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July 27, 2005

So You Want to Live in a Free Society (4): Personal Independence and the Rule of Law

Anderson on Political Economy, Elizabeth Anderson: July 27, 2005

In this series of posts, I've been developing a view of the requirements of a free society.  I've introduced two notions of freedom--as opportunity, and as personal independence or non-domination.  Last time I argued that freedom-as-opportunity is needed to justify private property, and is an indispensable idea for assessing social arrangements from the perspective of freedom.  In this post I'll argue that freedom-as-personal independence is also a necessary part of a free society.  Recall that to be free in this sense is to be in a state in which one "is not subject to coercion by the arbitrary will of another" (F. A. Hayek, The Constitution of Liberty, p. 11).  Despite my fealty to Hayek's own formulation (which in fact follows a very long tradition), some might suspect that I have tried to stack the deck with some left-wing, radical notion of freedom that capitalist freedom-lovers can do without.  Once again, the suspicion is right that this notion of freedom-as-personal-independence has some political implications that laissez-faire theorists will not like, as I plan to show in later posts.  But once again, freedom-lovers can't do without this notion, because it's necessary for the rule of law, without which capitalism cannot flourish.

Imagine a state in which people have wide opportunities, but enjoy them only at the pleasure of a dictator.  The dictator is easy-going and mostly lets his subjects do as they please.  But every so often he gets cranky and orders the arrest of a subject who has displeased him, or he gets greedy and orders the confiscation of a subject's possessions.  He doesn't have to prove that his subjects broke any laws that could warrant such punishment.  He can throw people in jail or take their possessions without a trial.  He can do this to any of his subjects at his whim.

What does this say about the subjects who have not been arrested or had their possessions seized?  Are they free, or not?  In the opportunity sense of freedom, they are still free.  But their opportunities are implicitly conditioned on the permission of the dictator.  They enjoy them as a mere grant of privilege from him, not as a right against him.  This has consequences beyond the relative insecurity of their freedom.  It also means that they had better toady up to the dictator, lest he take away their opportunities.  People who must grovel in order to retain their opportunities are not fully free. They lack freedom in the sense of personal independence. 

There is a way to secure people's personal independence from state agents.  It's called the rule of law.  In a state governed by the rule of law, the agents of the state can act only pursuant to prior, duly enacted, publicized laws of general application specifying what may be done to whom and for what reasons.  People's liberties can only be taken away by due process of law.  The point of the rule of law is to limit the discretionary power of state agents within tight bounds.  When acting for the state, they cannot do as they please, but only as publicized, general, duly enacted laws authorize them to act.

Without the rule of law, private property rights, and hence capitalism, cannot flourish.  We see this point being made in China today, where oil prospectors have filed suit against the state for seizing their wells and paying them a small fraction of what they are worth.  Here's the background:  In 1994, China, eager to develop its own energy resources, wisely decided to permit private oil prospecting.  Its bet on private enterprise paid off hugely when thousands of people of very modest means signed development contracts with the Oil Ministry, scrimped together their savings along with that of their family, friends, and neighbors, and drilled over 2,000 productive wells in Shaanxi Province.  State officials, once they saw how profitable these investments were, seized the wells for the government, paying investors a fraction of their investment--and more importantly, a fraction of the market value of the wells.  Given the quasi-feudal mode of state governance in China, where local officials treat their governmental domains as integrated with their private property, and tax the locals to generate revenue for their firms, it is reasonable to assume that the officials plan to skim the profits of the oil wells for themselves.  "Let the people take the risks; we'll take the profits" is the best translation of the explanation by the mayor of one Shaanxi town, who called the experiment of allowing private prospecting "a beautiful mistake."  Beautiful for him, a mistake for the poor prospectors who did all the work, relying on the state's lying promise to recognize their claim to property.  The people are fighting back with an unprecedented class action suit against the government, demanding either full restitution of their wells or better compensation for their investment.

What's emerging is a major test of the rule of law and hence the future of capitalism in China.  So far, the rule of arbitrary state will appears to be winning over the rule of law.  The lead lawyer for the prospectors has been arrested, some of the plaintiffs have been arrested, others are in hiding, and the state has banned the plaintiffs' lawyers from talking to the press.  The choice is stark:  shall it be klepto-capitalism for the ruling class, feudalism for everyone else, or shall all be free to become capitalists, with rights to private property?  The irony is heavy:  can today's Communist Party/company town ruler-owners point to anything that distinguishes them, morally, from the oppressive landlords the original Communists fought to overthrow?  More and more frequently, rioting peasants and villagers don't see much of a difference.  Their vision is 20/20.

No doubt, the readers of this blog will join me in expressing outrage at China's actions.  But we may differ in our grounds.  For some, the outrage consists in its violation of a sacred and inviolable natural right to private property.  For me, the outrage consists in exploitative lies, corruption, and gross violations of the rule of law.  The two concerns converge in a common condemnation of the state's oppression of its people in this case.  But they diverge in other cases, notably concerning the scope of the state's power of eminent domain.  More on that in my next post.


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I've been looking forward to the next post in Elizabeth Anderson's series on freedom, and it is now up. This one stresses the need for the rule of law in order to protect any kind of meaningful political freedom. [Read More]

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