Are declining economic growth rates likely to have undesirable impacts on social attitudes?

 

Research for an earlier essay on this blog led to the conclusion that declining economic growth rates in high income countries are likely to cause an increasing proportion of the population of those countries to feel that their standard of living is worse than that of their parents at a comparable age, and therefore to experience lower average life satisfaction. In this essay I extend that analysis to consider the social attitudes of people in the USA, Britain and Australia who feel worse off than their parents.

In the previous study I used data from the World ValuesSurvey to examine the relationship between the perceptions of respondents about their standard of living relative to their parents at a comparable age and economic growth in the countries in which they reside. That data was then linked to average life satisfaction.

The main findings were:

• Perceptions of standard of living relative to parents are positively related to past economic growth experience of the countries in which people live.
• In the high-income countries, low growth has a greater adverse impact on young peoples’ perceptions of their standard of living relative to parents than on the corresponding perceptions of old people.
• The perception of having a lower standard of living than parents at a comparable age has a substantial adverse impact on life satisfaction ratings.

These findings imply that lower economic growth rates would be likely to result in an increasing proportion of the population having lower living standards than their parents, and hence, lower average life satisfaction. The psychic costs of adjustment to lower economic growth would initially fall most heavily on young and middle-aged people.

Those findings raise questions about likely changes in social attitudes if economic growth prospects continue to decline in high-income countries, resulting in an increasing proportion of people who feel worse off than their parents were at a comparable age. This essay uses World Values Survey data to explore how some of the social attitudes of people who perceive themselves to have a lower standard of living that parents differ from those of the rest of the population.

I focus on three high-income countries – USA, Britain and Australia. The USA survey was undertaken in 2017, the British survey in 2022, and the Australian survey in 2018.

Figure 1 provides further evidence that people in the USA, Britain and Australia tend to have lower average life satisfaction if they perceive that their standard of living is lower than that of their parents.

 

Demographics

Figure 2 indicates that people who perceive themselves to be “worse off” than their parents tend to be concentrated in the 25-54 age groups.

 

Figure 3 suggests that the sex composition of those who feel “worse off” than their parents differs somewhat by age group in the countries considered, but I have no idea why. There appears to be a higher percentage of young women in that category in Australia, a higher percentage of women in the 30-49 age group in Britain and a higher percentage of older women in the United States.

 

Work and Success

Figure 4 indicates that those in the “worse off” category are less likely to agree that hard work brings a better life.

 

Attitude to Migrants and Migration

The only conclusion I can draw from Figures 5 and 6 is that Australians who feel “worse off” than their parents tend to have more negative attitudes toward migrants and immigration than those who feel better off or about the same.

 

Trust

Figure 7 suggests that a lower percentage in the "worse off" category say most people can be trusted.

Figure 8 suggests that a lower percentage of those in the "worse off" category have confidence in the justice system.

Priority given to Freedom

Figures 9 and 10 suggest that there is not much difference between the three groups in terms of priority given to freedom. Slightly fewer of those in the “worse off” category tend to give freedom higher priority than equality. Surprisingly, in Australia and Britain, slightly more of the people in that category tend to give freedom higher priority than security.

 

Government objectives

Figure 11 indicates that those in the “worse off” category are more inclined to want government to take more responsibility to ensure everyone is provided for. The percentages shown are for the top 3 ratings on a 10 point scale.

 

Figure 12 indicates that those in the “worse off” category are less inclined to give high priority to economic growth. Respondents were asked to select from a list which national aim should be given highest priority. Other items on the list include having strong defence forces and individuals having more say in decision making.

 

Politics

Figure 13 suggests that those in the “worse off” category are no more interested in politics than other people in the countries considered.

 

Figure 14 suggests that people in the “worse off” category are no more likely to consider that it is good to have a strong political leader.

 

Figure 15 suggests that people in the “worse off” category are no less likely to consider that democracy is important.

 

Figure 16 suggests that people in the “worse of” category are less likely to be satisfied with political system performance than are people in the other categories.

 

Figure 17 suggests that people in the “worse off” category are as strongly opposed to political violence as are people in the other categories.

 

Conclusions

The social attitudes of people who perceive their standard of living to be worse than that of their parents at a comparable age are similar in many respects to those of people who perceive their standard of living to be better or about the same as that of their parents.

However, there are some important differences. People who perceive their standard of living to be worse than that of their parents at a comparable age are more inclined to:

• Skepticism about hard work bringing a better life;
• Pessimism about trustworthiness of others and lack of confidence in the justice system;
• Collectivism in terms of responsibility for the wellbeing of citizens;
• Negativity about giving high priority to economic growth; and
• Dissatisfaction with political system performance.

