Wednesday, December 5, 2012

From the Empirical Archives: Money, Time, and Real Freedom by Gar Alperovitz

Money, Time, and Real Freedom 
Gar Alperovitz
Originally Published in Empirical magazine in June 2012

Two quite distinct trends have produced growing concern that the political-economic system no longer appears able to sustain a culture of liberty. The first and most obvious involves restrictions on individual liberties in response to terrorism and war, and in response to crime. The second, and more fundamental, relates to foundational issues involving the underlying structures and institutions of the political-economic system as a whole.

Our primary interest at this point is with foundational problems–the bedrock questions at the very heart of the system.


It is essential to understand the deep-seated nature of the problem confronting those concerned with liberty even, in the first instance, when approached from the perspective of the traditional (conservative) assumptions prominent in contemporary discourse. That a dead-end has been reached with virtually no way back to traditional approaches is painfully obvious to sophisticated thinkers. Indeed, in this respect thoughtful conservatives are in as much of a quandary as thoughtful liberals concerned with equality, the system-wide nature of the problems they face no different.

Traditional conservative approaches to liberty depend, foundationally, upon quite distinct institutional judgements: First, that “big government” must be reduced; second, that a free market capitalist economy must be protected and sustained both because it is held that free markets are important to liberty in general, and because it is held that they nurture the spirit of entrepreneurship and a culture of free individualism.

That “big government” is anathema to individual liberty is the fundamental structural argument of traditional theory. Ultimately, a reduction in government’s reach, scale, and function is the premise of all secondary arguments – the necessary condition which allows the citizenry to build a society capable of nurturing and sustaining liberty against its many challenges. All power corrupts, it is held – even (perhaps especially) benevolent power.

Despite President Bill Clinton’s assurance that the era of big government is over, the reality is that government in the United States is big – far bigger than most realize. Rhetoric aside, what is striking is that conservatives have simply been unable to alter the fundamental patterns and orders of magnitude:

Government grew from roughly 7% of the economy in 1902 to roughly 30% in 2002. By a more comprehensive measure the current figure is at least 35-36%, and some recent estimates of the impact of regulatory and other indirect activity add an additional 8%, bringing the total to 43-44% of the economy. (Milton Friedman believes the actual number is closer to 50%).

“I will do many things for my country,” columnist George Will lamented during the Reagan years, “but I will not pretend that the careers of, say, Ronald Reagan and Franklin Roosevelt involve serious philosophical differences.”

Richard Nixon left office with government more expansive than that left by Eisenhower; that of Reagan was larger than that of Nixon; government at the end the first Bush Presidency was larger than that of Reagan. And even before a major military build-up expanded the Federal budget there was little statistical evidence that George W. Bush would be able to more than marginally alter government’s overall scope and scale.4 Indeed, not only did government increase as a share of the economy during his first years in office but, much to the dismay of many conservatives, Bush pushed for $400 billion in new prescription drug spending in 2003.

It is not that conservatives have not tried – and still continue to try: A broad range of strategies have been attempted – including selective budget-cutting, balanced budgets laws, tax reduction designed to “starve government,” even attempts to amend the Constitution. Just as traditional liberal strategies may have slowed the trend of growing inequality (but failed to reverse the trend beyond temporary moments), so too the conservative approaches which have so angered liberals have altered priorities and cut back the growth of government. What they have not done is achieve any degree of significant alteration in government’s basic order of magnitude.


A cottage industry of political scientists has probed the institutional, constituency, organizational, and other reasons why government has grown, and why its core structures have been so unyielding. One group of scholars has argued that government grows because citizens oppose government in general, but want specific programs of interest to them in particular. Another group of theories derives from the work of the economist, the late Mancur Olson, and from related work by Anthony Downs, James Buchanan and Gordon Tullock. This emphasizes that special interests have large incentives to secure government benefits – and also have the power to organize to gain their objectives. Even though greater numbers in the public may pay the costs, it is difficult and expensive to organize them since few individuals have enough incentive to participate effectively.

Still another theory is that of political-economist Robert Higgs, who argues that a series of crises – World War I, the Great Depression, World War II – have been exploited in ways which not only expand government, but lead to a “ratcheting” upward of government’s scope and scale. Once expanded in the context of crisis, constituencies develop around programs and make it impossible to reverse the now upwardly “ratcheted” new levels.

Whatever theory or theories in the end prove to offer the most accurate explanation, the bottom line is that there are powerful reasons why very little structural or trend change has occurred–even when conservatives have been elected to office. When the smoke screen of rhetoric attacking big government is pierced we can understand why the chief architect of the ‘Reagan Revolution,’ Budget Bureau Director David Stockman, left office convinced that real change was “impossible.” Or why conservative economist Milton Friedman might lament: “We have been, despite some successes, mostly on the losing side.”


