The Elitist as Egalitarian

The Pursuit of INequality, by Philip Green. Pantheon Books, 306 pp., $14.95.

As the libertarian movement grows, it is to be expected—and welcomed—that its growth will generate attacks and criticisms from the left and the right. In fulfillment of this expectation, academician Philip Green, chairman of the government department at Smith College in western Massachusetts, has come forth to do battle. Green, an outspoken “egalitarian,” has previously attacked libertarianism in the pages of The Nation (“America Amok” and “In Defense of the State”) and democracy (“Two Cheers for the State”). In The Pursuit of INequality he is at it again, attempting to refute not only libertarianism but other currently popular systems that oppose egalitarian statism.

The Pursuit of INequality is an important anti-liberal (in the classical liberal sense of that term) work which deserves close examination. For one thing, Green is a thoroughgoing and consistent egalitarian. He recognizes, as few leftist egalitarians do, that if we are to have “equality of outcomes” we cannot have “equality of opportunity.” As Green points out, “The two aspects of liberal individualism that will be discussed—the principle of equal opportunity for individuals and the principle of limiting government interference with the ‘free’ market—might at first glance seem unrelated to each other; certainly many people who uphold the first of those principles would repudiate the second unqualifiedly. But in practical fact they are deeply related.” Green at least has the courage to recognize this truth and to reject both market freedom and equality of opportunity.

Four chapters of his critique of “inegalitarianism” are devoted to a somewhat confused refutation of “sociobiology.” While Green does occasionally score some solid hits, in the process he exhibits numerous flaws in his understanding (e.g., treating sociologist Steven Goldberg, author of The Inevitability of Patriarchy, as a “sociobiologist”). While I do not agree with the sociobiologists’ genetic, sexual, and racial explanations and justifications of the existence of “inequality,” I still found Green’s attempted refutation of them unconvincing. As Green admits, he believes, “The crucial difference between explanations of social phenomena is not in their ‘scientific validity’ but in the purposes they serve.” Since these arguments do not serve his purposes, Green opposes them. This is hardly a convincing starting point for a serious refutation.

It is libertarianism, however, which the author believes to be the most formidable opponent of his new egalitarian order. In the section entitled “The New Individualism: The State, the Public, and Liberty” he focuses on the political theories of Milton Friedman and Robert Nozick, to the exclusion of such Austrian economists as F. A. Hayek and Murray Rothbard, seeming to deliberately sidestep any confrontation with the (to my mind) much more sweeping arguments for libertarianism, both from the classical liberal side and from that of more thoroughly anti-statist partisans.

Green presents himself as a mainstream modern liberal, but his basic analytical and sociological framework is Marxist. It is, however, a decadent pop-Marxism, without the virtue of Marx’s understanding of social reality. Marx (along with Adam Smith, Carl Menger, Ludwig von Mises, F. A. Hayek, and Murray Rothbard, to name a few) understood social reality, as Thomas Sowell put it, “in terms of the mutually constraining complex of relationships whose results form a pattern not necessarily similar to the intentions of any of the individuals involved.” That is, it takes more to explain society than the “intentional” goodness or wickedness of social actors. Green superficially employs a Marxist sociology of change, yet he simultaneously places the blame for injustice and inequality on the intentional behavior of discriminatory, racist, greedy, mean businesspeople, unfiltered by any matrix of incentives and disincentives and thus reduces the Marxist system to a mere parody of social analysis.

He has apparently read Milton Friedman’s Capitalism and Freedom and a book review of Robert Nozick’s Anarchy, State and Utopia. He makes some telling points against Friedman’s “public goods” justification of the state. When it comes to Nozick, however, Green is on much shakier ground. Nozick’s step-by-step justification of the minimal state is totally misstated by Green. Green states that Nozick is a social contract theorist, although Nozick himself writes in Anarchy, State and Utopia that his view “differs from social compact views in its invisible-hand structure.” Green has Nozick “postulating” the legitimacy of the minimal state, whereas Nozick attempts to demonstrate its legitimacy. Green reverses (to the detriment of the argument) the order of Locke’s argument concerning the legitimacy of property, by listing it as property first in inanimate objects, then in one’s own labor, although both Locke and Nozick have it the other way around. Green sidesteps the crucial Nozickian argument that, because one cannot avoid the assignment of rights to control objects that cannot be used by two or more different people at the same time and in the same respect, all political theories are property rights theories.

