Deflationary Liberalism

Social contract theory from the bottom-up

In my last post, I argued that the neoliberal-era is best understood as the structural transition to a form “disembedded liberalism” that, in the pursuit of international economic integration, constrained popular sovereignty through supranational institutions and the diffusion of political power into a technocratic managerial class.

I reject neoliberalism, but not because I’m a Post Liberal or anti-capitalist. On the contrary, my problems with the neoliberal era stem from my even deeper commitment to political liberalism in the truer philosophical sense.

Start with Hayek’s classic distinction between the Anglo-Scottish strains of liberalism and the rationalist “constructivist” liberalism of the French Enlightenment. The former sees liberal institutions as emerging from a spontaneous, bottom-up process of social evolution à la common law, while the latter seeks to design a free society from top-down à la Napoleonic Codes.

Wanting to redesign society along rational principles is typically associated with the left and modern liberalism, though it needn’t be. Libertarianism is a rationalist mutation of classical liberalism, while John Dewey’s modern liberalism endorsed an evolutionary account of social progress.

Whether classical or modern, I’ve always been more partial to the evolutionary account of liberalism for a few reasons:

• First, as a kind of Hegelian, I’m skeptical of attempts to impose a rational design on society detached from the concrete “actuality” of existing social practices. Classical liberals understand this point well in the context of left-wing social engineering schemes, but it applies equally to top-down attempts at liberalization, from the Shock Therapy imposed on Russia in the early 1990s, to the neoconservative project of democratizing Iraq and Afghanistan.

• Second, the evolutionary account comes closer to reconstructing how liberal norms and institutions actually emerged in the first place; namely, as a way to transcend sectarian conflict and restore order in the aftermath of the European Wars of Religion. As evinced by the proto-liberalism of Thomas Hobbes or the natural law theory of Hugo Grotius, liberalism was in some sense discovered through the logic of positive-sum games, not invented by Enlightenment philosophers. They merely gave that logic a vocabulary.

• Third, in lieu of consensus on values and morality, bottom-up liberalism provides a potential framework for mediating between different conceptions of the good. Critics of liberalism sometimes lament “liberal neutrality” for being empty of moral content, but that is by design. As Hume put it, justice is an “artifice” for securing social cooperation, not a natural virtue in its own right, as what ought cannot be derived from what is.

Putting these together, my approach to liberalism is in some sense deflationary. I don’t think it makes sense to self-identify as a “liberal,” for instance; or at least, it cannot be the whole of one’s identity. The Acts of Toleration that restored comity between Protestants and Catholics depended on the existence of Protestants and Catholics with different, incompatible conceptions of the good. An 18th century Catholic could be liberal in the adjectival sense of being committed to mutual respect and toleration, but their theological identity still came prior. The ideal “liberal” in this sense is a kind of impartial arbiter or broker — an institutional role one can adopt, but not embody as a conception of the good in itself. The critics of the hollowness of “liberal neutrality” are thus on some level right about the need for pre-liberal value systems and “forms of living” to breathe life into liberal institutions.

At the same time, liberalism isn’t totally value neutral. Its quietism on issues of worldview, religion and culture is in service of a positive normative commitment to social cooperation. As the Joker put it, “We live in a society.” We can either learn to tolerate each other in pursuit of shared goals or embrace the zero-sum logic of conflict theory and mutual domination.

Bottom-up social contract theory

This more deflationary notion of liberalism was recapitulated by John Rawls in Political Liberalism, the book of his I most greatly admire. Rawls sets out to derive a “freestanding” basis for the legitimacy and stability of liberal institutions that, by definition, must avoid imposing a “comprehensive doctrine” on its citizens, including the more “comprehensive” forms of liberalism associated with Kant and Mill. This is what gives rise to Rawls’s notion of the “overlapping consensus,” as the laws that different peoples find mutually agreeable will automatically inherit a degree of legitimacy. The proviso is that the citizenry must practice “reasonable pluralism,” such that “perfectionist” worldviews that call for the imposition of contested values on others needn’t be accommodated.

Cooperation is possible despite different conceptions of the good

As a neo-Kantian, Rawls’s general approach to political philosophy was to construct these kinds of abstract, “ideal” principles of justice in which everyone is well-behaved and only later work out how our messy, “non-ideal” reality can be brought into conformity. As a Hegelian, I flip this methodology on its head by beginning with the world as it is, and only later try to “rationally reconstruct” the norms implicit in antecedent practices. While the two approaches can converge, the latter is less likely to fall prey to empty abstractions and provides a more compelling account of how liberal principles inherit their normative force.

