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From: carnes@gargoyle.UChicago.UUCP (Richard Carnes)
Newsgroups: net.politics
Subject: Freedom, coercion, and free markets
Message-ID: <311@gargoyle.UChicago.UUCP>
Date: Mon, 21-Jan-85 21:07:16 EST
Article-I.D.: gargoyle.311
Posted: Mon Jan 21 21:07:16 1985
Date-Received: Wed, 23-Jan-85 04:42:43 EST
Organization: U. Chicago - Computer Science
Lines: 100

There has been a good deal of discussion recently in net.politics on the
subject of freedom and its relation to free-market systems, with
libertarians and their allies generally taking the position that the market
supports and is necessary for freedom.  The best discussion of this question
that I am aware of is in Charles E. Lindblom, *Politics and Markets:  The
World's Political-Economic Systems*, a book I highly recommend to anyone
with an interest in the title subject.  I hope it is obvious that in quoting
from Lindblom I am not quoting an "authority" to silence opposition, but
rather I am presenting his arguments for your consideration in hopes of
promoting a more informed and intelligent discussion of this topic.  It
would be a pointless waste of labor to paraphrase Lindblom, so I will simply
lift whole paragraphs from his chapter entitled "Exchange and Markets."
_________________

The classical liberal case for market systems declares:  Liberty through the
market; no liberty without.  True?  No one understands market systems until
he appreciates how many good, though conflicting, answers can be given to
that simple question.  Beginning with parental control in infancy, no one
ever escapes social control.  "Freedom" and "liberty" denote situations in
which controls are not absent but are in some sense acceptable.  Whether,
then, the market supports freedom raises questions about its characteristic
forms of control.

According to the [classical] liberal argument in the tradition of Locke,
Smith, the Mills, Spencer, and Dicey, in a market system one responds--for
example, takes a particular job--only if the proffered benefits are
attractive, hence only if one voluntarily chooses to do so.  In an authority
system one is required to work where assigned and obey any other command
regardless of benefit.  As some people see it, no more needs to be said to
prove men freer in markets than in authority systems.

An immediate objection to that line of argument is that it simply ignores
the effect of a transaction on persons not a party to it--those who must
endure the smell of a new factory in the area, the noise of motorcycles
breaking the quiet of their neighborhood, or the risk of accident in a
nuclear power plant.  In a market system, they make no free choice; these
effects are imposed upon them.  

Third-party or external effects aside, the argument does not hold even for
the parties immediate to the transaction, who are regarded as voluntarily
entering into exchange with each other.  Let us see why.

PROPERTY.  How much I can accomplish and how effectively I can protect
myself through exchange depends in large part on what I own and can offer in
exchange.  A hidden assumption in the conventional argument is that private
property, on which exchange rests, does not itself constitute a barrier to
freedom and is, in addition, noncoercively established and perpetuated.  If
one imagines a small society sharing assets collectively which is then
transformed, by assignment of every asset to some one individual, into a
society practicing exchange among owners of private property--and with
grossly unequal distribution of the assets to individuals--it is not at all
obvious that free exchange makes (or leaves) the less propertied members of
that society free.  And if the move from collective to private ownership is
imposed by strong men who forcibly take the lion's share of the assets,
clearly no simple argument leads to the conclusion that subsequent exchanges
among them, however free, make those who have little property free.  Nor if
we are all born into a world in which property rights are already assigned,
as indeed they are, does it follow that exchange supports our freedom unless
we own a great deal.  

This objection to the liberal argument does not depend on how in actual fact
private property was historically established, how it is in fact maintained,
or whether it is a good institution.  The objection rests on logic.  The
traditional liberal argument is incomplete unless it defends private
property as itself consistent with freedom, a point on which it is silent.
[Author's footnote:  In both Friedman, *Capitalism and Freedom*, and Hayek,
*Road to Serfdom*, the possible coerciveness of the distribution of property
is not discussed.  Frank H. Knight argues that the history of the
distribution of property undermines the claim that freedom leads to
desirable results, but he does not consider the possibility that it may
itself undercut the claim that market relations are free (in *Freedom and
Reform*).]  It [the traditional liberal argument] is simply blind to the
implications for freedom of Proudhon's "Property is theft!" as well as to
implications of less extreme interpretations of how property is established
and maintained.  [Author's footnote:  Formally, the same objection can be
brought against the liberal position that, leaving property aside, exchange
of services makes men free because they will respond through exchange of
services only when they voluntarily choose to do so.  Some distribution of
skills among persons would make some men greatly dependent on others--for an
extreme example, if only a few persons could fight and thus defend
themselves and others.  The favored persons could extract, as a price for
their services, concessions from the others inconsistent with their freedom,
however freedom is defined.  Again, whether historically this is or is not
the case, the liberal argument simply fails to examine the implications for
freedom of distribution of skills.]

Another way to put the point is this.  In liberal thought a world of
exchange is conflict-free.  Everyone does what he wishes.  When all social
coordination is through voluntary exchange, no one imposes his will on
anyone else.  But how, we ask, can such a happy state be possible?  It is
possible only because the conflicts over who gets what have already been
settled through a distribution of property rights in the society.  Was that
distribution conflict-free?  Obviously not.  Was it noncoercively achieved?
Obviously not.  The distribution of wealth in contemporary England, for
example, is a consequence of centuries of conflict, including Viking raids,
the Norman Conquest, the early authority of Crown and nobility, two waves of
dispossession of agricultural labor from the land, and the law of
inheritance.  --Charles E. Lindblom

[To be continued]
Richard Carnes, ihnp4!gargoyle!carnes