The distortions and misrepresentations of Green’s argument could be catalogued forever, but the core of his antilibertarian perspective is contained in his answer to the question he puts to the reader: “Is a ‘free man’ who owns large-scale means of production the same kind of ‘free man’ as one who does not, who owns nothing but his own body and its ability to do labor?”

To which he answers that “the owner of a mere body is ‘free’ to sell labor at its price, and get the returns on that sale from his or her employer. The latter sells products, the price of which includes the price of the employed labor plus profit. But whereas the employee can bargain with the employer about the rate of pay for labor, there is no bargaining about the disposition of profit: that belongs entirely to the employer; it is the ‘property right’ of ownership of productive property.” (Emphasis in original)

But this is self-contradictory. If profit is defined, as Green defines it, as the difference between the product of labor and its wage, and if wages are subject to negotiation, then profit is subject to negotiation. But Green’s argument isn’t just self-contradictory—it is in fact based on the fallacies of Marxist economics which have been exploded again and again in economics, from Eugen von Böhm-Bawerk’s famous refutation in his Capital and Interest and Karl Marx and the Close of His System to Israel Kirzner’s recent brilliant analysis in Competition and Entrepreneurship and his most recent collection of essays, Perception, Opportunity, and Profit. The fallacious Marxist view holds that exchange is not “equal” when the transactors possess unequal resources; therefore the equality of opportunity offered by a liberal society is in reality inequality. Hence, Green’s explicit opposition to the liberal or libertarian advocacy of equality of legal rights.

Green sketches a brief scenario which he believes typifies “capitalist society.” A family lives

in a house near a lake.... The members of the family all work at a nearby industrial plant. They contracted freely to work there, agreed quite cheerfully to the contractual terms of employment, and consider themselves free agents still. However, because of its ability to employ them and their fellow workers at average wages lower than the average revenue it earns from the workers’ total contribution to the sale of the product they help make... the corporation is enabled to make a profit — to realize an investable surplus. With this investable surplus, which over time becomes immense, the company buys the neighbor’s lakefront property for expansion purposes. It promptly closes down the family’s access to the lake. Of course, the lake has a circumference, not all of which is taken over by the company; with some trouble, the family can still find a public beach. But then the company, which manufactures chemicals, begins to discharge their residues into the lake.... The family decides to take its freely earned wages and move. At this point, however, the company uses its surplus funds to contract with a road-building company to drive a giant highway from its expanded operation to the outside world — a sloping downhill road in which giant trailer trucks reach a double-clutched climax about ten feet from the family’s front door. Their property has become worthless; they can no longer sell it at a price that will enable them to replace it with a similar abode. The company, of course, will buy it from them—for a song. Without ever expecting to do so in the slightest, this family of workers have [sic] discovered the relationship between surplus value in the particular form of private profit outside their control, and alienation..

It would indeed be shocking if Green’s portrayal were an accurate picture of what the market was like. But it isn’t. As an attempted portrait of the market economy in the real world, Green’s horror story can perhaps best be described as plain silly. It conveniently leaves out all possible options and alternatives which the workers — or for that matter, the corporation — might have in such a series of events. In a market system based on property rights, for example, the corporation would be legally accountable for the pollution of the lake. And once the highway was completed, it would make the worker’s property more valuable as commercial property, whether the worker wanted to use it commercially, or sell it. There is no mention of the possibility of collective action on the part of the workers at the factory, if in fact the employer’s actions were damaging their interests, or of class action suits, if the other neighbors were not fellow employees. Equally unrealistic, and far worse in terms of a vision of humanity, is Green’s elitism in portraying the family of workers as poor dumb saps, frozen in time and space, helpless against the omnipotent onslaught of the Corporate Monster.

From the point of view of economic analysis, Green’s scenario is based on Marx’s fallacious Labor Theory of Value, a theory refuted in the late nineteenth century by the “marginalist economists.” The fallacies of this theory are worth discussing briefly here.

Green’s analysis accepts Marx’s belief that labor is the only possible unit of value, and supposes that the only reason the corporation can make a profit, or “investable surplus,” is that it pays the workers less than the value of their “total contribution” to the product, i.e., their labor. This in turn rests on the notion that the exchange of goods implies an equality of value between them (if 3 oranges are exchanged for 10 apples, then 3 oranges are equal in value to 10 apples). Marx tried to identify this equality by looking at various possible constituent elements of value, finally settling on labor. He concluded that commodities exchange in proportion to the amount of “crystallized labor time” contained in them; that is, the amount of labor necessary for their reproduction.