That combination of attitudes seems likely to be self-perpetuating because it is likely to promote policy responses that will lead to lower economic growth and a further increase in the proportion of the population who perceive their standard of living to be worse than that of their parents. Adoption of more market-friendly economic policies to facilitate higher economic growth seems unlikely to occur before that course of action becomes more obviously necessary to avert major economic crises.   

Can Empirical Natural Rights be viewed as metanormative principles?

 

Prior to attempting to answer the question posed above I briefly outline the concept of individual rights as metanormative principles - as discussed by Douglas Rasmussen and Douglas Den Uyl - and consider the alternative approach that John Hasnas has adopted in his discussion of empirical natural rights.

Rights as metanormative principles

In their book, Norms of Liberty (published in 2005) Douglas Rasmussen and Douglas Den Uyl note that a rule qualifies as metanormative if it “seeks not to guide individual conduct in moral activity, but rather to regulate conduct so that conditions might be obtained where moral action can take place”. (p. 34) They argue that, as metanormative principles, individual rights solve a problem that is uniquely social, political, and legal. They describe the problem as follows:

“How do we allow for the possibility that individuals might flourish in different ways (in different communities and cultures) without creating inherent moral conflict in the overall structure of the social/political context—that is the structure that is provided by the political/legal order? How do we find a political/legal order that will in principle not require that the human flourishing of any person or group be given structural preference over others? How do we protect the possibility that each may flourish while at the same time provide principles that regulate the conduct of all?” (p. 78)

Recognition of individual rights solves the problem because it protects individual self-direction and enables individuals to flourish in different ways, provided they do not interfere with the rights of others.

The “instrumental moral value” of empirical natural rights

I was prompted to ask myself the question posed above as I was re-reading part of John Hasnas’s book, Common Law Liberalism (2024).

As I noted in an earlier essay published here, Hasnas offers an alternative conception of natural rights – empirical natural rights (ENR) – that evolve in the state of nature. He then proceeds to argue that ENR form a good approximation to individual rights as propounded John Locke.

Hasnas claims that he “can offer no argument that empirical natural rights have any intrinsic moral value.” He then goes on to argue that ENR have “instrumental moral value regardless of the moral theory and general approach to ethics one adopts”:

“This is because empirical natural rights facilitate peaceful human interaction and peace is an important, if not pre-eminent moral value in virtually all moral theories.” (p. 150)

Hasnas then proceeds to discuss why peaceful human interaction is necessary for the realization of deontological, consequentialist, and Aristotelian moral theories.

I think I can understand why Hasnas has adopted that approach. If you want moral theorists from a variety of different traditions to see merit in a new concept that you espouse, it is helpful to be able to argue that the concept is in harmony with their traditions.

However, it would be preferable, it seems to me, to be able to argue that recognition of ENR provides the metanormative conditions that enable moral conduct to take place, and that individual rights over-ride other moral claims.

Would Hasnas have grounds for concern that Kantians and Utilitarians might reject ENR as a metanormative concept?

My first thought was that their reactions might depend on how the metanormative principle was stated. Kantians and Utilitarians would have no obvious grounds to object to ENR being recognized as metanormative principles on the grounds that they protect individual self-direction and enable individuals to “to use their knowledge for their purposes”, provided they do not interfere with the rights of others.

The quoted words are from the Friedrich Hayek quote in the epigraph. (Law, Legislation and Liberty, Vol. 1, p. 55.) It seems to me that use of one’s knowledge for one’s purposes comes close to the idea that human flourishing is best understood as “the exercise of one’s own practical wisdom.” As far as I can see, ENR are identical to the “rules of just conduct” referred to by Hayek.

Nevertheless, I think it is preferable to acknowledge the activity of flourishing explicitly because that is the best way to describe the human telos.

Would Kantians and Utilitarians object to a metanormative principle which recognizes that people seek to flourish in different ways?

I asked Chat GPT whether a person who subscribes to Kantian deontology would have grounds to object to my observation that they use their own practical wisdom to flourish. Here is part of her reply:

“They could argue that flourishing may occur as a byproduct of acting morally, but it is not the guiding principle. True moral worth arises when actions are performed out of respect for the moral law, not for the sake of achieving personal flourishing.”

When I think about it, I don’t think many Neo-Aristotelians would claim personal flourishing as their motive for acting with integrity toward others, even though they would view such behaviour as integral to their flourishing. People pursue the goods of a flourishing human because they perceive them to be good. The activity of flourishing is not about doing things that might raise one’s score in an imaginary index of individual flourishing.

From my reading, I don’t think many Utilitarians would raise strong objections to being told that they are seeking to flourish. At one point in On Liberty, J. S. Mill refers to “the judicious utilitarianism of Aristotle”, so it seems unlikely that he would have raised objections. Referring specifically to arguments for individual rights to be given an Aristotelian grounding, Leland Yeager suggests: “Such ‘Aristotelian’ arguments diverge from utilitarianism less in substance than in rhetoric.” (Leland B Yeager, Ethics as Social Science (Cheltenham: Edward Elgar, 2001) p. 222.

