not rise or fall based on any particular merits of their own. Because the distribution of natural talents, social advantages, and marketable skills was “arbitrary from a moral point of view,” there was no compelling argument for allowing these to be determinative. Indeed he compared those who defended or naturalized inequalities arising from such differences to the illiberal proponents of caste and aristocratic societies, which most of us are very happy to see the back of.

“We may reject the contention that the ordering of institutions is always defective because the distribution of natural talents and the contingencies of social circumstance are unjust, and this injustice must inevitably carry over to human arrangements. Occasionally this reflection is offered as an excuse for ignoring injustice, as if the refusal to acquiesce in injustice is on a par with being unable to accept death. The natural distribution is neither just nor unjust; nor is it unjust that persons are born into society at some particular position. These are simply natural facts. What is just and unjust is the way that institutions deal with these facts. Aristocratic and caste societies are unjust because they make these contingencies the ascriptive basis for belonging to more or less enclosed and privileged social classes. The basic structure of these societies incorporates the arbitrariness found in nature. But there is no necessity for men to resign themselves to these contingencies. The social system is not an unchangeable order beyond human control but a pattern of human action.”

Consequently, Rawls argued that a just liberal society would only allow inequalities where those benefited the least well off. In the 1970s, this was often taken to be a theoretical defense of the welfare state emerging in Europe and in Lyndon Johnson’s “Great Society.” This would have already situated Rawls comfortably on the left end of the liberal political spectrum. But in fact, it turned out he was not comfortable there. Responding to criticism from the left, Rawls gradually argued that even a liberal welfare state would not be sufficiently just. This was both because it still allowed for the persistence of too many inequalities not to the benefit of the least well-off, and because such inequalities compromised the equal value of the more familiar liberal liberties. This was a very innovative argument, as Rawls came to recognize that vast disparities in economic wealth and power ensured that some citizens were able to enjoy their personal and political freedom more equally than others. A very transparent example of this was the way the very rich were and are able to hedge their money into influence at the highest reaches of government, a worry that seems ever more prescient in our post Citizens United era. For these reasons Rawls argued that a just liberal society would need to progress towards what he called either property-owning democracy or liberal socialism. In this society individuals would enjoy equal value from their basic liberties, and personal and extensive forms of private property would persist. But it would be distributed in a far more egalitarian manner. In his book John Rawls: Reticent Socialist the philosopher William Edmundson extends these arguments to describe how one might experiment with new forms of economic democratization; perhaps following something like the Swedish Meidner plan of the 1970s.

Conclusion: Why Liberals Shouldn’t Support Capitalism

The fact that the two most important liberal philosophers of the last 200 years both rejected capitalism should tell us a great deal about just how important supporting it is to liberalism. That is to say, not much at all. What is fundamental to liberalism is its commitment to human freedom and moral equality. Contra someone like Ludwig von Mises in his Liberalism text, this is far more promordial than the liberal commitment to the sacredness of private property-which is at best a secondary right to the extent respect for property is necessary for the freedom and capacity to lead a good life of an individual. Without a doubt this requires respect for personal integrity and possessions. But the notion that liberals would be required to respect vastly more extensive property claims where those are not only uncessary but actually compromise more foundational liberal ideals-for instance the equal value of political liberties in a democracy-is out of whack.

A just liberal society is one where the maximal balance is achieved between freedom and equality. This of course precludes any kind of command economy as much as it does an aristocracy or the new kinds of integralist theocracies put forward by some on the American hard right. But it certainly doesn’t preclude efforts to democratize the workplace through unionization, the formation or a transition to coops, or co-determination models where works enjoys places on corporate boards as they do in Germany. Nor does it preclude the provision of a very extensive set of public goods and resources to all citizens, much like they have in the Nordic countries. Indeed, given that the Nordic states are consistently ranked as not only the happiest and most equal but also the “freest” societies in the world-with more miltantly capitalist states like the US and South Korea falling well behind-there are even good libertarian reasons for pursuing higher levels of equal well-being and flourishing. It is long since time we took the great liberal thinkers at their word and recognize that liberalism needs militant capitalism like a grown adult needs a tricyle: time to grow up and move on.