1. Introduction: Left and Right Against the Market?
"The signature of a 'left' criticism of markets is the call for resources to be made freely available to all.... The signature of the 'right' criticism of markets we have considered in these columns is the doctrine of human hierarchy."
Sixty years ago in the Road to Serfdom F. A. Hayek called attention to the alliance between "left" and "right" critics of liberal democratic society. Today, we see the Hayekian problem of the right-left anti-liberal coalition in the political debates leading up to the war with the fascist regime of Iraq. Paul Berman found it useful to open Liberalism and Terror by returning to the 1950s problem of the "astonishing" similarity of communism and fascism.
Though we find this longstanding recognition of the anti-market coalition, little attention has been paid to how the coalition of right and left actually functioned in the past. In this column we examine an early criticism of property and exchange by William Godwin, and we begin to ask what, historically, united these seemingly opposite intellectual traditions. What has persuaded writers of the left to find more in common with fascist regimes than with markets and the economists who favor them?
The signature of a "left" criticism of markets is the call for resources to be made freely available to all. In this intellectual tradition, positive prices are seen as unnatural and unjust. In a just world, we are told, there is enough to go around. This is precisely the case that Godwin made in his Political Justice.
The signature of the "right" criticism of markets we have considered in these columns is the doctrine of human hierarchy. In an ordered world, we are informed, superior types naturally make decisions for lower types (see The Secret History of the Dismal Science: Paternalism, Hierarchy, and Markets). What is perhaps most interesting about Godwin's Political Justice is that it makes this argument, as well. But before we can appreciate this, or how Godwin's hierarchicalism manifested itself in response to the reaction of T. R. Malthus, we should consider Godwin's "system of equality" with all due seriousness. This is our main concern here.
The anti-exchange coalition of left and right has historically worked this way: in both instances, human nature is regarded as a policy variable, as something to be transformed. For the critics of markets on the left, this has the appeal of allowing for the end of scarcity as we know it. As long as tastes can be re-shaped so that people want less, scarcity can be abolished. And for the right critics of markets, the appeal is that humans are improved by absorbing, willingly or otherwise, the advice of their betters. In both instances, hierarchy prevails over individual decision-making: in the former, the hierarchy is a hierarchy of tastes, some of which deserve to be satiated while others do not; in the second, the hierarchy is one of direction, entailing who gets to make the decision about tastes and consumption.
In the early nineteenth century, acceptance (or denial) of scarcity is therefore the key to understanding the opposition to economics. Embracing scarcity is equivalent to accepting the claim that human nature is fixed. If, by contrast, human nature is itself a policy variable, then resource allocation can be affected by remaking—"improving"—human nature. Indeed, if human nature is sufficiently plastic, then even if we know that for humans as we see them, there is scarcity; for humans whose tastes have been sufficiently "developed" by their betters, there may be no such thing. Those who are attracted to this argument attempt to replace unimpeded trade with the "new and improved economic man" superior to those unfortunates who now populate market economies.
In this column, we begin to examine the left-right opposition to exchange by considering the details of the first great "left" attack on markets. In 1793, William Godwin proposed to deal with scarcity by abolishing property and establishing in its stead a "system of equality".
2. Scarcity and Property
We begin by considering David Hume's rationale for property in a world of scarcity. Hume argued that in a world without scarcity, there would be no need for property or exchange. However, once goods become scarce, the need for exchange—and property—arises. Thus, property occurs only when abundance and benevolence are limited:
if every man had a tender regard for another, or if nature supplied abundantly all our wants and desires ... the jealousy of interest, which justice supposes, could no longer have place; nor would there be any occasion for those distinctions and limits of property and possession, which at present are in use among mankind.
