Social Welfare Measures

COMMON OBJECTION to totalitarian societies is that they re- gard the end as justifying the means. Taken literally, this objec- tion is clearly illogical. If the end does not justify the means, what does? But this easy answer does not dispose of the objection; it simply shows that the objection is not well put. To deny that the end justifies the means is indirectly to assert that the end in question is not the ultimate end, that the ultimate end is itself the use of the proper means. Desirable or not, any end that can be attained only by the use of bad means must give way to the more basic end of the use of acceptable means. To the liberal, the appropriate means are free discussion and voluntary co-operation, which implies that any form of coercion is inappropriate. The ideal is unanimity among responsible indi- Government in a Free Society 23 viduals achieved on the basis of free and full discussion. This is another way of expressing the goal of freedom emphasized in the preceding chapter. From this standpoint, the role of the market, as already noted, is that it permits unanimity without conformity; that it is a sys- tem of effectively proportional representation. On the other hand, the characteristic feature of action through explicitly po- litical channels is that it tends to require or to enforce substantial conformity. The typical issue must be decided “yes” or “no”; at most, provision can be made for a fairly limited number of alternatives. Even the use of proportional representation in its explicitly political form does not alter this conclusion.

The number of separate groups that can in fact be represented is narrowly limited, enormously so by comparison with the proportional rep- resentation of the market. More important, the fact that the final outcome generally must be a law applicable to all groups, rather than separate legislative enactments for each “party” rep- resented, means that proportional representation in its political version, far from permitting unanimity without conformity, tends toward ineffectiveness and fragmentation. It thereby op- erates to destroy any consensus on which unanimity with con- formity can rest.

There are clearly some matters with respect to which effective proportional representation is impossible. I cannot get the amount of national defense I want and you, a different amount. With respect to such indivisible matters we can discuss, and argue, and vote. But having decided, we must conform. It is pre- cisely the existence of such indivisible matters-protection of the individual and the nation from coercion are clearly the most basic-that prevents exclusive reliance on individual action through the market. If we are to use some of our resources for such indivisible items, we must employ political channels to reconcile differences.

The use of political channels, while inevitable, tends to strain the social cohesion essential for a stable society. The strain is least if agreement for joint action need be reached only on a limited range of issues on which people in any event have common views.

Every extension of the range of issues for which explicit agreement is sought strains further the delicate threads that hold explicitly political form does not alter this conclusion. The num- ber of separate groups that can in fact be represented is narrowly limited, enormously so by comparison with the proportional rep- resentation of the market. More important, the fact that the final outcome generally must be a law applicable to all groups, rather than separate legislative enactments for each “party” rep- resented, means that proportional representation in its political version, far from permitting unanimity without conformity, tends toward ineffectiveness and fragmentation. It thereby op- erates to destroy any consensus on which unanimity with con- formity can rest.

There are clearly some matters with respect to which effective proportional representation is impossible. I cannot get the amount of national defense I want and you, a different amount. With respect to such indivisible matters we can discuss, and argue, and vote. But having decided, we must conform. It is pre- cisely the existence of such indivisible matters-protection of the individual and the nation from coercion are clearly the most basic-that prevents exclusive reliance on individual action through the market. If we are to use some of our resources for such indivisible items, we must employ political channels to reconcile differences.

The use of political channels, while inevitable, tends to strain the social cohesion essential for a stable society. The strain is least if agreement for joint action need be reached only on a limited range of issues on which people in any event have common views. Every extension of the range of issues for which explicit agreement is sought strains further the delicate threads that hold

GOVERNMENT AS RULE-MAKER AND UMPIRE

It is important to distinguish the day-to-day activities of people from the general customary and legal framework within which these take place. The day-to-day activities are like the actions of the participants in a game when they are playing it; the frame- work, like the rules of the game they play. And just as a good game requires acceptance by the players both of the rules and of the umpire to interpret and enforce them, so a good society re- quires that its members agree on the general conditions that will govern relations among them, on some means of arbitrating different interpretations of these conditions, and on some device for enforcing compliance with the generally accepted rules. As in games, so also in society, most of the general conditions are the unintended outcome of custom, accepted unthinkingly. At most, we consider explicitly only minor modifications in them, though the cumulative effect of a series of minor modifications may be a drastic alteration in the character of the game or of the society. In both games and society also, no set of rules can prevail unless most participants most of the time conform to them without external sanctions; unless that is, there is a broad underlying social consensus. But we cannot rely on custom or on this con- sensus alone to interpret and to enforce the rules; we need an umpire. These then are the basic roles of government in a free society: to provide a means whereby we can modify the rules, to mediate differences among us on the meaning of the rules, and to enforce compliance with the rules on the part of those few who would otherwise not play the game. The need for government in these respects arises because ab- solute freedom is impossible. However attractive anarchy may be as a philosophy, it is not feasible in a world of imperfect men.