Similar problems confront the argument that individual liberty also depends, foundationally, on maintaining the underlying institutions of free market capitalism–especially the independence and energy of the entrepreneur. Although it is also held that a thorough-going entrepreneurial economy is required to disperse power and nurture a culture of liberty, giant corporations now control such key industries as energy, telecommunications, steel, autos, home appliances, many food products, etc. Simply by way of illustration:

General Electric, Whirlpool, and Maytag sell 80% of all ovens and 85% of all dryers; Proctor & Gamble, Unilever, Colgate-Palmolive, and Dial account for 83% of bar soap sold in the United States. Three companies dominate 60-66% of the cable television, online job recruitment and college text book markets. Two companies control 75% of the soft drink market.

Globally a mere three hundred multinational corporations account for an estimated 25 percent of productive assets. “The sales of General Motors and Ford,” Noreena Hertz of Cambridge University observes, “are greater than the GDP of the whole of sub-Saharan Africa; the assets of IBM, BP and General Electric outstrip the economic capabilities of most small nations; and Wal-Mart, the US supermarket retailer, has higher revenues than most Central and Eastern European states including Poland, the Czech Republic, Ukraine, Hungary, Romania and Slovakia.”

Nor, as traditional theory assumes, do such firms avoid government. Richard Nixon’s Secretary of the Treasury, the late William Simon, recalled how during his “tenure at Treasury I watched with incredulity as businessmen ran to the government in every crisis, whining for handouts or protection from the very competition that has made this system so productive...”

I saw Texas ranchers, hit by drought, demanding
government-guaranteed loans; giant milk
cooperatives lobbying for higher price supports;
major airlines fighting deregulation to preserve
their monopoly status; giant companies like
Lockheed seeking federal assistance to rescue
them from sheer inefficiency; bankers, like David
Rockefeller, demanding government bailouts
to protect them from their ill-conceived
investments; network executives, like William
Paley of CBS, fighting to preserve regulatory
restrictions and to block the emergence of competitive
cable and pay TV.

“And always, such gentlemen proclaimed their devotion to free enterprise and their opposition to the arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest.”

Traditional conservatives, like the founder of the University of Chicago freemarket school of economics, Henry C. Simons, begged fellow conservatives to recognize that “[t]urned loose with inordinate powers, corporations have vastly overorganized most industries.” Indeed, this highly respected conservative (and Milton Friedman’s revered teacher) held that “America might now be better off if the corporate form had never been invented or never made available to private enterprise.”

Another leading conservative, Friedrich A. Hayek, years ago urged that “if we continue on the path we have been treading [toward what he termed the “monopolistic organization of industry” closely allied with government], it will lead us to totalitarianism.”


The traditional response to the reality of corporate power has been an anti-trust effort to break up giant firms. But few any longer believe the kind of economy which undergirds the traditional theory can be restored by such means. An occasional anti-trust battle has been won, but in the more than one hundred years since the Sherman Anti-Trust Act was enacted there have only been a handful of successful challenges to major corporations. Commonly, even when large corporations have lost legal battles–as in the recent Microsoft case – they have been able to hire top legal teams and use delaying tactics until a new Administration comes to power or until technological advantage has given them de facto control of the economic landscape of concern.

Even in the few cases where anti-trust has succeeded, the understanding of additional conservatism that corporate power threatens values of liberty and democracy has all but disappeared. In the modern era, anti trust discussions are narrowly focused on technical economic matters and complex (and debatable) measurements of the potential impact on consumers. William Safire is one of the few to stress what was once self-evident to fellow conservatives:

With the round-heeled Michael Powell steering
the Federal Communications Commission
toward terminal fecklessness; with the redoubtable
Joel Klein succeeded at Justice’s antitrust
division by an assortment of wimps; and with
appeals courts approving the concentration of
media power as if nothing had changed since
President Taft’s day, the checks and balances
made possible by diverse competition are being

“The longtime anti-business coloration of liberals reduces their ability to take on the convergence con. It is for conservatives to ask ourselves: Since when is bigness goodness?”

The power implications of the giant corporation are one thing. Equally important is the indirect cultural and human impact of the historic shift away from entrepreneurial capitalism. “Dependence,” Thomas Jefferson urged, “begets subservience and venality, suffocates the germ of virtue...” Jefferson held that only under conditions of widespread small scale individual property ownership could a people “safely and advantageously reserve to themselves a wholesome control over their public affairs.”

A hundred years later Woodrow Wilson warned that if America’s children in future were to “open their eyes in a country where they must be employees or nothing ... then they will see an America as the founders of this Republic would have wept to think of.” Louis Brandeis asked: “Can any man be really free who is constantly in danger of becoming dependent for mere subsistence upon somebody and something else than his own exertion and conduct?”