Conclusion

In discussing the normative significance of his concept of empirical natural rights (ENR) John Hasnas suggests that because they facilitate “peaceful human interaction” they have “instrumental moral value regardless of the moral theory and general approach to ethics one adopts.” I suggest that it would be preferable to be able to argue that recognition of ENR provides the metanormative conditions that enable moral conduct to take place, and that individual rights override other moral claims.

In exploring whether Kantians and Utilitarians might object to an argument for ENR to be viewed as metanormative principles I first suggested that they could have no objection to them being justified in Hayekian terms - recognizing that ENR protect individual self-direction and enable individuals to “to use their knowledge for their purposes”, provided they do not interfere with the rights of others.

It is possible that some Kantians and Utilitarians might object to a metanormative justification of ENR being framed in terms of allowing for “the possibility that individuals might flourish in different ways” on the grounds that they don’t recognize flourishing as a prime motivation for moral conduct. However, Neo-Aristotelians also pursue the goods of a flourishing human because they perceive them to be good rather than to raise their score in some imaginary index of personal flourishing.

 It seems to me that it would be very difficult for anyone who supports individual rights to object to them being viewed as metanormative principles. It would be almost as difficult to object to them being justified on the grounds that, among other things, they enable individuals to flourish in different ways.

Addendum

I have been thinking further about the question of whether there are reasons for anyone to object to a metanormative principle which recognizes that humans seek to flourish. It seems to me that to do that one would need to reject a description of human life that recognizes that it has inherent potentiality. For example:

“Humans, like all living things are teleological beings and have an inherent potentiality for their mature state – which is to say, they have what could be broadly called natural inclinations or desires to engage in activities that constitute their completion or fulfillment. They have a natural desire for their good.” (Douglas Den Uyl and Douglas Rasmussen, The Perfectionist Turn, p 237)

That observation owes a lot to Aristotle but is it not still consistent with what we know about humans from the findings of biology, neurology, and psychology?

Second Addendum

This is what ended up in the first draft of the article I am writing:

The idea that it is natural for humans to seek to flourish should not be controversial.[1] It follows from a description of human life that recognizes that “like all living things … [humans] have what could be broadly called natural inclinations or desires to engage in activities that constitute their completion or fulfillment.”[2] Nevertheless, it may be worth adding that recognition of individual rights as a metanormative principle also protects the choices of those who wish to follow the directions of religious leaders rather than to be self-directed, and even of those who are motivated to behave in ways that might detract from their individual flourishing - provided they do not interfere with the rights of others.

---

[1] I raise the issue because Hasnas seems to imply that Kantians and Utilitarians might have reason to object to the concept of flourishing because it is associated with Aristotelian moral theory. He argues that peace is consistent with deontological moral standards and makes the realization of the ends of consequentialist moral theory more likely, as well as well as being necessary for human flourishing. See: Common Law Liberalism, p. 150.

[2] Douglas Den Uyl and Douglas Rasmussen, The Perfectionist Turn (Edinburgh: Edinburgh University Press, 2016), p. 237. The authors note that knowing that a particular activity is good for you will not necessarily provide you with a reason or motivation to engage in it.

Should Libertarians be Attempting to Influence Culture: A Discussion with Winton Bates and Chris Matthew Sciabarra (III)

 

In this third instalment of our collaboration, we move on to consider more specifically how libertarians should respond to some illiberal tendencies in the cultures of the liberal democracies. The discussion focuses particularly on university culture.   

Before moving into that discussion, however, it is appropriate to outline some points from earlier editions of our collaboration to help readers to see where we are coming from.

First instalment

In raising the question of whether libertarians should be attempting to influence culture, Winton mentioned that he is reconsidering his objections to J. S. Mill’s view that the sanctions imposed by “prevailing opinion and feeling” were akin to tyranny. He suggested that the only reason he could think of why libertarians should not be attempting to influence culture was the difficulty they would have in agreeing on the kinds of cultural change they would like to promote.

In his response, Chris discussed the changes in the libertarian movement that had occurred since he first encountered it in the late 1970s. He noted that “thin libertarians”, who argued that freedom does not require anything more than robust defence of the nonaggression principle, had ended up endorsing paleoconservative values opposed to a cosmopolitan social framework. He suggested that although that approach is fundamentally opposed to liberal values, it is an acknowledgement that some kind of cultural matrix is necessary to nourish the freedom project.

Chris summed up his response to the question by suggesting that libertarians should be focused on exploring the role of culture in shaping political and social outcomes.

