Subversive thoughts on freedom and the common good.

• Date: 01 May 1999
• Author: Alexander, Larry

PRINCIPLES FOR A FREE SOCIETY: RECONCILING INDIVIDUAL LIBERTY WITH THE COMMON GOOD. By Richard A. Epstein. Reading, Mass.: Perseus Books. 1998. Pp. xii, 360. $30.

Richard Epstein(1) is a rare and forceful voice against the conventional academic wisdom of our time. Legal scholarship of the past few decades overwhelmingly supports more government regulation and more power for the courts, partly in order to control businesses for environmental and other reasons, but more broadly in hopes of achieving egalitarian outcomes along the famous lines of race, gender, and class. Epstein is deeply skeptical that any of this is the shining path to a better world. Epstein's moral criterion for evaluating social policy is to look at how fully it allows individual human beings to satisfy their preferences in life, and he argues that the best policy is individual liberty and a large degree of laissez faire. More and bigger government, as Epstein relentlessly illustrates, often leads to unintended and unwanted consequences. In Principles for a Free Society, the argument is cogent and specific, drawing on Epstein's enormous economic, philosophical, and legal erudition.

Although skeptical of many of the trends of recent decades, Principles for a Free Society is an optimistic book. Epstein's optimistic view is that utility (the common good), natural law (principles of liberty), and the Anglo-American common law tradition all agree on fundamental laissez-faire ideas. The theme of the book is that, far from confronting tragic choices, citizens can enjoy both liberty and the common good; the two are really one, and apparently conflicting philosophical outlooks like utilitarianism and natural law ultimately converge on laissez-faire principles.

1. PRINCIPLES OF FREEDOM AND THE COMMON GOOD

   Epstein's root principles are individual autonomy, private property, and voluntary exchange. Individual moral autonomy is basic for Epstein. He doesn't really argue for it, nor does he need to: it is the foundation of any kind of liberalism. It is also the foundation of almost any moral theory: without free choice you are not responsible for your actions. Even Marxists, feminists, or communitarians, who might denounce autonomy ("individualism") rhetorically, would not really give it up in their own lives; and as a matter of moral theory, they cannot completely repudiate it however much they might want to hedge it in.

   Private property -- and what goes along with it, voluntary exchange -- is, at least to some extent, a practical prerequisite for the exercise of individual autonomy. Private property gives you a degree of moral independence from other people, establishing separate domains that enable you to live side by side with others in peace. It is also an indispensable counterweight to government power and the force of social conformity, as it gives you a basis for resisting the influence of other people's political (or religious) orthodoxies. In the nature of private property, some people will have more of it than others, but in a society without property rights there will be no climate of individual autonomy at all. Private property also provides a spur to economic productivity, by guaranteeing to producers that others will not expropriate the fruits of their labors.(2)

   Classic libertarianism therefore says that government power should be exercised only to restrain violence and fraud to person and property, and to enforce the contracts through which people undertake voluntary exchanges. Safeguarding fundamental principles requires only that much government; more government threatens these principles, and tends to violate human autonomy. This sort of libertarianism is easy to criticize as dogmatic: it insists on its principles, even when people would be better off under different arrangements (for instance, with a more active government).

   Epstein takes his fundamental principles seriously, but he is not a fundamentalist about them. He supports government regulation -- unlike the stereotypical libertarian -- whenever regulation serves the common good. But the common good, says Epstein, must not be abstracted from the sum of the good of each and every person. A regulation is for the common good when it is to the advantage of all: when all (or more realistically, almost all) are better off with the particular regulation than they would be without it (pp. 4, 127-28). This is a call for "Pareto superiority," a very stringent standard: most regulation, and practically any program for redistribution, will fail to satisfy it.

   When it comes to government regulation or redistribution, in other words, Epstein insists on a higher threshold of justification than a mere utilitarian balancing of costs and benefits, or being satisfied with greater good for a greater number. But Epstein is often a utilitarian about other things. Market competition, or free speech for that matter, leaves some people worse off than they might otherwise be; but Epstein supports these things, as we shall see, because the benefits exceed the costs on the whole. The inconsistency might seem to cast doubt on his whole argument: Why does Epstein not accept the sort of utilitarian case for regulation that he might accept for anything else?

   Moreover, the existing distribution of things may be unjust and should not have morally privileged standing.(3) The existing distribution is certainly unjust if justice is believed to mean equal distribution. Even if one does not believe justice means that, one can question a distribution that results so heavily from luck or ancestral competitive success. What is wrong with government redistribution to redress injustice (or bad luck), even if it imposes costs on some for the benefit of others?

   As for Epstein's inconsistency, it is more apparent than real: Epstein's central theme is that the benefits of regulation might exceed the costs in the short run, but that a climate of regulation and redistribution will create perverse incentives and social costs which will be worse on the whole in the longer run.(4) Government is unique: its monopoly of legitimate force makes it uniquely dangerous and susceptible to corruption in ways that Epstein colorfully illustrates. And as to injustice, Epstein does not make any strong argument for the justice of the status quo.(5) He implicitly accepts a degree of injustice as less bad -- and ultimately, even less unjust -- than the redistributionist alternative, which puts property rights perpetually up for grabs in a zero-sum (or negative-sum) political tug of war.

   Above and beyond the libertarian prevention of force and fraud and enforcement of contracts, when do all (or almost all) citizens benefit from regulation instead of leaving things to purely voluntary arrangements? Everyone benefits from compulsory regulation when (as economists would say) there are hold-out or coordination problems. If one person can stand in the way of a desirable project or policy, then a purely voluntary arrangement allows that person to command a monopoly price in exchange for cooperation. And a coordination problem (or "prisoner's dilemma") arises when all would be better off if all cooperate, but each will not be better off by cooperating if each cannot be sure that others will cooperate. In these situations, government regulation makes everyone (or almost everyone) better off, and we have a principled basis for restraining liberty, property, and freedom of contract.

   This is the way Epstein would understand John Stuart Mill's idea that a person's liberty should only be regulated to prevent harm to others.(6) The obvious objection to Mill is that every imaginable regulation, however inimical to freedom, is designed to prevent some harm to someone, even if only to someone's feelings or moral sensibilities.(7) Epstein would measure harm by a utilitarian calculation of gains and losses -- to all concerned, including third parties -- from the activity to be regulated. Monopoly, as well as force and fraud, should therefore be regulated: almost no one other than the perpetrator gains from these activities, and many people lose. But economic competition and free speech should not be suppressed. Of course, this will mean that some people get hurt: the losers in the competition and those offended by the ideas. But the gains, including "positive externalities" to third parties, outweigh the losses as society is enriched economically by competition and intellectually by the free flow of ideas. Environmental regulations ought to be looked at in the same way: an environmental harm should be suppressed when the overall loss it causes outweighs the gain, but not otherwise.(8)

   Epstein's essential point is that a great deal of today's government regulation is not really justified by hold-out or coordination problems, and does not in fact serve the common good: "[J]ust calling a social state of affairs a prisoner's dilemma game does not make it so" (p. 69). Sometimes, to be sure, the cost of defection from social norms -- such as the norm against violence -- is too high...