That a nation in which nine out of ten people are ‘employees’ is radically different, culturally, from a nation of entrepreneurs – and that the problems this raises for liberty must also be confronted – is something very few conservatives have even been willing to discuss in recent years. They have mainly looked away from what was once a central element in their philosophical stance – perhaps because the implications are so difficult to accept.


For these many reasons, viewed in broadest historical perspective (and whether one agrees or disagrees with them) such traditional theories of liberty increasingly appear as walking intellectual corpses – ideas which for better or worse no longer have much structural relationship to the living realities of the modern political economic world. Philosophical conservatives have developed wonderfully coherent abstract theories based on assumed first premises – but the premises commonly sidestep the hard problems defined by the long, unyielding real world structures and trends. (None of this, of course, has prevented politicians from continuing to hammer away at traditional ideological themes to rally support for favored policies.)

If even from within the perspective of traditional conservatism what have been understood as the institutional foundations of liberty no longer seem achievable in the real world, are there any strategic approaches which might one day come to terms with the underlying foundational issues?

One modern line of attack stems from the work of the late Robert Nisbet, a highly regarded conservative sociologist. Broadly speaking, traditional theories involve an implicit balance of power conception. On the one hand, liberty can be enhanced by weakening the state; on the other, it can be enhanced by protecting or bolstering the position of the individual (by, for instance, encouraging an entrepreneurial economy). A critical – indeed, absolutely essential – way to support the individual, Nisbet held, is to nurture the kinds of “intermediate institutions” which stand between the lone individual and the state, thereby providing both social support and a buffer against centralized power.

The rise of fascism before and during World War II, Nisbet contended, demonstrated that isolated individuals were psychologically and politically vulnerable to the appeals of powerful leaders like Hitler: “Only in their social interdependence are men given to resist the tyranny that always threatens to arise out of any political government, democratic or other.” A decline in the importance of churches, unions, and various local and neighborhood civic associations had been disastrous. Planning and an all-out effort to nurture the conditions which support such institutions, Nisbet urged, was therefore required to protect individuals against the claims of centralized power.

Peter Berger, William Schambra, and several other writers have offered variations on this basic theme in recent years. The concept of “mediating structures,” Berger urges, is “politically promising. It cuts across the ideological divides...” and offers ways to transcend the dangers of a world characterized by the “‘liquid molecules’ of individuals caught in a chaotic private world, and the leveling tyranny of the totalitarian state.”

The argument intersects with the similar but slightly different argument that democracy (not liberty) requires nurturing local citizen associations. And in both cases – as Nisbet’s general contention suggests – the argument leads to the question of how the underpinnings of the local context in which individuals and associations flourish or fail can be made secure.

A very different strategy aimed at bolstering the individual side of the state individual balance has been offered by the well-known management consultant, Peter Drucker – one of the very few who has been willing to confront the implications of the trend which has transformed entrepreneurs into employees.

Drucker suggests that the only way to establish the kind of stability and security once theoretically offered by individual entrepreneurial property is through government policies which achieve the “evolution of jobs into a kind of property.” This requires that there be no “‘expropriation [of the job] without compensation,’ and that employers take responsibility to anticipate redundancies, retraining employees... and finding and placing them in new jobs.” What is needed is “redundancy planning rather than unemployment compensation.”

A similar, even more sharply focused extension of the argument that jobs must be made secure – even a matter of legal right! – was included in early drafts of the Humphrey-Hawkins Full Employment Act. And, of course, the idea that real liberty requires job security is at the heart of most academic freedom arguments urged in defense of tenure arrangements common among college professors: Without a secure place to stand it is very difficult to achieve the independence which liberty urges as a central value.

Finally, such arguments and strategies, of course, also speak to the concern urged by scholars like Edward Luttwak that economic insecurities generated by “turbo-capitalism” are ultimately responsible for a liberty destroying culture which “vents its anger and resentment by punishing, restricting and prohibiting all that can be punished, restricted and prohibited.”


Traditional conservative premises have also been challenged in other ways. Political theorist Alan Ryan points out that there “have been many societies in which private property was taken seriously and political liberty was almost wholly absent.” After all, he and others note, all the fascist systems we know of were built upon and grew out of what had previously been free market capitalist foundations.

Again, in a recent book Stephen Holmes and Cass Sunstein stress that without effective and, indeed, costly government programs Americans “would enjoy few or none of their constitutionally guaranteed individual rights. Personal liberty, as Americans value and experience it, presupposes social cooperation managed by government officials. The private realm we rightly prize is sustained, indeed created, by public action.”

