Monday, August 29, 2011

The moral basis for an extensive state

A recent post focused on the conception of society involved in seventeenth- and eighteenth-century English political thinking, the theory of possessive individualism. The post suggested that this conception has a lot of resonance with the ideas and rhetoric of the Tea Party today. I've also posted a number of discussions of the social ideals of John Rawls (link, link), expressing a liberal democratic view of the good society.  These posts remind me how important it is to have some fairly specific ideas about how we would want society to be organized in the future, so we can also have some ideas about current reforms that might take us in that direction.  And today we don't seem to have a lot of clarity about this kind of vision, especially on the progressive side of the political spectrum.

The ideal that seems to lie behind the conservative Tea Party political philosophy is simple but alarming:
  1. Citizens should have maximum possible liberties of activity and use of property.
  2. Citizens have no positive obligations to other citizens, beyond those associated with respecting liberties and property rights.
  3. The state exists only to secure the liberties and security of citizens; this means the state needs to have funds to provide for national defense, enforcement of property rights, and maintenance of public order.
  4. The state has no legitimate basis for creating more extensive regulations on the exercise of liberty and property (FDA, EPA, regulation of banks, …).  Such regulations represent an unjustified interference with the exercise of private property rights.
  5. The state has no legitimate basis for using tax moneys to provide a social safety net (unemployment payments, welfare payments, food and housing subsidies, …).  Such transfer programs represent an unjustified system of redistribution of wealth and income that violates the property rights of anyone who is taxed more extensively than a fair share of the costs of providing for national defense and maintenance of public order.
This political philosophy is familiar from Robert Nozick's Anarchy, State, and Utopia (1974).  At the time Nozick's vision was considered extreme from a philosophical point of view; it took to a logical limit the very limited assumptions about individual rights that were a part of the Lockean tradition of political philosophy, and arrived at what was then a very startling set of conclusions about the limits on legitimate state action.  Nozick referred to this conception as the "minimal state".  Nozick's philosophy expressed a form of libertarian conservativism, with no inclination towards the "social values" of more recent conservatism.

If this political philosophy were to be enacted through legislation, it would imply a number of things: abolition of mandatory social security, abolition of regulatory agencies like EPA and FDA, abolition of unemployment benefits and poverty-based welfare programs, and dramatic reduction of taxes on the affluent.  This is a vision of the minimal state with a vengeance; and it seems rather familiar from much of the rhetoric offered by Tea Party activists and Republican presidential candidates alike.

We could spend time thinking about the deficiencies of this political philosophy from a number of points of view.  Here my interest is different; I'd like to consider what components might go into a political philosophy that expresses a moral justification for the more extensive state that a great many Americans would want to have. First, what are the institutional arrangements that might be considered?