One of the points raised in comments on our first instalment is that there is a difference between saying libertarianism qua political philosophy should attempt to change culture and saying that a libertarian concerned in advancing libertarianism should attempt to change culture. One commentator suggested that libertarians should “work as individuals, and in concert with others, to build a freedom-friendly culture of moral and virtuous people who strive to create a good life, to flourish, and to be happy.”

Second instalment

Winton opened the discussion by raising the question of whether Enlightenment humanist values are still broadly supported by public opinion. He observed that support for reason and reality seemed to have diminished with increasing disrespect for truth in narratives of conservative populists as well as radical progressives who are seeking political power. He noted his support for attempts to understand power relations in society.

Chris explained his Tri-level Model of Power Relations, which was first derived from his reconstruction of Ayn Rand’s analyses of social problems in Ayn Rand: The Russian Radical. The Tri-level Model illustrates the importance of paying attention to interactions between personal, cultural, and structural factors (political and economic structures, institutions and processes). An exclusive focus on any one of these levels of analysis overlooks the importance of factors associated with other levels in determining the ability of individuals to flourish. Individual flourishing is affected by cultural and structural factors as well as by the individual’s values and habits.

Chris’s contribution highlighted the potential for personal ethical and psycho-epistemological practices to affect the dominant cultural institutions. It also highlighted the potential for cultural practices to undermine (or reinforce) the humanism and cosmopolitanism that supports personal flourishing and liberty.

Winton Bates’s views on university culture

The sources of illiberal tendencies in universities differ from those that concerned J. S. Mill when he wrote the sentence quoted in the epigraph at the beginning of this article. Mill suggested that “dogmatic religion, dogmatic morality, and dogmatic philosophy” needed to “be rooted out” of the universities. Mill’s main target seems to have been the Church of England.

A modern libertarian who is concerned about illiberal tendencies in universities is likely to have in mind different sources of dogmatism – for example, action by students and staff to silence voices that are opposed to prevailing campus orthodoxies. The common element is interference with the free exchange of ideas that is indispensable to the search for truth.  

The context in which Mill was writing about universities is relevant to the broader question of what attitude libertarians should adopt toward illiberal tendencies in culture. Mill was concerned that growth in the power of public opinion would cause “the individual” to become lost in the crowd. He hoped that the universities would be able to foster “great minds” who would have a positive impact on public opinion.

There is arguably more reason for libertarians to be concerned about illiberal tendencies in educational organisations than in social media and other economic and social activities that influence public opinion. When a social media firm interferes with freedom of expression, self-correcting forces are likely to be activated eventually as people perceive themselves to be adversely affected and shift their support to competing social media firms. Similarly, self-correcting forces are likely to be activated if a community group subjects a media firm to a boycott, if members of other community groups consider such action to be unfair.

Self-correcting mechanisms seem to be more muted in educational organisations. When their actions prevent invited speakers from being heard, students rarely face consequences that might deter such behaviour in the future. Students who have been seeking to silence opposing voices on campuses in recent months are following in the footsteps of students who adopted similar tactics with equal passion a few decades ago. Whether or not they intend it, their dogmatism in insisting that opposing voices should not be heard is placing at risk the culture of free exchange of ideas that should characterize university education.

Libertarians are not alone in having reasons to support the free exchange of ideas in universities. Anyone who has an interest in the search for truth has reason to support free exchange of ideas.

However, there are at least three good reasons why libertarians should be taking a leading role in seeking to restore the culture of universities as bastions for the free exchange of ideas.

First, the personal values held by many libertarians emphasize the importance of behaving with integrity towards other people. That entails recognizing links between individual flourishing and freedom of expression. Individuals are more likely to flourish academically if the free exchange of ideas and search for truth is emphasized in the prevailing cultures of universities.

Second, it is doubtful whether the legal order can continue to protect free speech if freedom of expression is severely restricted within universities, whether by government or by the activities of university authorities, staff, and students. A legal order protecting free speech depends ultimately on public opinion that values free speech, which, in turn, requires intellectual support.

Third, if staff and students do not take action to restore the culture of universities, it is likely that governments will intervene. Some libertarians might consider government intervention to be appropriate in that context, but it could provide a precept for government intervention that limits the autonomy of universities and poses a threat to freedom of speech.

Chris Matthew Sciabarra comments:

In asking “Should Libertarians be Attempting to Influence Culture?”, this dialogue has focused important attention on the role of culture in affecting social change.