To illustrate the difference, consider that Rawls’s most important philosophical contribution was arguably the revival of social contract theory as a serious alternative to both Marxism and utilitarianism. As he puts it in A Theory of Justice, “the basic structure” of a liberal society should be conceived as “a cooperative venture for mutual advantage,” where “the basic structure” refers to the foundational legal and social institutions we share in common but did not explicitly opt-in to. This restricts the scope of liberal principles to the members of the same basic structure (i.e. the nation-state), and distributive justice to the “cooperative surplus” enabled by those institutions.

I also think of myself as a kind of contractarian, just of a decidedly non-ideal sort. Rather than start with abstract scenarios like Rawls’ “original position” or Hobbes “state of nature,” I see the constitution of actually-existing liberal societies as embodying political settlements between their internal factions. This historical, “bottom-up” approach to the social contract has a few implications:

• Rather than positing what neo-Hobbesian theorist David Gauthier calls an "initial bargaining position" between hypothetical members of a society, bargaining between individuals, groups and institutions is a continual, on-going process. It’s the difference between the top-down social planner of Paul Samuelson and the bottom-up institutionalism of Ronald Coase or Elinor Ostrom.

• In lieu of a sharp historical break, the roots of Western liberalism can be traced to the “constitutional bargaining” of the late medieval period, suggesting a deeper continuity between feudal Europe and modern liberalism than Enlightenment thinkers cared to admit. Joseph de Maistre pointed this out in his treatise on The Generative Principle of Political Constitutions, which argued that written constitutions conceal the extent to which all constitutions are still overwhelmingly unwritten.

• While centralized governments were key to getting liberalism-proper off the ground, de facto sovereignty in liberal societies remains highly polycentric. The rise of liberalism and nationalism went hand-in-hand as a superstructure for channeling the polycentric sovereignty of pre-modern society toward the “commonweal,” eg. from corporations chartered by the King to acts of general incorporation within a Smithian framework of socially productive competition. “Ordered liberty” thus consists in the building and maintenance of “well-constructed institutions” that protect this equilibrium from decaying back into the medieval rule of the clan.

• Liberal principles of justice only exist to the extent they’re institutionally embedded. In contrast, utilitarian, universalist and cosmopolitan varieties of liberalism are products of what Hegel famously called “Empty Formalism”: abstractions detached from the concrete networks of mutual exchange and recognition that give our ethical commitments their normative force. In particular, the nation-state synthesizes our ethical identity (the nation) with an interlocking set of civic institutions (the state), allowing us to realize our freedom through the other.

• Merely positing a liberal theory of justice is insufficient. Actionable theories of justice must be able to reconstruct the development of existing institutions, which means putting political economy center stage. Think Mancur Olson’s notion of an “encompassing coalition” or John Kenneth Galbraith’s “Countervailing Power.” Whether a society’s institutions are inclusive or extractive depends on a variety of path-dependent historical, economic and technological factors, the structure of political competition, the incentives facing political elites, and the relative bargaining power of minority factions, among many other things.

• Appreciating how transaction costs structure the boundary of firms and governments alike reveals parallels between corporate and political forms of governance. Medieval fiefdoms and city states are analogous to hierarchical corporations with residual claimants, for example, while modern social democracies are structured more like “mutual insurance co-operatives” that divide ownership equally among the citizen-members.

• Securing cooperation across society’s members requires the “losers” from major trade, technology and policy shocks to be made better off. Hicks-Kaldor efficiency isn't good enough.

Per Rawls’ notion of the “cooperative surplus,” the 19th and 20th century development of liberal welfare states can even be reconstructed as reflecting the positive-sum logic of compensatory social insurance, in some sense completing the market in light of endemic market failures, rather than as a purely zero-sum form of egalitarianism. Consider Denmark’s “flexicurity” model of labor relations. Flexicurity approximates the modern liberal ideal by combining highly flexible labor market regulations with robust income security for displaced workers. Rather than being the result of a technocratic policy choice, the Danish model emerged as a political settlement between sectoral labor unions and employer associations across a century of dialogue and negotiation, and will no doubt continue to evolve over time. As I put it in my paper on The Free-market Welfare State, “Like other varieties of liberalism, Denmark’s success is liminal, existing on the boundary of conflicting worldviews.”

Pluralism vs. the separateness of persons

The Danish example also illustrates the extent to which actually-existing social contracts require intermediate groups to aggregate individual interests into collective action, putting limits on what Rawls called “the separateness of persons.” As Charles Taylor argues in Sources of The Self, the notion that an individual’s identity is neatly separable from the culture and community in which they are embedded is historically modern. In reality, our sense of self and identity is constituted inter-subjectively by our peers and surrounding culture, and requires the existence of different peoples to ground our own identity through mutual recognition. Even identifying as an authentic individual implicitly depends on the recognition of your individuality in others. The modern, individualistic conception of human dignity and autonomy is thus itself a kind of cultural inheritance, as reflected in the Christian genealogy of Kant, Descartes and Locke.

