Neo-Liberals or Libertarians: Theorists of the Thin State

As a reaction to the growing thickness of the state as a welfare flag- bearer and interventionist mechanism in the economic sphere, a new stream of critique emerged. This is led by the neo-liberals or the Libertarians, chiefly amongst them are Friedrich A. Hayek, Milton Friedman, Isaiah Berlin and Robert Nozick. Their main opposition to the growing intervention of the state emerges from their concern for liberty and freedom. All of them support the negative view of liberty and argue for non-interference in the economic liberty of the individual. In short, they take the debate back to a possessive individual and laissez-faire state.

F. A. Hayek, an Austrian economist and political philosopher, is a prominent neo-liberal and advocate of negative liberty and thin state. The Road to Serfdom (1948), The Constitution of Liberty (1960) and Law, Legislation and Liberty (1979), he has supported a free liberal order based on capitalist economy, which he considers as the only guarantee of individual liberty. During the Second World War, he wrote The Road to Serfdom, in which he opposed planned economy, as the title says a road to serfdom. In fact, Keynes theory of public investment and regulated economy has created a favourable climate, which has manifested in the New Deal legislations. Hayek presented his indictment of ‘over planned economy’; the same can be summarized as follows:

• Hayek distinguishes individual freedom from political and other forms of freedom. He defines individual freedom as ‘freedom from subjection of coercion of arbitrary will of others’. This is a negative concept of freedom and liberty where it consists in the absence of coercion.
• He rejects the positive or developmental view of liberty and freedom, which advocates freedom or liberty of conditions that helps in self-development, as inimical to ‘individual liberty’, due to the former leading to collectivist justification of state interference.
• He opposed planned economy and called centrally directed mobilization and utilization of economy as serfdom. This is because he feels that enactment of rules, which specify how people should use the means at their disposal, interferes with people’s own capacity to determine their objective. This is coercive and is incompatible with individual liberty.
• For him, any regulation, planning and direction of economy and resources lead to totalitarianism and serfdom. He opposes distributive justice on this ground. Distributive justice is unacceptable because it imposes some other’s conception of merit and requires allocation of resources through central intervention. Further, there is equality of opportunity but since individuals differ in their talent and skill, it results in inequality which should not be tempered with. For Hayek equality and liberty are incompatible.
• Hayek is also opposed to mixed economy because it is based on co-existence of private as well as public sector. According to Hayek, such a system is without a market or plan and fails to allocate rationally.
• State intervention is seen as an obstacle or dead hand, which reduces competition, efficiency and production.

Thus, for Hayek, only free market economy can be the basis of liberal order and individual liberty. Here, collective choices are determined on individual basis. His is a minimalist and thin state with negative liberty as the basis of individualistic society.

Milton Friedman, a US economist, is a critic of Keynesian economics and ‘tax and spend’ government policies and an exponent of monetarism and free-market economics. Monetarism means ‘inflation is always and every where a monetary phenomenon’,⁷⁷ i.e., a reflection of demand and supply. As per Friedman’s logic, focus on inflation reduction becomes important, and as a result, government bothers more for reduction of inflation than reduction of unemployment. He signalled a shift from Keynesian economics to monetarism. He has presented his views in Capitalism and Freedom (1962), Free to Choose: A Personal Statement (1980). Briefly his views can be summarized as under:

• Core of Friedmans argument is that economic freedom is not only a component of freedom but also an essential prerequisite for political freedom.
• Political freedom is inseparable from economic freedom and economic freedom from capitalist competitive economy. Only a free market system can lead to a liberal order with capacity for genuine realization of liberty.
• State intervention is seen as an obstacle or dead hand, which reduces competition, efficiency and production. Any interference is incompatible with economic liberty and as such socialism is an enemy of freedom.
• Capitalist competitive economy promotes free liberal society in two ways: (i) freedom of private enterprise and private initiative is a component of broader freedom, hence economic freedom is an end in itself, and (ii) economic freedom promotes political freedom because it separates economic power and political power and thus enables one to offset the other.
• Friedman insists that the history of growth of political freedom is the history of development of capitalist institutions.