In our last instalment detailing my Tri-Level Model of Power Relations, I highlighted Level 2, which brings to the foreground of our analysis the role of cultural traditions, institutions, and practices in helping to sustain the existing social system. I wrote:

How does culture perpetuate existing social conditions? This is achieved through linguistic, educational, and ideological means, among others. Distortions in language—through the use of anti-concepts, for example—will tend to undermine rational discourse, while serving the needs of the powerful. Certain educational institutions and pedagogical practices will tend to undermine autonomy, perpetuate conformity, inculcate obedience to authority, and subvert the development of critical thinking. Stultifying, rigid, intolerant, racist, sexist, or tribalist ideologies or belief systems (including dogmatic religious beliefs) will tend to foster exclusionary “thinking within a square.” Such cultural practices can undermine those humanist, cosmopolitan characteristics consistent with the development of human freedom and personal flourishing.

On Level 2, then, the role of educational institutions and pedagogical practices is of paramount importance. It must be remembered that this is a dialectical framework of analysis—one that preserves the larger context within which such institutions and practices are situated. Hence, it is important to consider not only how political and economic structures tend to perpetuate a certain constellation of such institutions and practices—but also its reciprocal implication: how a certain constellation of educational institutions and pedagogical practices tends to perpetuate the political and economic order.

It is beyond the scope of this brief exchange to examine the nature of these interactions. Suffice it to say, as Winton points out, there are illiberal tendencies in university life that have quelled the free spirit of discussion, silencing voices of dissent and shoring up campus orthodoxies. But this attack on dissent also has the effect of bolstering larger social, political, and economic orthodoxies.

There are virtually no educational institutions that are free of political strictures, guidelines, or subsidies of one sort or another. This isn’t an issue of “public” versus “private” universities. The line between the ‘public’ and the ‘private’ has all but disappeared and the power of the purse has had an unmistakable impact on the ways in which universities function. In these instances, the “self-correcting forces” that Winton ascribes to social media often give way to imposed “corrections” from the top-down. The culture war between left-wing “woke warriors” and right-wing “anti-woke crusaders” has resulted in an explosive political battlefield in which state actors attempt to impose changes to educational practices, whether through restrictions on the curriculum or the hiring and firing of university personnel. As Winton points out, this is precisely the kind of government intervention that must ultimately undermine free expression.

Sadly, even with its self-correcting forces, not even social media is immune to this kind of political gamesmanship, given evidence of government interference in the dissemination of information and the use of certain platforms for the promotion of ideas that are antithetical to liberal, cosmopolitan values. While libertarians should indeed be taking a leading role in nourishing the free exchange of ideas in university life, we should also be vigilant in exposing and opposing those ideas at war with human freedom and personal flourishing. Preserving and extending a liberal cultural atmosphere that allows for vigorous intellectual engagement is therefore the surest way to make transparent the illiberal ideas among us.

Why should peacefulness be viewed as a characteristic of a good society?

 

In the most popular post on my blog, written in 2009, I asked: What are the characteristics of a good society? I began the post by suggesting that a good society would have good institutions – norms and laws that are good for its members. I noted that in thinking about the characteristics of a good society different people tend to emphasise different things that they consider to be important e.g. egalitarianism, personal freedom, moral values and spirituality. I then suggested that rather than just agreeing to differ, it might be useful to try to identify some characteristics of a good society that nearly everyone would agree to be important. 

The three characteristics I identified were: 

• institutions that enable members to live together in peace; 
• institutions that provide members with opportunities to flourish – to have more of the things that are good for humans to have; 
• and institutions that provide members with a degree of security against potential threats to individual flourishing.

No-one has suggested to me that they disagree that good societies should have those three characteristics.

However, I have been wondering recently how I should respond if someone suggested that in some societies a substantial proportion of the population hold attitudes that place a relatively low priority on living together peacefully. For example, while they may play lip service to peacefulness, people in some societies may not consider that it is important for children to learn to have tolerance and respect for others.  The chart shown above suggests that the importance placed on that particular child quality does indeed vary substantially throughout the world.

On reflection, I have decided that my view that peacefulness is a characteristic of a good society does not actually depend on the degree of support for that view in any society.

Why is peacefulness important?

It is appropriate to begin with the proposition that a good society would have good institutions – norms and laws that are good for its members. What that means is that a good society has institutions that support the flourishing of its individual members.

In my book, Freedom, Progress, and Human Flourishing, I identified several basic goods that a flourishing person could be expected to have:

• Wise and well-informed self-direction
• Health and longevity
• Positive relationships
• Living in harmony with nature
• Psychological well-being.

The merits of that list is a matter for ongoing reflection and discussion but I think it is helpful in considering what characteristics a society needs to have if it is to support the flourishing of individual members.

The contributions of peacefulness are fairly obvious. Peaceful societies protect the rights of individuals to self-direct, provided they do not interfere with the rights of others. They contribute to health and longevity my minimizing violence. They provide a context in which people can develop trusting relationships with others.