In Hume's account, justice is required for the enforcement of property but when there is no scarcity, there is neither justice nor property:
when there is such a plenty of any thing as satisfies all the desires of
men: In which case the distinction of property is entirely lost, and every
thing remains in common. This we may observe with regard to air and water,
tho' the most valuable of all external objects; and may easily conclude,
that if men were supplied with every thing in the same abundance, or if
every one had the same affection and tender regard for every one as
for himself; justice and injustice would be equally unknown among mankind. (495)
So, for Hume and the political economists who followed in this tradition, scarcity is the root cause of property and exchange. And scarcity is an inescapable fact.
3. Godwin's "System of Equality"
Figure 1. Title Page from Godwin's Political Justice, 3rd edition.
In his 1793 Political Justice, Godwin proposed to replace the existing system of private property with a system of equality, where everyone gets an equal share of the communal income. Property, Godwin stresses as he begins the last book of Political Justice, serves as culmination of the entire work:
The subject of property is the key-stone that completes the fabric of political justice. According as our ideas respecting it are crude or correct, they will enlighten us as to the consequences of a simple form of society without government, and remove the prejudices that attach us to complexity.
We shall see what "simple" and "complex" mean as the argument unfolds.
The key characteristic of property is that ownership ensures others are excluded:
The subject to which the doctrine of property relates, is, all those things which conduce, or may be conceived to conduce, to the benefit or pleasure of man, and which can no otherwise be applied to the use of one or more persons, than by a permanent or temporary exclusion of the rest of the species. Such things in particular are food, clothing, habituation and furniture. (Book VIII, Ch I § 3).
In earlier parts of the volume, Godwin developed a utilitarianism which he now applies to the idea of property:
There is not an article of the kinds above specified, which will not ultimately be the instrument of more benefit and happiness, in one individual mode of application, than in any other than that can be devised. This is the application it ought to receive. (Book VIII, Ch I § 5)
"The English translation of Das Kapital was first published in 1887. Karl Marx's "Wallachian Boyard" was thus the first reference to Dracula (for symbolic purposes) in the English language." (See: Christopher Frayling, The Vampyre. London: Victor Gollancz, Ltd., 1978, p. 82.)
"...Goule, a sort of wandering demon, which is known to infest ruinous buildings, and from time to time suddenly rushes out, seizes children and other defenceless people, strangles, and devours them." (William Godwin, Lives of the Necromancers. London, 1834, p. 202.)
One aspect of Godwin's utilitarian criticism of private property is that property discourages population. In a system of equality, he argued, this discouragement would end and people would not be so friendless. So, Godwin offers a pro-natalist criticism of capitalism in which he also suggested that the poor suffer the consequences more than the rich.
Long before Karl Marx used the word "vampire" to describe the position of the capitalist vis-à-vis the worker, Godwin charged the system of private property with ghoulism:
It has been calculated that the average cultivation of Europe might be improved, so as to maintain five times her present number of inhabitants.... Thus the established system of property may be considered as strangling a considerable portion of our children in their cradle. Whatever may be the value of the life of man, or rather whatever would be his capability of happiness in a free and equal state of society, the system we are here opposing may be considered as arresting upon the threshold of existence four fifths of that value and that happiness.
In terms of the utilitarianism based on counting harms and hurts which we discussed in our column on the happiness of nations (link to Column 7), the existing few are said to benefit at the expense of the strangled many. Godwin gives us his conclusion:
Hence it follows, upon the principles of equal and impartial justice, that the good things of the world are a common stock, upon which one man has as valid a title as another to draw for what he wants.
