Vaishak Kumar, University of Pennsylvania
6.1. The Illusion of Freedom The neoliberal argument rests on the belief that free markets facilitate mutually beneficial voluntary exchanges between two self-interested parties. It is argued that if the arrangement is not beneficial, these rational agents will not take part in these exchanges at all. This elegant argument, however, does not hold up in practice. Consider the case of a destitute immigrant who works on a Florida tomato farm for the meagre wage of $8 a day. While many would regard this as exploitation, free market liberals might argue that the worker has entered this arrangement because it is beneficial to him and if not, he was free to do something else. In a similar vein, Friedman wrote, “Since the household always has the alternative of producing directly for itself, it need not enter into any exchange unless it benefits from it” which is a simple version of the underlying logic of the notion of ‘natural rate of unemployment’ employed in many neoclassical macroeconomic models. In order to counter this argument, we will first have to define freedom.
Isaiah Berlin, in his seminal work The Two Concepts of Liberty, gave us two related but distinct ways to think about freedom. He defined negative freedom as the area within which a man can act unobstructed by others. “If I am prevented by others from doing what I could otherwise do, I am to that degree unfree,” Berlin summarized his notion of coercion (Berlin 122). So in a negative sense, one can say that there was nothing stopping the immigrant worker from rejecting the farmer’s offer and spending his days in leisure. As might be obvious, this would be very simplistic. Economist Amartya Sen’s capabilities approach to freedom will shed some light on the problem. According to Sen, a person is said to be free to do something if he has the capability to accomplish it. Capability includes the material goods and conditions that allow a person to do
a specific task. Therefore, Sen argues for a positive definition of freedom; It is not just the absence of obstacles but also the presence of certain conditions that make a man free (Robeyns).
Using Sen’s definition of freedom, we can understand the immigrant worker’s plight better. The liberal position that he is free to not work on the farm is untenable. They say that surely the worker can either work somewhere else where he may earn a better wage or desist from working altogether. The former may not be possible because either he doesn’t have the requisite qualifications and cannot allocate time and resources towards acquiring them as the short-run cost of not earning any wage exceeds the long-run benefit of earning higher wage. The latter is not possible because if he does not work – even for that meagre wage – he cannot feed himself. When this man does not have the capabilities to realize any of the alternatives to being exploited, we cannot claim that he is free to abstain from such an exchange. Therefore, when workers agree to work for very low wages, they do so not out of their free will. They are forced to work those jobs because they have no other options. So, if the government enforces a reasonable minimum wage, provides a well paying job, or redistributes wealth, it can truly preserve the freedom of the worker.
6.2. Justice Perhaps the strongest criticism that can be made against the ideology of neoliberalism is that its demand for unbridled freedom comes at the cost of justice. An impersonal market has many advantages. Prejudice and discrimination are remedied to a certain extent in a system where price is the single most important signal. However, this very quality also becomes a weakness. The
market in its free form does not concern itself with the history of the means of production employed or that of the products themselves. Nozick, a libertarian philosopher, who was interested in the ‘historical entitlement’ conception of justice put down a few principles to ensure that a transaction was just. His principle of justice in acquisition states that a person who acquires a holding by claiming an unused natural resource (especially land) is entitled to that holding. The principle of justice in transfer states that a person who acquires a holding through voluntary exchange (usually for labor or another holding) from someone else entitled to the holding, is entitled to the holding. Nozick says that no one is entitled to any holding except by repeated applications of these two principles. With this logic, he argued that taxation, even for the purpose of redistribution, is theft (Mack).
While this argument makes intuitive sense, it is not hard to see that Nozick has a rather optimistic view of the world. In historical reality, people did not acquire holdings by claiming virgin lands but did so through coercive measures. Karl Marx and other early political economists called this initial acquisition as the ‘primitive accumulation of capital.’ Marx claimed that pre-capitalist systems based on private property such as feudalism had their roots in violent expropriation of land and other resources. People were killed, driven off or cheated from their land, and the powerful accumulated this capital. Another effect of this accumulation was that it created a class of people who did not own property and in order to survive were forced to work for those who did (Marx 507-508). In light of this, Nozick’s principle of justice in acquisition has been violated and any subsequent transaction is unjust. It is indeed a sham to call our markets ‘free’ when it is based on this historical exploitation.
John Rawls provided another conception of justice that will help us tackle our problem. For Rawls, Justice is closely related to the notion of fairness. He conducts a thought experiment in which all the people in a society are put behind a ‘veil of ignorance’ so that we do not know the specifics of our identity such as our gender, race, class, etc., and even our preferences. Rawls says that when asked to propose principles for institutions in a just society in this ‘original position’, we would propose the following two principles:
First: each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others. Second: and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone’s advantage, and (b) attached to positions and offices open to all. (Rawls 42-43)
One may rightly criticize Rawls’s assertion saying that this might be only one possible set of principles that might be chosen behind the veil of ignorance, and that any choice made behind the veil where the agents do not know their preferences might not be really meaningful. However, there are a few facets of this theory that can inform our own ideal of justice such as the foundational importance of fairness, prioritization of liberty, and preference for procedures and institutions over outcomes. A just system is one that distributes freedoms impartially. Rawls, much like liberals, sees freedom as an integral concern for justice. Further, he fully recognizes that luck plays an unreasonably important role in determining who gets what kinds of liberties, and therefore, would like for society to strive towards endowing everyone with the freedom to do what they choose to irrespective of what background they come from.
Though we do not have to aspire to any particular ideal of justice, increasing fairness in the distribution of freedoms should be our goal just as securing negative freedom has been in the recent past. A social order that does not do this only perpetuates historical injustices. Neoliberalism can also be viewed as an ideology that theorizes freedom and efficiency that justifies the domination of labour by capital. This view is buttressed by the fact that incomes of those at the top of the pyramid have been steadily increasing while wages of the majority have been stagnating for roughly thirty years. The weakening of labour unions and cuts in social spending have significantly hurt the interests of blue collar workers. This phenomenon has given rise to the precariat, a new social class that is in a constant state of economic precarity (Standing). This class feels that the free market and the political system have cheated them, and populist politicians are taking advantage of that. The British exit from the European Union and the election of Donald Trump as President are both instances of economic anxiety fueling racial resentment and anti-establishment politics. If this trend continues, we might lose all the socio-political gains that we have made since the the great wars.
- Conclusion There is no doubt that liberalization of markets has spurred innovation and has, in general, increased global wealth. However, the pendulum seems to have swung too much towards market fundamentalism. The idea that self-regulation works best is a very convenient solution for a government that struggles to regulate the large and complex economy of today’s world, but our experience with over-financialization, global warming and extreme inequality tells us that this complacency will not do. The government has to play an active part in the economy to prevent
market failures and to make sure that each person gets a fair chance to realize his personal aspirations. What is required is a robust form of liberalism that not only protects the freedoms of individuals but also upholds justice. This is not the end of history; it is but the beginning of a new chapter.