Building a Living Democracy
Beyond Socialism and Capitalism
by Gar Alperovitz
Sojourner, April 1990

Page 4 of 9
Liberty

A second potential element of a comprehensive vision--one that is rarely discussed in systemic terms by progressives--has to do with establishing the necessary underlying conditions of liberty in a new system. The collapse of the traditional socialist ideal--and particularly the weakness of democratic practices and political liberty in the East--makes this a matter of considerable urgency.

The thoughtful conservative argument against statist socialism urged not simply that the concentration of economic and political power in the institution of the state was dangerous, but that there had to be alternative sources of independent support for the individual--else liberty could never be sustained over time. The notion, in fact, involves the idea of a balance of forces: At the same time that they contended against a strong state, such conservatives argued the critical importance of small scale, entrepreneurial enterprise. In their system the underlying structural support for the principle of liberty could not be compromised: A free political culture required, they held, that society rest upon a foundation of true citizenry based on economic independence.

Conservative economist Milton Friedman observes:

"It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arrangements....Such a view is a delusion....The kind of economic organization that provides economic freedom directly, namely competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other."

Thomas Jefferson urged a broadly similar theory of the requirements of a meaningful political-economic system. In his 1791 Notes on Virginia, Jefferson wrote: "Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition...." His hope for the new system in late 18th Century America had a very specific structural foundation:

"Everyone may have land to labor for himself, if he chooses; or, preferring the exercise of any other industry, may exact for it such compensation as not only to afford a comfortable subsistence, but wherewith to provide for a cessation from labor in old age....Such men may safely and advantageously reserve to themselves a wholesome control over their public affairs, and a degree of freedom..."

The dangers of statism in socialism are now clear to all. However, serious conservatives, like serious progressives, must also confront a direct contradiction of both aspects of their most dearly held theory in the experience of the West. In the United Sates, for instance, irrespective of the hopes of conservatives and largely irrespective of who has been in power, including Herbert Hoover and Ronald Reagan--the state has grown in size and power. The government, for instance, accounted for only about 7 percent of the GNP just before the turn of the 20th Century--and has grown to roughly 35 percent in recent years.

Moreover, for all its other difficulties, pre-20th-century American society did in fact rest upon a footing of millions and millions of individual entrepreneurs. They were mostly farmers (or, more accurately, farmer-businesspeople--an entrepreneurial breed very different, for instance, from the farmer-peasants of many other societies.) A majority of the society (including spouses and children) actually had the experience of individually risking capital and being directly responsible for their own economic enterprises.

By the late 20th century, however, only a very small fraction of Americans--no more than 15 percent--can in any reasonable sense be called individual entrepreneurs. The United States has become a society of employees, most of whom work for large or medium sized bureaucracies, private or public. The difference between a system dominated by General Motors and Exxon, and one based upon the individual landholding farmer and small businessperson of an earlier day in American history may very well be greater--in the real life experience of the average person--than the difference between a system based upon large private bureaucracies in the United States and public bureaucracies in socialist nations.

A half century ago the conservative economist Joseph Schumpeter urged that the rise of the corporate system inevitably meant the death of capitalism--above all because it destroyed the key structural component of that system, the individual entrepreneur. With this loss, he believed, went both the soul of the system and its foundation. "The political structure of a nation is profoundly affected by the elimination of a host of small and medium-sized firms the owner-managers of which, together with their dependents, henchmen and connections, count quantitatively at the polls and have a hold on what we may term the foreman class that no management of a large unit can ever have."

Moreover, it is no secret that a corporation-dominated political culture has consequences: Repeated academic studies routinely document the power of major private corporations to shape legislation, influence regulatory agencies, dominate important Executive Branch decisions, and influence election patterns and the media.

H.C. Simon, founder of the conservative Chicago School of Economics (and Milton Friedman's revered teacher) argued more than 40 years ago that the "cause of economic liberalism and political democracy faces distinctly unfavorable odds." The central challenge, in his view, came from what he called "private monopoly in all its forms." The movement away from a capitalism organized by individual entrepreneurs to one operated by giant corporations was extreme. Simon challenged conservatives to face up to the fact that "the corporation is simply running away with or economic (and political) system." An important recent study by respected Yale political scientist Charles Lindblom surveys the literature of corporate political power and concludes: "The large private corporation fits oddly into democratic theory and vision. Indeed, it does not fit."

If the individual must have an independent "place to stand," as it were, and if the small entrepreneurial basis of "liberty" can never be retrieved, what then?

