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June 04, 2006
The liberal political philosophical tradition (in both its social contract and utilitarian forms) is grounded on a negative conception of liberty as 'a doing as I please.' Hence it is concerned to restrict each person's freedom so that it harmonizes with the freedom of everyone else within the nation-state's system of the rule of law. So each individual pursues their self-interest (or happiness) in whatever way they see fit, so long as he/she does not infringe upon the freedom of others to pursue a similar end within public law.
So the problem of the state is how to harmonize individual wills or interests. How then does the 'harmonizing' happen to ensure the nation-state continues to exist?
The answer that is given is that in the market place it is the invisible hand, is it not. The market is deemed to be self-regulating and so when self-interested human action is constrained to the context of civil law it would tend to promote the harmonization of the actions of all indiivduals in a nation-state.The market, as an allocation mechanism, could only operate satisfactorily---ie., harmonizing actions of self-interested agents with the interests of society as a whole (ie., the public good) ---within a framework of legal, political, and moral restrictions.
That is Adam Smith's legacy is it not?
The most basic function of government was the establishment and enforcement of a system of law that would control, channel, and restrain individual action in such manner that the individual pursuit of self-interest would lead to the greatest happiness. So what we get is the transformation of self-interest from something negative whose effects should be negated by a wide-ranging program of governmental restrictions to a view of self-interest as a driving force toward increased economic welfare for all when channeled through the competitive market process.
This is famously evidenced in Smith's statement that "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Smith’s "invisible hand" is actually government itself, the hand of the law-giver, the hand which withdraws from the sphere of the
pursuit of self-interest those possibilities which do not harmonize with the public good."
The optimism in the phrases 'it would tend to' or 'promotes' covers up the debate about the means to ensure harmony or coordination of individual interests; a debate between those who argue that the means to coordinate or restrain the negative effects of self-interested behavior in terms of government regulation; those like Adam Smith and the nineteenth-century
classicals who held that the system of natural liberty harmonizing, to a greater or lesser extent, self-interest and social interest, could be harmonized by allowing the market to function with a minimum of direct control by government; or the neoclassical economists who argued that there was a rather extensive set of divergences that the market could not satisfactorily coordinate--ie., market failures and who argued that government could
serve as an efficient coordinating force by correcting market failure.
And in the democratic polity? By compulsion? Or fear? If not how? The polity is not the self-regulating market is it? So how does the polity harmonize individual interests to ensure the public good?
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