The classical liberals knew it was unjust for the state to play favorites. Modern libertarians should bring back their conception of “privilege.”

Privilege and the Liberal Tradition

Steven Horwitz is Economics Editor at Lib​er​tar​i​an​ism​.org and Distinguished Professor of Free Enterprise at Ball State University. Horwitz has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and macroeconomics.

With the rise of the so‐​called “woke” left, the word “privilege” seems to be everywhere. There is much discussion of “white privilege” and we are often told “check your privilege” when we say things that assume that everyone lives in the same privileged social world that we do. Interestingly, a Google n‐​gram search indicates that use of the word in the book sources that Google archives peaked almost 200 years ago. The period of roughly1810 to 1850 saw the most frequent use of the word, with a clear and steady decline since then. The low point was 2013 with a small increase in frequency since then. Admittedly, Google cannot capture its use in conversation or on Twitter or other non‐​book sources. Still, it’s curious that people wrote a lot more about it in books 150 or 200 years ago than they do now.

One explanation is that the word has undergone changes in meaning and usage since then that have made it less common. Or perhaps we are less concerned today about the phenomena that our predecessors were concerned with when talking about privilege. For my purposes, I will just note that its much more common use in the 19th century might be a reflection of the importance the word had for liberalism and thinkers we would now label as classical liberal. We find it in the thought of three of the great liberal thinkers of the last three centuries: Adam Smith in the 18th century, John Stuart Mill in the 19th, and F. A. Hayek in the 20th. For all three, liberalism was seen as the enemy of what they understood as privilege. Modern‐​day libertarians should revive this meaning and position ourselves, like the classical liberals, in opposition to privilege in that older sense.

What the Classical Liberals Meant by “Privilege”

Let me start by making clear that I think the phenomenon described by contemporary uses of the word “privilege” is a real one. My argument is not that what the woke folks call privilege is not real, but rather that there is an older use of the word that captures an idea that was particularly important to classical liberals and that has been largely neglected by modern libertarians.

The classical liberals of the 18th, 19th, and much of the 20th century positioned themselves as opponents of what they termed “privilege.” For these thinkers, privilege referred to the monopolies, protections, subsidies, and other benefits that the state made available to particular people but not others equally situated. In the classical liberal tradition, these sorts of privileges violated the central liberal principle of equality before the law. It treated similarly situated people differently. As Hayek notes in The Constitution of Liberty, this use of “privilege” can be understood as deriving from the etymology of the word: the Latin word for laws, “leges,” modified by “privi” for “private.” Privilege was understood to be “private law,” or laws that only applied to some and not others.

Hayek

Hayek’s discussion of the etymology of “privilege” occurs within his discussion of the need for law to be general, abstract, and applicable to all. This generality norm, along with equality before the law, remain core components of a liberal social order, and together they are the opposite of privilege, where the law benefits some but not all. As Hayek points out, the law should only make distinctions among groups when both those inside the group and those outside of it agree that the distinction is a sensible one. He concludes:

When, however, only those inside the group favor the distinction, it is clearly privilege; while if only those outside favor it, it is discrimination. What is privilege to some is, of course, always discrimination to the rest.

It was precisely the idea that some people or groups were subject to state actions that others were not, without agreement from those both in and out of the groups in question, that liberalism objected to so strongly.

Smith

This use of privilege by Hayek was hardly new within the long liberal tradition. A cursory glance at Adam Smith’s The Wealth of Nations finds repeated use of privilege in this way. Of particular note is that the word is frequently modified by “exclusive” as a way of describing the various monopolies that Smith so vociferously opposed. The use of “exclusive” parallels Hayek’s point about privilege being “private law” and the importance of equality before the law. One way to see Smith’s opposition to exclusive privilege is that he wants an economic system that, to use a contemporary term, is far more “inclusive” by opening up opportunity to more people through genuine competition that eliminates these forms of privilege. One of the reasons Smith felt the need to modify the word “privilege” is that it did have a second, though related, meaning, which was that it referred to the privileges of citizenship. Those too could be exclusive, but unlike the privileges associated with monopolies, which should be abolished, the liberal ideal was to extend the privileges of citizenship as widely as possible in the name of equality before the law. That goal has been steadily accomplished in the past 250 years.

Mill

These same issues around the multiple meanings of privilege are present in the 19th century in the work of John Stuart Mill. In much of his economic analysis in his Principles of Political Economy, he uses privilege in much the way Smith did, including favorably quoting Smith at length on the problems of “exclusive privilege.” For Mill, this notion of privilege is tied to the idea of monopoly and appears in his discussions of patents and of the exclusive privilege of currency issuance in the hands of a few banks. His analysis points to the problems with creating such privileges. However, in his Representative Government, Mill uses privilege in the context of those privileges of citizenship:

It is a great discouragement to an individual, and a still greater one to a class, to be left out of the constitution; to be reduced to plead from outside the door to the arbiters of their destiny, not taken into the consultation within. The maximum of the invigorating effect of freedom upon the character is only obtained, when the person acted on either is, or is looking forward to becoming, a citizen as fully privileged as any other.

