Monday, September 13, 2010

Neoliberalism: Alexander Hamilton's Evil Twin Wearing a Thomas Jefferson Mask

If there is one Founding Father who shared the kind of disdain for the average American citizen as did the founders of neoliberalism, it was Alexander Hamilton:

All communities divide themselves into the few and the many. The first are the rich and well-born, the other the mass of the people. The voice of the people has been said to be the voice of God; and, however generally this maxim has been quoted and believed, it is not true in fact. The people are turbulent and changing; they seldom judge or determine right. Give, therefore, to the first class a distinct, permanent share in the government. They will check the unsteadiness of the second, and, as they cannot receive any advantage by a change, they therefore will ever maintain good government.
And some other choice words from the Constitutional Convention:

Take mankind in general, they are vicious, their passions may be operated upon. We have been taught to reprobate the danger of influence in the British government, without duly reflecting how far it was necessary to support a good government. We have taken up many ideas upon trust, and at last, pleased with our own opinions, establish them as undoubted truths. Hume's opinion of the British constitution confirms the remark, that there is always a body of firm patriots, who often shake a corrupt administration. Take mankind as they are, and what are they governed by? Their passions. There may be in every government a few choice spirits, who may act from more worthy motives. One great error is that we suppose mankind more honest than they are. Our prevailing passions are ambition and interest; and it will ever be the duty of a wise government to avail itself of the passions, in order to make them subservient to the public good; for these ever induce us to action.
Flash forward to Walter Lippmann, an American journalist who was very influential in the founding of the neoliberal movement, according to a fascinating collection of essays about the genesis of neoliberalism entitled The Road From Mont Pelerin. (right click on link to open substantial preview at Google Books in a new tab or window.)  Lippmann was extremely insightful, identifying and explaining in his 1922 Public Opinion many of the cognitive biases later "discovered" by modern cognitive scientists and behavioral economists, which are outlined in this interesting document:

Cognitive Biases - A Visual Study Guide

By 1937, Lippmann had become as cynical as he was insightful, and he authored The Good Society, which in many ways is a blueprint for Hayek's The Road to Serfdom.  In the fifteen years that had passed since he published Public Opinion, Lippman and gone from describing "the manufacture of consent" to trying his hand at it.  Echoing Hamilton

It is evident that the American people as a whole have never consistently believed that all their interests could be placed unreservedly at the disposal of the people, however refined their representation, however conscientiously the people's will was checked and balanced.
They have not believed whole-heartedly that democracy was safe for the world. This unbelief is, I believe, an intuition that there is something lacking in the theory of democracy, that somewhere the doctrine of popular sovereignty as conceived by its apostles is inconsistent with essential facts of human experience.  Popular government has not worked out as promised, and all through the nineteenth century democrats speculated on the reasons for their disappointment.
The Good Society at p. 261.

There is one important difference between Lippmann and Hamilton, which is that Lippmann was describing America's representative republic, which Hamilton championed and won as an alternative to democracy, as a failed "democracy."  Because of his loss of faith in the rationality of the human animal, Lippmann was pessimistic about any involvement by the American public in determining how the United States should be governed, that popular opinion in democratic societies unnecessarily impinges on the indpendence (i.e., freedom) of elected officials:

In government offices whach are sensitive to the vehemence and passion of mass sentiment, public men have no sure tenure.  They are in effect prepetual office seekers, always on trial for their political lives.  They are deprived of their independence . . . the devitalization of the governing power is the malady of democratic states. As the malady grows the executives become highly susceptible to encroachment and usurpation by elected assemblies; they are pressed and harassed by the haggling of parties, by the agents of organized interests, and by the spokesmen of sectarians and ideologues. The malady can be fatal. It can be deadly to the survival of the state as a free society if, when the great issues of war and peace, of security and solvency, of revolution and order are up for decision, the executive and political departments, with their civil servants and technicians, have lost the power to decide.
The Essential Lippmann (1965) at pages 464-65.

If Lippmann's disdain for popular rule made Hamilton look like an optimist, Hayek made Hamilton appear a hopeless romantic by comparison :

Whether he is free or not does not depend on the range of choice but on whether he can expect to shape his course of action in accordance with his present intentions, or whether somebody else has power so to manipulate the conditions as to make him act according to that person’s will rather than his own. Freedom thus presupposes that the individual has some assured private sphere, that there is some set of circumstances in his environment with which others cannot interfere . . .

The first meaning of "freedom" with which we must contrast our own use of the term is one generally recognized as distinct.  It is what is commonly called "political freedom," the participation of men in the choice of their government, in the process of legislation, and in the control of administration.  It derives from an application of our concept to groups of men as a whole which gives them a sort of collective liberty.  But a free people in this sense is not necessarily a people of free men . . .

The application of the concept of freedom to a collective rather than to individuals is a clear when we speak of a people's desire to be free from a foreign yoke and to determine its own fate.  In this case we use "freedom" in the sense of absence of coercion of a people as a whole.  The advocates of individual freedom have generally sympathized with such aspirations for national freedom, and this led  to the constant but uneasy alliance between the liberal and the national movements during the nineteenth century.  But though the concept of national freedom is analagous to that of individual freedom, it is not the same; and the striving for the first has not always enhanced the second.
The Constitution of Liberty (1960) at pages 13-15.

What is truly amazing is that neoliberal rhetoric like this, which is on its face contrary to the conception of freedom and liberty enshrined in the U.S. Constitution, is how far the neoliberal vision of "freedom" has penetrated the American psyche. 

One of the points made in the postface of The Road from Mont Pelerin is that neoliberalism (commonly marketed as libertarianism and found at places like has embedded within it a double truth doctrine: one truth for the masses, and another truth for the elite.  One way to describe this double truth is as a Federalist wolf in Anti-Federalist sheep's clothing.  Neoliberals parrot Thomas Jefferson's conception of liberty for the masses while executing on Alexander Hamilton's conception of a strong state that protects and serves the elite.  The primary difference between neoliberals and Hamilton is that the elite are to be unelected, unknown and unaccountable to the public, who are exactly as free to choose as the elite decides.