The Modernist Paradigm: Salvation by Politics

How does the common-law paradigm subsume the conflicts that animate the Left? In other words, how are left-wing objections met and answered in a satisfactory manner?

The short answer is: by recognizing that the interest-group-politics model of societal integration is not the only form of integration, and, in fact, is not a very good method of integrating at all. Such a form is based on a misunderstanding of the exigencies of social life — i.e., by the belief that society is ruled by a conflict of interests, that it is a zero-sum game, and that what matters is elbowing one’s way into the circle of intimates in order to obtain one’s “fair” slice of the pie.

Liberals and progressives believe that conservatives and capitalists are people who have owned too much of the pie for too long. It is time for them to relinquish that unfair portion, and share the wealth.

The common-law paradigm provides an alternative viewpoint. It recognizes that the zero-sum, fixed-pie society is not the only approach to organizing a social order. In fact, the zero-sum approach is a particular response to a particular social condition, that of monetary scarcity. (I argue this point in my book Follow the Money, to which I refer the reader for details.)

But the common-law paradigm offers an alternative, that of an equal-opportunity playing field wherein risks have to be taken in order for rewards to be gained, and those rewards are earned through the interplay of property and contract, not through the political process. In such a society, it is voluntary association and the plethora of free institutions and organizations — family, church, business corporation, clubs and societies of all stripes — that provide the framework within which the citizen can contribute to the common good while providing for his or her own interest at the same time.

How did we get to the modern-day conviction that we are ruled by the terms of the zero-sum society? We need to go back and take a look at origins.

One of the legacies of the natural-rights paradigm is the “night watchman” state, which is something of a parody of the limited state. The “night watchman” state enjoyed its heyday in the 19th century. It stood by while the bankers instituted a regime of commodity money which they themselves controlled (through the instrumentality of fractional-reserve banking). In so doing they established a boom-bust economy in which the creditor class fattened its bank accounts at the expense of the producing classes. Both the entrepreneur and the worker suffered under this regime.

The commodity-money regime (which attained its purest form with the gold standard) entailed a  money base controlled by the bankers which, by its very nature, was biased towards shrinkage. This was why the creditor class extolled its virtues. In the words of the Report of the U.S. Monetary Commission of 1876 (p. 53), “Money in shrinking volume … is the fruitful source of political and social disturbance. It foments strife between labor and other forms of capital, while itself hidden away in security gorges on both. It rewards close-fisted lenders and filches from and bankrupts enterprising borrowers. It circulates freely in the stock exchange but avoids the labor exchange. It has in all ages been the worst enemy with which society has had to contend.”

As I argue in Follow the Money (three relevant chapters of which I excerpted here), it was this regime that gave free trade a bad name and called up the labor movement, socialism, and communism. Hence, after a period of triumph, it yielded to the resurgent mercantilism of the modernist paradigm, in which interest-group politics take pride of place. The change of the guard took place in the 1930s, with the triumph of New Deal politics and Keynesian economics.

This change entailed a different form of social integration, that centered in the political rather than the economic process. In this new form, it was likewise a child of the rights paradigm. The French Revolution was its progenitor. As Alexis de Tocqueville presciently noted in The Old Regime and the French Revolution, the new republican regime of Revolution simply continued the structures and imperatives of the old monarchical regime. It assumed the patrimony of monarchy while establishing it upon new foundations. Thus it established interest-group politics as integrating mechanism, analogous to monarchy’s royal mechanism.

The royal mechanism, likewise described in Follow the Money, was elucidated for us by Norbert Elias in his book Power and Civility. In this mechanism, the king sits at the center of power, balancing the various power groups in society while keeping them from combining with each other. If they ever did combine, that would spell the end to his role as power-broker. Thus, there were privileged groups of all sorts, from the original nobility and clergy to the newer forms of merchant prince, bureaucrats of the noblesse de robe, the various privileged guilds, etc. All these formed entrenched interests that received power from the king in exchange for loyalty. The resulting suffocating mass of privileges and exemptions (mainly tax exemptions) in the end could not be reformed, but rather guaranteed the Old Regime’s overthrow in 1789.

The royal mechanism nevertheless continued its existence under new management, that of parliamentary democracy. The institution of political representation initially was held in abeyance by the rule of law, especially in common-law countries, but the built-in bias toward government activism could not be held in restraint forever, given the inherent bias toward the primacy of the will nestling at the heart of the natural-rights framework, upon which modern democracy was erected. Dicey’s Lectures on the Relation Between Law and Public Opinion in England During the Nineteenth Century (1905) provide an overview of debates in England relating to the gradual shift that finally culminated in the 1930s.

As Hayek detailed in his masterly Law, Legislation, and Liberty, it was the genesis of the representative assembly as an extension of government rather than law that is at the heart of the problem. Legislatures, strictly speaking, were not legislatures but governmental policy developers and executors. These two functions were carefully, and helpfully, distinguished by Stahl in his Doctrine of State and Principles of State LawNow, they are entirely forgotten as law gets swallowed up by politics. We are now ruled, not by law, but by interest groups demanding privileges. And we are being suffocated under layer upon layer of lobbyist-inspired privileges and immunities granted by “legislatures” which are in fact nothing other than vote-buying machines.

So then: in the 19th century, during the heyday of  the “night watchman state” and laissez-faire, labor bore the brunt of the effects of the gold standard and its so-called automatic mechanism. The labor movement was born from the desire to shift this burden. But instead of pursuing a common-law solution, labor reinvigorated the royal mechanism. The modern political system is a refurbished version: it is a mechanism to satisfy interest groups in exchange for votes. This is behind the dictum, “all politics is local.” What is meant thereby is that all politics responds to some specific interest, and seeks to build coalitions in terms of those interests.

We end up with the conundrum of the conflicted electorate: “A series of deals by which the wishes of one group are satisfied in return for the satisfaction of the wishes of another … may determine aims for common action of a coalition, but does not signify popular approval of the overall results. The outcome may indeed be wholly contrary to any principles which the several members of the majority would approve if they ever had an opportunity to vote on them” (Hayek, Law, Legislation, and Liberty: Vol. 3, p. 15: cf. Common Law & Natural Rights ch. 2: “The Broken Machinery”).

The common-law alternative is the rule of law: no special privilege, the citizen ideal of a free and equal citizenry, in which justice is blind, as opposed to discriminating in favor of the privileged. The U.S. Constitution envisioned this order, but did not provide a proper philosophical foundation for it, nor did it provide for the separation of law and government needed to establish a true separation of powers (see Common Law & Natural Rights for more on this).

Further reading:

Common Law & Natural Rights: The Question of Conservative Foundations contains a thorough discussion of the shortcomings of the political mechanism, by which interest groups are allowed to dominate policy in the face of public opposition.

Follow the Money: The Money Trail Through History contains a discussion of the royal mechanism, which was the machinery by which monarchy maintained its position of supremacy over society. It maintained a balance of power between disparate interest groups unable to cooperate with each other. Monarchy fomented this balkanization in order to retain its seat at the pinnacle. Modern interest-group politics nurtures the same system through the functionality of representative democracy.