For both Smith and Mill, the privileges of citizenship were things to be extended as part of their commitment to equality before the law, while the exclusive privileges of monopoly and other forms of state‐​granted protection were to be opposed and removed in the name of more inclusive competition and opportunity, as well as extending equality before the law. The problem with privileges arose when they were exclusive rather than part of the general set of things that citizens could do.

Types and Examples of Privilege

The opposition to exclusive privilege also explains why Hayek, and other liberals, have been critical of various forms of government protection, including labor unions. It is not that those liberals were opposed to unions per se, as there’s nothing wrong with collective bargaining or providing collective benefits for workers or the like. The problem was that unions often got privileges that other organizations or workers did not. If the state protects your union job or allows you to get away with strike‐​related violence that would otherwise be punished, you have a privilege that others do not. The law you are subject to is “private” in the way Hayek described. Similarly, the ways in which some corporations and capitalists are able to get benefits and protection from the state, or get the state to impose costs on other firms, are forms of privilege in the same sense and were likewise opposed by liberals like Hayek.

This use of “privilege” also suggests a consistency among various positions held by modern‐​day libertarians. The opposition to various forms of monopoly, whether it be occupational licensure or taxicabs or the US Postal Service, or even the Federal Reserve System and the public schools, can be understood as being an objection to privileges granted to producers. (In the world of COVID-19 we are certainly seeing the privileges of the public schools shine through as they are able to still collect property tax funds while not delivering the promised product, and where that lack of product is driven by privileged teachers unions.) Although libertarians often speak of this as “corporate welfare,” I think there’s something to be said for reverting to the old language of “privilege.” If people on the left object to the privilege they see embedded in tacit social norms and problematic institutions, and we agree that those problems are real, perhaps we can be more explicit in making the case to them that this older and more explicit form of privilege should be opposed with equal vigor.

The other set of issues that can be nicely framed by privilege is equal treatment under the law. Within the formal law, many of the old inequities have been addressed, but issues such as same‐​sex marriage could have easily been approached by libertarians with the language of privilege—heterosexual couples had a privilege that same‐​sex couples did not. The end of the marital rape exemption fits this pattern as well. As we continue to look for places that the law does not treat people equally by race or gender or other demographic categories, libertarians can accurately point to their past by invoking an opposition to privilege as a core principle for their concern with equality before the law.

With this understanding of privilege, some of the things that the left points to as “privileges” really aren’t, and here I’m thinking of wealth. Wealth earned through the voluntary transactions of the market is not a “privilege” in the sense that liberals have used that word. It’s true that those with wealth have opportunities available to them that others don’t, but those haven’t been “granted” and they are not “exclusive.” The opportunity to have access to those opportunities is itself open to all – or should be in a liberal society. In fact, one way to think about the classical liberal fight against privilege is that we wish to extend the opportunity for more people to enjoy the “privilege” of wealth by destroying the exclusive privileges granted by the state. The opposition to privileges such as occupational licensure and taxicab monopolies and other restrictions on entry into various industries is all about ending laws that prevent all from having equal access to wealth accumulation. Wealth certainly brings with it what we might call “advantages,” but if the opportunity to acquire them is open to all, then it is not a privilege. And when we consider that markets are positive‐​sum games, one party’s accumulation of wealth does not exclude, and in fact derives from, others gaining from the exchanges.

This is also why I think the term “rent‐​seeking” suffers from an important ambiguity in economics. Rent is the return above opportunity cost for a specific asset. Economic actors are, in some sense, always seeking rents – we all want a salary that’s substantially higher than the next best offer we could get. But that’s not problematic. The “rents” that are problematic are those that come from privilege. Lobbying to get a particular regulation passed that benefits you or harms your competition, or to obtain a monopoly over the production of some good, is an attempt to earn rents by seeking a privilege. And that’s why this form of “rent‐​seeking” should really be called “privilege‐​seeking,” and it also explains why rent‐​seeking behavior has troubled so many classical liberals and libertarians over the last 75 years. It harkens back to our roots in defining ourselves as opponents of privilege.

Conclusion

Making fun of the language of privilege as it’s deployed by the left today does us no good. That word is part of our own heritage as well. We should be trying to elbow our way into the conversation by pointing out this older history. The privileges that classical liberals have long opposed are ones that have tended harm the material well‐​being of the least well‐​off and treated people differentially by race and gender in ways that should find a sympathetic audience among those who are focused on the more contemporary use of the word. Pointing out this older use of the word, and the ways in which those privileges harmed groups that progressives champion, might be a means to get those progressives to take more seriously the problems with the sorts of privileges that concern classical liberals. If nothing else, recapturing that older use of privilege would focus our attention on those issues, and positioning ourselves as opponents of privilege might have some rhetorical value. If it was good enough for Smith, Mill, and Hayek, it should be good enough for us.