The question Godwin now raises is how to get from here to there. He points to a class of consumption goods which seem to be the central problem:
... such gratifications, as are by no means essential to healthful and vigorous existence, and cannot be purchased but with considerable labour and industry. It is the last class principally that interposes an obstruction in the way of equal distribution. ... And in what manner are these seeming superfluities usually procured? By abridging multitudes of men, to a deplorable degree, in point of essential moment, that one man may be accommodated, with sumptuous yet, strictly considered, insignificant luxuries. (Book VIII, Ch 1 § 8)
Godwin thinks that he can separate these costly luxuries into two parts: the simple or "direct" pleasures of our nature and the more complex pleasures which are instruments to achieving social distinction:
To the forming of a just estimate of costly gratifications, it is necessary, that we should abstract the direct pleasure, on the one hand, from the pleasure they afford us, only as instruments for satisfying our love of distinction. ... we ought not to refuse any pleasure, except as it tends to the exclusion of some greater pleasure. But it has already been shown, that the difference in the pleasures of the palate, between a simple and wholesome diet on the one hand, and all the complexities of the most splendid table on the other, is so small, that few men would even think it worth the tedium that attends upon a change of services, if the pleasure of the palate were the only thing in question, and they had no spectator to admire their magnificence. (Book VIII, Ch 1 § 9)
Figure 2. William Godwin
William Godwin [Source: The Monthly Mirror, Volume 29 (1805)]
For Godwin, the problem is non-simple pleasures, those which are enjoyed as instruments to achieving social recognition and distinction. Thus, for Godwin, scarcity arises because people who have means, consume "too much" of such instrumental goods, "too much" of the wrong sorts of goods, goods which serve little real purpose and which only enable people to achieve distinction.
Godwin has thus turned Hume's thinking—scarcity causes property—around. For Godwin, scarcity results from the institution of private property, the desire to achieve social distinction and the ability to exclude people from consumption. And, were "simple" pleasures the only pleasures sought by humans, scarcity would be abolished.
4. The Theorist and the Theorized
Our guide to the debates over scarcity is Adam Smith's characterization of the "man of system" in Theory of Moral Sentiments. Smith points out that systematic theorists are inclined to confuse their motivation with the motives of those about whom they theorize:
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. (Book VI, Chapter 2, § 42)
In Smith's account, all people share the ability to theorize, and all people—theorist and theorized alike—are motivated by fame and fortune. We call this doctrine, which makes no distinction between theorist and theorized, analytical egalitarianism. The question is what is more important, the theorist's vision or the desires of people for whom he theorizes.
Godwin has taken the position of Smith's "man of system" who places his own conclusions about the valuation of pleasures above that of his subject: goods associated with "complex" pleasures, in the theorist's mind, are less deserving of consumption that goods associated with "simple" pleasures. The theorist has been elevated to a position above the theorized.
To bring the world into accord with the demands of the theory, Godwin urged that society rid itself of social distinctions. The radicalism of Godwin's attempt to rid the world of social distinctions, and thus to reduce consumption to goods associated only with "simple" pleasure, can be best appreciated in the first version of his proposal to abolish marriage as a legal institution. In addition to many evils associated with the near impossibility of ending a failed marriage, Godwin says, in all editions:
marriage, as now understood, is a monopoly, and the worst of monopolies. So long as two human beings are forbidden, by positive institution, to follow the dictates of their own mind, prejudice will be alive and vigorous. So long as I seek, by despotic and artificial means, to maintain my possession of a woman, I am guilty of the most odious selfishness. Over this imaginary prize, men watch with perpetual jealousy; and one man finds his desire, and his capacity to circumvent, as much excited as the other is excited to traverse his projects, and frustrate his hopes. As long as this state of society continues, philanthropy will be crossed and checked in a thousand ways, and the still augmenting stream of abuse will continue to flow.
In the first edition, Godwin was explicit about the difficulty created by the fact that people care more about "their" children than other children. To eliminate this problem, he looked forward to the abolition of surnames so that a man could not tell the difference between "his" child and other children. So who will support a child if the father is not known? No coherent system of equality could require that the mother care for her children if she is not so inclined. Does this raise a problem? Not to Godwin's way of thinking because there will now be abundance and benevolence, and resources will consequently flow from where they are in surplus to where they are needed:
Let us consider the way in which this state of society will modify education. It may be imagined that the abolition of the present state of marriage would make education, in a certain sense, the affair of the public; though if there be any truth in the reasonings of this work, to provide for it by the positive institutions of a community would be extremely inconsistent with the true principles of an intellectual nature. Education may be regarded as consisting of various branches. First, the personal cares which the helpless state of an infant requires. These will probably devolve upon the mother; unless, by frequent parturition, or by the nature of these cares, that be found to render her share of the burthen unequal; and then it will be amicably and willingly participated by others. Second, food and other necessary supplies. These will easily find their true level and spontaneously flow, from the quarter in which they abound, to the quarter than is deficient.