There isn’t any explicit discussion of the concept of a good society in Freedom, Progress, and Human Flourishing but the extensive discussion of progress in that book is highly relevant. Progress is defined in the book as growth of opportunities for human flourishing. On that basis, the good societies are those in which a great deal of progress has occurred in the past. Progress can be ongoing because there is always scope for good societies to become better.

Importance of consensus about the desirability of peacefulness    

Widespread agreement about the importance of peacefulness to human flourishing provides important support for institutions that enable the peaceful resolution of disputes among people with different political objectives. A society has little hope of becoming good, or remaining good, when an increasing number of people become willing to resort to violence to impose their visions of a good society on others.

Is ecological justice also a mirage?

 

David Schmidtz advocates “ecological justice” in his book, Living Together: Inventing Moral Science. Although Schmidtz does not refer to Friedrich Hayek in this book, his general line of argument is similar, in many respects, to that developed by Hayek in Law, Legislation, and Liberty. From Schmidtz’s earlier writings, it clear that he is well aware of Hayek’s views.

I presume Schmidtz has good reasons for not comparing his views to those of Hayek in this book. However, since Hayek argued that ‘social justice’ is a mirage, I thought Hayek would not object to me asking whether ecological justice could also be a mirage.

In this essay, I provide a brief summary of Hayek’s reasons for viewing social justice as a mirage before considering the basis for Schmidtz’s concept of ecological justice.

Why did Hayek view social justice as a mirage?

Hayek argued that it is “a dishonest insinuation” and “intellectually disreputable” to make reference to social justice in an attempt to bolster an argument “that one ought to agree to a demand of some special interest which can give no reason for it”. Hayek implies that where there are good reasons for assistance to the less fortunate, reference to social justice adds nothing to the argument. (LLL, V2, p 97. See also p 87 for Hayek’s discussion of reasons to support “protection against severe deprivation”.)

Hayek also argued that “a society of free individuals” … “lacks the fundamental precondition for the application of the concept of justice to the manner in which material benefits are shared among its members, namely that this is determined by a human will – or that the determination of rewards by human will could produce a viable market order”. (LLL, V2, pp 96-7)

Elsewhere, Hayek made the point that the size of the national cake and its distribution are not separable issues:

“We must face the truth that it is not the magnitude of a given aggregate product which allows us to decide what to do with it, but rather the other way around: that a process which tells us how to reward the several contributions to this product is also the indispensable source of information for the individuals, telling them where they can make the aggregate product as large as possible” (Conference paper published in Nishiyama and Leube, “The Essence of Hayek”, p 323).

Hayek went on to make the point that John Stuart Mill’s claim that “once the product is there, mankind, individually or collectively, can do with it whatever it pleases” is really “an incredible stupidity, showing a complete unawareness of the crucial guide function of prices”.

Interestingly, David Schmidtz suggests that by pulling production and distribution apart, J. S. Mill “unwittingly pulled one question into two half questions that in fractured isolation had no proper answers and that would derail rather than facilitate our study of the human condition”. (p 6) Following Mill, questions about production were allocated to economists, while questions of distribution were the province of philosophers: “those who work on justice”. (p 5)

What is ecological about justice?  

David Schmidtz writes:

“We are social and political animals, and justice is a human adaptation to an ecological niche.” (p 220)

What does that mean? The common human characteristic of negotiating what we expect from each other is one of the reasons why humans are viewed as social and political animals. As people negotiate what to expect from each other, they create social niches in which they hope to flourish. (p 25) Schmidtz suggests that to speak of justice is to speak of what we should be able to expect from each other. (p 219)

Justice manages traffic. (p 220) People share an interest in avoiding collision, but otherwise have destinations of their own:

“The truth for political animals is that since we began to settle in large communities, being of one mind has not been an option. Being on the same page is not an option. Even our diverse ideas about how to resolve conflict are a source of conflict. And, disturbing though it may be for a theorist to admit it, theories do not help. It is a political fact that we live among people who have theories of their own, who do not find each other’s theories compelling, and who are perfectly aware that there is no reason why they should.” (p 221)

Schmidtz discusses several other features of ecological justice. For example, norms of ecological justice are an adaptive response to reality. Principles of justice are based on an understanding of which institutional frameworks are enabling people to flourish and which are not. Justice is somewhat testable: when the world tests our ideals and finds them wanting, we need to rethink.

The author ends up suggesting that the features of ecological justice that he has discussed “do not define ecological justice, and do not exhaust it, but they indicate whether a conception of justice is more or less ecological”. (p 226)

 Instead of seeking to define ecological justice, perhaps it is more helpful to ask what is the question that ecological justice seeks to answer. The title of Schmidtz’s book suggests that the question has to do with how we can live together. In his introduction, he asks:

“What if justice evolved as a real question about what people ought to be able to expect of each other?”