Men’s freedoms can conflict, and when they do, one man’s free- dom must be limited to preserve another’s-as a Supreme Court Justice once put it, “My freedom to move my fist must be limited by the proximity of your chin.” The major problem in deciding the appropriate activities of government is how to resolve such conflicts among the freedoms of different individuals. In some cases, the answer is easy. There is little difficulty in attaining near unanimity to the proposition that one man’s freedom to murder his neighbor must be sacri- ficed to preserve the freedom of the other man to live. In other cases, the answer is difficult. In the economic area, a major prob- lem arises in respect of the conflict between freedom to combine and freedom to compete. What meaning is to be attributed to “free” as modifying “enterprise”? In the United States, “free” has been understood to mean that anyone is free to set up an enterprise, which means that existing enterprises are not free to keep out competitors except by selling a better product at the same price or the same product at a lower price. In the con- tinental tradition, on the other hand, the meaning has generally been that enterprises are free to do what they want, including the fixing of prices, division of markets, and the adoption of other techniques to keep out potential competitors. Perhaps the most difficult specific problem in this area arises with respect to combinations among laborers, where the problem of freedom to combine and freedom to compete is particularly acute.

A still more basic economic area in which the answer is both difficult and important is the definition of property rights. The notion of property, as it has developed over centuries and as it is embodied in our legal codes, has become so much a part of us that we tend to take it for granted, and fail to recognize the ex- tent to which just what constitutes property and what rights the

Men’s freedoms can conflict, and when they do, one man’s free- dom must be limited to preserve another’s-as a Supreme Court Justice once put it, “My freedom to move my fist must be limited by the proximity of your chin.”

The major problem in deciding the appropriate activities of government is how to resolve such conflicts among the freedoms of different individuals. In some cases, the answer is easy. There is little difficulty in attaining near unanimity to the proposition that one man’s freedom to murder his neighbor must be sacri- ficed to preserve the freedom of the other man to live. In other cases, the answer is difficult. In the economic area, a major prob- lem arises in respect of the conflict between freedom to combine and freedom to compete. What meaning is to be attributed to “free” as modifying “enterprise”? In the United States, “free” has been understood to mean that anyone is free to set up an enterprise, which means that existing enterprises are not free to keep out competitors except by selling a better product at the same price or the same product at a lower price. In the con- tinental tradition, on the other hand, the meaning has generally been that enterprises are free to do what they want, including the fixing of prices, division of markets, and the adoption of other techniques to keep out potential competitors. Perhaps the most difficult specific problem in this area arises with respect to combinations among laborers, where the problem of freedom to combine and freedom to compete is particularly acute.

A still more basic economic area in which the answer is both difficult and important is the definition of property rights. The notion of property, as it has developed over centuries and as it is embodied in our legal codes, has become so much a part of us that we tend to take it for granted, and fail to recognize the ex- tent to which just what constitutes property and what rights the

ACTION THROUGH COVERNMENT ON GROUNDS OF TECHNICAL MONOPOLY AND NEIGHBORHOOD EFFECTS

The role of government just considered is to do something that the market cannot do for itself, namely, to determine, arbitrate, and enforce the rules of the game. We may also want to do through government some things that might conceivably be done through the market but that technical or similar conditions render it difficult to do in that way. These all reduce to cases in which strictly voluntary exchange is either exceedingly costly or practically impossible. There are two general classes of such cases: monopoly and similar market imperfections, and neigh- borhood effects.

Exchange is truly voluntary only when nearly equivalent al- ternatives exist. Monopoly implies the absence of alternatives and thereby inhibits effective freedom of exchange. In practice, monopoly frequently, if not generally, arises from government support or from collusive agreements among individuals. With respect to these, the problem is either to avoid governmental fos- tering of monopoly or to stimulate the effective enforcement of rules such as those embodied in our anti-trust laws. However, monopoly may also arise because it is technically efficient to have a single producer or enterprise. I venture to suggest that such cases are more limited than is supposed but they unquestionably do arise. A simple example is perhaps the provision of telephone services within a community. I shall refer to such cases as “tech- nical” monopoly.

When technical conditions make a monopoly the natural out-