A strong alternative to the minimal state is the Nordic model -- essentially the political and economic system associated with Scandinavian democracies in the 1960s through the 1980s.  Here is an interesting monograph on the economic and social characteristics of the Nordic model: The Nordic Model: Embracing globalization and sharing risks (Torben M. Andersen, Bengt Holmström, Seppo Honkapohja, Sixten Korkman, Hans Tson Söderström, Juhana Vartiainen; published by the Research Institute of the Finnish Economy); link.  The authors describe the key economic and social commitments of the Nordic model in these terms:
  • a comprehensive welfare state with an emphasis on transfers to households and publicly provided social services financed by taxes, which are high notably for wage income and consumption;
  • a lot of public and/or private spending on investment in human capital, including child care and education as well as research and development (R&D);
  • and a set of labour market institutions that include strong labour unions and employer associations, significant elements of wage coordination, relatively generous unemployment benefits and a prominent role for active labour market policies. (13)
A key goal of the study is to assess the economic performance of the Nordic model over the past fifty years.  The study's summary conclusion is very favorable: contrary to anti-tax, anti-government ideology, the Nordic economies have performed very well.
The Nordic countries have, according to many indicators, succeeded relatively well in fulfilling their social ambitions. Recently, this has been combined with a satisfactory economic performance in terms of employment and productivity levels as well as growth of GDP per capita. Also, the macroeconomic balance is good and public finances are strong. There is indeed a Nordic success story in the sense of a favourable combination of economic efficiency and social equality. 
True, the Nordics went through a period of low productivity growth in the 1970s (like most other OECD countries) as well as a major financial and macroeconomic crisis with very high unemployment rates and large fiscal imbalances in the early 1990s (somewhat earlier and less dramatically in the case of Denmark). But even so, the Nordics have more or less managed to keep up with the US in terms of PPP-adjusted GDP over the last 25–30 years, which is more than can be said of most other EU15 countries. The longterm performance is mainly recorded as a high rate of total factor productivity growth. This indicates that technical progress, notably in the area of information and communication technology (IT), has played in important role in growth. More importantly, it also shows that the Nordics – contrary to popular belief – demonstrate a high degree of economic flexibility and capacity of structural change. The macroeconomic crises have helped the process by inducing growth-enhancing changes in structural policies (and, for a while, through the improvements of competitiveness caused by large depreciations in the early 1990s). (15)
These are social and economic arrangements that establish an active state, a state with broad responsibilities to the welfare of its citizens, and a state that calls upon a significant fraction of the wealth of society to do its work.  What are the moral principles that might underly such a conception of a good society?  Here are a few axioms that seem to be worth considering within such a political philosophy.
  1. Society is a system of interdependency and mutual benefit for all citizens. Everyone benefits from being part of a just society.
  2. The moral situation of individuals in society includes several important components:
    1. Individuals within society have rights, liberties, and needs for personal security.
    2. Individuals have obligations to each other to help prevent hardship and to facilitate full human development. These obligations derive from at least two sources: (a) the benefits we all enjoy as a result of social cooperation in a functioning society; and (b) the moral recognition we have of the equal human worth and dignity of fellow citizens.
    3. Individuals within society have universal needs to facilitate their full human development and functioning, including education, health care, housing, and adequate nutrition.
  3. Certain core functions for the state follow from these moral ideas:
    1. The state is obligated to create a system of law that protects the rights, liberties, and security needs of all citizens.
    2. The state is obligated to serve as one of the important vehicles through which our positive obligations to other citizens are honored. 
      1. The state needs to ensure that all citizens have access to education, healthcare, and the essentials of life.
      2. The state needs to provide a safety net for citizens whose earnings within the market economy leave them unable to provide for a decent standard of living.
    3. The state is obligated to protect the public from the harmful effects of private activities, including regulations concerning health and safety, conditions of labor, and environmental harms.
  4. A handful of moral constraints surround the policies and laws the state may adopt:
    1. The state is authorized to collect taxes to efficiently perform its functions of protecting rights, securing welfare, and regulating harmful activities.
    2. The state is obligated to be procedurally just and economically efficient in its administration of public programs.
    3. The policies and laws of the state need to be adopted through a democratic process in which all citizens have equal voice.
This formulation highlights a cluster of values that can potentially gain wide support within a democracy: the equal worth of all individuals, the importance of liberty, the importance of a range of social obligations all citizens have to each other, and the idea that the state needs to be articulated in such a way as to embody these moral ideas.

If the theory of the minimal state owes much of its content to John Locke, the more extensive state described here owes much of its moral rationale to Jean-Jacques Rousseau.  Rousseau brought the moral perspective of the "individual within community" into the foundations of political philosophy.  Josh Cohen's Rousseau: A Free Community of Equals provides an excellent discussion of Rousseau's political theory; link.

(Gosta Esping-Andersen has studied the politics and policies of social democracies through a lifetime of writing. Especially important are The Three Worlds of Welfare Capitalism and Politics Against Markets: The Social Democratic Road to Power.)


Hannu T. said...

I found your discussion very interesting and just want to make two additional points. First, I find Andedersen et al. a little bit puzzling in a way that they acknowledge the success of the Nordic model but somehow try to make a statement without a clear justification that it cannot work anymore. Second, Pestieau in his book "The Welfare state in the European Union" notes in Esping-Andersen's typology that '[w]e thus have several triptychs. On the left, one finds the state, the virtue of equality, Rousseau, the social democracy. In the center, one can see the family and the firm, the virtue of fraternity and solidarity, Hobbes and a corpostist society. On the right, there is the market, the virtues of freedom and liberty, Locke and a market economy.'

Dan Little said...

Hannu, thanks for both points. As for the first -- I don't read Andersen et al coming to the negative conclusion about the future of this model. They acknowledge there are difficult challenges and are doubtful that some traditional solutions will work to solve these. But the productivity growth they mention in the quoted passage is a very favorable sign.

The Pestieau quote is interesting. I might place thei position they call "center" a little differently, as the communitarian left along the lines of Michael Sandel.

Anonymous said...

My feeling is that the cluster of values would be adopted in its weakest possible form inside a state as large and as heterogeneous as the USA, as its appeal depends on the extent to which values are shared across the aggregate population. I wonder whether the denizens of those Nordic countries would be so strongly supportive of these elements were they to be applied EU-wide as opposed to just among "their people". Perhaps only the Finns were brazen enough to suggest collateral but I imagine similar thoughts went through the minds of many of the taxpayers in the neighboring countries. The theory of the minimal state becomes much easier to sell when its function can be depicted as mainly a financial transfer mechanism to outsiders, whether by trade or by open borders.