Since we have reasons to believe that justice evolved in that way, perhaps the relevant question is:

What rules of just conduct should influence what people ought to be able to be able to expect of each other, allowing for the possibility that individuals might flourish in different ways?  

(That question borrows words from Friedrich Hayek, and Douglas Rasmussen and Douglas Den Uyl, as well as David Schmidtz.)

Conclusion

David Schmidtz’s concept of ecological justice is certainly not a mirage. It has to do with the nature of humans as social and political animals, and the nature of justice as a human adaptation to an ecological niche.

Rather than seeking to define ecological justice precisely, perhaps it is more helpful to ask what is the question that ecological justice seeks to answer. My suggestion is:

What rules of just conduct should influence what people ought to be able to be able to expect of each other, allowing for the possibility that individuals might flourish in different ways?  

To what extent do international differences in economic freedom reflect people's values?

 

This is a companion piece to the preceding post in which I considered the extent to which international differences in personal freedom reflect people’s values.

The extent to which international differences in economic freedom reflect different values is of interest because it has bearing on the extent of popular support likely to be given to policy proposals involving expansion or restriction of economic freedom. If people feel that existing economic policy regimes are aligned with their personal values, they are less likely to support radical change.

The accompanying graph suggests the existence of a positive relationship between an index of facilitating values and economic freedom. As suggested in the label of the horizontal axis, the index of facilitating values reflects the priority that people in different countries place on autonomy, and the extent of interpersonal trust in different countries.

Indexes

I am not aware of any other index of values facilitating economic freedom similar to the one I constructed in preparing the graph, even though there has been a substantial amount of previous research undertaken on cultural values supporting economic growth and institutional change. (Nicholas Moellman and Danko Tarabar have referred to some relevant literature in their article, ‘Economic Freedom Reform: does culture matter?’, Journal of Institutional Economics (2022), 18, 139-157.)

The priority people place on autonomy seems likely to be important in facilitating economic freedom because respect for individual autonomy implies respect for individuals engaged in commerce, particularly innovators. Trust of strangers seems likely to be important in facilitating economic freedom because it reduces the tribal instinct to seek to use the powers of the state to advance the interests of group members at the expense of other groups.

I have used Christian Welzel’s autonomy index to measure autonomy. This index uses three items in the World Values Survey (WVS) which ask respondents their views about desirable child qualities. Autonomy is considered to be valued more highly by those who independence and imagination as desirable child qualities but do not consider obedience as such a quality. (See: Christian Welzel, Freedom Rising, 2013). I used an updated version of the index based on the latest round of the WVS (2017-2022).

Welzel’s generalized trust index was used to measure interpersonal trust. This index gives higher weight to trust of strangers than to trust of family. I reconstructed the index for the latest round of the WVS by combining items covering close trust (trust of family, neighbours, and people you know personally), unspecified trust (whether most people can be trusted) and remote trust (trust of people you meet for the first time, people of another religion and people of another nationality). Unspecified trust was given double the weight of close trust, and remote trust was given three times the weight of close trust.

In constructing the facilitating values index, autonomy was allocated 75% of the weight and generalized trust was allocated 25%. Those weights were chosen on the basis of regression analysis using the autonomy and generalized trust indexes as explanatory variables to explain economic freedom. (Researchers seeking further information about the methodology used in constructing this index are welcome to contact me.)

 The Fraser Institute’s economic freedom index incorporates a large number of indicators relating to size of government, legal systems and property rights, sound money, freedom of international trade and regulation.

Discussion

My focus is on the outlier data points in the accompanying graph, and particularly on those countries which have substantially lower or higher economic freedom than might be predicted on the basis of values facilitating economic freedom.

One of the first things readers may notice in the graph is that values facilitating economic freedom are shown to be higher in China than in the U.S. and Australia. That may seem surprising if Geert Hofstede’s analysis, or your knowledge of cultural heritage, has led you to expect Chinese people to be much less individualistic than Westerners. If you need to be persuaded that many Chinese people have an individualistic perception of human flourishing, you might like to read an article I wrote on that topic in 2021.

While you are thinking about China, you might like to compare economic freedom in that country with that in Singapore, Hong Kong, and Taiwan. The most obvious reason why the latter jurisdictions have greater economic freedom is because they have adopted market-friendly ideologies.

Similarly, adoption of market-friendly ideologies explains why Albania has substantially greater economic freedom than Iran and Libya, and why Chile has greater economic freedom than Argentina and Venezuela.

Conclusion

The existence of values facilitating economic freedom helps to explain why some countries have higher economic freedom than others. However, it seems that a substantial part of international differences in economic freedom can be explained more directly in terms of prevailing government ideologies which either support or oppose free markets.

Can cottage industries exist in a machine age?

