Freeman

PERSPECTIVE

There's No Such Thing as Economic Freedom

AUGUST 29, 2012 by SHELDON RICHMAN

In 1938 the U.S. Supreme Court ruled that a federal law prohibiting the interstate shipping of filled milk violated neither the commerce clause nor the due process clause of the Constitution. What is best remembered about that opinion is “footnote four,” which has influenced American jurisprudence ever since.

Writing for the majority in United States v. Carolene Products Company, Justice Harlan F. Stone set out the doctrine that some kinds of freedom are more equal than others and that certain government acts warrant a higher judicial scrutiny than other kinds. The latter are to begin with a presumption of constitutionality: “There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten amendments.”

In other words, when the court decides that a government regulation lies beyond an explicit constitutional prohibition—for example, one found in the Bill of Rights—the court should presume it is constitutional and not subject to the strict scrutiny that regulations lying within some explicit prohibition deserve. For example, the court will simply assume members of Congress had a good reason to regulate some aspect of commerce unless it can be shown otherwise. When it comes to economic activity, there is to be no presumption of liberty as there is in other matters.

Hence the bifurcated system of freedoms—fundamental and economic—we labor under today.

Advocates of freedom know this doctrine is based on an error and invoke the indivisibility of freedom in response. But too often they undercut their own case by talking about . . . economic freedom.

I realize this phrase may be meant only to emphasize the depreciated aspect of freedom, but as free-market advocates know, intentions don’t nullify effects. Whenever one says “economic freedom,” one implies that other kinds of freedom exist. That of course does not imply that some freedoms are more equal than others, but it certainly opens the possibility. That can’t happen if we insist that freedom is indivisible.

The case for the indivisibility of freedom is not hard to make when one remembers that there are no economic ends. There are only ends—namely, the values we pursue in the course of our lives. Thomas Sowell writes in Basic Economics, “One of the last refuges of someone whose pet project or theory has been exposed as economic nonsense is to say: ‘Economics is all very well, but there are also non-economic values to consider.’ Presumably, these are supposed to be higher and nobler concerns that soar above the level of crass materialism.

“Of course there are non-economic values. In fact, there are only non-economic values. Economics is not a value in and of itself. It is only a way of weighing one value against another.”

If there are no economic ends, then there is no economic freedom. There is only freedom. Full stop.

People act to achieve objectives they believe will help them to flourish (however they may conceive that). Sometimes they pursue material values; other times they pursue nonmaterial, or spiritual, values. But the material values serve the same purpose as the nonmaterial ones. They are not pursued for economic purposes.

This fits the Austrian insight—developed also by the British economist Philip Wicksteed—that the classical economists erred in thinking their discipline applies only to the self-interested pursuit of material wealth. Economics (or praxeology, to use Ludwig von Mises’s term for the broader discipline) analyzes purposeful action in itself. It doesn’t matter what the purpose is; the principles of action are universal.

Living a human life consists in the pursuit of a variety of values, some material, some not. Thus dividing freedom into spheres is both arbitrary and ultimately pernicious.

* * *

Frédéric Bastiat is beloved by advocates of freedom; they simply can’t get enough of his incisive and witty writings. Too bad he never got to the big book he hoped to write. David Hart tells us what Bastiat would have said.

This year marks the 50th anniversary of a landmark volume on Austrian economics: Murray Rothbard’s Man, Economy, and State. Robert Murphy explains its importance and staying power.

American pundits would have us believe that much of Europe is suffering a double-dip recession because governments are practicing fiscal austerity. Not so, says Stephen Davies.

There’s more to the cost of the welfare state than its explicit budget amounts. James Payne does a fuller accounting.

A privatized orphanage in Guatemala demonstrates what one determined woman can do if given the freedom to do it. John Blundell has the story.

The National Resources Planning Board sounds like something out of an Ayn Rand novel, but it was created during the New Deal. Warren Gibson fills in the details of this ominous-sounding agency.

Earlier in U.S. history women lacked the full rights of men, and this shaped the behavior even of private insurance companies and mutual-aid organizations. One woman changed things radically. Wendy McElroy tells us how.

Our busy columnists have come up with an assortment of topics. Lawrence Reed celebrates the life of Richard Cobden. Donald Boudreaux contemplates complexity. Robert Higgs explains the post-World War II boom. John Stossel sees “regime uncertainty” all around. Charles Baird looks at labor in the context of freedom of association. And Kevin Carson, reading one columnist’s claim that there are many different kinds of capitalism, replies, “It Just Ain’t So!”

The subjects of book reviews in this issue are Herbert Spencer, school reform, shrinking big government, and racial discrimination.

In Capital Letters, David Henderson is challenged on open borders.

—Sheldon Richman

srichman@fee.org


Filed Under : U.S. Constitution

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September 2012

ABOUT

SHELDON RICHMAN

Sheldon Richman is the former editor of The Freeman and TheFreemanOnline.org, and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families.

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