Isaiah Berlin, a Latvian-born English philosopher who developed a form of liberal pluralism, advocated that conflicts of values are intrinsic to human life. His writings constitute a defence of liberalism against ‘totalitarianism. In his Four Essays on Liberty (1958), he actively defends negative liberty and criticizes positive liberty.⁷⁸ His basic thesis is that liberty is neither related to equality nor to justice. He, in fact, takes a cue from John Locke, J. S. Mill, Benjamin Constant and Alex de Tocqueville in defending negative liberty. Briefly, his views on liberty and its non-interfering requirement are as follows:

• Liberty in a negative sense is the area within which the individual, or a group of individuals, can act unobstructed by others. According to Berlin, liberty is ‘freedom to do what one wants or to attain a goal for which one is capable if not interfered’. For him political liberty belongs to the sphere of negative liberty.
• Berlin maintains that tradition of liberalism has always advocated protecting an ‘area’ of individual liberty un-interfered by others. Though the ‘area’ has been determined by applying different criteria like natural law, natural rights (Locke), utilities (Bentham) or self-regarding action (J. S. Mill).
• Mere lack of capability or condition to attain a goal is not lack of political freedom. This is because freedom is not related with capacity or condition but with area in which one can act unobstructed. As such, wider the area unobstructed, wider would be the freedom.
• For Berlin, liberty per se is different from conditions for realizing liberty. Inability to enjoy freedom does not mean its absence. He criticizes those who insist on socio-economic conditions in which they claim real freedom is realized tend to forget freedom itself. This concern of Berlin is premised on the fear that insistence on provision of socioeconomic conditions of freedom leads to paternalism, state directed welfare. He expresses his fears thus, ‘paternalism can provide condition of freedom, yet withholds freedom itself’. He advocates a non-interfering state and individual liberty.
• He argues that there is no logical relationship between liberty and equality or justice and also form of government, democracy or otherwise. Berlin advocates negative liberty and non-interference by the State.

Some of the political theorists like Charles Taylor, C. B. Macpherson and Bhikhu Parekh have criticized Berlin for ignoring external conditions, which are important for realizing freedom and instead insisting only on freedom per se. In fact, absence of conditions themselves constitute interference in the area, hence it is a restraint. Taylor has further added that there can be internal restrictions also in the form of incapacity which itself constitutes a restriction. To be uncharitable though, can we say that an idiot and Berlin have the same freedom (internal intellectual capacity) to pronounce on liberty or liberal pluralism?

Robert Nozick, an American political philosopher, is considered as a leading libertarian. Anarchy, State and Utopia (1974) he has applied the Lockean theory of property based on labour as an inalienable natural right and reinterprets Locke’s contract to formulate his theory of entitlement. Nozick is a supporter of a minimalist non-interventionist state—night watchman state. Nozick’s libertarian theory of justice based on entitlement was developed in response to liberal equalitarian theory of justice advocated by Rawls. We may summarize Nozick’s views as follows:

• Nozick follows Lockes tradition of prior and inalienable natural rights of an individual, possessed independently of society, particularly, inviolable property rights.⁷⁹
• Based on inviolable right to property he says, right to property should be strictly upheld provided wealth has been justly acquired or transferred from one person to another. He propounds entitlement theory of justice which means that ‘from each according to what he chooses to do, to each according to what he makes for himself…’ This is entitlement-based justice for a liberal order that Nozick advocates.
• Thus, one has the right to do or work as per choice and is entitled to the fruits of his work, creation or skill. He says, ‘whether or not people’s natural assets are arbitrary from a moral point of view, they are entitled to them, and to what flows from them.’⁸⁰ For Nozick, skills are not common assets. A doctor’s skill is relevant in relation to patients and their needs. Hence, a doctor’s skill can be utilized, as per Rawlsian justice, in meeting those needs irrespective of purchasing power. But Nozick says, doctor’s skills are not common assets, they are entitled to them. Thus, individuals having skills are entitled to use them as per their advantage.
• Nozick criticizes Rawls’s theory of justice because the role of the State expresses a patterned conception of justice. This conception imposes a pattern of distribution on society, which is not natural. Nozick opposes any type of redistribution of resources in society other than the operation of the entitlement-based justice.

From this conception of entitlement-based justice, Nozick formulates a concept of minimalist state. He says:

Our main conclusions about the state are that a minimal state, limited to narrow functions of protection against force, theft, fraud, enforcement of contracts, and so on, is justified; and that the minimal state is inspiring as well as right. Two noteworthy implications are that the state may not use its coercive apparatus for the purpose of getting some citizens to aid others, or in order to prohibit activities to people for their own good or protection.

Thus, a minimal state, which does not seek taxation or welfare or redistribution, is envisaged.

It seems that the liberal theory has taken a circular transition, advocating a night watchman state than allowing it to police and regulate widely as a thick state and again stripping it to be the night watchman. These changes are responses to changing requirements of the capital and sense of individual liberty. It seems, some time the liberal individual is morally sick requiring development and some other, economically filthy, just to be left alone. Nevertheless, in its focus, the liberal theory of the State—both positive and negative, has ‘liberalindividual’ as its concern. It is now on the Marxian theory to take the focus away from the individual to a separate terrain occupied by classes. The individual becomes part of a class and negotiates its fate with not only the state but also ‘the other’ class. The issue now will not be whether the state should be a police or a night watchman or a paternalistic dispenser, rather in whatever capacity it is, whose state is it any way?