For the most part, liberals who have confronted the foundational issue have focused on how the conditions which define the real world situation facing the individual can be altered so as to increase freedom of action and the power to choose. One major line of thought emphasizes questions of time: Individual liberty can obviously never be fully realized if men and women must work devastatingly long hours simply to feed and shelter their families.

Only if an individual has time which she can dispose of freely as she sees fit can liberty be truly meaningful.

Walter Lippman held that free time was “the substance of liberty, the material of free will.” John Maynard Keynes looked forward to an era (“much sooner perhaps than we are all of us aware of ”) when a reduction of working hours would confront man “with his real, his permanent problem – how to use his freedom... .” Herbert Marcuse judged “the reduction of the working day to a point where the mere quantum of labor time no longer arrests human development is the first prerequisite for freedom.”

The reality, however, is that the political-economic trend which reduced the workweek from more than 70 hours at the end of the 19th century to roughly 40 hours today has been essentially stalled for almost 50 years. Writers like economist Juliet Schor, historian Benjamin Hunnicutt, and philosopher Jerome Segal have suggested that the productivity gains offered by modern technological development offer radically new possibilities for the expansion of free time as a foundation for individual liberty and freedom of choice. They have also begun to propose strategies to encourage a resumption of the previously downward-moving trend over the course of the 21st century.29

One commonly urged approach would strengthen and revise current “40 hour a week” laws limiting full-time work and regulating overtime pay.

Segal proposes that public policy should ultimately aim to reduce the work-week to 25 hours–and that the additional money needed to maintain basic needs be provided by an expanded form of the Earned Income Tax Credit (EITC) which currently provides a wage supplement for low income working families.

Other answers to the underlying question have been proposed by political theorists like Bill Jordon and Philippe Van Parijs, and Yale Law Professor Anne Alstott. All have argued in general that a publicly guaranteed floor level amount of income (beyond mere subsistence) is essential if liberty is to have meaning in the modern era. Van Parijs, whose work has been at the center of discussion here and in Europe, holds: “If we are serious about pursuing real-freedom-for-all... what we have to go for is the highest unconditional income for all consistent with security and self-ownership.”

Significantly, the conservative Nobel Laureate, James Buchanan, also urges a “demogrant” form of basic income given equally to all (and financed by a flat tax). For many years Milton Friedman has also consistently urged the importance of a “negative” income tax involving cash supplements to low paid workers–the underlying principle of which has been enacted on a bipartisan basis in the form of the Earned Income Tax Credit.


Historian Eric Foner reminds us that during the early years of the Republic the central focus of debate was not simply “liberty,” but “equal liberty” – an idea which also reaches beyond legal and Constitutional protections to consider the capacities and real world conditions of the vast majority. “Even a conservative like John Adams, who distrusted the era’s democratic pretensions,” Foner observes, believed this required enabling “every member of society” to acquire land. Tocqueville put it this way: “[N]othing struck me more forcibly than the general equality of condition among the people...”

[T]he more I advanced in the study of American
society, the more I perceived that this
equality of condition is the fundamental fact
from which all others seem to be derived and
the central point at which all my observations
constantly terminated.

A final group of theorists has returned to the question of “equality of condition” in the search for strategies to nurture liberty by bolstering the position and capacities of the individual. Most have also built upon John Dewey’s argument that “effective freedom” is radically different from the “highly formal and limited concept of liberty.” It requires “effective power to do specific things.” Thus Washington Post columnist E. J. Dionne states: “To be the master of one’s own fate – a fair definition of liberty – means not simply being free from overt coercion (though that is a precondition); it also involves being given the means to overcome various external forces that impinge on freedom of choice and self-sufficiency. It means being free to set one’s course...”

Similarly, Alan Ryan writes: Most people understand that freedom “involves the expansion of our options...” “‘Freedom of choice’ implies a wide range of options...” The full implications of the argument have been developed by Nobel Laureate Amartya Sen in work outlining the “capabilities” and “outcomes” needed to make freedom real. “Capability is... the substantive freedom to achieve alternative functioning combinations (or, less formally put, the freedom to achieve various life styles).”

All arguments which focus on the importance of ‘equality of liberty,’ of course, bring with them a series of proposals for improving the education, health, and economic conditions of those whose capacities for choice are limited by the way in which economic and other resources are currently allocated.


Broadly speaking, emerging modern theories of liberty converge on three central propositions:

First, liberty requires institutional and structural support for individual economic security to replace that which at least in theory was once provided by entrepreneurial property. Second, it requires support for the community-wide conditions needed to nurture the intermediate associations and civil society organizations which are essential to sustaining a culture supportive of liberty. Third, it requires greater amounts of equitably distributed free time (without which little real freedom of choice is possible) and support for individual development (without which the capacities needed to exercise real freedom must inevitably be limited).

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