The vast majority of conservatives have avoided this issue. They have mostly looked away even as the institutional basis of their theoretical system has substantially dissipated. Only a very few have had the courage to acknowledge (in the words of Herbert Hoover) that the true free enterprise system is long dead: "The 18th century thesis of laissez-faire passed in the United States half a century ago" he wrote in the midst of the Great Depression.

Nor, avoiding the gaping hole in their theory, have many confronted the possibility that without some secure new footings for liberty the present system might all too easily be shaken by the scape-goating of minorities, unpopular political groups, or non-conformist in general. That a new institutional theory is needed if liberty is to have meaning has been recognized by still fewer conservatives.

Peter Drucker, to his credit, has acknowledged that in Western society "the overwhelming majority of the people in the labor force are employees of `organizations'--in the U.S. the figure is 93%--and the `means of production' is therefore the job." He affirms, therefore, that jobs should (and in many ways have already) become a form of property; the right to a job should therefore be accepted as fundamental. Such an approach, in the modern era, Drucker argues, "is compatible with limited government, personal freedom...."

But if "the job" is to provide the foundation for liberty in the new era, it must obviously be made secure. Liberals and socialists have proposed--mainly on equity grounds (since few have confronted this aspect of the institutional problem of liberty)--that there be a legal right to a job.

And, in turn, to be meaningful--to be truly a right and not merely a hope--this requires absolute guarantees. In the mid-1970s the initial drafts of the proposed Humphrey-Hawkins full employment legislation contained provisions allowing an individual to go to court to secure a government guaranteed job if no other possibilities were available.

Another solution suggested by others who have begun to explore longer term approaches to the problem of liberty in the new century involves the direct provision of a substantial share of income to individuals as a matter of right. The aim of such income, it is important to understand, is not simply to help the poor, or because people are elderly, or for any reason other than the most fundamental one that if liberty and democracy are to have meaning, individuals must ultimately have substantial economic security, a structural basis for liberty and democracy.

In his book The State, British political theorist Bill Jordan argues:

"In order to reconcile political authority with individual autonomy the state needs to take certain steps to ensure a basis of equality and freedom amongst its citizens....The new principle is that the state should pay to each citizen, simply by virtue of his or her citizenship, an income sufficient for subsistence. This should be unconditional, and paid equally to all, employed and unemployed, men and women, married and single....This state-guaranteed subsistence income (sometimes referred to as the social dividend or social wage) would give every citizen the basis for equal autonomy."

Again, to be quite clear, the issue here is not one of social justice. It is rather how to insure that the conditions necessary for true democratic participation and liberty are met in societies that are long past the era of the individual yeoman farmer and small entrepreneur.

The notion that in the long run there must be an alternative guarantee for some substantial economic security is also a core element in the systemic visions proposed by such diverse theorists as Paul and Percvial Goodman, on the one hand and Jacques Maritain on the other. In their book Communitas, for instance, the Goodmans suggested a dual vision based on the distinction between necessities and luxury production:

"The direct solution...would be to divide the economy and provide the subsistence directly, letting the rest complicate and fluctuate as it will. Let whatever is essential for life and security be considered by itself, and since this is a political need in an elementary sense, let political means be used to guarantee it. But the rest of the economy, providing wealth, power, luxury, emulation, convenience, interest and variety, has to do with varying human wishes and satisfactions, and there is no reason for government to intervene in it in any way.

"The dividend economy has therefore, the twofold advantage that it directly provides the essential thing that is in jeopardy, without having to underwrite something else; and it restricts the intervention of government to this limited sphere."

Jacques Maritain was clearly struggling toward a roughly similar formulation:

"In order to assure the free basic level of income...each qualifying individual would be required to work half-time--manually or intellectually--in the profession of his choice....Let us give the name "basic requirements" to the half-time manual or intellectual work....During the other half of the day, people would ...world as it pleased them to do so....[Resources would be provided to] the institutions and enterprises that any number of citizens would like to found or to direct during that part of the day dedicated to life-enhancement activities."

Only a few decades ago the idea that individuals should receive direct funding from the government -- as for instance, in the Social Security program--was regarded as illusory. In the coming new century, student grants, unemployment compensation, training assistance, Social Security, and other forms of direct cash payment might well establish partial precedents for a more comprehensive system in which a certain portion of income is received as a matter of right. But this in turn requires that the concept be based upon a much more powerful systemic vision and goal -- in this instance, the fundamental requirement of sufficient independence to make liberty and democracy meaningful.