5. Godwin on the Division of Labor
Abundance is a complicated issue for Godwin. That abundance differs from satiation is clear from Godwin's discussion of the division of labor. This discussion is remarkable for several reasons. First, it contains the only reference to Adam Smith in the work, a fact of dire consequence for the fate of his argument. Second, Godwin develops a very early criticism of what we now think of as globalization. He suggests that the process of voluntary trade creates mutual obligations that are akin to family obligations and which conflict with the philosopher's vision of the good life. If you and I trade, our obligations may outweigh our obligations to others:
These observations lead us to the consideration of one additional difficulty, which relates to the division of labour. Shall each man manufacture his tools, furniture and accommodations? This would perhaps be a tedious operation. Every man performs the task to which he is accustomed, more skilfully, and in a shorter time than another. It is reasonable that you should make for me that which perhaps I should be three or four times as long in making, and should make imperfectly at last. Shall we then introduce barter and exchange? By no means. The moment I require any further reason for supplying you than the cogency of your claim, the moment, in addition to the dictates of benevolence, I demand a prospect of reciprocal advantage to myself, there is an end of that political justice and pure society of which we treat.
For Godwin, the answer is not to encourage a universal system of exchange in which everyone is linked by reciprocal obligation to everyone, but for people instead to reduce their desires to some approved level:
The division of labour, as it has been developed my commercial writers, is the offspring of avarice. It has been found than ten persons can make two hundred and forty times as many pins in a day as one person. [Smith's Wealth of Nations, Book I, Chap. I] This refinement is the growth of monopoly. The object is to see into how vast a surface the industry of the lower classes maybe beaten, the more completely to gild over the indolent and the proud. The ingenuity of the merchant is whetted by new improvements of this sort to transport more of the wealth of the powerful into his coffers. The practicability of effecting a compendium of labour by his means will be greatly diminished when men shall learn to deny themselves partial superfluities. .. From what has been said it appears that there will be a division of labour if we compare the society in question with the state of the solitaire and the savage. But it will produce an extensive simplification of labour if we compare it with that to which we are at present accustomed in civilized Europe.
Figure 3. Fleeming Jenkin sketch
Jenkin imported engineering graphical methods into economics. He first drew demand and supply curves in English language economics. This figure, depicting exchange in circular form, is from Fleeming Jenkin, Papers, literary, scientific, &c., London, New York, Longmans, Green, and Co., 1887, volume 2, p. 150. Courtesy of the Library of Congress.
For Godwin, a "simple" order therefore means one without the complications associated with family or trading partners, because those involve distinctions among people. Godwin's vision of the good society is thus at direct odds with the political economist's defense of trade and the reciprocal relationships that trade establishes. It contrasts sharply with F. A. Hayek's defense of a non-hierarchical social order akin to the one which the engineer-economist, Fleeming Jenkin, whom have encountered in a previous column, drew.
Godwin's elegant argument against private property marks a beginning for attacks on markets and trade. His central point, that market activity serving the desire for status is wasteful, was taken up most famously in Thorstein Veblen's 1899 Theory of the Leisure Class. Veblen developed Godwin's thought that we want wealth to obtain status. The result is waste:
With the exception of the instinct of self-preservation, the propensity for emulation is probably the strongest and most alert and persistent of the economic motives proper. IN an industrial community this propensity for emulation expresses itself in pecuniary emulation; and this, so far as regards the Western civilised communities of the present, is virtually equivalent to saying that it expresses itself in some form of conspicuous waste. (Theory of the Leisure Class, p. 148).