Taylor’s argument for the “diversity of goods” leads to a notion of pluralism as distinct from the more rationalistic notions of individual rights and freedoms. He was writing in the context of the Canadian debate over multiculturalism, particularly Anglophone-Francophone relations. The fact that Canada has Quebec, a distinct “French Nation” within an otherwise English speaking country, generates ethnolinguistic conflicts over power sharing and notions of the good. Out of this conflict, which at its peak included a credible separatist movement, emerged a number of political settlements rooted in a particularistic application of liberal neutrality and accommodation (eg. official bilingualism and robust confederalism).

Liberal neutrality and pluralism are thus less about maximizing an abstract notion of individual autonomy than about maintaining harmonious cooperation between different social classes and sub-groups vis-à-vis their shared institutions. This differs markedly from the perfectionist liberalism of, say, John Stuart Mill, who argued that our formative peer groups and cultures can themselves be tyrannical. As Mill writes in On Liberty,

Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself.

The tension between the rationalist and pluralist conception of liberalism was illustrated in France’s debate over whether to “ban the burqa.” Rationalist liberal feminists argue that the burqa and niqab represent patriarchal oppression, such that a woman raised in a traditional Muslim culture is less free even if they believe they’re making a free choice. It’s likewise no accident that Mill was both an early feminist and a proponent of British colonialism’s “civilizing” effect on India. A pluralist, in contrast, would argue that — whatever one’s personal views — the basic structures of a liberal society should seek to accommodate traditional cultures and focus more on civic integration, which coercive forms of cultural assimilation may even undermine.

Liberal Protestantism as America’s civil religion

I fall squarely in the pluralist camp, and see the “perfectionist liberalism” of Mill as oxymoronic. Mill was the son of an ordained Presbyterian minister, and while his father left the flock for “Natural Religion,” Mill professed reverence for Jesus Christ and frequented worship services throughout his life. Mill’s liberalism was thus itself a comprehensive doctrine reflecting a secular-rationalist form of Protestantism.

Explaining these distinctions is tricky in the U.S. context given the strong Protestant influence on American culture. The semantic conflation between “political liberalism” and “social liberalism” is particularly hard to avoid, but there is a distinction with a difference. The “Great Awokening,” for example, had clear echoes with the Protestant Great Awakenings that have recurred throughout American history. Progressivism’s religious underpinnings are simply masked by the contemporary decline in explicit religious affiliation, particularly within the Mainline church, and yet the sociological base remains nearly identical. Jordan Peterson’s attribution of woke politics to “Postmodern Marxist” college professors is thus mistaken. Wokism is as American as apple-pie, reflecting a Protestant form of Christian Nationalism that's secular but no less sectarian.

It should therefore be no surprise that most of the leading “Post Liberals” in American politics are Catholic. Catholic social teaching and Thomism provide alternative accounts of the good; ones that — per Rawls — a liberal society ought to accommodate. Instead, elite American Protestants have used their cultural and institutional dominance to embed their comprehensive doctrine into everything from the federal rule-making process to professional medical guidelines. The inevitable backlash to this overreach is then presented as “illiberal” via the semantic conflation between the political and social forms of liberalism mentioned above, when if anything the Post Liberals are directionally pluralist.

Similarly, the New Right critique of “woke capital” is not merely a critique of ESG or investment screening regulations, but an identification of wokeness with the telos of managerial capitalism per se. That is, rather than being an aberration, multinational corporations seem to strongly post-select for woke HR departments and DEI trainings as a way to enforce workplace harmony, as though blending Quaker theology with the Singapore model of multiculturalism.

Given both its universalist moral orientation and hostility to institutional mediation, America’s low church Protestant culture was thus uniquely well adapted to the era of “disembedded liberalism.” Conversely, the Post Liberal interest in labor unions and “integralism” seems to be groping at the sort of embedded, membership-driven social institutions that once helped order people’s lives and align diffuse interests toward the common good.

Some argue that Protestantism's cultural triumph over counter-revolutionary Catholicism has nevertheless benefited the world, pointing to the evidence that Protestant countries are more innovative, ambitious, and industrious. While true, this judgment appeals to abstract moral theories like utilitarianism and consequentialism, which by nature transcend the specific duties created by our communities, institutions and social compacts. It's no surprise that these philosophical approaches were developed during the height of the British Empire and regained popularity in the era of disembedded liberalism. Utilitarianism, viewing morality from the “God's eye” perspective of a global social planner, dismisses the need for concrete social foundations. To my deflationary liberal mind, that makes it just another comprehensive doctrine among many.

Remember, political liberalism emerged out of religious conflict, and while we’ve secularized and changed some labels around, those conflicts are largely still with us today. Forgetting that fact and allowing one conception of the good to become hegemonic is a recipe for sectarian conflict. It follows that our elite institutions either need to deflate their conception of liberalism or risk rediscovering the logic of social contract theory the hard way.