Since labor too is a commodity, it also contains “crystallized labor time,” that is, the amount needed to produce the means of subsistence (food, shelter, clothing) required to reproduce it. But a laborer produces in a day more than the “equivalent labor” needed to support him or her at the subsistence level which according to Marx determines his or her wages. This difference is called “surplus value” and is what constitutes profit. Hence the capitalist who employs labor reaps surplus value — profit — which would otherwise belong to the worker.

This theory fails totally to explain such phenomena as business losses, rising living standards, etc. — which gave rise to its refutation by the marginalists, whose key point was that an exchange of goods is never based on equal valuations, for if valuations were truly equal, there would be no

reason to exchange. Rather, voluntary exchange occurs because the parties to the exchange each place unequal valuations on the goods: I value your three oranges more highly than my ten apples, and vice versa; the exchange is unequal for both parties; and the outcome is mutually beneficial.

Green never stops to analyze — or even to make explicit — the theories underlying his story of the family by the lake. Nor does he address the theories of the marginalist economists — he barely pauses to scoff at them, but in doing so he reveals that he does not even understand the economist’s use of the word “marginal.”

There are two further arguments which Green believes provide the coup de grace for libertarianism. The first is that consumers do not have “the faintest idea” of how to spend their incomes on the goods and services now provided by government agencies; “only trained people familiar with the specific problems and paid to devote time to them can do that,” i.e., Green and his fellow would-be philosopher kings. This elitist argument is beneath contempt. If I cannot wisely run my life (or even choose others to advise me), why is Green more competent to do it for me? Does not the argument apply to him as well? How easily egalitarianism slides into elitism.

The second argument is that past statist interventions have had a powerful influence on present institutions, therefore justifying further interventions. It is regrettably true that previous injustices have had lasting effects, and to the extent that the victims of such injustices can be identified and compensated, libertarians favor strict and immediate restitution. That is, after all, the basic requirement and foundation of the system of justice underlying the free market. However, the results of many previous injustices cannot be so rectified (the criminal parties — or the victims — are dead, or the victimization did not result in any lasting theft of property with identifiable victims or their heirs). This decidedly does not justify further state action. By way of example, the past actions of states have had profound effect on the ideas widely held today. Had Socrates not been condemned to death by the Athenian jury, the world might be a far different place. Vagrancy laws and Green’s beloved compulsory state “education” have done much to shape present values and attitudes toward work. Do these facts justify further censorship and crushing of dissent? or justify socialism? Quite the contrary. If anything, they should strengthen our resolve to do away with such injustices, not encourage us to heap on more of the same. Green’s recitation of past state interventions merely provides us with powerful examples of how states inevitably use their power to exploit and oppress their subjects — as would Professor Green’s egalitarian state.

We now come to what I consider to be the underlying purpose of the book. After studying the work, I found The Pursuit of INequality to be aptly named, though not for reasons the author might advance. It is appropriately named because, in the final analysis, inequality is precisely what Professor Green is pursuing.

Under the pretense of criticizing all those who oppose the imposition of egalitarian statism on society, Green argues that the opponents of egalitarianism are merely defending their “class interests.” This is not only a questionable technique of argumentation (at least in isolation), it also neatly sidesteps the question of Green’s own class interests. The Pursuit of INequality is first and foremost a poleemic for the imposition of the rule of “intellectuals” such as Professor Green over the rest of us.

Why is this so? The answer is to be be found in the characteristics that define intellectuals as a class. As Thomas Sowell argues in his brilliant Knowledge and Decisions, intellectuals are people who deal in the transmission of articulated knowledge. Knowledge comes in many forms. Prices in the market, for example, convey effective, but unarticulated, knowledge; one need not know the causes of a diminution or expansion of the supply of wheat, for example, for the price rise or fall to lead to a change in one’s purchasing patterns. This is merely one example of the many kinds of unarticulated knowledge that come into play in the regular interactions of human beings. In another interesting work which supplements the point Sowell is making, Michael Polanyi’s The Tacit Dimension, Polanyi discusses the implications of the fact that “we know more than we can say,” that is, we know more than we can put into explicit language. Playing the piano, sculpting, painting, turning a lathe, all rest on kinds of knowledge which are