When Veblen published his Engineers and the Price System in 1921, the "scientists'" views on breeding policy were being listened to by policy makers throughout America (link to eugenics column). Veblen called for a Soviet of Engineers to ensure the production of right or valuable goods as opposed to relying on market mechanisms and the waste associated with them:
The incoming industrial order is designed to correct the shortcomings of the old. The duties and powers of the incoming directorate will accordingly converge on those points in the administration of industry where the old order has most signally fallen short; that is to say, on the due allocation of resources and a consequent full and reasonably proportioned employment of the available equipment and man power; on the avoidance of waste and duplication of work; and on an equitable and sufficient supply of goods and services to consumers. Evidently the most immediate and most urgent work to be taken over by the incoming directorate is that for want of which under the old order the industrial system has been working slack and at cross purposes; that is to say the due allocation of available resources, in power, equipment, and materials, among the greater primary industries. For this necessary work of allocation there has been substantially no provision under the old order.
Veblen's attack on the old economists continues the intensity of the opposition to political economy in the nineteenth century. When the Fenian violence was blamed upon those who defended the Jamaicans, J. S. Mill and the Unitarian radical, P. A. Taylor, were given special attention in a Punch poem, "A Fenian on His Friends":
To bring a loyal subject to
The gallows was their aim,
And oh may they exert themselves
To save us from the same!
Success to P. A. TAYLOR,
JOHN STUART MILL, and those
That seek the life of England's friends,
And side with England's foes.
The House of commons won't expel
The friends that all find who rebel. (7 March 1868, p. 107).
This task called for a new sort of economist:
Armed with these powers and working in due consultation with a sufficient ramification of sub-centers and local councils, this industrial directorate should be in a position to avoid virtually all unemployment of serviceable equipment and man power on the one hand, and all local or seasonal scarcity on the other hand. The main line of duties indicated by the character of the work incumbent on the directorate, as well as the main line of qualifications in its personnel, both executive and advisory, is such as will call for the services of Production Engineers, to use a term which is coming into use. But it is also evident that in its continued work of planning and advisement the directorate will require the services of an appreciable number of consulting economists; men who are qualified to be called Production Economists. The profession now includes men with the requisite qualifications, although it cannot be said that the gild of economists is made up of such men in the main. Quite blamelessly, the economists have, by tradition and by force of commercial pressure, habitually gone in for a theoretical inquiry into the ways and means of salesmanship, financial traffic, and the distribution of income and property, rather than a study of the industrial system considered as a ways and means of producing goods and services. Yet there now are, after all, especially among the younger generation, an appreciable number, perhaps an adequate number, of economists who have learned that "business" is not "industry" and that investment is not production. And, here as always, the best is good enough, perforce.
Engineers, rather than those "Vested Interests" participating in markets, shall make decisions about production and consumption. Veblen objects to the principle of undirected markets:
All this abjuration of business principles and businesslike sagacity may appear to be a taking of precautions about a vacant formality; but it is as well to recall that by trained propensity and tradition the business men, great and small, are after all, each in their degree, lieutenants of those Vested Interests which the projected organization of industry is designed to displace, schooled in their tactics and marching under their banners. The experience of the war administration and its management of industry by help of the business men during the past few years goes to show what manner of industrial wisdom is to be looked for where capable and well-intentioned business men are called in to direct industry with a view to maximum production and economy. For its responsible personnel the administration has uniformly drawn on experienced business men, preferably men of successful experience in Big Business; that is to say, trained men with a shrewd eye to the main chance. And the tale of its adventures, so far as a businesslike reticence has allowed them to become known, is an amazing comedy of errors; which runs to substantially the same issue whether it is told of one or another of the many departments, boards, councils, commissions, and administrations, that have had this work to do.
Why the engineering priesthood, tempted by the power which comes from being able to control the lives of lesser men and women, would be exempt from considerations of self-interest is something which Veblen neglected to explain. Would this not simply be a return to feudal hierarchy under another name?