 J C Kumarappa posed that question his book, Economy of Permanence, which was first published in 1945. He argued that in the final analysis “values and valuation” would determine the direction to be taken. He viewed the choice between cottage industry and large-scale production as an ethical choice as to which type of economy would be preferable. He associated cottage industry with “permanence and non-violence”, and large-scale production with “transience and violence”.

Kumarappa has been described as an ecological economist. He was a follower of Mahatma Gandhi, who wrote a foreword to his book.

Some of Kumarappa’s views seem to have been largely a product of the context in which he lived, but others resonate more broadly. Similar views have been taken up by many affluent consumers in high-income countries. In what follows, I will discuss first why Kumarappa associated large-scale production with violence before considering why he associated it with transience.

Violence

Kumarappa recognizes the potential for specialization and market transactions to be mutually beneficial for the people involved. On that basis, readers might expect him to view wealth accumulation via specialization, trade, and market competition to be a peaceful process.

However, Kumarappa argues that large-scale production prompted industrialized countries to hold other countries in political subjection to obtain materials. He also suggests that large-scale production “is the root cause of wars”. He claims that machines must make full use of productive capacity, rather meet market demand. That results in surplus production. Wars are started to capture markets.

I see several problems with that line of reasoning, but I will only focus on the most obvious one here. Kumarappa seems to assume that manufacturers have control of armies that can be used to ensure access to raw materials and markets. That seems to me to be a strange assumption to make, but I can understand why an Indian economist might see things differently in the light of the history of British colonial rule.

Transience

Kumarappa argues that an economy based on large-scale production is built on the “quicksands” of “profit, price, purchasing power, and foreign trade”. He suggests that material standards of value and personal feelings of consumers cannot have “any degree of permanence” because people change and are perishable. For permanence to be achieved, the standard of value must be objective and controlled by ideals that have enduring qualities. He claims that civilization had endured in China and India because it was based on altruistic and objective values.

The value that Kumarappa places on permanence may require explanation because Hinduism, the dominant religion in India, shares with Buddhism the doctrine that everything is in a constant state of change. Kumarappa was a Christian, but I don’t think that explains as much as his reverence for what he describes as “the secret of nature’s permanency”.  He was referring to ecological factors which “function in close cooperation to maintain the continuity of life”.

Kumarappa was particularly concerned about the impact that the products of large-scale production were having on traditional village life. He argues:

“We are often led away by low money prices ignoring the great gashes in our economic and social organisation made by such short-sighted choice of ours.  … Money value blinds the vision to a long range social view, so that the wielder of the axe fells the branch on which he is standing”.

Kumarappa argues that moral values are attached to every article sold in the market. We should not ignore such values and say “business is business”. Accordingly, anyone who enters into a commercial transaction has a grave responsibility to ensure that she does not become party to circumstances that she would not consciously support. He believed that the consumer is only able to bring her scale of values into play when goods are made locally.

Different views of progress

Kumarappa had a very different view of economic growth than is presented in my book, Freedom, Progress, and Human Flourishing. It may be worthwhile to try to pinpoint the reasons for this.

I don’t think Kumarappa would have any problems with my definition of progress as the growth of opportunities to obtain the basic goods of a flourishing human. He would probably agree, more or less, with my list of the basic goods – wise and well-informed self-direction, health and longevity, positive relationships with others, living in harmony with nature, and psychological well-being.

Kumarappa would probably begin to object at the point where I assert that economic growth counts as progress to the extent that people aspire to have the goods that it offers. He might suggest that people who aspire to have those goods are mistaken because they could flourish to a greater extent by maintaining a simple lifestyle. The more powerful argument he would offer is the one presented above - that the products of new technology are disruptive to existing economic and social organisation.

I would respond by referring to what Deirdre McCloskey has referred to as the bourgeois deal. People in industrialised countries have been willing to accept the possibility that the introduction of new technologies might disrupt their lives because they have good reasons to expect that they, and future generations, are likely to benefit from the expansion of opportunities that it provides.

If that line of argument had been presented to J C Kumarappa in 1945 I imagine he would have viewed it as “pie in the sky”. I am less sure that he would hold the same view today.

Cottage industry

I don’t know much about the economic health of cottage industry in Inda today, but it does continue to exist. The photo shown at the top of this article was taken at Kalra’s Cottage Industry in Agra, when I visited there last year. (By the way, the service offered was excellent. The hand-knotted floor rug I purchased was delivered to my home in Australia without any problems, and in perfect condition.)

My point is that as their material standard of living rises, many people are willing to pay more for high quality products of cottage industries than for mass produced items. Many people also become increasingly concerned about such things as the levels of remuneration of workers who produce the products that they buy and potential environmental damage of production methods. People tend to pay greater attention to such concerns when they feel that they can more readily afford to do so.