We know that a hierarchical order may be a simple order. For Godwin's vision of the world, the question is whether there exists any simple order that is not hierarchical? Is there any simple order which can take people as they are, which does not involve remaking them into 'better' people?
"In the year around 1950, writers from several parts of the world set out to produce a new literature of political analysis, differing from any political literature of the part, with a goal of describing and analyzing the totalitarian political passions of the twentieth century—the topic of the hour.... The writers disagreed with one another. These people were not a faction. Still their tracts and essays and novels did share one very noticeable quality. It was a tone of voice. And the tone expressed a shared emotion, which was this: astonishment.
"Every one of those writers had started out as an enemy of fascism and the extreme right in the 1930s and 40s; and every one of them, glancing over his shoulder, had begun to notice after a while that communism in the age of Stalin was pretty scary, too. And each of these writers made one additional observation, which was positively alarming. Fascism and communism were violent enemies of each other—bitter opposites. But, caught in a certain light, the bitter opposites looked oddly similar. And visible similarity led to an anxious worry. Was it possible that fascism and communism were somehow related? Paul Berman, Terror and Liberalism, New York, 2003, p. 22.
Debate over the hierarchy of "pleasures" continued long after the Godwin-Malthus discussion we consider here. For a review of the debate between J. S. Mill and W. S. Jevons on the matter, see Sandra J. Peart, "W. S. Jevons's Application of Utilitarian Theory to Economic Policy" (1990), Utilitas: A Journal of Utilitarian Studies 2: 2, pp. 281-306.
This is stressed in A. M. C. Waterman, Revolution, Economics and Religion. Cambridge: Cambridge University Press, 1991.
David Hume, 1739-1740, A Treatise of Human Nature, edited by L. A. Selby-Bigge and P. H. Nidditch, Oxford: Clarendon Press, 1978, p. 494.
William Godwin, Enquiry concerning Political Justice, and its Influence on Morals and Happiness, edited by F.E.L. Priestley, (Toronto: University of Toronto Press: 1946), volume 2, p. 420. (Book VIII, Chapter 1, § 1). Priestly's edition is the only one which collates the changes over the three editions. Because it is hard to find, we provide section numbers to link with less expensive editions.
Political Justice, volume 2, 467; Book VIII, Chapter III, § 15. We have added the emphasis.
Volume 2, p. 423 (Book VIII, Chapter 1, § 7)
Political Justice, volume 2, pp. 507-8; Book VIII, Chapter VIII, Appendix, § 12.
Priestley (Political Justice, volume 3, p. 220) gives the collation with the first edition in which these sentences, dropped from the 3rd edition, appear: "In a state of equality it will be a question of no importance, to know who is the parent of each individual child." (Volume 3, p. 221): "I ought to prefer no human being to another, because that being is my father, my wife or my son, but because for reasons, which equally appeal to all understandings, that being is entitled to preference. One among the measures which will successively be dictated by the spirit of democracy, and that probably at no great distance, is the abolition of surnames."
Political Justice, volume 2, pp. 511-12; Book VIII, Chapter VIII, Appendix, § 17.
Political Justice, volume 2, p. 513; Book VIII, Chapter VIII, Appendix, § 18.
Political Justice, volume 2, p. 513; Book VIII, Chapter VIII, Appendix, § 19.
Malthus responded to Godwin by appealing to the most simple of human desires, for companionship and for a family. This challenges Godwin at the center of his thinking, as Godwin had written a magical novel, St. Leon, in which he asked what would be the fate of a man who was granted the power of infinite wealth and infinite youth. Godwin's profound answer is "infinitely lonely."
St. Leon marks Godwin's change of mind about marriage. His tragically brief marriage to Mary Wollstonecraft (author of Vindication of Rights of Women) was enormously happy. Their daughter, the future Mary Shelley, would become the author of Frankenstein.
David M. Levy
is professor of economics, George Mason University, and a research associate of the Center for the Study of Public Choice. His email address is DavidMLevy at aol.com